September 20, 2023 | Uncertainty surrounds the reimbursement landscape for multiplex testing and mandates and guidance issued as part of the COVID-19 public health emergency (PHE) only added a fresh dose of complications, according to Nicholas Halzack, director of health policy at Roche Diagnostics. Many of the challenges stem from the lack of granularity and uniformity in how CPT codes are structured across disease areas and the unintended consequences of alternative coding pathways that have exploded in popularity. Reimbursement strategies need to consider the emerging role being played by lab benefit managers (LBMs) as well as the need to bridge evidence gaps with studies reflective of coverage trends.
Halzack was speaking on the final day of the recent Next Generation Dx Summit, where multiple talks on the coverage and reimbursement topic highlighted the need to strategize as early as possible in product development and to consider the differing outcome timeframes of interest to commercial and government payers. Private insurers as a rule are not looking to achieve public health benefit but are “very focused on individual patient care and in particular lower volume, higher-cost tests,” he says.
Medicare administrative contractors made their first forays into addressing coverage for multiplex testing in the spring of 2018 through a couple of local coverage determinations (LCDs) specific to the respiratory and gastrointestinal (GI) space, Halzack begins. Smaller respiratory panels were covered, but only in acute care settings or when ordered by an infectious disease specialist. Panels of six or more GI pathogens were entirely non-covered, although there was some coverage for smaller panels and up to 11 pathogens was allowed if C. diff was in the mix and 12 or more for critically ill or immunocompromised patients.
Through the rest of 2018 and into 2019, some of the major private payers started adopting similar coverage policies limiting respiratory panel testing to high-risk patients and GI panel testing to immunocompromised patients, he continues. In general, coverage was particularly restrictive in primary care outpatient settings.
Payers’ definition of clinical utility at the time did not include public health benefit, such as reducing the spread of an infection or improving antimicrobial stewardship, Halzack notes. Payers and federal agencies like the Centers for Disease Control and Prevention pointed to each other as the responsible party for dealing with population-sized medical problems.
In the commercial market, public health benefits are difficult to quantify and often go unseen since they take time to accrue, says Halzack. Given that the average beneficiary turn is somewhere in the five-year range, private payers therefore tend to think of care outcomes that are achievable within 18 to 36 months.
Before the pandemic, payers were also thinking about the clinical utility of each of the pathogens on the panel, Halzack says, meaning their positive impact on patient care management. Lacking that, many payers were more comfortable taking a step-wise testing approach where multiplexing was limited to smaller targeted panels.
Peer-reviewed evidence was key to making the case for coverage, says Halzack, and those studies typically didn’t provide the kind of details about positive outcomes payers wanted—e.g., more frequent physician follow-up with patients who tested positive. That is a “relatively clear target” to aim for when developing new evidence, he adds.
In fact, some of the initial coverage policies issued in 2018 and 2019 reference a handful of studies where the participants mirrored the populations—presenting in acute care settings and immunocompromised or otherwise high-risk patients—who eventually received coverage, continues Halzack. The lack of coverage for average-risk patients in non-acute settings “was just due to a lack of evidence in those types of populations and settings.”
Part of the problem was multiplex codes during that period were being billed in increasingly higher volume, he says. Payers responded by creating noncoverage determinations for some of the larger panels and putting the burden of proof on manufacturers of multiplex technologies that their tests deserved coverage.
The COVID coverage mandate introduced by the CARES Act specifically references in vitro diagnostic (IVD) products for the detection of SARS-CoV-2 but does not make clear if that applies to multiplex tests that have a SARS-CoV-2 component, says Halzack. “Anecdotally we heard that tests that looked [for COVID] either way were both receiving coverage for the most part, but that mandate was handled ... differently in the commercial and the Medicare markets.”
Commercial payers typically let their existing, limited-coverage policies stand while creating separate parallel policies specific to COVID testing, inclusive of multiplex assays because of a couple “more granular” codes that were introduced, Halzack says. But some uncertainty remained around the respiratory panels that did not include SARS-CoV-2.
Medicare, meanwhile, attempted to address this evolution in coverage through a single policy, he continues. The Molecular Diagnostic Services Program (MolDX), the largest of three partnering intermediaries for Medicare, made several edits to the associated billing article of the multiplex respiratory LCD.
