Palmetto GBA Announces Molecular Test Registry

Labs in California, Hawaii, and Nevada need to seek approval for each code-stacked test

CEO SUMMARY: Palmetto GBA, the nation’s largest Medicare Administrative Contractor (MAC), is asking labs in the J1 jurisdiction to submit applications for each molecular test they run. Molecular assays will receive a unique five-digit alpha-numeric identifier (Z-code) that will be entered into the narrative/comment field on claims. A panel of subject matter experts will evaluate the analytical and clinical validity of the assays, and to determine the clinical utility of the assay.

SEEKING A CLEAR, EVIDENCE-BASED PROCESS to ensure the clinical quality of molecular diagnostic tests (MDTs), the Centers for Medicare & Medicaid Services (CMS) has asked its largest payment contractor to develop coding and reimbursement guidelines for these tests.

In an announcement issued on November 2, CMS said that Palmetto GBA, located in Columbia, South Carolina, should use its Molecular Diagnostic Services (MolDx) Program to establish a standardized test registration and coverage-determination process.

A Molecular Test Registry

In an interview with THE DARK REPORT, Palmetto Medical Director Elaine Jeter, M.D., and Vice President Mike Barlow explained the process Palmetto GBA will use to establish a registry of molecular tests and to review and approve molecular tests.

Currently, clinical laboratories and pathology groups use methodology-based code stacks for molecular assays that do not contain the information needed by Palmetto GBA and other payers to identify the assays actually performed. The methodology codes are analogous to baking—one measures the baking ingredients, uses an electric mixer to blend the ingredients, pours the mixture into a pan, bakes the product, and gets a baked good. But what was it? A cake, a pie, or cookies?

Similarly, Medicare and all other payers are paying for methodologic steps to perform an assay, but the payer does not know what assay was actually performed. Without this information, it is not possible to evaluate the services rendered for many molecular assays submitted for Medicare payment. For these reasons, Palmetto GBA has stated that is has no way to determine the medical necessity of laboratory-developed molecular diagnostic tests (MDT).

“The growing volume and complexity of these tests, combined with the practice of code stacking, made it necessary to develop the proposed policies,” noted Jeter. “In the current coding construct, the methodology of code stacks precludes our knowing what we are paying for.”

“Under the MolDx program, each lab will need to obtain a Z-Code for every molecular test it uses,” explained Barlow. “The Z-Code will be unique to each lab test and the laboratory which performs that test.

Molecular Test Registries

“The process of establishing Z-Codes and a molecular test registry is an opportunity to bring transparency to molecular testing,” Barlow explained. “It’s an attempt to solve the identification problem and the registration of the test. The Z-Code simply says, ‘Now we know who you are, and we know this is your test.’

“Keep in mind that registration has nothing to do with coverage,” he added. “The registration application simply explains the steps that a lab follows to get a unique code. Thus, the test will have an identity.

“To that identity, we can attach a coverage assessment of the science and the clinical utility of that test that is provided by the laboratory,” commented Barlow. “Palmetto GBA can publish that assessment so that physicians can make good clinical judgment about the utilization of that test.

“The Z-Code registration will be specific for each test from each lab,” he added. “It’s comparable to a National Drug Code (NDC) number that pharmaceutical companies use for generic drugs. Each generic drug from each different manufacturer has a different NDC number. Z-Codes are simply the lab industry’s version of NDC numbers.

Developing an Online Tool

“To obtain a Z-Code, a lab simply needs to visit the website, download and complete the spreadsheet, then submit it to us,” stated Barlow. “Palmetto GBA is developing an online tool that will replace the spreadsheet in the coming months.

“Expectations are that we will receive a large volume of requests for Z-Codes,” he said. “A panel of subject-matter experts will review each application. (See sidebar.)

“In the meantime, we encourage laboratories to use the spreadsheet and start the process of getting the Z-Codes now,” advised Barlow. “That way, they’ll be ready by March 1. That is the date when every lab that runs molecular tests will need to have a Z-Code for each of its tests.

“Until March 1, Palmetto GBA will continue to pay for these tests while the science in support of that laboratory test is evaluated,” observed Barlow. “Any laboratory that currently submits claims for a MDT to Palmetto GBA will need to submit the clinical justification for these tests. If you are in J1 and you bill Palmetto GBA with a stack code today, you will have to get a Z-Code.

Coverage Determination

“To be clear: any lab currently submitting molecular tests to Palmetto for reimbursement has to submit the clinical and scientific material for each test so that Palmetto GBA can make a coverage determination for that test,” emphasized Barlow. “At the same time, we will not go back in time and penalize any laboratory that was benefiting from an ambiguous coding system. We were asked that question and we will not work retroactively, as some had speculated we would.”

The situation will be different for laboratories that wish to submit claims for MDTs that have not previously been submitted to Palmetto GBA. “For any new assay that we have not seen before—and for any new laboratory opening now—the only point of entry is to register that assay to get a Z-Code,” he said. “That creates a clear identity of that test and the laboratory that performs that test.

“Next, the laboratory will need to submit documentation about the science and the clinical utility of that test,” stated Barlow. “Subject matter experts will review the supporting science for each assay. Only then will a decision about coverage be made.”

