preparing for pama’s part b price cuts: what xifin’s …€¦ · lâle white, chairman and ceo,...

Lle White, Chairman and CEO, XIFIN Inc.

Preparing for PAMAs Part B Price Cuts: What XIFINs Impact Analysis Predicts for Labs Like Yours in 2018

How Will Medicares Payment System Change?

www.XIFIN.com 2

Applicable labs report data

CMS calculates weighted median private payor rate for each test

Source: Medicare Payments for Lab Tests in 2015: Year 2 of Baseline Data (OEI-09-16-00040)

Median determines new rate for tests paid on Medicare CLFS

CURRENT Implemented in 1984

Payment rates for existing tests are based on lab charges in 19841985, adjusted annually for inflation

57 local fee schedules

Same pricing schedule for all categories of lab tests on the fee schedule

FUTURETo 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 testsadvanced diagnostic laboratory testswith a different pricing schedule

PAMA Amplifies Significance of Financial DisciplineCMS 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.

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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

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Timeline for CMS and Laboratories

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CMS Develops New Rates

Data Collection Period Reportingperiod NewRates

Jan 12019

Jun 302019

Jan 12020

Sep 12020

March 312020

Jan 12021

CMS Publish

Draft Rates

CMS Publish

Final Rates

Jan 12016

Jun 302016

Jan 12017

Sep 12017

March 312017

Jan 12018

CMS makes

FFSDCS available

for testing

Jan 12022

Jun 302022

Jan 12023

Sep 12023

March 312023

Jan 12024

Extension

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

www.XIFIN.com 6

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 Medicares 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

www.XIFIN.com 7

Laboratory Industry Test Volume by Facility Type

www.XIFIN.com 8

Inpatient, 51%

Outreach/ Outpatient

49%

Independent, 34% Hospital,

53%

Other, 5%

POL, 7%

Source: G2 Intelligence, Truven Health Analytics. US Clinical Laboratory and Pathology Testing 2013-2015: Market Analysis, trends and Forecasts

Calculating the Weighted Median

www.XIFIN.com 9

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

Calculation of Average and Median

Source: Briggs Henan University 2010

Average 296.15 / 34 = 8.71

Median(7.69 + 7.8)/2 = 7.75

(there are 2 middle values)

Row # Reimbursement Units1 3.11 12 3.48 13 3.52 14 3.9 15 3.97 16 4.02 17 4.16 18 4.42 19 4.44 1

10 4.64 111 4.83 112 5.61 113 5.87 114 6.49 115 6.5 116 7.36 117 7.69 118 7.8 119 7.96 120 8.05 121 8.14 122 8.19 123 8.65 124 8.7 125 9.36 126 10.09 127 10.24 128 10.38 129 13.29 130 14.49 131 14.58 132 16.68 133 17.77 134 37.77 1

Sum 296.15 34

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Weighted Median vs. Weighted Average Weighted median calculation not suited for financial analysis Weighted median better suited for Quality Control and removing

outliers

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Weighted Average$9.25

Weighted Median$7.91

Medicare National Limit Amount $8.81

Source: XIFIN PAMA data set

Proc Code 85027: Distribution Complete CBC

Weighted Median vs. Weighted Average

www.XIFIN.com 12

Weighted Average$14.23Weighted Median

$10.50 Medicare National Limit Amount $14.39

Source: XIFIN PAMA data set

Proc Code 80053: Distribution Comprehensive Metabolic Panel

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.

www.XIFIN.com 13

In 2018 5 years (2016-25) 10 years (2016-25)

US$390 million US$2.3 Billion US$3.9 Billion

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

www.XIFIN.com 14

Source: September 2016 HHS OIG DATA BRIEF: Second set of annual baseline analysis of payment for the top 25 lab tests

Payments Unevenly Distributed Across Labs

1%

54%

4%

25%

95%

21%

$0.0

$0.5

$1.0

$1.5

$2.0

$2.6

$3.1

$3.6

$4.1

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Labs (29,211) MedicarePayments

($4.1B)

