CCLA Sues HHS Over Noncoverage of Lab Tests, Seeks to Have LCDs Declared Invalid

Frustrated by Medicare local coverage determinations (LCDs) that effectively deny patients access to critical lab testing, the California Clinical Laboratory Association (CCLA) on April 18 filed a lawsuit against the Department of Health and Human Services (HHS) asking that the LCD process and resulting LCDs for laboratory services to be declared invalid and unenforceable. The complaint, filed by the law firm of Hooper, Lundy, and Bookman PC (Los Angeles) on behalf of CCLA and an unnamed beneficiary, charges that Medicare Administrative Contractors (MACs) continue to develop and apply local coverage determinations that result in policies depriving Medicare beneficiaries throughout the country of critically necessary clinical laboratory services. “Today the MACs have a stranglehold on critical, cost-effective innovation,” said Patric Hooper, the lead attorney for the plaintiffs. “Our clients have been forced to bring this lawsuit to bring attention to, and change, the current practice of denying coverage for critically important laboratory services. In addition, the same private insurers who make determinations for Medicare also make determinations in the private market, so the entire population is affected.” At issue are coverage policies determined by MACs without any input from the laboratory community or beneficiaries. In many instances, lab tests are denied Medicare coverage despite the fact that the secretary of HHS has failed to implement the statutory procedures required by Congress, including a procedure for ensuring the nationwide consistency of LCDs and a mediation process mandated by law. What’s more, HHS has “eliminated any meaningful opportunity for laboratories to administratively appeal the application of LCDs to laboratory services by unilaterally suspending the only portion of the administrative appeal process where laboratories have any chance of avoiding the impact of adverse LCDs and of obtaining coverage for a laboratory service for a particular Medicare claim,” said the complaint, filed in federal district court in the District of Columbia. Of particular concern are noncoverage policies issued by MACs of molecular diagnostic tests, which often enable personalized protocols for treatments such as chemotherapy. The complaint cites as an example an LCD issued by Palmetto in 2011 that “drastically changed the standard for coverage for molecular diagnostic testing. Under this LCD . . . Palmetto confirmed its policy of ‘noncoverage’ for all molecular diagnostic tests that are not explicitly covered by [a national coverage decision], an LCD, or a coverage article published by Palmetto.” In January 2014, despite opposition from lab and pathology groups, Palmetto finalized another LCD stating that unless a molecular diagnostic test is expressly approved by Palmetto, it would be considered noncovered. Drug Testing Also an Issue The laboratory LCDs are not limited to molecular diagnostic testing. The complaint notes that MACs have issued LCDs affecting coverage of laboratory testing for drugs of abuse, with different MACs developing different coverage policies for such testing over the objections of various stakeholders. Proposed LCDs will disallow coverage for all confirmatory drug testing ordered by physicians by patients suspected of using illicit drugs if a less comprehensive screening test showed negative results for drug use. “This policy is inconsistent with the standard of medical practice regarding testing for drug abuse,” says the complaint. “In fact, the Florida and Kentucky Attorneys General and the Florida Assistant Secretary for Substance Abuse and Mental Health submitted comments to the MAC about how destructive this policy will be to efforts throughout the country to stop the abuse of heroin and prescription pain medications and ‘would walk the science back’ by disallowing confirmatory quantitative laboratory testing of the less sensitive cup tests as physicians attempt to combat prescription drug abuse.” Specifically, the complaint asserts that:

• »Congress has unlawfully delegated regulatory power to the MACs;
• »MACs have implemented Medicare policy without following required federal rulemaking requirements;
• »MACs have developed LCDs based on criteria they are not permitted to consider;
• »HHS has eliminated any meaningful opportunity for laboratories to administratively appeal the application of LCDs and has not established a required mediation process; and
• »HHS has not developed an effective plan to evaluate the appropriateness of adopting new LCDs nationally, as noted recently by the Office of Inspector General.

Takeaway: A lawsuit filed by the California Clinical Laboratory Association seeks to have the current system used by Medicare contractors to develop local coverage policies declared invalid.