California Medicare administrator Palmetto GBA is implementing tougher provider claims rules to more closely manage payment for new genetic tests.

On Sept. 1, Palmetto started requiring providers to enter the specific test name in the description field of the claims form. Claims without this information will be rejected beginning Dec. 1 and must be resubmitted, the contractor ¹ said Aug. 31.

Palmetto explains the new policy is necessary because it must determine whether to pay for molecular diagnostic tests not yet listed in the CMS laboratory fee schedule. The organization often has to interpret miscellaneous codes that do not identify the performed service and "stacked" methodology-based code descriptions that are used instead of specific test descriptions.

Palmetto is attempting to "crack down on genetic tests it deems unreasonable or unnecessary, but that it may be paying for anyway due to issues with the current coding system," writes Eric Assaraf, a policy analyst with Concept Capital, in a Sept. 1 report.

According to Assaraf, the American Medical Association's Current Procedural Terminology (CPT) coding panel is working to reform the genetic testing code system to address the concerns expressed by Palmetto and other payers, but that effort will not be completed until 2012.

In its Aug. 31 posting, Palmetto also said that in considering whether to pay for tests described by miscellaneous codes, it will not be "bound to a reimbursement established by another contractor prior to jurisdictional award."

Assaraf points out that this statement may not bode well for Genomic Health, which depends on miscellaneous codes for its Oncotype Dx breast cancer prognosis test. The firm's coding strategy was set before Palmetto took over the California Medicare jurisdiction in 2008, he notes.

Palmetto also says it is encouraging providers that bill to miscellaneous codes to obtain a CPT code.

"At the very least we view this as a warning to other laboratories that the Genomic Health model will no longer be a pathway to obtain higher reimbursement," Assaraf says.

- Mark Hollmer ( ² m.hollmer@elsevier.com )

New California Medicare Coding Requirements Target Genetic Test Payments

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