Labs Face Consequences from MolDx Test ‘Mess’

Decisions threaten laboratory viability and steady progress toward personalized medicine

CEO SUMMARY: Non-payment of molecular test claims for the first five months of 2013 is not the only financial disruption for labs that perform these tests. Reports are coming in about how Medicare contractors, Medicaid programs, and private payers are declining to pay claims based on rulings that the molecular tests fail to meet medical necessity criteria. Labs were unprepared to respond to requests for extensive documentation to support claims for the same molecular tests that were covered in 2012.

UNEXPECTED DEVELOPMENTS HAVE SURFACED AS A CONSEQUENCE of Medicare’s botched implementation of the molecular test CPT codes. These developments are a totally new threat and new challenge to laboratories performing molecular diagnostic testing.

The primary issue—that of non-payment of molecular test claims submitted by labs since January 1, 2013—has gotten the most attention. In fact, in recent weeks, some labs have reported that they are now receiving payments.

However, much uncertainty still surrounds this situation. Executives at laboratory billing companies say that they can not state definitely that all Medicare Administrative Contractors (MACs) and private payers have resumed sending payments for these molecular test claims in May and June.

Meanwhile, the harm that many laboratory organizations have experienced—and continue to experience—has become visible. This harm is a direct result of the non-payment of molecular test claims for a period now extending into the sixth month of the year.

In its discussions with lab billing experts and lab leaders, THE DARK REPORT learned that labs are dealing with at least five troubling effects from this avoidable situation. First, some labs have stopped offering the molecular tests coded to the new molecular CPT codes.

Second, labs have laid off staff and downsized operations in response to non-payment. Third, THE DARK REPORT can identify lab companies that have been forced to close their doors because of the months of non-payment for these molecular tests.

Not Medically Necessary

Fourth is the new threat that all types of payers—Medicare, Medicaid, and private health insurers—are declaring some molecular tests to be medically unnecessary. Payers taking this stance are demanding that labs submit voluminous documentation to support the medical necessity of these molecular tests.

Fifth, and be no means the last type of consequence experienced by labs, they are being paid much less for many molecular tests compared with what they were paid last year. Of course, in many cases they are not being paid at all.

“Just about every lab that performs the frequently-used and well-established molecular tests—such as EGFR, KRAS, and BRAF—have been affected negatively by decisions of the MACs,” said a spokesperson for the newly-formed Coalition to Strengthen the Future of Molecular Diagnostics. “We estimate that it could be well over 100 laboratories, including hospital labs, that are affected negatively.

“In addition, MACs seem to have suddenly decided that many molecular tests are investigational, for screening, or not medically necessary,” continued the spokesperson. “As a result, labs that run these tests are not getting paid and are in dire financial straits. This is particularly true for labs that specialize in running one or two molecular diagnostic tests and are now being sent reimbursement that is below the cost to perform this testing.”

Documentation Required

This statement is consistent with the newest development identified by THE DARK REPORT. In recent weeks, labs have disclosed that certain MACs are demanding extensive documentation to support the medical necessity of molecular test claims.

These negative coverage decisions have hit some labs hard. In Lexington, Massachusetts, Predictive Biosciences has gone out of business. (See sidebar below.) Another lab firm, Genomas LLC of Hartford, Connecticut, is being paid less than it received last year and needs to submit additional documentation about the utility of its molecular tests.

In an interview with THE DARK REPORT, Gualberto Ruaño, M.D., Ph.D., President and CEO of Genomas, explained that the Medicare contractor made problematic determinations for each of the company’s three molecular assays.

In the case of the two CYP450 assays used to assess a patient’s functional status for isoenzymes CYP2D6 and CYP2C9, the Medicare contractor posted no prices for those molecular CPT codes.

The Medicare carrier did post a price for CYP2C19. That is the third molecular test offered by Genomas. But, Ruaño said, the posted price is below production costs to perform the test. He added that these isoenzymes affect the metabolism of neuro-psychiatric and cardio-metabolic drugs.

