Preparing for PAMA s Part B Price Cuts: What XIFIN s Impact Analysis Predicts for Labs Like Yours in Lâle White, Chairman and CEO, XIFIN Inc.

Transcription

1 Preparing for PAMA s Part B Price Cuts: What XIFIN s Impact Analysis Predicts for Labs Like Yours in 2018 Lâle White, Chairman and CEO, XIFIN Inc.

2 How Will Medicare s Payment System Change? CURRENT Implemented in 1984 Payment rates for existing tests are based on lab charges in , adjusted annually for inflation 57 local fee schedules Same pricing schedule for all categories of lab tests on the fee schedule FUTURE To be implemented in 2018 Payment rates for existing tests will be based on current rates from private payers, and updated every 3 years using current data Single national fee schedule Creates a new category of lab tests advanced diagnostic laboratory tests with a different pricing schedule Applicable labs report data CMS calculates weighted median private payor rate for each test Median determines new rate for tests paid on Medicare CLFS Source: Medicare Payments for Lab Tests in 2015: Year 2 of Baseline Data (OEI ) 2

3 PAMA Amplifies Significance of Financial Discipline CMS responds to lab comments and extends deadline to report by 60 days, stating that both the number of labs reporting & the volume of data submitted through March 30th was less than expected. 3

4 Just when you thought PAMA was the end of it... FASB ASC 606 Effective Jan 2018 for publicly held companies Effective Jan 2019 for privately held companies 4

5 Timeline for CMS and Laboratories Jan Jun Jan March Sep Jan Data Collection Period CMS makes FFSDCS available for testing Reporting period CMS Develops New Rates Extension CMS Publish Draft Rates CMS Publish Final Rates New Rates Jan Jun Jan March Sep Jan Jan Jun Jan March Sep Jan

6 Is CMS Gaming the System to Ensure CLFS Cuts? 2016 OIG PAMA report reflects concerns that certain aspects of PAMA could limit savings Despite CMS-redefined Applicable Lab, the number of hospital labs that will report is still not reflective of market composition Labs that receive greater than 50% of Medicare revenue under the CLFS/PFS based on NPI rather than TIN Calculation based on the weighted median for the data period vs. weighted average Market factors do not reflect market pricing for routine clinical tests Private payor pricing is influenced by the CLFS A number of private payor contracts are at a percentage of the Medicare CLFS 6

7 OIG Concerned: Certain Aspects of PAMA Could Limit Savings Medicare could pay more for certain lab tests when it switches to a single national fee schedule Regional payments could be higher Median pricing in the private market could be higher than Medicare s current rate for some tests Medicare may pay more for specific sets of lab tests because under the new payment system, it will no longer be able to pay using bundled rates for those sets The absence of certain private payor pricing data from the data that CMS will receive could limit decreases in Medicare lab test rates 7

8 Laboratory Industry Test Volume by Facility Type Independent, 34% Hospital, 53% Inpatient, 51% Outreach/ Outpatient 49% POL, 7% Other, 5% Source: G2 Intelligence, Truven Health Analytics. US Clinical Laboratory and Pathology Testing : Market Analysis, trends and Forecasts 8

9 Calculating the Weighted Median Source: Cormen, Thomas H.; Leiserson, Charles E.; Rivest, Ronald L.; Stein, Clifford (2001). "Introduction to Algorithms" 9

10 Calculation of Average and Median Row # Reimbursement Units Sum Average / 34 = 8.71 Median ( )/2 = 7.75 (there are 2 middle values ) Source: Briggs Henan University

11 Weighted Median vs. Weighted Average Weighted median calculation not suited for financial analysis Weighted median better suited for Quality Control and removing outliers Proc Code 85027: Distribution Complete CBC Medicare National Limit Amount $8.81 Weighted Median $7.91 Weighted Average $9.25 Source: XIFIN PAMA data set 11

12 Weighted Median vs. Weighted Average Proc Code 80053: Distribution Comprehensive Metabolic Panel Weighted Median $10.50 Weighted Average $14.23 Medicare National Limit Amount $14.39 Source: XIFIN PAMA data set 12

13 CMS Projects Medicare Benefit Savings Estimated Savings: 5.6% of CLFS spending in first year Estimates based on very limited information Note: Savings estimates do not represent across-the-board cuts and were based on a sub set of high volume tests Each lab test can move up or down by different amounts. In years ( ) 10 years ( ) US$390 million US$2.3 Billion US$3.9 Billion 13

14 Medicare Payments for Lab Tests in 2015: Year 2 of Baseline Data - Summary Medicare Part B paid $7 billion for lab tests in 2015 (no change from 2014) The top 25 lab tests totaled $4.1 billion in 2015 (slightly less than in 2014) Medicare paid 19% more for all drug tests in 2015 than in 2014 Medicare paid 44% less for all molecular tests in 2015 than in 2014 New payment rates for lab tests will be based on data provided by a projected 5% of labs; these labs received 69% of Medicare payments in 2015 Although Medicare payment rates are expected to decrease overall, rates for some tests will increase in certain locations under the new payment system Certain aspects of the new payment system that could limit savings warrant ongoing monitoring Source: September 2016 HHS OIG DATA BRIEF: Second set of annual baseline analysis of payment for the top 25 lab tests 14

