Brief Blog: OIG Issues Report on How CMS Set its COVID Test Rates

OIG issues an annual report on the Clin Lab Fee Schedule (CLFS) as a whole.  There was also a side report on inappropriate overbilling of code 81408 (a $2000 miscellaneous genetic code that autopaid in some geographies.)

Here's another special report.  OIG reviews how prices were set during the public health emergency (PHE) for COVID testing.

https://oig.hhs.gov/reports-and-publications/all-reports-and-publications/cms-could-improve-its-procedures-for-setting-medicare-clinical-diagnostic-laboratory-test-rates-under-the-clinical-laboratory-fee-schedule-for-future-public-health-emergencies/

OIG asks, for example, whether principals for government procurement were followed (citing to Standards for Internal Controls in the Federal Government (Green Book).)

What OIG Found

Here's the summary by OIG of "What OIG Found."   

CMS’s procedures for CDLT rate setting could be improved for future PHEs. Specifically, CMS could improve its: (1) communication with laboratory associations and the MACs’ pricing coordinators, and (2) procedures to provide the MACs with additional flexibility when they set interim CDLT rates to respond to a PHE. Neither the Clinical Laboratory Fee Schedule statute (CLFS) nor its implementing regulations specifically address how pricing coordinators could quickly set rates for new CDLTs before the lengthy public consultation rate setting process. Normally, CMS fills that delay by using its longstanding MAC interim rate setting policy. Accordingly, in March 2020, MACs set rates for new COVID-19 viral tests through CMS’s interim MAC rate setting policy. However, CMS had to take additional action beyond its standard rate setting procedures to set and adjust rates for CDLTs.

As a result, CMS’s standard rate setting procedures did not allow the MACs to set rates that were adequate to cover the cost of conducting COVID-19 viral tests for all laboratories during a time when CMS was working to increase testing capacity. CMS may have missed opportunities to obtain important information that could have improved its response to the COVID-19 pandemic from laboratory associations and the MACs’ pricing coordinators when it made decisions about the new CDLT rates.

Here's another quote:

In a statement to USA Today, the CMS Administrator acknowledged that the payment rate initially set by the MACs may have played a role in testing shortages.[fn] The CMS Administrator also noted that a lot of laboratories were not performing the tests and acknowledged that the initial payment rate may have been set too low.