$ Billion

% o

f Lab

s

Medicare Payments for Top 25 Lab Tests

www.XIFIN.com 15

Source: OIG analysis of Medicare Part B lab test payments, 2016

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

www.XIFIN.com 16

Limited Sampling of Market Pricing Clinical Labs

Based on XIFIN dataWeighted Average

Big Labs Represent 50% of Volume PAMA Impact : -29.6%

Big Labs Represent 30% of Volume PAMA Impact : -19.6%

www.XIFIN.com 17

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

80048 Metabolic panel total ca 11.52$ 10.26$ -13%80053 CMP 14.39$ 10.28$ -38%80061 Lipid panel 17.73$ 14.22$ -24%82306 Vit D 40.33$ 27.62$ -35%82542 Chromotography quant 24.60$ 18.73$ -25%82607 B12 20.54$ 13.98$ -33%82728 Ferritin 18.57$ 12.94$ -31%82746 Folic acid serum 20.03$ 13.55$ -33%83036 Glycosylated hemoglobin 13.22$ 10.63$ -20%83880 Natriuretic peptide 46.24$ 38.26$ -18%83970 Parathormone 56.23$ 41.35$ -27%84153 PSA 25.06$ 17.84$ -29%84439 Thyroxine 12.28$ 9.03$ -27%84443 TSH 22.89$ 16.92$ -27%85025 Complete CBC w/auto diff wbc 10.59$ 7.33$ -34%85027 Complete CBC automated 8.81$ 6.47$ -27%85610 Prothrombin time 5.36$ 4.18$ -22%87086 Urine culture/colony count 11.00$ 7.59$ -32%87491 Chlamidia, Amp. Probe 47.80$ 32.10$ -35%88175 Cytopathology, Auto 36.09$ 29.67$ -19%

Source: XIFIN analysis based on XIFIN PAMA data set

Sheet1

Proc CodeTest CodeMedicare National LimitPrivate Pyr Weighted Average RateWeighted Average Increase / Decrease

Column1Column2Column3Column4Column6

80048Metabolic panel total ca$ 11.52$ 10.26-13%

80053CMP$ 14.39$ 10.28-38%

80061Lipid panel$ 17.73$ 14.22-24%

82306Vit D$ 40.33$ 27.62-35%

82542Chromotography quant$ 24.60$ 18.73-25%

82607B12$ 20.54$ 13.98-33%

82728Ferritin$ 18.57$ 12.94-31%

82746Folic acid serum$ 20.03$ 13.55-33%

83036Glycosylated hemoglobin$ 13.22$ 10.63-20%

83880Natriuretic peptide$ 46.24$ 38.26-18%

83970Parathormone$ 56.23$ 41.35-27%

84153PSA$ 25.06$ 17.84-29%

84439Thyroxine$ 12.28$ 9.03-27%

84443TSH$ 22.89$ 16.92-27%

85025Complete CBC w/auto diff wbc$ 10.59$ 7.33-34%

85027Complete CBC automated$ 8.81$ 6.47-27%

85610Prothrombin time$ 5.36$ 4.18-22%

87086Urine culture/colony count$ 11.00$ 7.59-32%

87491Chlamidia, Amp. Probe$ 47.80$ 32.10-35%

88175Cytopathology, Auto$ 36.09$ 29.67-19%

Limited Sampling of Market Pricing Hospital Labs

Based on XIFIN dataWeighted Average

Hospital Labs with NPIPAMA Impact: +26.5%

Mix of Hospital Labs with & without NPIPAMA Impact: +32.1%

www.XIFIN.com 18

Top 20 tests based on Medicare Part B 2015 payments

Proc Code Test Code

Medicare National

Limit


Rate

Weighted Average

Percentage Increase / Decrease

80048 Metabolic panel total ca 11.52$ 12.35$ 8%80053 CMP 14.39$ 19.05$ 39%80061 Lipid Panel 17.73$ 22.58$ 39%82306 Vit D 40.33$ 52.56$ 31%82542 Chromotography quant 24.60$ 30.96$ 26%82607 B12 20.54$ 27.09$ 33%82728 Ferritin 18.57$ 24.53$ 33%82746 Folic acid serum 20.03$ 28.08$ 41%83036 Glycosylated hemoglobin 13.22$ 18.32$ 39%83880 Natriuretic peptide 46.24$ 53.79$ 17%83970 Parathormone 56.23$ 74.51$ 33%84153 PSA 25.06$ 32.47$ 30%84439 Thyroxine 12.28$ 17.08$ 40%84443 TSH 22.89$ 29.64$ 30%85025 Complete CBCw/auto diff 10.59$ 13.73$ 32%85027 Complete CBC automated 8.81$ 10.50$ 20%85610 Prothrombin time 5.36$ 6.67$ 25%87086 Urine culture/colony count 11.00$ 14.66$ 34%87491 Chylmd trach dna amp probe 47.80$ 47.33$ -1%88175 Cytopatholgy, Auto 36.09$ 47.96$ 36%


Sheet1

Proc CodeTest CodeMedicare National LimitPrivate Pyr Weighted Average RateWeighted Average Percentage Increase / Decrease


