Medicare COVID Test Coding May Become a ‘Logistical Nightmare’

CMS adds more billing codes to implement new 48-hour payment rule for COVID-19 tests

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STARTING JAN. 1, 2021, clinical laboratories performing COVID-19 tests using high-throughput systems for Medicare patients must comply with a complex new coding rule when submitting claims for these tests. 

The federal Centers for Medicare and Medicaid Services (CMS) will pay $100 for COVID-19 test claims if labs can document that the tests were completed within 48 hours and that most of the previous month’s COVID-19 tests were completed within that same turnaround time. 

Fail to meet these two 48-hour TAT requirements and CMS will pay only $75 per COVID-19 test. (See, “Medicare to Cut Payment for COVID Tests Starting Jan. 1,” TDR, Oct. 26, 2020.)

‘Logistical Nightmare’

The new Medicare rule is expected to be “a logistical nightmare for clinical labs, pathology groups, and billing companies,” predicted Leigh Polk, Sales and Marketing Director for Change Healthcare, a billing and consulting company.

Associations representing clinical laboratories said CMS’ use of a TAT standard for cutting payment may be a first for clinical laboratories and anatomic pathologists.

Thus, lab and pathology groups using high-throughput systems for SARS-CoV-2 testing must assess their work processes to ensure that they can complete COVID-19 tests within Medicare’s 48-hour TAT requirement. 

“What makes this a challenge is that often a lab codes test claims based on which tests physicians order and not on the test turnaround time,” explained Polk. “Now, both labs and their billing service companies need to have procedures in place to identify those tests that meet the 48-hour standard and those that do not.” 

CMS amended an administrative ruling (CMS 2020-1-R2) to lower the reimbursement rate for codes U0003 and U0004 to $75. CMS also said it would pay an additional $25 to laboratories that complete testing within two calendar days and use HCPCS code U0005 for that purpose. 

When using code U0005, the lab would be designating that it was detecting an infectious agent by nucleic acid (either DNA or RNA) for severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) using an amplified probe technique and high-throughput machines, CMS said. 

Those tests need to be completed within two calendar days from the date and time of specimen collection, the agency added.

The U0005 code would need to be listed separately in addition to either HCPCS code U0003 or U0004. This change would be effective for a date of service collection on or after Jan. 1, CMS said. 

Quick Turn-around Time

One challenge for clinical labs and pathology practices will be accomplishing these tests within two calendar days. 

“That TAT includes the date and time from specimen collection to the date the specimen result is completed, which CMS says is when the results of the test are final and ready for release to the ordering physician,” she said.

Once a lab has run these molecular COVID tests using high-throughput machines, then they can bill for the $25 add-on payment using HCPCS code U0005 as long as they meet these two conditions: 

First, the tests must be completed within two calendar days from the date of specimen collection, and

Second, most (51%) of a lab or pathology group’s COVID-19 tests must be completed using high-throughput technology in the previous calendar month within two calendar days for all of their patients, and not just a lab or group’s Medicare patients.

CMS Audit of U0005 Claims

“There is a strong likelihood that CMS will audit practices that bill using U0005,” Polk commented. 

“Therefore, we urge our lab clients to have processes in place to monitor and document turnaround time for both individual tests and the tests run in the previous month.”

ACLA Says CMS Change to COVID-19 Payment ‘Raises Red Flag for a Number of Reasons’

EARLIER THIS YEAR, the federal Centers for Medicare and Medicaid Services (CMS) increased payment for COVID-19 molecular tests to $100. But last month, CMS cut that rate to $75, creating problems for clinical labs seeking to boost capacity, said the American Clinical Laboratory Association (ACLA). 

“The latest change in payment from CMS raises red flags for a number of reasons. Primarily that payment cuts don’t actually address the root causes of delayed turnaround times,” said ACLA President Julie Khani. 

“Turnaround times are driven largely by fluctuations in demand and labs’ access to critical supplies,” she added. “Instead of addressing those core issues, the new Medicare framework penalizes laboratories for factors often outside their control.

“Adequate, predictable reimbursement allows labs to make investments and increase capacity for COVID-19 testing.” Khani noted. “At a time when the country faces a rise in infections, we are concerned about the potential domino effect of this policy.

“There is no question that unsustainable reimbursement has an impact on efforts to expand COVID-19 test capacity, and CMS acknowledged that reality when the agency increased the payment for high-throughput COVID-19 testing back in the spring,” she reported. 

“But now, CMS cutting payment and insurance companies continue to deny claims for COVID-19 testing—even in cases when the patient is suspected of having or been exposed to the coronavirus—creates problems for labs,” she added.

“Increasing the payment per test to $100 allowed labs doing COVID-19 testing to expand capacity, and also allowed labs that were not doing these tests to begin doing so,” she added. 

“Now that CMS has cut payment, ACLA encourages all healthcare professionals both inside and outside the lab community to contact members of Congress to make sure that we are closing the persistent coverage gaps that make it harder to obtain testing,” she concluded.

Contact Leigh Polk at 843-601-0184 or Leigh.Polk@ChangeHealthcare.com; Julie Khani at 202-569-9715.

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