The MAC for Medicare Part B providers in Connecticut and New York is National Government Services, Inc. (NGS). “NGS has not issued a formal coverage determination.” stated Ruaño. “Instead, NGS has left those prices blank. Because of this, our claims are coming back to us with requests for medical necessity and documentation.

“To respond, we must obtain the patients’ medical records to document the medical necessity,” he continued. “NGS wants to know the names of the tests, the resources used to do the test, and how the test results were interpreted.

Doctors’ Clinic Notes

“NGS also requires the clinical notes from the referring physicians as they relate to medical necessity, which is burdensome on clinicians,” added Ruaño. “Along with this information, NGS asks us for a dossier of our peer-reviewed publications, which we are happy to provide.

“Since January 1, our lab has been underpaid for CYP2C19 and not paid for CYP2D6 or CYP2C9,” he declared. “Now, instead of a price decision, we get the claims sent back to us this month along with demands for more information!

“We see most private health insurers following Medicare and questioning the coverage of this test as well,” said Ruaño. “Only some private payers are paying now.

“The NGS decision has put us at a competitive disadvantage with labs in other parts of the country,” observed Ruaño. “Those labs are getting paid for these tests. This situation is bad for our patients and for physicians too.”

THE DARK REPORT invites other laboratories experiencing similar situations who are willing to share their stories to contact our offices. Without documentation of these situations, elected officials cannot act to correct the problems caused by Medicare and Medicaid program administrators.

Investors Close Laboratory After MAC’s Decision

AT THE END OF MAY, venture capital investors for Predictive Biosciences (PB) of Lexington, Massachusetts, decided not to continue funding the molecular testing lab. The laboratory company ceased testing operations and closed its doors, said Pierre Cassigneul, PB’s CEO.

This action came after PB’s Medicare Administrative Contractor (MAC), CGS Administrators, in Nashville, Tennessee, deemed the company’s tests to be not medically necessary. It would not alter this determination unless additional clinical utility studies were published about the tests in the New England Journal of Medicine or the Journal of the American Medical Association and the tests were included in published clinical guidelines.

Cassigneul said that CGS simply posted no prices for the molecular CPT codes that would cover PB’s three molecular tests. These are the CertNDx Bladder Cancer Assays and are used for the detection, diagnosis, and management of bladder cancer.

Given this negative coverage decision by the Medicare contractor, Cassigneul stated that the company’s venture capital investors decided to close the company. That threw 90 employees out of work. THE DARK REPORT will provide detailed coverage of this development in an upcoming issue.

 Genomas’s Tests Provide Info about Drug Effects

ONE LAB IN CONNECTICUT was surprised that its primary Medicare contractor did not post prices for the specific molecular test CPT codes it uses for its proprietary assays.

“This decision by National Government Services, Inc. (NGS)—the MAC for Medicare Part B providers in Connecticut and New York—has meant non-payment for two of our lab tests and payment below our production costs for a third,” stated Gualberto Ruaño, M.D., Ph.D., President and CEO of Genomas LLC. “Private payers are following this Medicare contractor’s lead and are also not paying our claims.”

This currently affects patient access to the molecular tests offered by Genomas. “We continue to serve patients, but primarily those patients who can pay out-of- pocket for these tests,” explained Ruaño. “They can afford the testing and see the value. Recognizing the value is what Medicare, Medicaid, and commercial insurers are supposed to do. But members of these plans are being deprived of personalized medicine!

“Doctors use these tests because many Medicare patients have multiple chronic conditions and are on multiple medications,” he added. “Our studies show that about 75% of people on Medicare take more than two medications because they have diabetes, high blood pressure, a thyroid condition, or some other chronic illness.

“These patients are at very high risk for drug interactions,” explained Ruaño. “We have demonstrated that the risk of drug interactions is genetically determined.

“People who have deficiencies of different pathways of drug metabolism are at higher risk of drug interactions than people who have normal activity,” observed Ruaño. “So this is definitely a population in great need of this testing. Unfortunately, they are not getting it now because of decisions made by the Medicare contractors.”

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