MEDICARE AND THE LAB INDUSTRY

1. MEDICARE AND THE LAB INDUSTRY CCLA Annual Meeting Lake Tahoe Nov. 2, 2011

2. We Will Discuss • The Problem: Inappropriate Medicare Billing • Before tests proven validity & utility • Before Palmetto can reimburse • The Solution: Two New LCDs • Molecular Diagnostic Tests (DL32288) • Non-Standardized or Disease-Oriented Panels (DL32286) • New CMS Emphasis on Fraud • Definition • Situations and Solutions • Other Medicare Issues • Documentation for Tests • Dealing with Requests for Records • Signatures • Some Thoughts Regarding the Future

3. INAPPROPRIATE MEDICARE BILLING FOR MDT • Molecular Diagnostic Tests • Non-FDA approved • Sole source, lab developed • No specific CPT code • We Don’t know What We Are Paying For • But we are spending millions • We Don’t Know If The Test Has: • Validity • Clinical Utility • We Do Not Know Reimbursement • List price from lab not always realistic • Multiple steps may not be separately payable at full price • Some steps may not be reimbursable • Algorithms and other specific steps need to be distinguished and priced

4. INAPPROPRIATE MEDICARE BILLING FOR MDT • Molecular Diagnostic Tests • Non-FDA approved • Sole source, lab developed • No specific CPT code • Don’t know What We Are Paying For • But we are spending millions • Don’t Know If The Test Has: • Validity • Clinical Utility • We Do Not Know Reimbursement • List price from lab not always realistic • Multiple steps may not be separately payable at full price • Some steps may not be reimbursable • Algorithms and other specific steps need to be distinguished and priced • Must approve ourselves • May cover whole country • Use nonspecific codes • Is it bread, cake, muffins • Need proof of validity • Need proof of utility • Must independently price • Must realistically price • Need to know all steps • Will consider algorithm reimbursement

5. MOLECULAR DIAGNOSTIC POLICY • This policy confirms ‘non-coverage’ for all molecular diagnostic tests that are not explicitly covered by a National Coverage Determination (NCD), a Local Coverage Determination (LCD) or coverage article published by Palmetto GBA. • For the purposes of this policy, Palmetto GBA defines MDT as a single test (often with multiple components) that delivers one result and involves nucleic acids (DNA / RNA), proteins, enzymes and/or other metabolite detection. Most test results rely upon an algorithm or other form of data / evaluation derivation. • In addition, this non-coverage policy applies to all tests that: • Are Non-FDA cleared laboratory developed tests (LDTs, or • Are performed or marketed by a sole source, hospital or reference laboratory, or • Have not received a specific AMA CPT code, or • Have not obtained an NCD or a coverage determination from Palmetto GBA (LCD or article)

6. MOLECULAR DIAGNOSTIC POLICY • The available language in the CMS developed and maintained HCPCS manual and AMA developed and maintained CPT manual to describe the pathology and laboratory categories (and the tests included in those categories) are not specific to MDTs. • According to the AMA CPT instructions, when a rendered procedure or service does not match the published description, providers should use a Not Otherwise Classified (NOC) code (84999, 85999, 86849, and 87999). All MDT services correctly billed with an NOC code must be reviewed to assess if the service meets Medicare’s reasonable and necessary requirement. • Palmetto GBA will only cover and reimburse MDTs that demonstrate analytical and clinical validity, and clinical utility.

7. MOLECULAR DIAGNOSTIC POLICY • MDTs have been incorrectly reported for reimbursement with the following codes: • Method-based or “stacking” codes (83890 - 83914) • Array codes (88384-88386) • Cytogenetic codes • Combinations of method-based codes & serology-based codes • Combinations of method-based codes & anatomic pathology codes • Until Palmetto GBA has determined an MDT meets Medicare’s reasonable and necessary requirement, the MDT will be considered investigational and therefore, not a covered service. • Palmetto GBA understands concerns about delays in coverage reviews, and is working with CMS to address this through a standardized, transparent coverage review process previously released over the past 18 months and through increasing reviewing capacity.

8. MOLECULAR DIAGNOSTIC POLICY • Palmetto GBA will apply thefollowing rules to MDTs: • Tests submitted and paid that have NOT been reviewed and approved through the Palmetto GBA mandated process are considered investigational and will be denied. • Approved tests will be effective for dates of service on and after the approval date of a ‘coverage’ determination. Dates of service prior to the approval effective date will be subject to this non-coverage policy. • To obtain a Palmetto GBA determination on an MDT, see our well described article: Palmetto GBA Laboratory and Molecular Diagnostic Services Program.

