Host of recent COVID-19 testing rules seek to complicate reimbursement

October 19, 2020

Throughout the COVID-19 Public Health Emergency, Vachette has served as an invaluable resource to our laboratory clients as we’ve kept them abreast of and helped successfully navigate the myriad reimbursement issues surrounding reimbursement for this crucial service. However, we’ve recently seen a host of new rules from CMS that seemed specifically designed to greatly complicate COVID-19 testing reimbursement moving forward.

After initially offering healthy reimbursement rates and lowering most roadblocks to encourage widespread availability of COVID-19 testing, CMS now appears to be tightening the reins on spending with new rules ostensibly designed to prevent fraud and abuse – and you can bet commercial payers will soon gladly follow suit.

In August, CMS released an Interim Final Rule (IFR) that both set limits on the number of COVID-19 tests that could be performed on a patient without a practitioner’s order and imposed monetary penalties for failing to report test results to HHS or a local health authority within 24 hours of the results being known.

  • Monetary penalties for not reporting results: Lab and POC testing providers must report new COVID-19 test results daily to their local or state health authority. Failure to comply with these requirements will subject providers to penalties of $1,000 for the first day/$500 for any additional days of non-compliance.
  • One test rule: This IFR also imposed a “one-test rule,” which explains that Medicare will only cover one COVID-19 diagnostic test and one of each other related diagnostic test (e.g. influenza/respiratory) without a qualified practitioner order. Additional tests will only be covered with a practitioner’s order, as medically necessary.

While these rules certainly serve to create new administrative challenges in ensuring you’re maximizing and protecting COVID-19 test revenue, it wasn’t necessarily hard to envision CMS would eventually seek to implement barriers to reduce what it views as instances of unnecessary testing. But we’re even more concerned by the agency now making moves to reduce reimbursement rates, while at the same time creating what we strongly believe will be an administrative nightmare in the process. 

On Oct. 15, CMS announced it intends to reduce the payment rate for COVID-19 tests performed using high-throughput technology from $100 to $75. However, labs may receive an additional $25 add-on payment to make itself whole if a lab:

  • Completes the test in two calendar days or less, and
  • Completes the majority of their COVID-19 diagnostic tests that use high-throughput technology in two calendar days or less for all of their patients (not just their Medicare patients) in the previous month.

It doesn’t require expert analysis to deduce this new rule goes hand-in-hand with the requirement to report test results quickly. Now, labs who fail to do so will not only face monetary penalties, but will receive a 25% reduction to their reimbursement rate to boot! And how exactly will CMS administer these add-on payments, which come with a new HCPCS code (U0005)? Your guess is as good as ours, but you can be sure commercial payers are salivating at that opportunity to implement this guidance into their own policies.

In short, now more than ever is the time for labs and other entities performing COVID-19 testing seek out strategic partnerships that can help them both navigate this shifting landscape AND maximize their reimbursements while doing so. Vachette has worked to build a network of clients and collaborators throughout the PHE that have allowed us to get out in front of these developments and build consensus on best practices to not only survive, but thrive at a time when those less prepared have struggled or ceased to do business altogether.

If you would like to discuss any of the issues mentioned above, or review how Vachette can assist your lab during this challenging time, please reach out to Dustin Suntheimer, Vice President of Sales and Marketing, at 734-972-2693, or at dsuntheimer@vachettepathology.com.

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