Palmetto GBA Tells Consultant to Take Down Test Price Data

Molecular data and lab-strategy expert used federal records to inform public about potential fraud

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CEO SUMMARY: Lawyers for Medicare contractor Palmetto GBA sent a cease and desist letter in September to a respected lab consultant, telling him to delete from his health policy blog a document containing Medicare genetic test price and coding data. In the letter, Quinn was directed to delete the information from his own professional files and to tell all those who downloaded the data from his website to also delete the information.

SHOULD THE AMOUNTS MEDICARE PAYS FOR GENETICS TESTS AND OTHER SERVICES be released to the public simply because Medicare is an agency that spends taxpayer funds? That question surfaced after Palmetto GBA, a Medicare Administrative Contractor (MAC), sent a demand letter to a clinical laboratory consultant in September directing the consultant to remove the genetic price data it had earlier provided to him in response to a Freedom of Information Act (FOIA) request he submitted. 

The data on what Palmetto paid for molecular tests on behalf of Medicare patients must be removed, Palmetto said in a letter from its law firm to Bruce Quinn, MD, PhD, an expert on health policy, payment, and clinical lab strategies and a former MAC medical director. 

Gaming the System

Palmetto’s action has attracted attention among clinical laboratory professionals and from news outlets that cover diagnostics. For years, some clinical lab companies have gamed the Medicare program by coding their genetic test claims in ways that result in individual MACs paying these lab companies more for those claims, compared with what other labs billed for the same types of tests using more precise CPT codes.

Lab companies playing this game have benefited because the federal Centers for Medicare and Medicaid Services (CMS) never published data that showed the prices that physicians, hospitals, laboratories, and other providers billed Medicare for claims and the prices Medicare actually paid for these claims. In 2014, however, CMS released data on what it paid physicians. That was the first time in the 49-year history of Medicare that it did so. (See TDR, April 28, 2014.) 

In subsequent years, CMS publicly posted what it paid laboratories. Each year, the data sets CMS released included the:

Lab’s provider number, 

Amount the lab billed Medicare for each CPT code,

Payment Medicare made for each CPT code, and

Volume of test claims paid to the lab for each CPT code. 

In a letter dated Sept. 18, B. Craig Killough, a lawyer with the law firm of Barnwell Whaley Patterson and Helms, in Charleston, S.C., representing Palmetto GBA, told Quinn to delete from his “Discoveries in Health Policy” (DHP) blog a document containing Medicare lab test payment and coding data. 

In the letter, Killough told Quinn to delete the information from his own files and tell all those who downloaded the data from his website to delete the information as well. Killough also asserted that the information on the DHP blog and in Quinn’s file were Palmetto’s intellectual property. 

CMS Master Edit File

While it may be true that the data are intellectual property, Quinn obtained the information, which was contained in what CMS calls a Master Edit File (MEF), from CMS itself.

“I have a copy of the Palmetto MEF file that CMS released in December 2019,” Quinn said in an interview with The Dark Report. “And, I have a newer copy that Palmetto itself released two months ago.” 

In fact, Quinn obtained the original MEF from Palmetto through a request he submitted under the Freedom of Information Act. Under FOIA, members of the public may request documents that local, state, and federal agencies have not released. 

FOIA Law Requirements

Agencies must release those documents unless there is an overriding reason not to do so. The law has nine exemptions and three exclusions that would prohibit agencies from releasing documents. One exemption would exclude the release of information that would be prohibited under a different federal law. 

A Dark Report review of the exemptions and exclusions showed none that relate to intellectual property.

In his letter to Quinn, Killough said the MolDX program is the intellectual property of Palmetto and that, “possession, use, copying and publication of the file is restricted by intellectual property laws.” In addition, Killough said Quinn should ensure that the file “was deleted in all electronic forms.” Also, Killough told Quinn, “to provide to us names and contact information for all persons and entities known to you that downloaded the Master Edit File” or transmitted all or part of it.

This request means that clinical laboratory directors and pathologists could be asked to delete the MolDX information should they have downloaded that data from Quinn’s blog site for their own analysis. 