9. NON-STANDARDIZED ORGAN OR DISEASE-ORIENTED PANELS • This is a non-coverage policy for all non-standardized organ or disease-oriented panels that meet the following criteria: • Non-FDA cleared lab developed tests • Tests performed or marketed by a sole source, hospital or reference laboratory • Tests that have not received a specific AMA CPT code • Tests that have not obtained an NCD, or a coverage determination from Palmetto GBA (LCD or article) • Tests that require multiple CPT codes in order to submit a claim for a single assay/test

10. NON-STANDARDIZED ORGAN OR DISEASE-ORIENTED PANELS • Only the standard procedure reporting manuals CPT &HCPCS may generate panel definitions. • According to CPT instructions, if no specific code exists for a provided service, the appropriate unlisted procedure/service must be reported. • Panels defined and developed by an individual lab or manufacturer must be reported with the appropriate unlisted service and follow the published Palmetto GBA review process.

11. NON-STANDARDIZED ORGAN OR DISEASE-ORIENTED PANELS • Services reported with multiple codes and a single and/or multiple units of service to represent a single test panel are considered investigational and therefore, not covered. • Palmetto GBA will apply the following payment rules: • Test panels submitted and paid that have NOT been reviewed and approved through the Palmetto GBA mandated process are considered investigational and will be subject to overpayment collection. • Approved test panels will be effective for dates of service on and after the approval date. • Dates of service prior to the approval effective date will be subject to denial & overpayment collection. • Unapproved panels will be subject to denial and overpayment collection. • To obtain a Palmetto GBA determination on a non-standardized organ or disease-oriented panel, see the well described article:Palmetto GBA Laboratory and Molecular Diagnostic Services Program.

12. PREVENTING FRAUD IN MEDICARE PRACTICE From CMS Seminar September 14, 2011

13. Scare tactics

14. FRAUD DEFINITION • Fraud is generally defined in the law as an intentional misrepresentation of material existing fact made by one person to another with knowledge of its falsity and for the purpose of inducing the other person to act, and upon which the other person relies with resulting injury or damage. Fraud may also be made by an omission or purposeful failure to state material facts, which nondisclosure makes other statements misleading • To constitute fraud the misrepresentation or omission must be made knowingly and intentionally, not as a result of mistake or accident, or in negligent disregard of its truth or falsity. Also, the plaintiff must prove that the defendant intended for the plaintiff to rely upon the misrepresentation and/or omission; that the plaintiff did in fact rely upon the misrepresentation and/or omission; and that the plaintiff suffered injury or damage as a result of the fraud. Damages may include punitive damages as a punishment or public example due to the malicious nature of the fraud Fraud is generally defined in the law as an intentional misrepresentation of material existing fact made by one person to another with knowledge of its falsity. To constitute fraud the misrepresentation or omission must be made knowingly and intentionally, not as a result of mistake or accident, or in negligent disregard of its truth or falsity. from: USLegal.com free legal dictionary

15. PROTECTING AGAINST FRAUD---EXAMPLES • Billing for services not performed • Purposely & repeatedly billing improper and incorrect CPT or ICD-9-CM codes • Documenting things that did not happen • Knowingly billing for wrong patient • Repeatedly ordering / performing tests you know are not reasonable and necessary You are responsible for what others do in your office, and for the orders you sign.

16. PROTECTING AGAINST FRAUD---IN ENROLLMENT • Notify Medicare enrollment when • You change an address, even within the same medical building complex • You add or change a location or ownership • You change financial institutions • You add or change physicians in your group • You get a document showing a new office move or change THAT DID NOT OCCUR • Protect you ID information • Practice identification can be stolen and used • If the post office sends back a letter from Medicare that is deemed undeliverable, you may be dis-enrolled from the program.

