Blog #2 of 5: Medicare Tier Two Molecular Code Spending: 2019 vs 2018, and Where

Triggered by the December 22 release of the OIG report on lab spending for CY2019, I've written a set of 5 blogs.

• #1 - OIG report; Focus on 81408 as biggest genomic code
• #2 - Review of all Tier 2 payments (81400-81408)
• #3 - Review of MolDx Tier 2 payments
• #4 - Review of NGS MAC Tier 2 payments
• #5 - 81407 as the weirdest Tier 2 code

click to enlarge

Blog #1 here, Blog #2 here, Blog #3 here, Blog #4 here, Blog #5 here.

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Earlier this week I did a report on the new OIG analysis of 2019 Medicare lab test spending - here.  

OIG noted that highest-spending MoPath code in 2019 was 81408 - the Tier Two, Level 9 code which can represent any of about a dozen rarely sequenced genes.  

MAC contractors like Novitas state, they have no edits on Tier 2 codes, while other MACs (including NGS MAC and MolDx MACs) pay Tier 2 codes rarely or never, especially not paying codes 81407 or 81408 (see blogs #3 and #4).

OIG Highlighted 81408; Let's Look at All Tier 2 Codes

Looking at national data, and ignoring particularly MACs, OIG emphasized that 81408 was the heaviest-paid of all genomic codes at $289M.  OIG didn't mention, but I've reported, this code came out of nowhere (volume up 580X in just 3 years, 2016-2019'; see table in Blog #1).  

Rather than viewing 81408 by itself, let's view national payments for the whole set of AMA Tier 2 codes 81400-81408.  Payment for this group doubled between 2018 and 2019, from $190M to $390M.   Tier 2 codes 81406, 81407, 81408 all grew between 2X and 3X in just one year.

• This article focuses on national payments for Tier 2 codes.  For the mind-blowing story of how MolDx edits for Tier 2 codes differ from other MACs, see my sister article Blog #3 here.

What I Did:  National Data for Tier 2 Codes

I looked at the dollar volume and services volume for Tier 2 codes comparing 2018 and 2019.  See the next table.  

Lower Tier 2 Codes Shrank 2018-2019.  Interestingly, the services volume and dollar volume of the lower Tier 2 codes shrank between 2018 and 2019.   

For example, for 81400, there were 35,356 services in 2018 and 21,812 services in 2019.  Dollar volume shrank by ($872,755).   In fact, all the Tier 2 codes in the lower range 81400-81403 shrank coming in 2019.

Higher Tier 2 Codes Boomed 2018-2019.  At the same time the lower-level Tier 2 codes were shrinking, the higher-level and far more expensive Tier 2 codes grew A LOT from 2018 to 2019, rising from 62,280 uses to 146,014 uses, and dollars allowed for 81408 rising from $123M to $289M.  See table, click to enlarge.  The next tables contain multiples, the ratio of 2019 vs 2018 spending.  The lower Tier 2 codes have red multiples less than 1, and the top three Tier 2 codes double to triple.

DOJ-Supported Studies of Medicare Billing Data

In the past couple years, labs in GA, TN, OK seem to be disproportionately mentioned in DOJ-supported studies of Medicare billing data (here).  

In CY2018, these states had together 6% of the Medicare fee for service population, but they seemed disproportionately represented in 81408 billing (see pie chart in figure on this page).  I pulled these states separately across the range of Tier 2 codes.  Although holding only 6% of the population, these small states had up to 80% of Tier 2 services billed, e.g. for 81405.  

The table above had columns for GA, OK, TN.  In OK, the Tier 2 codes 81402, 81407, with N=1 in the MUE table below, were not billed.  But some labs have billing profiles for Tier 2 codes that mold to the MUE edits.

MUE Edits for Tier 2 Codes

While some MACs do not have edits on these Tier 2 codes and others do, there are National Medically Unlikely Edits which cap the volume of services per day per code per patient.  These range from 1 (81402, 81407) to 5 (81404).  For cryptic reasons, the third-highest Tier 2 code (81406) has an MUE of 2, 81407 has an MUE of 1, and 81408 has an MUE of 2 again.

If you multiply out the MUE edit allowance times the CLFS price, you get about $8600 allowed per day per patient under MUE edits.

The MAC for a state can alter the billing patterns  

We have a case study where the Palmetto MAC took over claims processing and edits from the former Cahaba MAC, for Jurisdiction J.  For example, billing for Tier 2 code "81408" was relatively high in Tennessee and Georgia in CY2018, but fell visibly when MolDx edits were fully implemented before the beginning of CY2019:

81408 Pmts Visibly Lower in 2019 than 2018

Let's take a pause there.  For more on how MolDx edits Tier 2 codes, see the sister article here.

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Grand Finale:  MACs Mightily Impact Tier 2 Payments

Here I conclude my analysis of national use of all Tier 2 codes by making summary graphs.  I broke out the MACs into three cohorts.

• In purple, the Novitas and FCSO MACs.
• In Orange, the small and now-gone Cahaba MAC (TN, GA, AL).
• In blue, all the remaining MACs (MolDx [Palmetto, WPS, Noridian, CGS], NGS MAC).

Practically all the spending for the Tier 2 codes 81400-81408 is for code 81408 by Novitas and Cahaba (which had no edits on these codes), piled up on the right of the bar chart.

Breathtaking.  From a payments viewpoint, we see two facts, unknown before now.

• Fact #1:  Nearly all spending for all Tier 2 codes flowed out via the Novitas and Cahaba MACs (purple + orange).  Only a sliver of payments went out through other MACs, and only for the lower Tier 2 codes.  
• Fact #2:  Total payments for all Tier 2 codes is massively skewed to 81408, the highest codes, often billed $4000 per patient (2 x 81408).  

In 2018+2019, Tier 2 spending (as above) was about $600M.

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Coda

If you look at services rather than payments, the bar graph is more balanced, but it's comparing test numbers rather than prices (some tests are $60, some $2000).

The next two blogs, #3 and #4, will look at edits and payment patterns in MolDx MACs and then in NGS MACs.   The final blog, #5, will ask why 81407 (see bar chart just above) is so tiny compared to 81406 and 81408.

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Footnote

For lab-level detail on how different labs billing Tier 2 codes show different billing patterns, see my side blog here.

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