Verma says CMS is working to fix inappropriate lab test billing

CMS Administrator Seema Verma told Senate Finance Chair Chuck Grassley (R-Iowa) the agency is scrutinizing lab test bills submitted to Medicare to make sure the government hasn't been overpaying laboratories because of inappropriate coding.

In a letter to Grassley, Verma noted that Medicare is required to pay a separate amount for each clinical diagnostic test under law. That rate has to be equal to the "weighted median of the private payer rates" for each test, based on the data reported by the labs that administer to the test.

Now, she said, the agency is analyzing claims data to find out whether laboratories were using separate CPT codes to bill for panel tests that had their own CPT codes. According to Verma, the CMS has also stated that a panel test can't be billed as an individual test.

The CMS is "working to automatically detect claims that have inappropriately unbundled the panel tests," Verma wrote.

The letter comes in response to Grassley's oversight request from January, when the senator followed up on a Government Accountability Office report warning Medicare could overspend billions of dollars on lab tests under a new payment system.

Verma also responded to the GAO's findings that the CMS had based its new pay rates for lab tests on incomplete laboratory data, writing that the agency is "continuing to evaluate ways to increase data reporting, including targeted outreach and auditing of laboratories that may meet the definition of an applicable laboratory.

GAO in its report looked into the CMS' implementation of the 2014 congressional mandate that the agency overhaul its pay rates for laboratory tests. These provisions were tucked into the Protecting Access to Medicare Act, and the CMS regulations that set the new payment model went into effect Jan. 1, 2018.

The clinical laboratory industry fought the changes through a lawsuit that was ultimately struck down. They claimed in the suit that they faced billions of dollars in reimbursement cuts.

The GAO said the CMS under the new system was paying separately for each test within a panel, rather than bundling them together—a point that Grassley focused on in his oversight letter to Verma.

The laboratory industry blasted the GAO report when it came out in November.

The American Clinical Laboratory Association called the findings "fundamentally flawed and inaccurate," and reflecting "a serious misunderstanding of standard industry practice for laboratory reimbursement."