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CMS MAC Payments for Genetic Testing Decline Significantly in 2022


NEW YORK – After multiple years of high payment rates for a category of genetic testing codes, billing data released by the US Centers for Medicare and Medicaid Services found that payments for some of those codes declined to almost nothing in 2022. 

Since 2019, Novitas Solutions and First Coast Service Options (FCSO), two Medicare administrative contractors, had seen particularly high rates of billing for tier two molecular pathology codes, a category that covers genetic testing for rare diseases and low volume molecular pathology services. Analysis of 2021 data released by the agency last year from reimbursement expert Bruce Quinn found that spending on one code in particular, code 81408, rose from $207 million in 2020 to $283 million in 2021, raising concerns about potentially fraudulent behavior. 

However, payment data released earlier this year for 2022 payments reveals the spending seems to have been brought under control. In 2022, payments for code 81408 had dropped to about $372,000, Quinn noted on his website.

2022 is the most recent year such data is available. 

Quinn told 360Dx last year that many of the highest-billed tier two codes were ones unlikely to be necessary in the Medicare population, such as code 81442 for genetic testing for Noonan syndrome — a disorder often tested for in children. Medicare payments for that code were $0 in 2019 but rose to $35 million in 2021. Many of those payments occurred in states covered by Novitas and FCSO, Quinn noted.

The most egregious overpayments were for code 81408 covering rare long sequence genes for orphan diseases — an issue covered in a report issued by the US Department of Health and Human Services' Office of the Inspector General in June. The report found that up to $888.2 million in Medicare payments for code 81408 from 2018 through to 2021 were at risk of improper payment. Ninety-seven percent of the total payments for code 81408 were from Novitas and FCSO, the OIG report noted.

The report found that CMS oversight did not ensure all Medicare enrollees had established relationships with ordering providers or ensure that Medicare payments for code 81408 were related to diseases associated with genes that would generally be tested and billed under that code. The report also found that not all contractors could identify the specific gene tested by laboratories that billed code 81408. 

In a recent interview, Quinn said it is "hard to imagine how you'd even find one patient that needed code 81408" in the Medicare population. 

The high payment rates for tier two codes began in 2018, which Quinn attributed to the fact that those codes received pricing from CMS in January 2018. Up until 2017, the codes had not been priced and all claims using them had to be handled manually, he said. Once they were priced, contractors could automatically pay for those codes without reviewing them. 

At the end of 2021 and beginning of 2022, Novitas published multiple coding and billing articles to clarify when and how tier two codes should be utilized, which a spokesperson said via email "may have contributed to how these codes are being billed/paid." One of those articles covers molecular pathology and genetic testing and notes that tier two codes "should rarely, if ever, be used unless instructed by other coding and billing articles." 

Quinn also posited that Novitas and FCSO made those codes nonpayable at the end of 2021, meaning that any claim using them had to be processed manually again. MACs under CMS's MolDx program have had tier two codes marked as nonpayable since they were priced, Quinn noted.

John Warren, a Medicare consultant with Gettysburg Healthcare Consulting, said that although he did not know exactly what measures Novitas and FCSO may have taken to reduce payments, he guessed they implemented a prepayment edit that is "stringent on the requirements for payment" for these codes. 

"Where things may have been a little more relaxed previously, it sounds like Novitas went in and … is really trying to identify the claims that should be appropriately paid and only allowing those sorts of claims to be sent through the system and paid," he said.

Across Medicare contractors, there are many prepayment validation checks that occur, and prepayment editing is "nothing new to the contractors," he added. 

Warren also noted that while they may not constitute fraud, the high payment rates give "all of the appearances of potentially abusive billing." 

Jason Mehta, a partner with law firm Foley and Lardner, said that there was an "incredible uptick in diagnostic testing claims in 2018," which was accompanied by a rash of fraud enforcement actions beginning that same year. Most of those cases have since worked their way through the criminal justice system, and CMS has accordingly strengthened its enforcement and restricted reimbursement, he said. 

CMS has a variety of ways to address potential fraud and abusive billing, he noted, such as issuing new guidance for contractors and imposing more stringent requirements on billing. It also has the ability to use systematic edits to weed out possible fraud, such as flagging laboratories that submit multiple claims on the same day for one beneficiary. 

Mehta said that while there have definitely been instances of fraudulent behavior related to genetic testing, that behavior is the exception and not the rule. It's "not surprising" that healthcare executives focused on higher reimbursing CPT codes or procedures, and that focus led to increased billing and claims for those codes. Code 81408, OIG noted in its June report, had the highest Medicare reimbursement rate out of all of the tier one and tier two molecular pathology procedure codes at $2,000 per test in 2021.

Mehta also said that the confluence of new science, such as next-generation sequencing, becoming more common in recent years and the advent of telemedicine led to significant variations in payments and coverage across different regions of the US. Those variations also likely drove claims for certain codes higher in states under the purview of different MACs with less stringent requirements. 

The question of fraud may be answered by CMS, as the agency concurred with recommendations put forth in OIG's June report that it should review claims billed under code 81408 to determine whether they complied with Medicare requirements. The agency said it will direct its contractors to review a sample of claims to determine whether coding was accurate and, depending on the results of the review, it will determine whether additional reviews are warranted.

But as of now the problem "seems to be solved," Quinn said.