The Tempest Continues, Fee Schedules in Collision: Medicare and Genomic Tests Prepare for 2013

Foley Hoag LLP

Understanding the genomic basis of the disease is the biological revolution of our times. Scientists are learning how to discover and validate this data; pharmaceutical companies are learning how to apply it for a new generation of medicines; the FDA is grappling with how to insure quality standards in the most rapidly advancing wave of biotechnology ever. Public health agencies, like the Agency for Healthcare Quality and Research, are working to fold genomic advances into “evidence-­- based medicine” and the Institute of Medicine holds policy meetings on genomics almost quarterly. Insurers are trying to understand when new molecular diagnostics tests pass a border assumed to exist between “investigational” and “medically necessary” services.

Medicare is trying to figure out how to use five-­-digit codes to identify genomic tests and how to assign prices to them. As many readers will know, since the 1990s the U.S. insurance payment system has used generic codes for DNA extraction, DNA sequencing, etc. – “stack codes” – to represent all genetic testing services to insurers. As described in a previous white paper in this series, released in November 2011, the AMA CPT committee published over 100 new genomic codes in October 2011 for use beginning in January 2012, but Medicare declined to allow use of the codes in 2012. This initial code set is just the beginning of a set of changes that will allow genomic tests to be recorded in standard formats in medical records and in transactions between providers and insurers, because the use of genomic testing in cancer, pharmacology, and prognostic medicine is rolling forward quickly. Imminently, other new technologies, such as next-­-generation sequencing, will need coding and communications systems as well. Nonetheless, how Medicare sets policy for these 100-­-odd first genomic codes will be precedential and is being watched closely.

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