Lessons Learned from the 2013 Molecular Diagnostics Gapfill Process Orrin Marcella Manager, Government Affairs GE Healthcare CCLA Annual Meeting San Diego, CA November 8, 2013

Molecular Diagnostic Payment Historical payment methodology – Code stacking 2011 – AMA CPT codes created 2012 – CMS decisions MPFS v. CLFS, crosswalk v. gapfill Regional Medicare contractors in charge

What is Gapfill Pricing? MACs were to work with labs in their region to determine the new gap-fill pricing Factors MAC takes into account when pricing: Charges for the test and routine discounts Resources required to perform the test Payment amounts determined by other payers Charges, payment amounts, resources for other comparable tests even if not sufficient to establish cross walk

Key Dates for CMS Gapfill April 30th (May 8th) – initial MAC pricing July 8th – stakeholder comments submitted Oct. 1st – 2013 MAC final prices released Oct. 31st – NLA reconsideration requests due Jan. 1st – 2014 prices final

Palmetto Feb. Rates

The Problem Initial analysis indicated that many of the new codes were priced far below the cost of providing the service These prices were effective immediately, retroactive to January 1, 2013 Labs worried about lengthy and uncertain process at CMS Some labs were forced to scale back their offerings and some forced to forego the use of certain test methodologies

Multiple Red Flags!!

Red Flag #1 - gapfill timeline Lesson: Industry should have pushed back on the “price as you go” timeline for 2013 Unprecedented number of codes All of 2012 to decide which fee schedule and weeks to price??

Red Flag #2 - no clear process Lesson: Industry should have asked CMS for a more clear process upfront and enlisted necessary Congressional support for this early on

Red Flag #3 - confusion/concerns about data requirements Lesson: Industry should have asked CMS for clear assurance and a process that protects proprietary information

Red Flag #4 - no standard way to represent lab costs Lesson: Industry should worked earlier to come up with a standardized way of representing direct and indirect lab costs Conversations with MACs and CMS should have happened in late 2012

Data, Data, Data…. Do you know your lab’s costs? Do you know what elements of cost matter? Do you know your lab’s cost for specific tests?

Lab Costs – what are they? Indirect costs Accessioning Logistics Commissions Billing Indirect wages T&L Other EE costs Depreciation Taxes Facility Purchased services Other supplies Direct costs Labor Supplies Development Validation

More Lessons: Earlier Engagement and Cooperation Needed Two way street – our initial unwillingness or inability to provide data harmed us

Key Decision Makers Medicare Administrative Contractors (MACs) National Medicare (CMS) U.S. Congress Obama White House

Coalition Advocacy TAKE ACTION! Contact your members of Congress and ask them to urge the Centers for Medicare & Medicaid Services (CMS) to adequately reimburse molecular diagnostic testing for Medicare patients. To send an email expressing your concern, click the option below that best describes you:  

2013 – Rate Roller Coaster (Palmetto)

Where Do We Stand? 2013 MAC rates are final Some 2014 CMS NLA rates are being challenged – KRAS is best example Huge coverage gaps still exist in certain areas (NGS for example) What about Tier II codes?

Is there a more sustainable model? Will Molecular diagnostics become commodities? Are they already? Value pricing is challenging (we are not Phrma) Gapfill reform is needed Transparency (public meetings) Clear process for participation Establish fair cost methodology Process must be completed in year before prices go into effect

Questions & Discussion