Specifically, in November 2020, it added “Service 81” referring to independent labs as covered settings.
Later, in February 2022, a retroactive revision allowed many more places of service but specified that coverage would be received only during the PHE, Halzack points out.
But then two months later, MolDX decided to retire those old LCDs and move to a more foundational LCD addressing syndromic panels across disease areas. “That’s where we are right now, at least in the Medicare system,” he says.
It’s a long and comprehensive coverage document that differentiates between what is deemed a targeted versus an expanded panel, “the magic number being five 5 pathogens” as a function of the available CPT codes, says Halzack. For the smaller targeted panels, there is variation in coverage criteria based on the health status of the patient (immunocompromised versus immunocompetent) and requirements related to peer-reviewed evidence and ruling out that single pathogen testing isn’t necessary.
Overall, coverage for the targeted panels is better than in the original LCD with the major restrictions regarding place-of-service and ordering specialist no longer present. Coverage for the expanded panels is available at some level across disease areas but varies widely, he says, noting that panels of six or more can now sometimes receive coverage under limited circumstances.
Coverage policies for multiplex tests in the commercial space vary in their level of restrictiveness. On one end of the spectrum is Anthem, whose policies largely resemble what existed in 2018, says Halzack. Anthem has also stuck with the separate parallel policy for respiratory viral panel testing, although it does not apply to multiplex testing in the COVID space.
Aetna’s coverage structure for panel testing looks more like the foundational LCDs favored by MolDX, he continues, with the criteria across disease areas housed in a single, lengthy policy document. Some coverage is available for smaller respiratory panels, inclusive of COVID-19, as well as larger respiratory panels for patients in certain circumstances. Coverage is also available for GI panels with up to 11 targets and, for critically ill or immunocompromised patients, more than 11.
Interestingly, no mention is made of targeted panels that don’t include SARS-CoV-2 testing. It therefore remains to be seen how claims for CPT code 87631—the code providers would normally use to report a test panel that detects three to five types of pathogens—are going to play out in different jurisdictions, says Halzack.
The better-case scenario, from a payment standpoint, is available through Centene. Smaller, targeted panels are covered for both immunocompetent and immunocompromised patients, it is clear how these health statuses are defined, and the payer provides high-level criteria about impacting clinical management test performance characteristics, he says. Panels testing for six or more pathogens are covered in critical care settings for immunocompromised patients but also for some immunocompetent patients.
LBMs are increasingly being used by commercial payers to navigate this new and expanding world of multiplex testing, reports Halzack. Small regional health plans have been especially active in partnering with LBMs for claims processing and clinical guidelines development and coverage policies.
“It’s not just an expansion of LBMs into new geographies or into partnerships with new payers,” he adds. The scope of their responsibilities is enlarging beyond lower-volume, high-cost tests. CareSource, for example, is now in a partnership specific to automating claims handling for routine lab testing, and EmblemHealth is in another to handle high-volume, low-cost laboratory tests—a category into which multiplex tests would certainly fall.
So how do LBMs think about multiplex coverage? In the respiratory space at eviCore Healthcare, coverage is typically available for targeted panels, and six or more panels are covered for pediatric or immunocompromised high-risk patients. In a prior version of the policy dated Jan. 1, 2023, all the respiratory panels were subjected to the most-restrictive coverage that is now only relegated to the larger panels, points out Halzack.
Avalon, another LBM, generally offers coverage for larger GI panels for patients who are immunocompromised. Coverage is also available for smaller, targeted respiratory panels, but there is blanket noncoverage for panels of six or more pathogens, he says.
LBMs “might create a little more uniformity across the market, [but] there is still not a lot of uniformity between [them] in terms of how they’re thinking about these multiplex technologies,” says Halzack. “It’s just a really interesting and evolving space right now.”
Alternative Coding Pathways
In the GI and respiratory space, one fundamental problem is that the CPT Category I codes for pathology and laboratory procedures don’t get specific about which multiple pathogens are being tested, Halzack says, even while payers are looking for the clinical utility case for each of the included pathogens. This had made payers “a little uncertain as to what they’re actually covering.”