It will take considerable effort to work through the volume of applications that are expected, given the number of different MDTs that currently exist. “Currently, laboratories may be submitting code-stacked claims to Palmetto GBA for as many as 1,500 unique laboratory tests,” observed Barlow.

“Laboratories want to know if Palmetto GBA can review and approve these tests between now and March 1,” he commented. “The answer is, yes! Resources are in place to accommodate this need and we are committed to the timeline. It will be a scramble for us over the next six months, but we expect to get the job done within the schedule we set out.

“Things should work like this,” Barlow explained. “From the date a lab’s application is accepted, a 90-day clock will run. If, at the end of that review cycle, the lab’s supporting material is found wanting, it can reapply after an additional 180 days.

“Each laboratory is requested to put forward the best science it has for each test and we will accept a whole range of data,” added Barlow. “Full details are explained on the MolDx site, which is Should a laboratory get a noncovered decision, it will also receive an explanation about why.”

Assessing Test Utility

Some pathologists have raised the question about whether Palmetto GBA will recognize that certain molecular tests are useful for a small population of patients. For that reason, there may be limited clinical research and not much information available in the literature.

“We heard that question and we are aware of such possibilities,” responded Barlow. “Palmetto GBA does not want to curb innovation. At the same time, it is necessary for us—and also for physicians—to understand the reason for the innovation.

“To be more specific, there is a concern that many molecular tests are for risk assessment or for screening,” he contin- ued. “Most pathologists and lab administrators understand that the Medicare program does not pay for assessment and screening.”

Barlow and Jeter wanted to emphasize that the review panel would be part of the process only for establishing the technical assessment. “Remember that the panel of subject matter experts will be limited to an examination of the science and clinical utility in these applications,” noted Jeter. “The review panel will not make a coverage determination. A coverage determination is a function of the contractor, Palmetto GBA.

Separate Calculation

“A component of the coverage determination is reimbursement,” she continued. “That will be a separate calculation. The reimbursement equation will include a review of the clinical efficacy of each test and the financial cost of running the test.”

Jeter also hopes that clinical lab professionals, physicians, and scientists will consider serving on the panel of subject-matter experts. “The names of these experts will be confidential,” she said. “Each will be asked to sign confidentiality and nondisclosure agreements.

“We welcome any industry experts who want to step forward to serve on this panel,” stated Jeter. “We have asked the industry associations to provide recommendations as well. Anyone interested in serving on this panel should send an email with a CV and a description of areas of expertise and knowledge of molecular testing. Such applications should be sent to”

Public Comments Invited

It has been about eight weeks since Palmetto GBA published its proposed two local coverage determinations. It later released details discussed here by Jeter and Barlow about the process that will be used to develop a molecular test registry. Palmetto GBA is keenly interested in public comment from the laboratory industry. It would be timely for pathologists and lab administrators to respond and offer their comments, as now is the time to influence the final processes that will be implemented in coming months.

Palmetto Explains How Labs Can Register Molecular Dx Tests for Coverage Review

TO APPLY FOR A COVERAGE DETERMINATION, laboratories will first apply to get a Z-Code for each molecular diagnostic test (MDT) they perform, according to the proposal drafted by Palmetto GBA. Next, a panel of molecular diagnostics experts will review the clinical documentation that labs provide once they have a Z-Code for each of their MDTs.

Palmetto described the methodologies it will use in the coverage determination process. For each molecular test that a lab submits for review and approval, a specific value will be developed. Palmetto GBA said it is seeking to approve MDTs that are value-and market-based.

Requesting Z-Codes

It was on November 14 when Palmetto announced that providers could request Z- Codes via a downloaded template on the MolDx site.(See “Jurisdiction 1, Part B, Z-Code Registration is Now Open,” on the Palmetto website:

Palmetto GBA is asking laboratories to submit their test catalog for procedures/services that require or use more than one CPT code to identify the service; or that use the methodology-based “stacking CPT codes” (83890-83914), micro-array CPT codes (88384-88386), and cytogenetic CPT codes (88230-88291).”

There are several steps to the process. Each laboratory seeking a coverage determination for a molecular test must submit the required test information and supporting evidence to the McKesson Diagnostics

Exchange Test Assessment Module: Palmetto GBA will send the non-confidential components of all completed coverage requests to a panel of subject matter experts who will assess the evidence using the Grading of Recommendations, Assessment, Development, and Evaluation (GRADE) System to evaluate tests. The GRADE Working Group began in 2000 as an informal collaborative of healthcare experts from around the world who seek to address the shortcomings of grading systems in healthcare.

Following the evaluation, the subject matter experts will report their findings to Palmetto GBA. Once it reviews these findings, Palmetto GBA will publish a coverage determination in a policy or article and publish the corresponding tech assessment summary of the coverage determination on the Diagnostics Exchange. All proprietary test information will remain confidential.

In January, the McKesson Diagnostics Exchange Registry Module will be available online for laboratories to access their Z-Code assignments and to register new tests, Palmetto said.

Also in January, the voluntary, manual registration of MDTs will begin. This registration becomes mandatory on March 1. After March 1, all MDT and LDT claims without a Z- Code will be rejected. Also, from March 1 forward, Palmetto said that claims for MDTs will not be considered for adjudication unless the test has been submitted to the test registry for review and a Z-Code has been assigned to the test.


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