Brief Blog: Is the Boom in ADLT's About to Start?

Recently on the YouTube channel Machine Thinking, I ran across this illustration:

...making the point that hockey-stick phenomena in technology weren't invented in the 1980s.

It's a kickoff for asking, will we see a hockey-stick uptick in ADLT applications at CMS?

• One lonely ADLT was approved in May 2018, then one more in December 2018, but three ADLTs just in the last few weeks.  
• And several more ADLTs were described as being underway last week, at a CMS pricing meeting.   
• So it looks like ADLT codes - like rabbits or bactgeria - may have a rapid "doubling time" at this point.

For coverage at 360Dx, July 18,  here.

What Are ADLT Codes?

The PAMA lab repricing act of 2014 created Advanced Diagnostic Laboratory Tests, which are always sole-source tests.  They may be (A) of the MAAA type or (B) they may be sole-source FDA cleared or approved tests.   If they are new tests, they can be ADLTs if they meet the category rules and if they are covered by Medicare.  If so, they get a year of pricing at their market rate followed by annual price re-sets to the current median payment rate. 

CMS has a webpage for ADLT policy here.   Currently, there are 3 PDF attachments on the web page.  These are a list of current ADLTs (here), a 17-page application form here, and a 30-page rules guide here.

I pointed out in 2018 the ADLT rules give a lot of latitude for game-playing particularly in the Year 1-2 transition (here).

Five ADLTs Already, More Coming

There are five ADLTs now, with CMS payment amounts ranging from $3,500 to $7,193:

click to enlarge

At a June 24, 2019 CMS public meeting on pricing some 90 new codes for CY2020, several labs made their presentation primarily to simply remark that the code in question was in the ADLT process and would probably be priced by ADLT rules, not the administrative crosswalk/gapfill process.  For example, Myriad had a code in this category.

The lab with the currently highest-ranked ADLT code, Castle Biosciences (for Decision-DX Melanoma), announced on June 26 it plans a summer IPO (here).

ADLT Prices Update Annually, but Lag

ADLT pricing rules are found in CMS's 30-page guidance, especially page 27-28 (here).   For a new ADLT in mid 2018, its price collection, price reporting, and new-price dates follow the PAMA cycle (here, January-June 2019 for price collection, January-March 2020 for price reporting, and new price effective for January 2021.)   For an ADLT, though, the pricing cycle begins anew every year, so while this lab is reporting its January-June 2019 prices in January-March 2020, it is also collecting new prices for January-June 2020 which it will report in January-March 2021 for the price year CY2022. 

This appears to give labs a lot of incentive to appeal lower-than-median payments during the price collection period so there is no firm lower-than-median and finalized price payment that falls fully within the catchment period (thus only higher paid prices for finalized claims need be reported in the reporting period).  As CMS states, 30 page document page 16, "Private payor rates (and the associated volume of tests) for laboratory test claims under appeal are included as applicable information if the final payment amount is determined and paid by the private payor during the data collection period."