The code set itself lacks uniformity in terms of how these codes are structured across disease areas, he continues. “In the respiratory and GI space you see some tiered panel codes that look very similar to each other. There is nothing that exists similarly in the STI [sexually transmitted infections] space. In the central nervous system space, there are panel codes available for very large panels but not for smaller panels.”
Two alternative coding pathways have emerged—Proprietary Laboratory Analysis (PLA) codes and Z-codes of the DEX Diagnostic Exchange—to bring matters into focus. But due to the nature of the codes, says Halzack, they have created other coverage challenges that are completely unrelated to the clinical utility of multiplex testing.
With PLA codes and Z-codes, the evidentiary requirements are much lower than with CPT codes, leading some payers to view them as suboptimal codes indicative of a lesser-quality test, he says. While the Medicare program has been quite receptive to accepting and covering PLA codes, in the commercial space it’s a “mixed bag” with movement in the direction of more openly evaluating the codes. Medicaid programs, for their part, either don’t accept PLA codes for processing at all or view them like Category 3 CPT codes referring to new and experimental technologies that are generally not covered.
The Z-codes are a fixture within the MolDX program and solve for the granularity issue but can be burdensome for manufacturers to obtain, Halzack says. Unlike CPT category 1 and PLA codes, descriptive information about Z-codes isn’t readily available.
DEX requires that each person or entity looking to use a Z-code apply for it one by one, which is meant to control for the fact that a lab may modify a test, says Halzack. The timeframes to get those Z-codes can also vary, especially for laboratory developed tests and IVDs.
In terms of the gaps in respiratory multiplex coverage, Halzack highlights the role of new evidence development. He advises that studies be designed to incorporate elements that are influencing some of the coverage splits, for example by enrolling average-risk patients in nonacute settings and looking at the impact on the clinical management of patients for individual pathogens on a panel—including changes not often incorporated into peer-reviewed studies that can be cross-referenced with clinical guidelines.
An outcome such as “change in antibiotic prescription rate” could alternately be viewed as good if it goes up, because it suggests taking an action towards treatment, or down, because it means the clinical utility of the test is to avoid inappropriate prescribing, he says. Either approach could be critical to obtaining coverage provided that the short- and mid-term cost of care outcomes are emphasized when dealing with commercial payers.
On the statutory and legislative front, Halzack starts with Medicare’s new technology add-on payment (NTAP) pathway that could apply to innovative multiplex testing. But the financial incentives for diagnostics are “not particularly persuasive” given that the circumstances under which a hospital or provider would receive the add-on payment are rare and the dollar amount associated with it is relatively low. The payments also go away after a couple of years, he adds.
In its new Transitional Coverage for Emerging Technologies (TCET) pathway, the Centers for Medicare & Medicaid Services (CMS) is prioritizing applicants based on the potential to impact the greatest number of individuals on Medicare. “I think a lot of stakeholders are going to be looking for clarity as to what exactly that means, but I do wonder whether there might be an angle there to talk about public health benefit and population health outcomes,” says Halzack.
The Center for Medicare and Medicaid Innovation, an agency of CMS, “continues to be an intriguing agency where if you have a pilot showing really beneficial outcomes outlined specifically in statute then it has authority to expand coverage throughout the Medicare program,” he says. Perhaps one of these pilots could achieve desirable public health outcomes and in doing so drive broader market access and better reimbursement for multiplex testing, he muses.
Further guidance on the meaning of “reasonable and necessary” in the context of public health is also needed, says Halzack. Here, too, the value and impact of multiplex testing during the COVID pandemic might be retroactively analyzed, leading to more “permanent positive impact throughout the Medicare system” to fit within that definition. “Back in 2018, the clinical utility case of quarantine on its own was not seen as something that was valid but maybe that has changed since it was such a key part of the pandemic response.”
Medicare coverage policy updates used to happen once a year or every few years prior to the pandemic, Halzack notes. But the pace has quickened and the regularly occurring changes are important to monitor. The federal health insurance program itself might be due for a major overhaul, he adds, noting that this year marks the 20th anniversary of the Medicare Modernization Act that established prescription drug coverage and the modern Medicare Advantage program.