Medicare insurance lab payment analysis raises queries about pricing transparency

The Medicare administrative contractor has delivered a cease-and-desist letter to a famous diagnostic reimbursement expert containing laboratory test pricing and coding details that reveals instances where CMS may be overpaying for certain molecular checks.

Palmetto GBA sent the letter to Bruce Quinn, asking him to remove information from a public blog great own files. Palmetto’s lawyer claims that the information was included in the document, known as a master edit document (MEF), that is the contractor’s intellectual real estate.

However , based on Quinn and a market analyst’s record, the file was obtained by way of a Freedom of Information Act (FOIA) ask for to CMS, meaning the company has already deemed the release of the details to be in the public interest. Quinn claims that the analysis he has done utilizing the MEF data demonstrates its worth to the public. The information is also associated with competitive interest to labs who also often face a difficult reimbursement atmosphere and are under pressure to lower costs.

However , FOIA scholarships the public the right to request information within federal agencies if the information doesn’t fall under one of nine exemptions, for example , information that invades private privacy or trade secrets attained outside of the government. Quinn’s experience with Palmetto, which CMS has said it is considering, raises questions about whether the government contractor can legally limit public access to information obtained below FOIA, particularly a document which contains information about how the government disburses taxpayer funds.

Quinn’s exchange with the MAC comes each time when rapid growth in the hereditary testing industry is increasing Medicare health insurance spending on laboratory testing. HHS’ Workplace of Inspector General recently documented that Medicare spending on lab tests within 2018 was $7. 6 billion dollars, up 6% from $7. one billion in 2017. The OIG noted that although payment prices decreased for 75% of medical tests, the savings were erased mainly by greater spending on genetic exams, which was approximately $1 billion within 2018 compared to around $500 mil in 2017.

In step with increasing hereditary testing expenditures, the OIG can also be ramping up efforts to track deceptive billing practices in the space. For instance , OIG and its law enforcement partners a year ago brought charges against 35 people who had illegally billed Medicare greater than $2. 1 billion for hereditary tests.

Furthermore, Palmetto’s actions seem out of stage with CMS’s recognition that better pricing transparency in the healthcare industry is in the public interest. In The month of january 2014, CMS instituted a new plan where it would determine on a case-by-case basis whether to grant FOIA requests seeking information on Medicare obligations to physicians. In making such determinations, CMS said it would weigh if the privacy interests of individual physicians outweighed the public’s interest in accessing this information.

Right after its FOIA policy took impact in March 2014, CMS obtained several requests for the release associated with physician payment data, at which stage the agency decided it would the actual public by regularly publishing Medicare health insurance payment for services — which includes lab tests — furnished by physicians and other healthcare professionals.

“The Department concluded that the information to be released would assist the particular public’s understanding of Medicare fraud, waste materials, and abuse, as well as shed light on obligations to physicians for services equipped to Medicare beneficiaries, which are ruled by statutory requirements that CMS must follow, ” CMS wrote within an April 2014 letter to United states Medical Association CEO James Madara informing him of this change.

CMS further described that the information it would publish would certainly identify service providers by their National Service provider Identifier (NPI) and the services these people billed Medicare for by Health care Common Procedure Coding System unique codes (i. e. CPT codes), plus detail the average submitted charges, typical allowed amount, the average Medicare transaction, and the number of beneficiaries who obtained the service.

Quinn maintains that the activities that he received a cease-and-desist notice from Palmetto are in line along with CMS’ policies aimed at price openness and the agency’s goals to reveal Medicare waste and fraud. In addition, he noted that most of the details in the document in question is already openly available, and the information that is not however public will eventually become then when CMS publishes Medicare payment details for physician and lab providers, as it has annually since 2015. (Each year, the released transaction data is for two calendar many years prior. )

“This makes it nonsensical to say that will Palmetto’s payment rates to labs are entirely a business secret associated with Palmetto, ” Quinn said.

The MEF in question was created simply by Palmetto and contains the Medicare transaction rates to labs (identifiable simply by NPI) for 22, 000 medical tests (identifiable by CPT codes). Investment decision firm Nephron received the MEF from CMS, under FOIA, using the specific goal of pinpointing the actual government was paying one laboratory, Myriad Genetics, for GeneSight, the multi-gene, combinatorial pharmacogenetic test in order to doctors understand how patients’ genetic variants can impact their ability to respond to specific depression drugs. During an Aug earnings call, Myriad executives declared that GeneSight was being reimbursed by Medicare insurance at a new rate but dropped to disclose the price.

In a September note, titled “FOIA Says: New GeneSight Price is usually $1, 569, ” Nephron expert Jack Meehan alerted investors from the new Medicare price. Although the brand new rate is a 28% cut in order to GeneSight’s prior Medicare price of $2, 184, it is still more than 3 times what another lab, AutoGenomics, gets from CMS (around $450), to get a test which identifies patients in danger for opioid dependency.

