AHLA. XX. Clinical Labs. Peter M. Kazon Alston & Bird LLP Washington, DC

Transcription

1 AHLA XX. Clinical Labs Peter M. Kazon Alston & Bird LLP Washington, DC Institute on Medicare and Medicaid Payment Issues March 26-28, 2014

2 AMERICAN HEALTH LAWYERS ASSOCIATION Institute on Medicare and Medicaid Payment Issues March 26-28, 2014 CLINICAL LABORATORY UPDATE Peter M. Kazon Alston & Bird, LLP Washington, D.C. Today s Agenda Focus on recent key regulatory and reimbursement developments affecting laboratories FDA regulatory actions CLIA changes Molecular diagnostics Changes in clinical lab reimbursement 1

3 FDA Regulatory Issues Most genetic tests are done as Laboratory Developed Tests. Developed in-house by labs for use within the laboratory and not commercialized. Historically, FDA has not regulated home brew or Laboratory Developed Tests ( LDTs ). If it qualifies as an LDT, then the FDA exercises enforcement discretion at least for now. FDA has taken action against products that it believes are not LDTs. FDA Regulatory Issues: LDTs In 2007, FDA first suggested it might regulate certain LDTs referred to as In Vitro Devices Multivariate Index Assays ( IVDMIAs ). In July 2010, FDA announced it had decided to regulate LDTs, although the type of regulation was unclear. FDA has suggested that it has 3 draft guidances under review: A guidance discussing a general regulatory framework. A guidance that will address some type of registration or notice requirement for LDTs. A guidance comparing the Quality Control requirements under both FDA law and CLIA. Status is unclear at this time. 2

4 FDA Regulatory Issues: Companion Dx One area where FDA is exercising its authority is in the area of companion diagnostics. FDA defines a companion diagnostic as one that is essential for the safe and effective use of the corresponding therapeutic product. Does not include a test that is useful to the physician, but which is not a determining factor in the safe and effective use of the product. For novel therapeutic products, FDA expects the companion diagnostic will be developed and cleared/approved contemporaneous with the therapeutic product. Final Guidance is high priority for 2014 and is expected any time. 5 FDA Regulatory Issues: 23andme FDA also sent a Warning Letter to 23andme, a testing company that offered DTC genetic testing. FDA alleged that the company had failed to validate adequately the testing that it offered. Letter notes that FDA had met frequently with the company, but had not received responses to its questions. Considered an unapproved medical device. Company currently only offers ancestry testing. 6 3

5 CLIA Changes: The Test Act Two recent changes in CLIA are significant. In 2012, Congress passed the TEST Act Gives CMS greater discretion in cases where lab referred a PT testing sample. Previously, CMS took the position it was required to suspend the CLIA certificate for at least 2 years and suspend the lab director. Under Proposed Regulations, CMS would not suspend the CLIA certificate where the laboratory inappropriately referred the PT specimen but caught the error before the testing laboratory reported the results. Under an earlier proposal, CMS would also not suspend where the referred testing was for reflex or confirmatory testing that the referring laboratory did not usually do. The laboratories might still be subject to alternative sanctions such as CMPs. 7 CLIA Changes: Providing Patient Test Reports In February 2014, HHS also amended CLIA and HIPAA to require laboratories to provide, upon request, copies of laboratory test reports to patients or their authorized representatives. Prior rule deferred to state law on this issue. Some state laws limited test results to authorized persons, which prevented patients from obtaining them. That exception in HIPAA has now been eliminated and CLIA regulations were modified. Laboratory must still authenticate that the person is authorized to receive the results. Compliance date is October 6, B 8 4

6 Molecular Diagnostics Until 2013, molecular diagnostic tests were billed using stacking codes. Each step of the process was separately coded, and the price for the test was the sum of all of those steps. Key problem with this approach: Payors, including Medicare, complained they didn t know what they were paying for. The analyte wasn t identified; just the steps. No way to judge medical necessity or validity of the test without manual review of each test. Molecular Diagnostics: The MolDx Program Palmetto, contractor for California, North Carolina, South Carolina, and Virginia, was the first to address this issue. Palmetto developed a special MolDx Program. MolDx requires most molecular pathology tests to get a special code. Code identifies the particular test being performed by the laboratory. Either a Z code from McKesson Diagnostics or a PTI code from Palmetto. Tests submitted without the necessary code would be rejected. Tests were also required to go through a Tech Assessment prior to coverage. 5

