NEW YORK – The prices set by the US Centers for Medicare and Medicaid Services for six new codes related to genomic sequencing procedures have left laboratory industry stakeholders concerned about the feasibility of performing these tests and questioning the transparency of the pricing process.
After more than a year of back and forth, CMS has set final prices for the new codes that some stakeholders feel are better than the preliminary prices but still falling short of the costs of performing these tests.
Last year, CMS held a public meeting on the adoption of six new CPT codes related to genomic sequencing procedures, three for tissue-based testing and three for cell-free DNA testing. The tissue-based codes cover genomic sequence analysis panels of solid organ neoplasms with interrogation for sequence variants and include code 81457, which covers DNA analysis and microsatellite instability; code 81458, which covers DNA analysis, copy number variants, and microsatellite instability; and code 81459, which covers DNA analysis or combined DNA and RNA analysis, copy number variants, microsatellite instability, tumor mutation burden, and rearrangements.
The cell-free DNA testing codes are for genomic sequence analysis panels of solid organ neoplasms using cell-free nucleic acid with interrogation for sequence variants. Code 81462 includes DNA analysis or combined DNA and RNA analysis, copy number variants and rearrangements, while code 81463 includes DNA analysis, copy number variants, and microsatellite instability. Code 81464 includes DNA analysis or combined DNA and RNA analysis, copy number variants, microsatellite instability, tumor mutation burden, and rearrangements.
The recommended prices for those six CPT codes ranged between $1,759.60 and $4,375 depending on the code's complexity and the resource requirements and were determined by crosswalking, a method of matching the new codes to another existing code and assigning the new code the same payment. The six new CPT codes were recommended for crosswalking to existing code 81455 for a panel analyzing more than 50 genes, with additional modifications depending on other attributes being analyzed.
In June 2023, an advisory panel of experts agreed with five of the six recommended prices. However, in its preliminary pricing decision, CMS priced the codes at $597 each by crosswalking them to existing code 81445 for a panel analyzing between five and 50 genes. In its original decision, the agency said that it did not see "justification in crosswalking to a code that specifies analyzing more than 50 genes."
Last November, after pushback from laboratories, professional organizations, and patient advocates, CMS decided to postpone its pricing decision in a process called gapfilling, which involves reaching out to each CMS jurisdiction and gathering data on what the price of a code should be and then setting that price at the median rate.
In September, CMS released the final gapfill prices for these six codes, which now range from $896.87 to $3,288.51 — more than the $597 preliminary price but still below what the advisory panel recommended.
In an email, Victoria Pratt, chair of new codes for the Association for Molecular Pathology Economic Affairs Committee, said that reimbursement rates "must accurately reflect the work and resources required to perform each test," and that in this case, the final gapfill prices fall short because they do not "properly acknowledge that the work and resources required involve more advanced technologies to perform these types of tests."
"If prices are not adjusted, it may limit beneficiary access to these necessary services and could have a significant impact on patient access and AMP member laboratories," Pratt added.
The lower reimbursement rates "result in laboratories stretching already strained resources to ensure patient access to testing," Pratt said. "Smaller local or regional laboratories may choose to shut down testing and send patient samples to reference laboratories."
In a letter to CMS, AMP further noted that the variants specified by the code descriptors "entail months of validation studies in a high-complexity clinical laboratory, reagents, stringent quality control, proficiency testing, capacity of the instrumentation, and bioinformatic resources to run multiple algorithms for accurate reporting."
The organization in its letter requested that CMS reconsider the gapfill rates and revise the payment amounts, although a spokesperson for AMP noted that it did not submit a formal reconsideration request and just reiterated its recommendations.
Industry impacts
The original pricing decision was "industry crushing," said Maude Champagne, director of market access, strategy, and operations at Illumina. However, Champagne noted that there is still a discrepancy between the prices for these six generic codes and other mechanisms of pricing that CMS uses, including proprietary laboratory analyses (PLA) codes. PLA codes are unique, test-specific codes that a laboratory or company can apply for and receive a set price that may differ from a generic code.
Champagne cited generic code 81462, which is priced at $1,195.83 by CMS, as an example. The code for plasma-based testing includes DNA analysis or combined DNA and RNA analysis, copy number variants, and copy number rearrangements and has the "same attributes" as Inivata's InVision test. That test, however, has a PLA code and was gapfilled and priced at $3,500. Companies applying for PLA codes have the "opportunity to be very specific about their number of genes and attributes" in their tests, while the generic codes are "meant to be generic" and include more than one assay, Champagne said.
"It's very, very hard to strike a balance between having a code descriptor that is broad enough to represent the market … yet at the same time have a code descriptor that's specific enough to truly guide CMS in establishing a fair rate," she said.
PLA codes can only be applied for by manufacturers once a test has received approval from the US Food and Drug Administration or by labs with laboratory-developed tests that have the resources to apply, which Champagne said leaves hospital laboratories with fewer resources that put their own laboratory-developed tests at a disadvantage. As more test providers seek PLA codes in order to potentially receive more favorable pricing rates, the pricing and reimbursement landscape will become even more complex.
Gapfill pricing opaqueness
Champagne also noted that beyond the additional confusion that PLA codes bring, there is a lack of transparency surrounding the gapfill process that complicates pricing further. Because the final gapfill price is the median of all the Medicare administrative contractors' pricing for these codes, some MACs may originally pay more for a test covered under one of the generic codes and then be forced through gapfilling to lower their rates. "The labs that are located within those MACs' geographies are now going to see a reduction into how much they're being paid," Champagne said.
The pricing process, Champagne said, "is creating market pressures that are favorable or unfavorable for certain lab providers in different parts of the country."
"If you're in a position where you can [get a PLA code], you're going to end up at a better rate than your neighbor who doesn't," she added, which is "creating inequalities in the market."
Lack of pricing transparency during the gapfill process is a concern for others in the industry, as well. Jan Nowak, chair of the College of American Pathologists' CPT RUC Subcommittee, said that the gapfill process can only produce valid pricing "if sufficient numbers of performing laboratories utilize the new codes for their services and provide accurate information" to the MACs.
"When codes are new, many laboratories may be slow to implement the new codes and calculate associated prices based on true costs," Nowak added. "If the number of reporting labs is low, using the median to set a price is not a valid indicator of actual costs."
Although CMS published the prices from each of the MACs on its website, Nowak said that it's unclear how each MAC determined their preliminary payment rates and whether the majority of the MACs independently established and submitted their own gapfill pricing information, rather than adopting another MAC's pricing.
The lack of transparency "and resultant pricing rate may have adverse and unintended consequences" for providers and patients, Nowak said, such as limiting access to medically necessary testing.
This will also have an impact on private payors, as many commercial insurers use CMS payment rates as a reference when setting their own rates.
The lack of transparency surrounding pricing and the lower rates for generic codes are "creating a little bit of hesitancy" for laboratories that are deciding whether to offer these services, Champagne noted.
"Ultimately, the pricing process is going to start creating market pressures that are not necessarily favorable for decentralization or smaller pathology labs," she added.
For now, though, the immediate concern is focused on the six new codes for genomic sequencing procedures and whether CMS will once again accede to the industry voices calling for reconsideration of the reimbursement rates.
But while stakeholders may not have gotten all they asked for, Champagne noted that the final prices are an improvement on the previous pricing decision and CMS has been willing to listen to stakeholders and "made a lot of progress."