15 Payments Unevenly Distributed Across Labs 100% Medicare Payments for Top 25 Lab Tests $4.1 90% 21% $3.6 % of Labs 80% 70% 60% 50% 40% 95% 25% $3.1 $2.6 $2.0 $1.5 $ Billion 30% 20% 54% $1.0 10% 4% $0.5 0% 1% Labs (29,211) Medicare Payments ($4.1B) $0.0 Source: OIG analysis of Medicare Part B lab test payments,

16 How to Prepare for Data Submission Assign authority to project lead who will sign off on final submission Project lead should designate individuals for data collection and review Financial Analyst Financial/Compliance Auditor Billing system and reimbursement expert IT or reporting expert with access to reporting tools and source data Data Validation: Cross check system data to source data (ERAs/EOBs) Identify clerical payment posting errors and adjustments Verify all reportable data has been captured Analysis: Review data quality and integrity Determine if claim is fully adjudicated within reporting period (recoupments, adjustments, redeterminations) Identify payor adjudication errors that require redetermination, appeals etc. Financial over site to determine data makes sense 16

17 Limited Sampling of Market Pricing Clinical Labs Based on XIFIN data Weighted Average Big Labs Represent 50% of Volume PAMA Impact : -29.6% Big Labs Represent 30% of Volume PAMA Impact : -19.6% Source: XIFIN analysis based on XIFIN PAMA data set Top 20 tests based on Medicare Part B 2015 payments Proc Code Test Code Medicare National Limit Private Pyr Weighted Average Rate Weighted Average Increase / Decrease Metabolic panel total ca $ $ % CMP $ $ % Lipid panel $ $ % Vit D $ $ % Chromotography quant $ $ % B12 $ $ % Ferritin $ $ % Folic acid serum $ $ % Glycosylated hemoglobin $ $ % Natriuretic peptide $ $ % Parathormone $ $ % PSA $ $ % Thyroxine $ $ % TSH $ $ % Complete CBC w/auto diff wbc $ $ % Complete CBC automated $ 8.81 $ % Prothrombin time $ 5.36 $ % Urine culture/colony count $ $ % Chlamidia, Amp. Probe $ $ % Cytopathology, Auto $ $ % 17

18 Limited Sampling of Market Pricing Hospital Labs Based on XIFIN data Weighted Average Hospital Labs with NPI PAMA Impact: +26.5% Mix of Hospital Labs with & without NPI PAMA Impact: +32.1% Source: XIFIN analysis based on XIFIN PAMA data set Top 20 tests based on Medicare Part B 2015 payments Weighted Proc Code Test Code Medicare National Limit Private Pyr Weighted Average Rate Average Percentage Increase / Decrease Metabolic panel total ca $ $ % CMP $ $ % Lipid Panel $ $ % Vit D $ $ % Chromotography quant $ $ % B12 $ $ % Ferritin $ $ % Folic acid serum $ $ % Glycosylated hemoglobin $ $ % Natriuretic peptide $ $ % Parathormone $ $ % PSA $ $ % Thyroxine $ $ % TSH $ $ % Complete CBCw/auto diff $ $ % Complete CBC automated $ 8.81 $ % Prothrombin time $ 5.36 $ % Urine culture/colony count $ $ % Chylmd trach dna amp probe $ $ % Cytopatholgy, Auto $ $ % 18

19 Limited Sampling of Market Pricing Pain/Tox Labs Based on XIFIN data Weighted Average PAMA Impact: +50.4% Source: XIFIN analysis based on XIFIN PAMA data set Top 20 tests by Medicare dollar volume Weighted Proc Code Test Code Medicare National Limit Private Pyr Weighted Average Rate Average Percentage Increase / Decrease G0482 Drug test def classes $ $ % G0483 Drug test def 22+ classes $ $ % G0481 Drug test def 8-14 classes $ $ % G0479 Drug test presump not opt $ $ % G0480 Drug test def 1-7 classes $ $ % CYP2D6 gene com variants $ $ % Column chromo quant $ $ % Spectrophotometry $ 9.52 $ % Assay of urine creatinine $ 7.05 $ % MTHFR gene $ $ % Assay of phenobarbital $ $ % Assay ph body fluid nos $ 4.88 $ % Mass spectrometry quant $ $ % Drug screen quant gabapentin $ $ % Urinalysis auto w/o scope $ 3.06 $ % CYP2C19 gene com variants $ $ % MoPath Tier 2 $ $ % MoPath Tier 2 $ $ % CYP2C19 gene com variants $ $ % Assay of lead $ $ % 19

