Labs Get High Denial Rates Under New NCCI Rules

Billing expert says guidelines affect labs running molecular tests and assays requiring multiple steps

CEO SUMMARY: Under guidelines the National Correct Coding Initiative issued last year, many clinical laboratories are not getting paid for some tests. The rates of denial for labs running mostly molecular tests could range from 40% to 100% of revenue, one billing expert said. Implemented Jan. 1, the guidelines apply to labs running tests in multiple steps on one patient sample, including next-gen sequencing assays and routine lab testing for Medicare and Medicaid beneficiaries. 

MANY CLINICAL LABORATORIES REPORT high rates of denials for lab tests ordered on behalf  of Medicare and Medicaid patients as a result of changes the National Correct Coding Initiative (NCCI) made late last year, according to Kyle Fetter, Executive Vice President and General Manager of Diagnostic Services for XIFIN.

The new NCCI guidelines were issued three weeks before they took effect on Jan. 1 and were implemented without notice to or comment from stakeholder labs. Since then, the guidelines have been problematic for labs running clinical and molecular tests because they conflict with previous NCCI policy manual instructions and with coding guidance from the AMA. (See TDR, April 8, 2019.)

In an effort to resolve these conflicts, the American Clinical Laboratory Association (ACLA) and eight other lab industry associations sent a letter to the federal Centers for Medicare and Medicaid Services (CMS) urging the agency to withdraw the NCCI guidelines and work with labs to address the problems. In the letter, the associations said the NCCI guidelines are confusing for labs submitting claims for such tests to Medicaid and to any of the nation’s Medicare Administrative Contractors (MACs).

In a separate letter, ACLA raised similar complaints with NCCI. As of April 24, ACLA had not received a formal response from NCCI or CMS in regard to the issues raised in the letters.

Labs Have Three Concerns

In an interview with The Dark Report, Fetter said clinical laboratories that run molecular and other tests in multiple steps have three areas of concern regarding the new NCCI guidelines. They are:

  • 1. Labs are not getting paid for many procedures when multiple lab procedures are performed on one patient specimen for one date of service and laboratories do not know how to bill for the tests even though they are covered under existing NCCI guidelines or other applicable association guidelines.
  • 2. The changes will degrade the information that Medicare collects on these medical laboratory tests.
  • 3. Private payers could make similar changes.

Among these concerns, the last one may be the most significant. “Now that Medicare has made this change to the NCCI guidelines, one of the problems that could result is that all commercial payers could do the same thing,” warned Fetter.

“In other words, this problem could spread industrywide, meaning laboratory and genetic services that are the standard of care for many different types of patients are no longer payable without extensive efforts from the provider and patient,” he added. “Even the use of modifiers and other tools that are available to providers to manage these edits aren’t going to work at some point.”

As of early April, XIFIN did not have data showing that other payers were following Medicare’s lead, but XIFIN’s cross-industry analysts were monitoring payment trends and watching for denials from other payers, Fetter said.

“For large laboratories that do a lot of molecular testing and for those labs that do molecular testing only, this change could affect a significant source—or all—of their revenue,” continued Fetter. “Any clinical lab that runs tests in multiple steps—such as next-generation sequencing assays— may need to follow the new guidelines.”

Overlapping, Contradictory

Given that the guidance from NCCI and the AMA are overlapping and contradictory, the ACLA said specific requirements for labs remain unclear, and so ACLA has urged CMS to provide clarification.

For clinical labs and pathologists, payment denials and delays are significant concerns. “The denials are very high right now and those denials are nationwide,” Fetter commented. “Even if we consider only molecular tests in tier 1 and tier 2, there are many laboratories that are not getting paid for these tests. I would estimate that the effect of the changes NCCI made affects anywhere from 40% to 100% of the revenue for these types of specialty clinical labs.”

ACLA’s Joan Kegerize, JD, was concerned about payment for other lab tests. “In addition to molecular and genetic tests, the NCCI guidelines apply to HCPCS and CPT codes for more routine lab testing that require multiple steps on one patient specimen,” said Kegerize, Vice President of Reimbursement and Scientific Affairs. She offered the example of what happens when a physician orders routine creatinine and protein tests.

Concerns about Other Tests

“The codes apply to a laboratory procedure that produces multiple reportable test results for a single specimen,” she explained. “That means that when two or more tests are ordered on the same specimen, the laboratory shall select a code that most accurately describes the test, or the test would have to be submitted as an ‘unlisted chemistry procedure’ or, in the case of a pair of genetic tests, an ‘unlisted molecular pathology procedure.’”

Coding tests as unlisted procedures could cause confusion in lab billing departments, and because many labs may be unclear about how to bill, they cannot file claims with confidence. If they submit claims incorrectly, they might not get paid or the payer could demand repayment months later.

Asked how any lab would know how to comply with these new instructions, Kegerize said, “Individual labs would need to consult their legal and compliance teams. We have urged CMS to provide clarification and not to implement without engaging relevant stakeholders.”

Concerns about payment could cause healthcare costs to rise, in part because molecular tests are becoming more widespread every day, Fetter commented.

“Molecular and genetic tests are among the fastest-growing areas of diagnostics, because we’ve learned over time that they help identify genes that cause disease and impact how patients respond to different treatments,” he added. “And these diseases are extremely costly to the Medicare program and to the entire healthcare system.”

In 2018, Concert Genetics, a company in Franklin, Tenn., that tracks such testing, estimated that about 75,000 genetic testing products were in use and labs were introducing more than 10 new genetic tests each day. Concert Genetics defines a testing product as an individual gene test or multiple gene panels.

