PAMA Reimbursement: CMS Explains How to Get ADLT Status for New Lab Tests
From - National Intelligence Report Although the 2018 market-based Clinical Laboratory Fee Schedule (CLFS) is officially in effect, implementation of the new PAMA Part B payment rules for lab tests remains… . . . read more
Although the 2018 market-based Clinical Laboratory Fee Schedule (CLFS) is officially in effect, implementation of the new PAMA Part B payment rules for lab tests remains a work in progress. On March 23, CMS filled in some of the missing details by issuing guidance for labs seeking ADLT status for newly developed tests.
What Are ADLTs
ADLTs, or Advanced Diagnostic Laboratory Tests, are a new classification of tests created by PAMA. To qualify as an ADLT, a new test must:
- Be covered under Medicare Part B;
- Be offered, furnished and sold only by the single lab that develops the test (or a successor owner); and
- Meet either of the following:
- Criterion A: The test is an analysis of multiple biomarkers of DNA, RNA or protein combined with a unique algorithm to yield a single patient-specific result predicting if a patient will develop a condition(s), how the patient will respond to a therapy(ies) or providing new clinical diagnostic information that cannot be obtained from another test(s); or
- Criterion B: The test receives FDA clearance or approval.
What’s At Stake
Securing ADLT status for a new test is a big deal because it means the test is subject to separate pricing rules. Specifically, prices of new ADLTs are the actual list charge for the test over the first three quarters that the test is available on the market. Labs are required to report the prices of their ADLTs during that period. When the initial period ends, CMS will use this pricing data to determine the test’s weighted median rate. If the list charge turns out to be more than 130% of the median, CMS can make the lab repay the difference.
By contrast, pricing of new tests that are not ADLTs is based on current CMS cross-walking or gap-filling methods:
- Cross-walking to an existing HCPCS code is used if CMS determines that the new test is comparable to an existing test, multiple existing test codes or a portion of an existing test code;
- Gap-filling is used for tests that have no existing HCPCS analog and is based not on a HCPCS code but charges for the test, routine discounts, resources required to perform the test, payment amount set by other payors, input from the clinical lab payment advisory committee and other factors.
What the Guidance Says
Labs must apply to CMS to secure ADLT status for their tests. The significance of the new guidance is that it explains the application process in specific detail.
Information Required to Apply for ADLT Status
First, the guidance specifies the information the lab must furnish to show that the test meets each element of the ADLT definition explained above:
Information Labs Must Submit to CMS to Get ADLT Approval
|Element of ADLT Definition
|Required Documentation to Prove
|Test is covered by Medicare Part B
|Evidence of coverage includes (but isn’t limited to):
|Test is furnished, sold and offered by single lab that develops (or successor)
|Information that may be required includes:
|Pricing and payment information
|Current coding payment info for test which may include (for all payors to which test is billed):
|Pricing information about new ADLTs to be paid at actual list charge over initial period
|If test hasn’t been paid under CLFS before Jan. 1, 2018:
|Test meets Criterion A (described above)
|Test meets Criterion B, i.e., has received FDA clearance or approval
|Documentation must include:
The lab must also agree to notify CMS of any changes to the information in the application it submits within 30 days of the change.
Additional Information Required If Lab Is Also Applying for Unique HCPCS Code
Each ADLT must have a “unique” HCPCS code, i.e., a code that describes that particular test and only that particular test. If the would-be ADLT does not have a unique HCPCS, the lab must tell CMS if it has applied (or is in the process of applying) to the AMA for a unique level 1 HCPCS code for the test along with the date and status of the application. If not, the lab must include in its ADLT application a request for CMS to assign the test a unique level II HCPCS code when and if it okays ADLT status for the test.
ADLT Application Process
CMS will make ADLT status determinations (and, if necessary, accompanying HCPCS code assignments) on a quarterly basis based on the following calendar:
Quarterly ADLT Application Filing Window
|Dates on which CMS must Receive ADLT Application
|Jan. 1 to Jan. 31
|April 1 to April 30
|July 1 to July 31
|Oct. 1 to Oct. 31
CMS’ review of ADLT applications will result in one of three possible outcomes:
- Approval of the test for ADLT status (which may include assignment of a unique level II HCPCS code;
- Denial of ADLT status for test via email notification to the lab contact person; or
- Request for lab to supply additional information.
Takeaway: Along with the new guidance, CMS published the actual form that labs are supposed to use when applying for ADLT status. The good news is that breezing through this overview and carefully following the instructions set out in the application should spare you the agony of having to read all 30 pages of the guidance.
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