80048Metabolic panel total ca$ 11.52$ 12.358%

80053CMP$ 14.39$ 19.0539%

80061Lipid Panel$ 17.73$ 22.5839%

82306Vit D$ 40.33$ 52.5631%

82542Chromotography quant$ 24.60$ 30.9626%

82607B12$ 20.54$ 27.0933%

82728Ferritin$ 18.57$ 24.5333%

82746Folic acid serum$ 20.03$ 28.0841%

83036Glycosylated hemoglobin$ 13.22$ 18.3239%

83880Natriuretic peptide$ 46.24$ 53.7917%

83970Parathormone$ 56.23$ 74.5133%

84153PSA$ 25.06$ 32.4730%

84439Thyroxine$ 12.28$ 17.0840%

84443TSH$ 22.89$ 29.6430%

85025Complete CBCw/auto diff$ 10.59$ 13.7332%

85027Complete CBC automated$ 8.81$ 10.5020%

85610Prothrombin time$ 5.36$ 6.6725%

87086Urine culture/colony count$ 11.00$ 14.6634%

87491Chylmd trach dna amp probe$ 47.80$ 47.33-1%

88175Cytopatholgy, Auto$ 36.09$ 47.9636%

Limited Sampling of Market Pricing Pain/Tox Labs

Based on XIFIN data

Weighted AveragePAMA Impact: +50.4%

www.XIFIN.com 19

Proc Code Test Code

Medicare National

Limit


Rate

Weighted Average


G0482 Drug test def 15-21 classes 166.03$ 235.81$ 43%G0483 Drug test def 22+ classes 215.23$ 459.67$ 114%G0481 Drug test def 8-14 classes 122.99$ 163.59$ 34%G0479 Drug test presump not opt 79.25$ 103.31$ 32%G0480 Drug test def 1-7 classes 79.94$ 107.92$ 36%81226 CYP2D6 gene com variants 450.91$ 403.37$ -11%82542 Column chromo quant 24.60$ 22.44$ 74%84311 Spectrophotometry 9.52$ 9.01$ 12%82570 Assay of urine creatinine 7.05$ 6.79$ -4%81291 MTHFR gene 59.46$ 50.30$ -16%80184 Assay of phenobarbital 15.60$ 12.07$ -23%83986 Assay ph body fluid nos 4.88$ 4.67$ -4%83789 Mass spectrometry quant 24.60$ 38.25$ 181%80171 Drug screen quant gabapentin 18.06$ 15.83$ -13%81003 Urinalysis auto w/o scope 3.06$ 2.78$ -9%81225 CYP2C19 gene com variants 291.36$ 254.12$ -13%81401 MoPath Tier 2 137.20$ 122.08$ 70%81400 MoPath Tier 2 120.54$ 324.58$ 169%81227 CYP2C19 gene com variants 174.81$ 370.94$ 115%83655 Assay of lead 16.49$ 10.53$ -39%