7 Molecular Diagnostics: New CPT Codes In 2011, AMA approved over 100 new molecular diagnostic codes for New codes include some gene specific codes (Tier 1) and some general procedure based codes (Tier 2). These codes replace the stacking codes and NOC codes used to bill many MDx tests. AMA is working on additional codes for other more complex genetic tests. Allow payors greater transparency about what test is being performed. Molecular Diagnostics: Gapfilling Medicare and most other payors did not use the new codes for 2012 because they felt they needed more time. Several key issues concerning how the tests should be reimbursed: Physician Fee Schedule ( PFS ) or Clinical Laboratory Fee Schedule ( CLFS )? If CLFS, then cross-walking or gapfilling? In 2012, CMS announced it would keep the codes on the CLFS and pay for them using the gapfilling process. Did create a new interpretation code of G0452 valued at about $

8 Molecular Diagnostics: Gapfilling Gapfilling requires the Medicare contractors who process claims to develop new prices for the MDx codes. CMS published a listing of all the contractor prices in April, followed by a 60-day comment period. On September 30, CMS then posted the final carrierspecific codes along with the new NLA amounts for each code. There was then a 30 day period for reconsideration. The final prices were published on November 30. The new NLA equal 100% of the medians of the carrier specific prices. Those will become the new prices for Molecular Diagnostics: Gapfilling All of the prices listed in November were the same as those listed in September, with one significant exception. CMS reduced the price for BRCA1/2 by about $1300 from the levels established in September. Decision does not appear to have been based on a request for reconsideration. CMS then established a comment period to allow stakeholders to comment on the change. Comment period was extended after it ended until February 28. New lower BRCA price continues in effect however. 14 7

9 Molecular Diagnostics: Gapfilling Just as significant, many contractors are also not covering the new molecular diagnostics codes. Medicare only pays for tests that are considered medically necessary. Increasingly, Medicare also looks for evidence of clinical validity or clinical utility. Many contractors felt these were lacking for many molecular pathology tests. Some also limited when they would pay for these tests. 15 MAAA Tests When revising the molecular codes, the CPT Panel also created a new subset of codes. Molecular Assays with Algorithmic Analyses ( MAAAs ). Apply an algorithm to multiple results from different assays resulting in a numeric score or index. Score predicts the probability of a particular clinical result. Today, many of these are billed using Not Otherwise Classified Codes. Codes are unique to a single laboratory or manufacturer. 16 8

10 MAAA Tests In its statement of preliminary determinations for 2013, CMS stated it would not recognize any of the MAAA codes. CMS stated they were calculated or algorithmically derived rates and did not constitute a lab test. In November 2013, CMS said there is no definition that permits it to make a categorical determination of coverage. CMS does permit contractor to make the determination of whether or not to pay. 17 Reimbursement Changes: HOPPS Bundling In 2014 HOPPS Rule, CMS announced it intended to begin to bundle clinical laboratory services into the APC payment. Prior to that, they were paid separately based on the CLFS. Will apply to services provided on the same DOS and ordered by the same practitioner who ordered the primary service. CMS did exempt molecular pathology from this requirement. 18 9

11 Reimbursement Changes: OPPS Cap In the 2014 Proposed PFS Rule, CMS expressed concern about situations where it paid more for a service furnished in a physician s office than in a hospital. Believed it was due to inaccuracies in PE component of PFS. Proposed to limit payment under the PFS to what was paid in the facility setting for the same code under OPPS. Had a significant impact on pathology services. CMS did not adopt the change but said it would continue to study the issue and would issue a revised proposal at a later time. 19 Reimbursement Changes: CLFS Reform In the 2014 PFS Rule, CMS announced a new plan to adjust pricing on the CLFS to reflect technological changes that have occurred since the CLFS was first developed. Begins with the 2015 Proposed Rule. CMS will identify codes that it believes should be adjusted and propose a change. Then stakeholders will have 60 days to comment. Adjustments will be finalized in Final PFS Rule

12 Reimbursement Changes: CLFS Reform Initially, CMS said it would not revise any test that had not been on the CLFS for 5 years, but it rejected that in the Final Rule. In prioritizing tests to review, it states it will look at those with rapid spending growth, high dollar payment or high volume. Not just the oldest codes, as it had originally suggested. Expects it could about 5 years to review all 1250 codes on the CLFS. 21 EHR Donation Extension There is a safe harbor and an exception under the Stark law, which permit the donation of EHR software to physicians and others. Provisions were scheduled to expire at the end of They were extended until 2021on December 27, Laboratories were specifically excluded as eligible donors at the urging of the industry. Concerns about potential abuse from labs and physicians