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Laboratories to receive less reimbursement from CMS if they are too slow

Ingrid Stiver Senior Manager, Health Research Institute, PwC US October 29, 2020

Starting Jan. 1, CMS will tie its reimbursement rate for diagnostic tests for SARS-CoV-2, the virus that causes COVID-19, to how quickly the laboratories return the results, paying a lower rate to those that take more than two calendar days.

On Oct. 15, CMS unveiled the new payment rate for laboratories that perform “high throughput COVID-19 diagnostic tests,” lowering the Medicare base payment from $100 per test to $75. In the amended rule, CMS also established a $25 add-on payment that can be billed, bringing the total payment for those tests back to $100, if two conditions are met. First, the test being billed must have been completed within two calendar days of the collection of the specimen. Second, 51% or more of the tests completed in the prior calendar month—tests for all patients, not just Medicare patients—must have been completed within two calendar days of the specimen being collected. 

In April, CMS increased the reimbursement rate for the tests to $100 from about $50. But as surges hit different parts of the US during the summer, shortages in testing supplies resulted in delays of up to seven days. The amended rule could motivate labs to avoid wait times for Medicare and non-Medicare patients.

“As America continues to grapple with the COVID-19 pandemic, prompt testing turnaround times are more important than ever,” CMS Administrator Seema Verma said in a statement announcing the amended rule. 

HRI impact analysis

Major laboratories are reporting wait times of one to two days (see here and here). This ruling will apply to those who bill CMS for the SARS-CoV-2 tests and are performing high-throughput testing that employs automated processing of more than 200 specimens a day. In addition to commercial laboratories, this could affect hospitals and health systems testing Medicare patients and performing in-house testing of more than 200 specimens a day using high-throughput technologies. 

The potential cut to reimbursement rates could come as COVID-19 cases reach a new peak. Researchers publishing in the Journal of Infectious Diseases examined seasonality data from 21 countries and found that seasonal coronaviruses (excluding SARS-CoV-2, which has not been around long enough for researchers to gather enough data to determine its seasonal pattern, if any) were prevalent in winter months in most temperate locations. (China and tropical places were exceptions.) The researchers also found that about half of cases of seasonal coronavirus infections happened during influenza season. Some labs may have trouble keeping pace if SARS-CoV-2 follows a similar seasonality. 

In its amended ruling, CMS states that tests completed within two days allow patients and physicians to make faster and better decisions about treatment, monitoring of symptoms and the need (or not) for isolation. The agency also points to more effective contact tracing, since less time will have passed and fewer people may be exposed. Fast turnaround times have been cited as critical to controlling outbreaks, and public health experts, virologists and other scientists have been calling for regulatory approval of affordable, rapid tests that prioritize speed and frequency and can be deployed on a mass scale.

The FDA has started to approve some rapid COVID-19 diagnostics as well as tests that don’t rely on the same reagents, potentially reducing supply shortages (see here and here), but it is unclear yet if they could meet the demand if infections increase.

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Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Ingrid Stiver

Senior Manager, Health Research Institute, PwC US

Erin McCallister

Senior Manager, Health Research Institute, PwC US

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