It's a Chaotic Mess: CMS Pricing of BRCA Testing

When assessed by CY 2015 payments in the fee-for-service Medicare Part B system, BRCA testing is the third-largest expenditure, at about $52M per year.  However, the situation for CY 2017 is going to be much more complex, as there are now three different coding approaches, all recognized by CMS, resulting in drastically different Medicare expenditures for BRCA testing.

Depending on which set of rules and codes are applied,  payments could be anyone from $931 all-in for a BRCA panel including full dup-del analysis, all the way up to $2,780 for individual genetic components of BRCA 1 and BRCA 2 testing.

Assuming similar test utilization in 2017 as in 2015, Medicare's total payments could be as low as $17.9M this year or as high as $51M.   This article discusses how Medicare backed itself into this mess.   A shorter second blog (here) asks whether CMS panel pricing rules can or should apply to BRCA testing.

The Transition for Method-Based Stack Codes to Gene-Specific Codes

Between the 1990s and 2013, the AMA provided a "method based" code set for human genetic testing.   This involved a small number of codes that described lab steps, such as DNA extraction and DNA amplication, typically paying about $20 each.   For example, a particular genetic analysis might be billed as "DNA extraction x 1, $20" and "DNA amplification x 10, $200."  

For the CY 2013, AMA produced and CMS began using large numbers of new gene codes, each specific to a named gene.   During 2013, CMS had all of these priced under the gap-fill method, so there were no published reference prices until 2014.   For a side bar on this process, see here.


Initial AMA CPT Coding of BRCA Testing: 81211, 81213

The AMA CPT produced a code for BRCA-1 sequencing, a code for BRCA-2 sequencing, and a code for duplication-deletion analysis.   CMS declined to price the code for BRCA-2 sequencing alone, so it appears in the AMA CPT codebook but not CMS fee schedules.    There are also small, inexpensive codes for confirming a known point mutation in either BRCA-1 or BRCA-2.

In CMS data for 2015 (here), only two codes for BRCA are financially impactful.  These are the code for joint sequencing of both BRCA-1 and BRCA-2 (e.g. a two test panel code, 81211) and a sister code for dup-del analysis (81213).

CMS paid for 18,194 uses of BRCA-1, BRCA-2 sequencing (81211) totalling $41,695,542 and 184,437 uses of dup-del analysis (81213), totalling $10,557,877, or $52,253,420 together.

Only Oncotype DX payments (16,820 services for $57,438,641) and CYP2C19 payments (140,368 services for $62,981,667) were higher gross payments.

Medicare separately publishes payments by state (here).  In 2015, Utah-only payments were 13,559 services of 81211 ($28,881,385) and 13,634 services for 81213 ($7,747,238), or $36,628,624 in total.  Utah BRCA payments were 72% of USA BRCA payments.

Medicare's 2017 fee schedule pays $2195 for 81211, $585 for 81213, and $2780 for the code pair.


2016: AMA Introduces a Comprehensive BRCA Code: 81162

For CY 2016, AMA began using a single code that includes BRCA-1 and BRCA-2 sequencing along with dup-del analysis if performed.   During summer and fall of 2015, CMS priced this as the sum of 81211 + 81213 with a 10% discount, effective 1/1/2016.   This code is currently paying $2503 in 2017.   No CMS utilization data for CY2016 is yet available, so we don't know how many labs transitioned from 81211/81213 billing to 81162 billing.


2016: AMA Introduces Hereditary Breast Cancer Panel Testing

For Cy 2016, AMA also introduced a pair of codes that reflect testing of BRCA-1, BRCA-2, and other breast and ovarian risk genes.   The main code, 81432, is for sequencing.   The additional code, 81433, is for dup-del analysis, if performed.   In summer and fall of 2015, CMS determined that these codes should be priced by the MAC "gap-fill method," so these codes went live in January 2016 with local, unpublished pricing by CMS MACs.   (By 2016/2017, most MACs have local policies or LCDs for BRCA testing and most allow coverage of either BRCA-1&2 or the panel code.)

By the end of CY 2016, CMS had set pricing for 81432, sequencing, at $931 and for dup-del analysis, 81433, at $602.  When both codes are paid, they represent a panel of 14 or more genes, including BRCA-1 and BRCA-2, and including dup-del analysis, totalling $1,533.

But Wait, There's More: In 25 States, Medicare Apparently Won't Pay for 81433

25 states falling under 6 MAC regions and 4 different MAC companies don't appear to pay for 81433.  These states have opted into the MolDX uniform molecular policy program.

MolDX has a spreadsheet of never-paid CPT codes, the Excluded Test List.   81433 is on the spreadsheet as nonpayable.  (Here).   This means labs performing the BRCA extended comprehensive panel can bill for 81432 ($931) and 81433($602) but MolDX MACs will probably only pay them for 81432 ($931).

SUMMARY

Here's a summary showing the different ways AMA CPT can code for BRCA testing and the different rates that CMS can pay for it.  Bill 81211 and 81213, and CMS should cut you a check for $2780.   Bill 81162, and CMS should cut you a check for $2503.   If you do more testing - if you do more work, and add extra gene sequencing and meet the terms of code 81432 - CMS will cut your payment to only $931 max if you are based in the 25 MolDX states.    Outside a MolDX state, you can probably bill 81432 + 81433 and get $1,533.

All of these prices exist at once:

That's chaotic.   The lowest-priced codes (81432, with or without 81433) include the medical reports provided by doing BRCA-1 and BRCA-2 sequencing, while paying as little as one-third the money.

Now the summary chart that opened the essay can be viewed again.  Using 2015 utilization and 2017 fee schedules, status quo CMS BRCA payments would be over $50M, and just below $50M if 81162 were used.   If all CMS testing were done by gene panels in labs in MolDX states, total CMS payments would pluged to less than $18M, for $33M per year of savings.   (Where 81432 and 81433 are both paid, savings would still be circa 50% or circa $25M).

Perspective:  $37M versus $32M

To the costs and savings in perspective, Medicare's CMMI states that "12 Pioneer ACOs generated almost $37M in total savings in 2015."  This was based on a truly colossal amount of work and effort by CMS and by healthcare systems, with a couple years of preparatory work and a year of program activities.

From these tables, it looks like if it wanted to, CMS could save the same amount of money in 2017, about $33M, in about ten seconds, by capping its BRCA payment rates at $931, the panel rate in MolDX states.  To visualize the comparison, here:

Can CMS do that?  See the next blog, here.

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For a September 2016 blog on the emerging price disparities, see here.