Why Is Medicare Slow to Set Reimbursement Rates for Molecular Tests?

Posted by The Evidence Blog on April 29, 2013

By Diane Allingham-Hawkins, PhD, FCCMG, FACMG, Senior Director, Genetic Test Evaluation Program and Technical Editing

In our blog post last year, we discussed the new era in coding for molecular tests that was ushered in by the American Medical Association (AMA) beginning in 2012 and continued in 2013. As of January 1, 2013, the old “stacking codes,” a series of technology-specific CPT codes that were combined to generate a test-specific reimbursement rate, were retired and replaced by a series of test-specific CPT codes. The goal was to allow for greater transparency regarding the test and to standardize reimbursement rates for the same or similar tests.

The problem, as reported by Scott Gottlieb in a recent article in Forbes magazine, is that most Medicare contractors have yet to set reimbursement rates for the new CPT codes. Consequently, nearly 4 months into 2013, many providers of molecular tests have not been reimbursed by Medicare for the tests they have performed.

Why is Medicare slow to set reimbursement rates for molecular tests? The reasons aren’t as straightforward as Dr. Gottlieb proposes; there are sure to be many reasons but we believe one reason is likely to be the fact that, for many of these tests, there is little or no evidence that use of the test impacts patient outcomes. There are a handful of molecular tests that clearly do impact patient outcomes. For example, tests for familial cancer syndromes such as Lynch syndrome or hereditary breast and ovarian cancer allow at-risk relatives to be tested and, if positive, access increased surveillance or prophylactic treatment options to reduce their risk. Such tests are in the minority, however, with the vast majority of molecular tests having no demonstrable impact on patient outcomes. These tests may have demonstrated analytical validity—meaning that they work as they are supposed to in the lab—and clinical validity—meaning that they detect the disease or condition they are designed to detect—but what is missing is demonstrated clinical utility. Clinical utility—or what I like to refer to as the “so what?” factor—refers to the difference the test makes beyond what would already happen as a result of standard medical care. So, although a molecular test may confirm the diagnosis of a particular condition, if that diagnosis can be made unequivocally by medical examination and/or standard diagnostic tests, then the molecular test does not have clinical utility. If, however, the molecular test confirms an equivocal diagnosis AND confirmation of the diagnosis leads to a change in patient management, that molecular test does have clinical utility. The reality is that most molecular tests are introduced to the market before there is any evidence of clinical utility and it may be many years before such evidence accumulates—or it may never accumulate. In this era of escalating healthcare costs, both private and public payers are understandably and appropriately reluctant to cover the cost of tests that are unproven. This, we believe, is at least one of the reasons that Medicare is slow to set reimbursement rates for molecular tests.

Where can private and public payers access information about how and for whom molecular tests should be used? The Hayes Genetic Test Evaluation (GTE) program has evaluated the evidence behind nearly 200 molecular tests and evaluates at least 40 new tests each year. With Hayes GTE reports, seeing through the hype to the “so what?” factor is easy. We also assist payers to develop coverage policies for genetic and molecular tests. Contact us for more information.

Topics: Hayes Blog, Genetic Testing

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