Top 20 tests by Medicare dollar volume


Sheet1



G0482Drug test def 15-21 classes$ 166.03$ 235.8143%

G0483Drug test def 22+ classes$ 215.23$ 459.67114%


G0479Drug test presump not opt$ 79.25$ 103.3132%


81226CYP2D6 gene com variants$ 450.91$ 403.37-11%

82542Column chromo quant$ 24.60$ 22.4474%

84311Spectrophotometry$ 9.52$ 9.0112%

82570Assay of urine creatinine$ 7.05$ 6.79-4%

81291MTHFR gene$ 59.46$ 50.30-16%

80184Assay of phenobarbital$ 15.60$ 12.07-23%

83986Assay ph body fluid nos$ 4.88$ 4.67-4%

83789Mass spectrometry quant$ 24.60$ 38.25181%

80171Drug screen quant gabapentin$ 18.06$ 15.83-13%

81003Urinalysis auto w/o scope$ 3.06$ 2.78-9%

81225CYP2C19 gene com variants$ 291.36$ 254.12-13%

81401MoPath Tier 2$ 137.20$ 122.0870%

81400MoPath Tier 2$ 120.54$ 324.58169%

81227CYP2C19 gene com variants$ 174.81$ 370.94115%

83655Assay of lead$ 16.49$ 10.53-39%

Limited Sampling of Market Pricing Molecular Labs

Based on XIFIN data

Weighted AveragePAMA Impact:+27.3%

www.XIFIN.com 20

Proc Code Test Code

Medicare National

Limit


Rate

Weighted Average


81490 Autoimmune rheumatoid arthr 574.77$ 811.31$ 41%81211 seq & cBRCA1&2 com dup/del 2,180.22$ 2,573.29$ 18%81545 Oncology thyroid 3,135.07$ 3,616.72$ 15%81213 BRCA1&2 uncom dup/del var 581.84$ 548.99$ -6%81226 CYP2D6 gene com variants 450.91$ 736.55$ 63%87507 LADNA-DNA/RNA probe tq 12-25 567.75$ 221.98$ -61%81225 CYP2C19 gene com variants 291.36$ 422.89$ 45%87633 Resp virus 12-25 targets 567.75$ 194.30$ -66%81317 PMS2 gene full seq analysis 780.12$ 740.54$ -5%81292 MLH1 gene full seq 645.26$ 729.86$ 13%81291 MTHFR gene 59.46$ 129.59$ 118%81401 MoPath Tier 2 134.40$ 262.27$ 95%80061 Lipid panel 17.73$ 43.86$ 147%81298 MSH6 gene full seq 287.40$ 666.32$ 132%81400 MoPath Tier 2 305.47$ 305.47$ 160%81528 Oncology colorectal scr 508.87$ 502.45$ -1%81295 MSH2 gene full seq 151.48$ 501.63$ 231%81227 CYP2C9 gene com variants 174.81$ 280.50$ 61%81404 MoPath Tier 2 163.96$ 315.39$ 92%81381 HLAi typing 1 allele hr 128.84$ 300.90$ 134%

Top 20 tests by Medicare dollar volume


Mol



81490Autoimmune rheumatoid arthr$ 574.77$ 811.3141%

81211seq & cBRCA1&2 com dup/del$ 2,180.22$ 2,573.2918%

81545Oncology thyroid$ 3,135.07$ 3,616.7215%

81213BRCA1&2 uncom dup/del var$ 581.84$ 548.99-6%

81226CYP2D6 gene com variants$ 450.91$ 736.5563%

87507LADNA-DNA/RNA probe tq 12-25$ 567.75$ 221.98-61%


87633Resp virus 12-25 targets$ 567.75$ 194.30-66%

81317PMS2 gene full seq analysis$ 780.12$ 740.54-5%

81292MLH1 gene full seq$ 645.26$ 729.8613%

81291MTHFR gene$ 59.46$ 129.59118%

81401MoPath Tier 2$ 134.40$ 262.2795%

80061Lipid panel$ 17.73$ 43.86147%

81298MSH6 gene full seq$ 287.40$ 666.32132%

81400MoPath Tier 2$ 305.47$ 305.47160%

81528Oncology colorectal scr$ 508.87$ 502.45-1%

81295MSH2 gene full seq$ 151.48$ 501.63231%


81404MoPath Tier 2$ 163.96$ 315.3992%

81381HLAi typing 1 allele hr$ 128.84$ 300.90134%

Sheet2

PAMA Test Volume by Facility Type

www.XIFIN.com 21

Big Labs, 28%

Rest of Independent

Labs,28%

Hospital Outreach

Labs, 44%

Big Labs, 17%

Rest of Independent Labs, 17%

Hospital Outreach,

27%

Hospital Inpatient, 26%

Other, 5%

POL, 7%

Lab Type Percent of TotalWeighted Average Impact %

Big Labs 28% (44.8%)*Rest of Independent Labs 28% 8.0%*Hospital Outreach Labs 44% 32.1%*Total 100% 3.8%

*Top 20 OIG CodesSource: XIFIN analysis based on XIFIN PAMA data set

Hospital Outreach Impact on PAMA Rates

www.XIFIN.com 22


% of Hospital Outreach LabsReporting Weighted Average Impact %

0% -18.4%

10% -16.2%

25% -12.8%

50% -7.3%

75% -1.7%

100% 3.8%

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

www.XIFIN.com 23

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

www.XIFIN.com 24

Lessons from the PAMA Audit for Future Reference Billed amount equals allowable

Generally indicates labs 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

www.XIFIN.com 25

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

www.XIFIN.com 26

Thank You

Preparing for PAMAs Part B Price Cuts: What XIFINs Impact Analysis Predicts for Labs Like Yours in 2018 How Will Medicares Payment System Change?PAMA Amplifies Significance of Financial DisciplineJust when you thought PAMA was the end of it...Timeline for CMS and LaboratoriesIs CMS Gaming the System to Ensure CLFS Cuts?OIG Concerned: Certain Aspects of PAMA Could Limit Savings Laboratory Industry Test Volume by Facility TypeCalculating the Weighted MedianCalculation of Average and Median Weighted Median vs. Weighted AverageWeighted Median vs. Weighted AverageCMS Projects Medicare Benefit SavingsMedicare Payments for Lab Tests in 2015: Year 2 of Baseline Data - SummaryPayments Unevenly Distributed Across LabsHow to Prepare for Data SubmissionLimited Sampling of Market Pricing Clinical Labs Limited Sampling of Market Pricing Hospital LabsLimited Sampling of Market Pricing Pain/Tox LabsLimited Sampling of Market Pricing Molecular LabsPAMA Test Volume by Facility TypeHospital Outreach Impact on PAMA RatesData Capture Is CriticalCivil Monetary Penalties for Non-Reporting or Mistakes in ReportingLessons from the PAMA Audit for Future ReferenceExample Audit CasesThank You

preparing for pama’s part b price cuts: what xifin’s …€¦ · lâle white, chairman and ceo,...

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