December 2010 Clinical Laboratory News: Regulatory Profiles

Recovery Audit Contractors Expand

The Centers for Medicare and Medicaid Services (CMS) announced a deadline of April 1, 2011 for all state Medicaid directors to fully implement the Recovery Audit Contractor (RAC) provisions of the healthcare reform law. RACs have authority as third-party investigators to review medical records and other information and mine this data for possible overpayments, putting labs and other providers under pressure to closely monitor their billing and record-keeping practices. RACs get to keep a portion of the monies they recover, upping their incentive to find as many such overpayments as possible. Until now, RACs have only been let lose to tackle Medicare reimbursement.

More information is available from a letter to state Medicare directors on the CMS website.


California MAC Tightens Reimbursement for Molecular Tests

Palmetto GBA, the Medicare Administrative Contractor (MAC) for California, announced that it will require providers to submit additional data to be reimbursed for certain molecular pathology tests. Centers for Medicare and Medicaid Services (CMS) contractors such as Palmetto GBA are charged with determining reasonable and necessary services and figuring out how to estimate fair reimbursement for tests that are not listed in the current CMS laboratory fee schedule. According to Palmetto GBA, molecular diagnostic tests have “complicated” this task due to three frequent coding issues: available code descriptions do not identify the service performed, methodology-based code descriptions are used in place of the specific test performed, and multiple current procedural technology (CPT) codes are used to identify a single assay—also called code bundling.

“The vast numbers of new diagnostic and molecular assays entering the market magnify these issues,” the contractor stated in its announcement. To deal with these problems, Palmetto GBA plans to launch what it’s calling the Laboratory and Molecular Diagnostic Services Program that will focus on tests that use more than one CPT code, use methodology-based code staking, or use a not otherwise specified (NOC) code.

Under the new initiative, the contractor is requiring labs to start to submit the test/assay name in the description field in the electronic format at the procedure code level. As of December 1, 2010, Palmetto GBA will reject molecular pathology claims that do not include the name of the test in the description field.

The full announcement is available on the Palmetto GBA website.


Inspector General Takes on Lab Issues

The Department of Health and Human Services Office of the Inspector General (OIG) announced it will undertake several studies of clinical labs in 2011 to monitor the integrity of federal healthcare programs. The studies include: excessive payments and whether certain high-cost tests were medically necessary; test code unbundling by labs and whether labs have inappropriately unbundled lab profile or panel tests to maximize Medicare payment; the frequency of glycated hemoglobin A1c tests; a comparison of payment by Medicare to private payers for lab tests; and general trends in lab utilization to explain the overall 92% increase in Medicare billing for lab tests since 1998.

OIG plans to complete all of these investigations next year, except the comparison of the public and private sector charges. The OIG Work Plan detailing these studies is available from the agency website.


Appointments to New Patient-Centered Outcomes Research Institute Announced

The U.S. Government Accountability Office (GAO) announced the appointment of 19 members to the board of governors for the new Patient-Centered Outcomes Research Institute (PCORI).

The recently enacted healthcare reform law established PCORI as a non-profit organization to assist patients, clinicians, purchasers, and policy-makers in making informed health decisions by carrying out research projects. The board will be responsible for setting the research priorities of the new comparative effectiveness research panel, as well as funding and overseeing the studies.

The reform law directs the comptroller general of GAO to appoint 19 of the 21 PCORI board members. In addition to these 19 members, the director of the Agency for Healthcare Research and Quality and the director of the National Institutes of Health, or their designees, will serve on the PCORI board. The law also directs the comptroller general to appoint not more than 15 members to a methodology committee of PCORI. A Federal Register notice calling for nominations to this committee has been issued.

A list of the new PCORI board of directors is available on the GAO website. 


Bill Would Boost OIG Powers to Combat Fraud

The House of Representatives passed H.R.6130, the Strengthening Medicare Anti-Fraud Measures Act of 2010, which would give the Office of the Inspector General (OIG) new powers to combat Medicare fraud. The bill would allow OIG to ban corporate executives from doing business with Medicare if their companies were convicted of fraud and provide OIG with new authority to take action against the parent companies of so-called shell organizations created to commit fraud.

The bill is available on the congressional website.

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