ACLA Has its Say Regarding Molecular Dx Proposals

In a 23-page public comment letter, lab group takes issue with Palmetto GBA’s draft proposals

CEO SUMMARY: It is not known how many public comments have been submitted to Palmetto GBA, the big Medicare carrier, in response to its published proposals to change how code stacked claims for genetic and molecular tests will be handled, effective February 27, 2012, for labs in Medicare region J1. After filing its comments, the American Clinical Laboratory Association (ACLA) then made its letter public. The ACLA’s concerns include dissatisfaction with the draft proposals and how they were developed.

IN ITS COMMENTS ON PROPOSALS that would change how Medicare carrier Palmetto GBA handles code stacks for genetic and molecular test claims, the American Clinical Laboratory Association (ACLA) has submitted a 23-page letter.

This letter, dated December 2, 2012, shows how the battle lines may be shaping up between the lab testing industry at large and the Medicare carrier which has published drafts of the proposed changes. In its letter, ACLA said the proposals put forth by Palmetto GBA may be unneeded because of other efforts in the industry to improve how these tests are reviewed. ACLA also noted that the Palmetto proposals leave many questions unanswered.

The nation’s largest Medicare Administrative Contractor (MAC), Palmetto GBA published two proposed local coverage determinations (LCD) in September. The LCDs address how clinical labs submit claims for molecular diagnostic tests (MDTs) and laboratory-developed tests (LDTs). They are DL32288, LCD for
Molecular Diagnostic Tests, and DL32286, LCD for Non-Standardized Organ or Disease-Oriented Panels.

Palmetto plans to implement the new policies for MDTs and LDTs that use code stacked claims on February 27, 2012. (See TDRs, November 7, 2011, and November 28, 2011.) Following these two proposed LCDs, Palmetto posted information in October about its “Molecular Diagnostic Services Program” (MolDx).

If approved as presented, these two proposed LCDs and the MolDx program will significantly change how clinical labs and pathology groups use code stacked claims and submit bills for genetic and molecular tests.

Palmetto GBA’s proposals will take effect first in Jurisdiction 1 (J1), meaning California, Hawaii, and Nevada. After January 1, Palmetto will introduce these two LCDs in J11 (South Carolina, North Carolina, Virginia, and West Virginia).

Seeking Improvements

In its letter, ACLA said the two proposed LCDs and the MolDx program were developed with little industry input. “ACLA agrees with Palmetto and CMS that the Medicare program should know what tests it is paying for and that those tests should be reasonable and necessary,” the ACLA letter said. “However, to achieve that goal, Palmetto has established an entirely new regulatory framework that is a cause for serious concern.

“Prior to the announcement of the MolDx program in November, ACLA and other organizations had been working with Palmetto to address its concerns,” the letter said. “ACLA members had offered to provide a variety of information, including test catalogs, to assist Palmetto; however we were told to wait before submitting that information.

“ACLA and Palmetto had a conference call in late August 2011 to discuss the draft coverage article that Palmetto had posted on its website,” continued the ACLA letter. “Although ACLA did submit comments on the coverage article in August, many of the new features of the MolDx program, including the McKesson Z-code process, the technology assessment program, and the new coverage process, were a surprise and were developed with no notice to the industry or any opportunity to comment.

“Palmetto’s MolDx program is being planned and implemented in the midst of other significant changes that will render it obsolete in a year or two,” noted the letter. “The AMA CPT coding panel announced over 100 new CPT codes applicable to molecular diagnostics tests, exactly the tests that Palmetto is targeting. Most of those codes are specific to the particular genetic test being performed, so they will give Palmetto and other payers precisely the level of specificity that they seek. Therefore, once those codes are implemented, the Palmetto program will become unnecessary.”

A key concern is the requirement that a lab submit proprietary information to a McKesson-managed database and enter into a licensing agreement with McKesson to obtain a “Z-Code” to be used when billing Palmetto, ACLA wrote. “The application for the Z-Code requires the laboratory to submit over 32 separate pieces of information, far more than would be necessary for the mere assignment of a code,” the letter said.

“The licensing agreement, which is tilted entirely in McKesson’s favor, gives McKesson significant rights with regard to the information, requires laboratories to indemnify McKesson if it is sued, allows McKesson to change the terms of use without any input from laboratories, and includes no limitations on how McKesson can use the information,” the letter said.

Molecular Test Registry

“Palmetto’s MolDx program would force laboratories to provide valuable commercial information to McKesson without receiving any compensation, and McKesson could use and profit from the information in its other private business arrangements,” the letter said. “The Z-Code system is a part of the McKesson Diagnostic Exchange, a commercial database that McKesson has developed and that it sells to payers and other interested parties.”

Comments like these from ACLA and others are expected, because the proposals would significantly change how the Medicare carrier reviews and pays for LDTs and MDTs. In turn, this would directly affect labs currently using code stacks for their test claims.


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