The MEF confirmed that will Myriad was using a nonspecific molecular pathology code that labs make use of for tests that don’t have the proprietary code or aren’t defined by existing CPT codes, in order to bill for GeneSight. This little bit of information was already known from widely available CMS data, which demonstrated that Assurex, the company that created GeneSight and which Myriad obtained in 2016, used the code in order to bill for GeneSight. In fact , Meehan pointed out that based on CMS data through 2017, GeneSight received the biggest reveal of payments billed under that will code ($31. 5 million).

Meehan told traders that it is unusual for a test along with GeneSight’s level of utilization to not possess a proprietary or unique claims program code, which would allow Medicare to better monitor spending.

“Our FOIA response helps to shine much better light on GeneSight pricing, which usually previously has been a mystery to the expenditure community, ” Meehan wrote.

Ultimately, there were 2 pieces of new information related to GeneSight that Meehan was able to glean through the MEF. One was the new GeneSight Medicare price, and the other is that the test now had a new Z-code, which are unique identifiers for molecular tests originally developed by McKesson to enhance payors’ ability to track utilization. Palmetto now owns Z-codes.

In a statement, Chip Parkinson, Myriad’s executive vice president associated with payer markets and reimbursement, declared that it is the company’s understanding that certain facets of CMS and contractors’ test prices and coding determinations, such as Z-codes, are proprietary information. As such, sector stakeholders may have to pay a membership fee to access this information, Parkinson mentioned, and there may be rules or techniques associated with the disclosure of this information.

Quinn, who is the consultant to several of Myriad’s rivals in the PGx and hereditary malignancy risk testing markets, discussed the newest GeneSight pricing and Z-code within a post on his blog, and published for reference the MEF record, which he obtained from Nephron. Soon thereafter, Quinn received a cease-and-desist letter from Palmetto’s law firm saying that the entire MEF is the mental property of Palmetto, and that Quinn must delete the file through his blog and all copies in the possession. The law firm further required that Quinn provide the names plus contact information of those who may have down loaded the MEF from his weblog and anyone he distributed the particular file to.

Quinn has deleted the MEF file and redacted the GeneSight Z-code from his blog post, although the pricing analysis remains. However , this individual doubts Palmetto’s claim that the entire MEF is proprietary, especially since a good deal of the information in the file is already accessible upon its Diagnostics Exchange (DEX) website within MolDx, a claims digesting and utilization tracking program Palmetto operates for molecular diagnostics.

While Palmetto might assert its right to control the utilization and dissemination of Z-codes, outside of that “it’s not clear where [Palmetto’s] intellectual property starts and ends, ” Quinn stated.

Paul Garnishment, an attorney with Public Citizen Lawsuit Group, explained that if a company keeps the copyright to specific articles, for example , the New York Times retains a copyright to one of its released articles, then even if that write-up is released by the government included in a FOIA request, that write-up can’t be republished. That said, he furthermore wondered what specifically Palmetto will be claiming as its intellectual property. The particular cease-and-desist letter mentions that Palmetto “owns” Z-codes, and that these unique codes “are not for public submission or publication, ” but it also seems to say all the contents of the MEF is Palmetto’s intellectual property. “So, what is the claimed intellectual property? inch questioned Levy.

He found particularly problematic the particular part in Palmetto’s letter inquiring Quinn for the names of those and also require downloaded the MEF. “If We were Quinn, I would tell them to visit jump in a lake about revealing his users, ” Levy mentioned. “If they want to pursue the details of the downloaders, they can sue the particular downloaders as Doe defendants plus serve a subpoena seeking the info. Then, a judge will evaluate if the claim has any merit. inch

In response to e-mailed questions for this article, a CMS spokesperson confirmed that the agency is definitely looking into the matter, but also noted that will “on a case-by-case basis Medicare insurance Administrative Contractors can claim details as proprietary. ”

A spokesperson for BlueCross BlueShield of South Carolina, which Palmetto operates under, declined to provide remarks for this article.

Historically, labs have not publicly commented on what industrial and government payors are spending money on their tests, maintaining them because business secrets. Payors have also kept this line. Several lawyers symbolizing labs declined to comment with this article.

Charles Mathews, principal at consulting company ClearView Healthcare Partners, noted that will commercial and government revealing decided payment rates with specific labs limits payors’ negotiating power. “Everybody wants to feel like they are getting an offer, ” Mathews said. “[Payors] are open to secrecy, therefore labs are willing to give them better special discounts. ”

Quinn wrote in his blog post that their analysis based on the MEF data shows that Medicare contractors in the MolDx plan appear to be shielding some tests a few “lucky labs” from reduced costs stipulated under the Protecting Access to Medicare health insurance Act (PAMA) of 2014.

With the enactment associated with PAMA, a lot of pricing information has become public, since CMS must post the private payor rates by using as its base for Medicare transaction of lab tests every three years. It has increased pricing transparency, but Mathews noted that there are segments of the sector, for example , tests that are exempt through reporting private payor rates depending on volume, that will never be priced underneath the new law. Notably, the unspecified CPT code 81479 — that will Myriad uses for GeneSight and many more labs are increasingly using — is not priced under PAMA.