17. PROTECTING AGAINST FRAUD---IN YOUR LAB • Know what you are billing for • Select the correct CPT and ICD-9 codes for the services you perform---don’t just guess • Monitor your billing service or office billing and coding • Palmetto GBA has on-line claim management • Know what your other locations and office staff are doing and documenting & document your overall supervision • Have compliance plan appropriate for your size of office---AND KNOW WANT IS GOING ON • Watch for sudden changes in your billing and collections statements • Control who has access to your ID and other important personal information

18. PROTECTING AGAINST FRAUD--IN YOUR PRACTICE • Know / watch who you associate with—practice managers, outside services, IDTFs who offer deals etc. • If the deal you are offered is too good to be true…it is likely to lead to fraud • Guard your signature, your office financial matters, and those who have access to them for your protection • Document the orders for any service, particular unusual ones in the lab books • Control who has access to your ID and other important personal information

19. IF IT LOOKS LIKE FRAUD, AND SMELLS LIKE FRAUD… • If you are offered a deal too good to be true • It probably is • If someone wants a quid pro quo • Avoid the quid and the quo • If you get samples based on a condition • Remember conditions are diseases • Crooks do not like crooks on TV • They are smooth & slick like com men If you are not sure about a deal: Call your society, colleagues, CMS, DHCS, or your attorney...

20. THIRD PARTY MONITORING • MAC (Palmetto GBA) Medicare Admin. Contractor • ZBIC (SafeGuard) Zone Benefit Integrity Contractor • CMS (Part A and Part B Data outliers) • Other Federal Contractors • CERT • RAC • OIG (Office of Inspector General) • Private Insurance Companies It is easy to spot unusual spikes in codes, unusual services by some providers, rapid changes in billing patterns, unusual sites of service, unusual frequency of services, payments to compromised Medicare patient numbers, etc. CMS is planning new initiatives to prevent fraud

21. PROTECTING AGAINST FRAUD---WHY • Civil and monetary paybacks and penalties – possible jail. • Legal fees when trouble strikes • Major hassles to your practice and personal life that can last a long time • Potential harm to your reputation • Potential loss of state license and disenrollment in Medicare & Medicaid and private insurance programs

22. OTHER MEDICARE ISSUES • Physician signatures not needed but • If we requests reason for tests you must obtain the info from the physician office • If we ask, send the entire test result with interpretation if there is one • Expect ordering – referring regulations (provider must be in PECOS) to be enforced soon • SGR (Sustainable Growth Rate) and future Medicare fee schedules still up in the air • CPT will publish some codes for a percentage of Molecular Diagnostic Codes---but not priced • ICD-10 is coming….. • Various Medicare Incentive Programs

23. RESPONDING TO MEDICAL REVIEW • WHO CAN ASK FOR RECORDS / DOWNCODE OR DENY PAYMENT • MEDICARE A/B ADMIN. CONTRACTORS (MACs) • ZBIG: ZONE BENEFIT INTEGRITY CONTRACTOR (SAFEGUARD) • CERT CONTRACTORS (LIVANTA & ADVANCE MED) • RAC CONTRACTOR (HDI) • OIG • PRIVATE INSURANCE COMPANIES (FOR MEDICARE ADVANTAGE)

24. RESPONDING TO ANY REQUEST FOR RECORDS • Have a set office process for dealing with all ADRs (Additional Record Requests) • Have one individual responsible for collecting and sending all records – and copy what is sent • Experienced office person or clinical person as backup • Have a check off sheet that involves • Legibility (can add typed/printed addendum) if an issue • Correct name, date, specific test listed in request • Signature (signature sheet or attestation) if needed • Correct address to send records • Timeliness of records being sent • Record of lab request or called in request • Send by certified mail (or equivalent)

25. RESPONDING TO ANY REQUEST FOR RECORDS • Follow the process: wait for and expect an answer from the company asking for records • If you do not hear in a reasonable time, call the individual who requested the records • Remember difference between reject and denial • Reject never gets into our claims system--resend • Denials must be appealed • There is no harm in appealing • Make sure your compliance officers are informed about all record requests and denials so they do not make the same mistake twice • You have the right to be reimbursed for appropriate services

26. SOME THOUGHTS OF THE FUTURE OF HEALTHCARE • Things are changing rapidly • The science: new tests, personalized medicine • The patients: more of them and older • The delivery systems: more integration, more organization • The costs: rising unacceptably---where will the cuts be • The policies: subject to political and social changes • The laboratory industry • Probably more consolidation & purchase of successful startups • Emphasis on comparative effectiveness of testing • Emphasis on efficiencies to bring costs down • Fewer POLs, but large integrated systems will have own labs • Current Healthcare laws • Increased number of insured individuals & older folks • How many changes depend on next election cycle

27. Stay involved with your CCLA There are three kinds of people: There are those who make things happen There are those who watch things happen And there are those who ask “What happened?”

28. QUESTIONS AND COMMENTS