“Many of these tests use next-generation sequencing and these tests are becoming more affordable,” Fetter explained. “But now some laboratories are talking about the possibility of going back to different methodologies that they used earlier and those types of tests may be more expensive in some cases.

NCCI Guidelines Affect Even Routine Lab Tests

MOST OF THE FOCUS ON THE CHANGES MEDICARE MADE to the National Correct Coding Initiative (NCCI) has been on the effect the changes have on molecular and genetic tests. But the changes also apply to any labs that run more routine tests on one patient specimen, said Joan Kegerize, JD, Vice President of Reimbursement and Scientific Affairs for the American Clinical Laboratory Association.

“The codes apply to a laboratory procedure that produces multiple reportable test results for a single specimen,” she explained. “Let’s say a senior is having a regular check-up with her primary care doctor, and based on a health evaluation the physician orders and performs a urine protein and creatine test. According to longstanding CPT guidelines, the billing should document the individual tests performed, 82570 (creatinine) and 84156 (protein).

“But, if we are to interpret the new NCCI manual guidelines literally, labs must now bill for an unlisted chemistry code (84999) any time two or more chemistry analytes are ordered at the same time,” she added. “Billing this way reduces transparency and places a significant burden on MACs and state Medicaid programs, which will now have to adjudicate a vast number of claims with miscellaneous and unlisted codes.”

“Ultimately, this means that patient claims for medically necessary tests may be inappropriately denied,” Kegerize said. “It’s worrisome that the sweeping new language violates long-standing American Medical Association CPT guidance, which dictates that labs should use the most specific codes when billing tests. In our view, these hastily released changes require further clarification from CMS.”

Use of Misc. Procedure Code

“In addition, physicians order many molecular tests quite often,” he added. “Take, for example, EGFR or KRAS tests run for patients with certain types of cancers. A busy oncology practice orders these tests every day and the idea that a lab would need to submit a miscellaneous procedure code to get paid for these tests is a very big problem.

“Today, a growing number of tests are done on next-gen sequencing platforms because they offer a combination of efficiency and reliability, and these machines have become better, faster, and more accurate over time,” noted Fetter. As those machines have become more efficient, the cost of such testing has declined, he added.

While some clinical laboratories are not getting paid, others may have a workaround. “We work with many laboratories that have participated in the Medicare MolDx program for several years,” Fetter said. “As a result, some of those labs may have miscellaneous codes for some of their procedures already. If they do, then it’s likely that they are using those miscellaneous codes and getting paid.”

MolDx is a classification system that MACs use to identify molecular and genetic tests. Under MolDx, CMS groups tests into tier 1 and tier 2, genomic sequencing procedures, molecular multianalyte assays (MAAA), MAAA administrative codes, and proprietary laboratory analyses.

Lack of Coding Detail

The downside of using miscellaneous codes is a lack of specificity about which tests, or lab procedures, labs are running for patients. That lack of specificity is particularly troubling for any payer collecting data on which tests physicians are ordering for which patients and how much Medicare and Medicaid pay for these tests.

“That use of miscellaneous codes will be particularly troublesome for labs reporting their private payer lab test price data to CMS under the Protecting Access to Medicare Act (PAMA),” said Fetter.

Under PAMA, CMS requires what it calls “applicable labs” to report data on the prices commercial health insurers pay for the tests they run. CMS uses that data to set payment rates. If the data are inaccurate, labs can be fined and CMS’ payment rates could be based on bad data.

“Over time, and particularly since CMS introduced the MolDx program, we’ve developed a coding system for molecular and genetic tests,” he said. “But under the NCCI guidelines, those codes have pretty much been completely circumvented. Consider, for instance, testing for lung cancer or colon cancer. The specificity of testing for those diseases is hugely important for any physician trying to decide whether patients will respond to the different therapies that are available.

“Under the new NCCI guidelines, labs are told to use miscellaneous codes to identify what are typical and fairly normal tests and test procedures, which then makes it impossible to identify which specific tests are being used and for which tests Medicare is paying,” he added. “That greatly increases the burden on the MACs administering the MolDx program, because now they have to do an assessment on every test that comes through on every claim.”

Kegerize agreed. “This troubling change reduces transparency about testing,” she wrote in an email. “Using miscellaneous and unlisted codes rather than the individual codes places an unnecessary administrative burden on laboratories, the MACs, and state Medicaid programs.

“It means that when two or more tests are ordered on the same specimen, the laboratory shall select a code that most accurately describes the test, or the test would have to be submitted as an ‘unlisted chemistry procedure’ or, in the case of a pair of genetic tests, as an ‘unlisted molecular pathology procedure,’” she explained.

“This then puts the burden on MACs and state Medicaid programs to adjudicate a vast number of lab test claims with miscellaneous and unlisted codes,” continued Kegerize, “which will no doubt require collecting additional documentation, and may lead to medically necessary tests being inappropriately denied.”

One way to avoid confusion over what ACLA called contradictory guidance would be for CMS to withdraw the guidelines and work with labs and their associations to address their concerns about billing practices, she said.

More Specificity is Needed

“Insurers, clinical labs, and physicians all argue for more specificity rather than less,” concluded Fetter. “In that sense, it seems as if the ramifications of the changes CMS made in the NCCI guidelines were not fully understood.”

CMS replied on April 26 to The Dark Report’s request for comment. The organization is preparing a response to the concerns lab groups raised, which we will include in a future issue.

Contact Kyle Fetter at or 858-793-5700 or Joan Kegerize at 202-637-9466.


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