Once pricing regarding specific test codes is established via PAMA on the clinical lab charge schedule then MACs must abide by that pricing, Mathews recognized. However in his experience, contractors appear to convey more leeway in setting rates for several types of tests in those distance years before PAMA kicks within. “That’s where the flexibility is, inch he said, acknowledging, however , that will some of Quinn’s analysis on his weblog does appear to be highlighting instances exactly where certain codes and associated prices have been established for tests, yet contractors are not enforcing them.

Still, even if the associated with a specific test may eventually turn out to be public through CMS’s transparency guidelines, payors and labs may be inspired to keep payment information under wraps, even if only for a time, Mathews acknowledged.

However , in the event that after looking into Quinn’s experience with Palmetto CMS ultimately decides that the service provider was right to block public entry to test pricing information, it may increase even more questions as to how that will squares with its own, as well as the Trump Administration’s, push toward greater prices transparency in healthcare.

For example , following an professional order from President Donald Trump to increase pricing transparency, CMS released a final rule in November 2019 requiring hospitals to make public many “standard charges, ” including discussed prices with commercial payors plus discounted cash prices, for solutions provided in an in-patient or out-patient setting. The American Hospital Organization sued CMS trying to stop execution of the rule, but a federal determine in June dismissed the legal action. HHS Secretary Alex Azar the judge’s decision a “resounding triumph for President Trump and HHS’s agenda to lower Americans’ healthcare expenses. ”

Particularly, in the lab testing space, in spite of increased pricing transparency with the progress tier 1 and tier two molecular pathology codes and PAMA, there are still blind spots that make it difficult pertaining to payors to pinpoint which particular tests are contributing to inappropriate plus wasteful spending.

Meanwhile, government spending on lab tests, particularly on genetic tests, will be on the rise. CMS previously estimated how the implementation of PAMA would produce savings of $670 million within clinical lab test payments within 2018. The OIG’s recent evaluation of 2018 data, however , exposed that the savings didn’t materialize partially because Medicare paid out $969 mil on nearly 1 . 8 mil genetic test claims compared to $496 million on 950, 000 statements the prior year.

“Transparency is important when spending is certainly increasing at a fast pace [in order] to understand the reasons for that increase, ” said Lee Bendekgey, chief policy officer at Invitae, a firm that aims to broaden access to genomically informed care in order to more patients by lowering expenses.

In the period of personalized medicine, as hereditary testing utilization increases, payors are usually instituting prior authorization policies plus engaging third-party entities, such as lab-benefit managers, to control costs. In this atmosphere, Bendekgey believes even greater openness about pricing is needed in order to understand the cost-effectiveness of novel interventions.

“If more people are obtaining tested and better care has been delivered, that’s not a bad thing, inch he said. “On the other hands, if expensive tests, particularly amazing tests, are being ordered more frequently, as well as the result has not improved care, after that should be considered. ”

Quinn, who is a consultant for Invitae (a company that competes along with Myriad) and a former medical movie director for California’s Medicare program, mentioned his aim with the types of evaluation he posts on his blog would be to help Medicare identify irregularities within coding and pricing data it may have missed but which point out wasteful spending or fraudulent invoicing practices.

Medicare health insurance contractors like Palmetto are required to abide by CMS’s policies, including the National Right Coding Initiative (NCCI) manual. Regarding panel testing, for example , the code manual stipulates that when there is a CPT code for a test gauging several analytes, a lab analyzing all of the analytes for a patient should expenses the panel code, instead of invoicing separately for each individual analyte, which could result in overpayment. This latter kind of billing, called code stacking, is really a practice payors have been trying to overthrow for years. Quinn said his evaluation is essentially catching instances of code putting not allowed according to the NCCI manual along with other irregularities, such as potential overuse from the unspecified procedure CPT code 81479. “I have repeatedly informed Palmetto of some of the same errors through year to year, ” he said.

To do this analysis, this individual uses data that is either currently publicly available or that he provides obtained from CMS and contractors through FOIA. For example , he used widely available data from CMS to spot that in 2015, the MolDx program was paying much more compared to allowed clinical lab fee routine rate for EGFR testing for some labs, particularly Genoptix, which NeoGenomics acquired in 2018. After Quinn pointed this out, the overpayment was corrected, he said.

More recently, Quinn provides alerted Palmetto that some labs may not be following the contractor’s billing guidelines for Lynch syndrome panel screening and stacking analyte-specific codes, leading to payments of $3, 000 rather than the $1, 220 that is allowed. In addition , he has alerted Palmetto that labs may be overusing the unspecified methods CPT code 81479 and receiving increased payment for tests that they can or else bill using existing CPT unique codes for panel tests with reduced pricing.

Quinn in his blog states there appear to be irregularities in coding and invoicing information in Palmetto’s MEF meant for tests performed by Caris Living Sciences and Sonic Healthcare. Chevy sonic did not reply to a request for remark, but a Caris spokesperson mentioned, “that the Z-code Bruce Quinn attributed to the company does not, in fact , are part of Caris. Any attempts to connect that will Z-code to Caris would be incorrect. ” Quinn clarified that in the blog he is simply claiming which the “MEF has a cornucopia of mistakes in it” and he further observed that there is no way to tell from details in the file whether listed assessments are still ordered.

A version of this tale first appeared in our cousin publication, Genomeweb.