COVID Tests Worth Less in 2021

Medicare Payment for COVID-19 Tests

Labs soon will have to work harder to merit the maximum allowed Medicare payment for high-throughput tests used to detect SARS-CoV-2. The Centers for Medicare & Medicaid Services (CMS) has been paying labs $100 per test — up from $51 — since a public health emergency (PHE) for COVID-19 was declared on March 18, 2020. The PHE continues, but the agency recently announced new requirements tied to reimbursement for these diagnostic tests.

CMS Reassesses Lab Test Fee

Beginning on Jan. 1, 2021, Medicare will pay labs $75 per diagnostic test run on high-throughput technology. Labs can then earn an additional $25 ($100 total) per test if they work efficiently.

To earn the $25 add-on payment, labs must complete tests for detecting SARS-CoV-2 — the virus that causes COVID-19 — within two calendar days of when the specimens are collected. Here’s the catch: Labs must do this for “the majority” (51 percent) of these tests for all their patients (not just Medicare patients) in the previous month to merit the add-on payment.

In an April 14, 2020 administrative ruling (CMS-2020-01-R), CMS established HCPCS Level II codes U0003 and U0004 to identify molecular genomic clinical diagnostic laboratory tests (CDLTs) that make use of high-throughput technology. The agency also assessed the services described by these codes to be $100 per test. Over the past few months, however, CMS has had a change of heart.

“When test results are not produced within 2 calendar days of the specimen being collected, their value diminishes,” CMS states in an amended administrative ruling (CMS-2020-1-R2).

Coding CDLTs for COVID-19 in 2021

The modified payment of $75 will be for tests appropriately reported with U0003 or U0004. To receive the add-on payment for these CDLTs for COVID-19 under the Medicare Part B Clinical Laboratory Fee Schedule (CLFS), labs will also report new HCPCS Level II code U0005.

How will labs determine whether they qualify for the add-on payment? CMS provides this example in the amended ruling:

A laboratory is submitting a claim to Medicare for a CDLT performed on high-throughput technology for the detection of SARS-CoV-2 or the diagnosis of the virus that causes COVID-19 using HCPCS code U0003 with a line date of service of May 15, 2021. This laboratory would assess its performance based on CDLTs making use of high-throughput technologies for the detection of SARS-CoV-2 or the diagnosis of the virus that causes COVID-19 completed during the calendar month (April 1, 2021 – April 30, 2021) that precedes the month identified by the CDLT line date of service (May 2021). If the laboratory completed a total of 1,000 of those CDLTs (including all such tests for non-Medicare patients) in April, and 490 of them had been completed within 2 calendar days of the specimen being collected, the laboratory would have a 49 percent test timeliness completion rate and may not bill for the $25 add-on payment as represented by HCPCS code U0005.

Be Prepared for an Audit

If audited, labs will be asked to produce documentation of timeliness based on their performance in the month preceding the month identified by the line date of service for U0003 or U0004. This could be a problem, however, because CMS established exceptions for certain COVID-19 tests from the Medicare ordering and documentation requirements during the PHE.

“However,” CMS states in the amended ruling, “in the event of an audit or medical review, laboratories will need to produce documentation to support the add-on payment established in the Ruling, even if such documentation would not otherwise be required under Medicare regulations.”

Medicare Administrative Contractors are instructed in the amended ruling to monitor claims data for potential abuse, conduct medical review of claims, and refer cases of suspected fraud or abuse for further investigation. As such, it will be essential for labs to retain all records necessary to demonstrate compliance with the new requirements for billing U0005.

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