CMS Reduces Medicare Reimbursement Rate for Some COVID-19 Tests

CMS will reduce the base Medicare reimbursement rate for COVID-19 tests done by laboratories using high throughput technology, according to a new announcement.

The announcement made late last week stated that the rate will drop to $75 from $100 starting January 1, 2021, per the amended Administrative Ruling (CMS-2020-1-R2) released last Thursday.

CMS had previously upped the Medicare reimbursement rate for high throughput COVID-19 testing from approximately $51 to $100 at the start of the public health emergency.

But laboratories will still be able to bill for the higher rate of $100 if they can complete COVID-19 tests within two calendar dates of the specimen being collected, the rule also stated.

According to the amended rule, in order to qualify for the higher reimbursement rate, laboratories using high throughput technology for COVID-19 testing must be able to complete the diagnostic tests in two calendar days or less and had done so for the majority of their patients, not just Medicare patients, the previous month.

The new Medicare reimbursement rates are meant to support “faster high throughput testing, which will allow patients and physicians to act quickly and decisively with respect to treatment decisions, physical isolation, and contact tracing,” CMS Administrator Seema Verma said in the announcement.

“As America continues to grapple with the COVID-19 pandemic, prompt testing turnaround times are more important than ever,” Verma added.

In order to receive the higher reimbursement rate, laboratories will need to use the Healthcare Common Procedure Coding System (HCPCS) code U0005 and follow new coding instructions, which were also released last Thursday.

High throughput technologies enable increased testing capacity using an automated process that can administrate over 200 tests per day.

CMS stated that it doubled the Medicare reimbursement rate for COVID-19 diagnostic tests done using the technology to incent greater COVID-19 testing capacity.

The new rates effective at the start of next year “reflect the resource costs laboratories face for completing COVID-19 diagnostic tests using high throughput technology in a timely fashion during the Public Health Emergency,” the agency said in the latest announcement.

However, the new Medicare reimbursement rates are still well below those paid by private insurers. A study recently published in the Journal of General Internal Medicine found that the mean charge for COVID-19 diagnostic testing was about $144.

The most common facility type was independent laboratories (performed 49.7 percent of all tests), with an average charge of $140.41, followed by hospital outpatient settings (performed 34.5 percent of all tests), with an average charge of $168.87.

In a statement on the new Medicare reimbursement policy, the American Clinical Laboratory Association (ACLA) said the lower rates “won’t address the root causes of delayed turnaround times.”

“We’re concerned this policy could create a domino effect where patient access to testing is severely reduced,” Julie Khani, ACLA president, said in the statement. “Turnaround time is driven largely by fluctuations in demand and access to critical supplies. As states across the country experience a surge in new cases, the global demand for testing supplies remains high.”

Major clinical laboratory organizations are currently within the two-calendar day timeframe, at least for now.

Quest Diagnostic reported that, as of October 12, 2020, COVID-19 diagnostic testing was complete within one to two days for priority patients and two days for all patients. PCR testing done by LabCorp is typically done in less than day, according to the company’s website.

Hospitals have also worked to increase testing capacity and efficiency within their own laboratories since the start of the pandemic.

But as Khani pointed out, laboratories continue to face supply shortages that could impact COVID-19 testing turnaround times. Just recently, the Association for Molecular Pathology found that testing platforms, testing kits, reagents, laboratory consumables, and PPE are still in short supply, as well as qualified professionals.

About 85 percent of respondents said they have experienced shortages in staff, with 66 percent noting shortages in qualified clinical laboratory technologists/scientists and 53 percent experiencing shortages in clinical laboratory technicians.