20 Limited Sampling of Market Pricing Molecular Labs Based on XIFIN data Weighted Average PAMA Impact:+27.3% Source: XIFIN analysis based on XIFIN PAMA data set Top 20 tests by Medicare dollar volume Weighted Proc Code Test Code Medicare National Limit Private Pyr Weighted Average Rate Average Percentage Increase / Decrease Autoimmune rheumatoid arthr $ $ % seq & cbrca1&2 com dup/del $ 2, $ 2, % Oncology thyroid $ 3, $ 3, % BRCA1&2 uncom dup/del var $ $ % CYP2D6 gene com variants $ $ % LADNA-DNA/RNA probe tq $ $ % CYP2C19 gene com variants $ $ % Resp virus targets $ $ % PMS2 gene full seq analysis $ $ % MLH1 gene full seq $ $ % MTHFR gene $ $ % MoPath Tier 2 $ $ % Lipid panel $ $ % MSH6 gene full seq $ $ % MoPath Tier 2 $ $ % Oncology colorectal scr $ $ % MSH2 gene full seq $ $ % CYP2C9 gene com variants $ $ % MoPath Tier 2 $ $ % HLAi typing 1 allele hr $ $ % 20

21 PAMA Test Volume by Facility Type POL, 7% Other, 5% Hospital Inpatient, 26% Big Labs, 17% Hospital Outreach, 27% Rest of Independent Labs, 17% Big Labs, 28% Rest of Independent Labs, 28% Hospital Outreach Labs, 44% Lab Type Percent of Total Weighted Average Impact % Big Labs 28% (44.8%)* Rest of Independent Labs 28% 8.0%* Hospital Outreach Labs 44% 32.1%* Total 100% 3.8% Source: XIFIN analysis based on XIFIN PAMA data set *Top 20 OIG Codes 21

22 Hospital Outreach Impact on PAMA Rates % of Hospital Outreach Labs Reporting Weighted Average Impact % 0% -18.4% 10% -16.2% 25% -12.8% 50% -7.3% 75% -1.7% 100% 3.8% Source: XIFIN analysis based on XIFIN PAMA data set 22

23 Data Capture Is Critical Imperative to have a revenue cycle management system that can capture necessary information, ability to: Consolidate multiple payments per procedure code and adjusted allowables Reconcile units billed vs. paid Identify paid claims still in process (appeals, redetermination, corrected claim etc.) Identify over payments and under payments Accurately process recoupments, refunds and adjustments at the procedure code level Capture components of contractual allowance calculation Identify change in primary payor from the ERA To comply with deadlines, system must routinely have captured the information Data now needs to be refined to address final sub-regulatory criteria and portal reporting requirements 23

24 Civil Monetary Penalties for Non-Reporting or Mistakes in Reporting Certification By Specified Official Executive (President, CEO, or CFO, or an individual who has been delegated authority to sign for and who reports directly to such an official) of the Reporting Entity must attest that data are accurate, complete, and truthful, and meet all the reporting parameters Individual with delegated authority added in response to comments If CMS determines that an applicable laboratory has failed to report, or made a misrepresentation or omission in reporting, applicable information, the law provides that a civil monetary penalty of up to $10,000 per day per violation may apply Actual maximum of CMPs will be updated to reflect inflation: US$10,017 in 2016, with further annual updates in the future. CMS notes that the CMP amount is a maximum not a minimum and will be assessed based on circumstances of each case CMPs would apply at the level of the Reporting Entity 24

25 Lessons from the PAMA Audit for Future Reference Billed amount equals allowable Generally indicates lab s billed amount is lower than the allowable This artificially deflates the market price and should be noted for future corrections to billed price Allowed amount is less than contracted fee schedule Incorrect payment that should be appealed and not reported Contracts are a percentage of Medicare Contracts should be renegotiated to avoid distorting market based pricing analysis Retention of Source Documentation Optimize ERAs and eliminate manual payment posting Integrity of Financial Systems and reporting/analytical capabilities Creation of audit file that supports submission 25

26 Example Audit Cases Incorrect units reported on the EOB/ERA Units 5x, 10x and even 1000x more than actual test submitted. All other values are correct. (If they allowed $17 for 1 unit but show 1000 units, allowed = $0.017 per unit) Missing values from the EOB/ERA Missing reversal of the allowed amount only the payment was reversed. The allowed was reversed and the payment wasn't recouped. Multiple payments/reversals Payor did not apply a reversal of prior incorrect allowable, but provided an additional allowable when re-adjudicating claim. Possibly multiple times. Partial payments/reversals and how they aggregate. Contractual Allowance calculation is net of sequestration Clerical payment posting adjustments 1 in 10 manually posted claims have an error Payment posted in bulk, not at procedure code level Systems that auto-allocate bulk payments have high error rates and cannot be defended in an audit Misapplied allowed charges to wrong code or payor Keying errors 26

27 Thank You