Clinical OMICS

NOV-DEC 2017

Healthcare magazine for research scientists, labs, pathologists, hospitals, cancer centers, physicians and biopharma companies providing news articles, expert interviews and videos about molecular diagnostics in precision medicine

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34 Clinical OMICs November/December 2017 In the Lab P roposed 2018 Medicare payment rates for clinical diag- nostic laboratory tests, calculated under the Protecting Access to Medicare Act (PAMA), have drawn anger from labs that process the tests and others. The Centers for Medi- care & Medicaid Services (CMS) said the proposed rates would save about $670 million in Part B program payments for clinical lab fee schedule (CLFS) tests in Fiscal Year 2018, a roughly 10% reduction from the approximately $7 billion paid each year by the agency. CMS had projected a $390 mil- lion savings in FY2018, rising to $3.93 billion over 10 years. CMS' proposed rates would take effect January 1, 2018. The agency solicited public comment through October 23, with final rates set to be published in November. "CMS's implementation of PAMA as currently outlined threatens the existence of the small and mid-size labora- tory market, compromising access to laboratory testing for Medicare beneficiaries," the National Independent Labora- tory Association (NILA) concluded in a letter to CMS signed by Administrator Mark S. Birenbaum, Ph.D. According to CMS, approximately 75% of tests, will see rate reductions from 2017—with 58% of those having the decreases phased in because the agency has set a 10% per- year cap on reductions from 2018 to 2020. However, some tests showed significant rate increases: • CPT code 81450, covering tests for hematological malignancies, which rose by $106.59, or 16.3%, to $648.40. • CPT code 81519, covering Genomic Health's Oncotype DX for breast cancer, which rose by $429.64 or 12.48%, to $3,873. However, the rate for CPT code 81445—targeted next-gen- eration sequencing (NGS) analysis panels of five to 50 genes —dropped $4.19, or 0.7%, from $602.10 this year to $597.91 in 2018. Why the Decrease? "I think there could be at least a couple reasons," said Roger D. Klein, M.D., J.D., principal of an eponymous consulting firm and chair of the Association for Molecular Pathology's Professional Relations Committee. "First, the really large labs may simply have lower costs, making them and their pricing more competitive relative to CMS' prices. Second, it may be that private payers continue to believe that there is typically little usefulness or benefit from the multianalyte solid tumor NGS sequencing, and therefore they are very restrained when it comes to reimbursement." "Unfortunately, the PAMA rates may change the industry composition, thereby propagating these downward trends." Losses Forecast for Labs Lâle White, Executive Chairman and CEO of XIFIN, a healthcare information technology company based in San Diego, told Clinical OMICs that CMS' preliminary rates were skewed for most tests below their true market value because: • They were calculated at a weighted median cost instead of a weighted average cost. • Just about one-third (34%) of the lab market was represented, and hospital labs were underrepresented—CMS promulgated guidelines for PAMA implementation that defined "applicable labs" as those hospital labs that have their own NPI numbers. Most do not. • The top two commercial labs, Quest Diagnostics and LabCorp, accounted for about 80% of the volume of tests used to calculate the rates. Price Pressure PAMA 2018 Medicare Rates for Tests Draw Fire from Laboratories By Alex Philippidis Jovanmandic / Getty Images

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