CMS Intervenes

While Quinn deleted the link on the DHP blog site to the MolDX data, he did not have access to names of individuals or companies that downloaded the data, and he did not destroy the data, he told The Dark Report. He added, however, that CMS had intervened in the matter and asked him to await further instructions. 

“The data in the MolDX MEF that Palmetto is concerned about is the exact same pricing information that CMS releases every year for all physicians, labs, and CPT codes,” Quinn said in an email.

“The only difference between what I published on my DHP site and what CMS releases is that CMS imposes a one-year delay on its release. My goal in posting these data was to identify clear-cut payment errors—and I found many of them.”

A review of the blog post headlines on Quinn’s DPH site may reveal why Palmetto asked him to delete the data. Here are a few:

“Medicare’s Unorthodox Spending on Code 81408 in CY2019: 80% in Red States,” Oct. 14.

“Palmetto’s Public DEX Data Shows How Indicted Lab Invades Medicare, Gets Payable Z Codes,” Oct. 13.

“Comparing Medicare Molecular Pathology Spending in the Non-MolDX States,” Oct. 7.

“More Data on the Unbelievable Explosion of 81408 Spending at Medicare: Novitas and FCSO MACs Only, $300M Lost,” Oct. 6.

Medicare Spending on Tests 

The letter from Killough came one month after the federal Office of Inspector General (OIG) reported that the Medicare program spent $7.6 billion for clinical laboratory tests in 2018, a $459 million increase from the $7.1 billion it spent the year earlier.

“Although payment rates for most tests decreased in 2018, savings that resulted from lower rates were overtaken by increased spending on other tests,” the OIG said. “Spending on genetic tests increased from $473 million in 2017 to $969 million in 2018 because of new and expensive tests entering the CLFS, as well as an increase in the volume of existing genetic tests.”

Price Transparency Final Rule

Meanwhile, even as Palmetto was claiming that certain Medicare price and claims data were proprietary, the federal government was taking steps to increase the transparency of prices paid to hospitals, physicians, clinical laboratories, and other healthcare providers. On Oct. 29, CMS touted the completion of what it called a “historic price transparency initiative.”

On that day, CMS and the federal departments of Labor and Treasury issued a final rule on price transparency, requiring most commercial health plans—including group health plans and individual health plans sold on the Affordable Care Act Insurance Marketplace—to disclose their prices, including cost-sharing information on what consumers pay. 

The rule fulfills a key element of an executive order on price and quality transparency that President Trump issued in June 2019, CMS said. 

Earlier this year, CMS issued a similar final rule on price transparency for hospitals and health systems that becomes effective on Jan. 1, 2021.

All clinical labs performing genetic tests have an interest in this dispute, because transparency in prices and claims volume are one way that fraud can be identified, and competitive forces can work to prevent the Medicare program from being overcharged by less-than-ethical testing companies.

Lawyer Questions MAC’s Claim of Trade Secrets

IN A RESPONSE TO A REQUEST FOR AN OUTSIDE LEGAL OPINION, Jeffrey J. Sherrin, a healthcare lawyer with O’Connell and Aronowitz in Albany, N.Y., said he would question whether the Medicare information in question on the “Developments in Health Policy” site could be considered trade secrets. 

“I would seriously question whether that information could be considered a trade secret for private commercial lines of business,” Sherrin wrote in response to a request from The Dark Report on the letter Palmetto GBA sent to Bruce Quinn, MD, PhD. “I find no legitimacy to such a claim with respect to Medicare payments.

“By definition, if the federal government releases documents pursuant to a valid request under the Freedom of Information Act (FOIA), the presumption must be that they are not confidential trade secrets,” he wrote. “The federal government has no authority to release such confidential records under FOIA.

“There is always the possibility that the documents were released by the government in error, but that does not appear to be the case here,” he added. 

“In addition, I don’t see any validity to the claim that how much is paid on behalf of the Medicare program for particular tests is a trade secret,” Sherrin noted. “In fact, I find it disturbing that Palmetto would try to prevent disclosure of such information.” 

Contact Bruce Quinn, MD, at bruce@brucequinn.com; Jeffrey J. Sherrin at 518-462-5601 or jsherrin@oalaw.com.

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