What impact will regulatory changes have on laboratory adherence to guidelines and reimbursement for claims?
This spring, the laboratory industry is facing a season of change. Four significant regulatory factors are on the horizon, which will influence how labs adhere to FDA, PAMA and CLIA guidelines and navigate reimbursement claims. Failure to anticipate and prepare for the upcoming changes in the next 12 to 36 months could create a challenging environment that may impact their financial stability.
Z-Codes
Update (8/1/24) Providers can register tests for Phase 2 of UnitedHealthcare's DEX Z-Codes® for molecular diagnostic test services. This is part of their updated Molecular Pathology Reimbursement Policy, effective June 1, 2024, for commercial plans. From November 1, 2024, these tests must include the appropriate Z-Code on claims for reimbursement. Early registration is encouraged to address potential issues and complete the necessary assessments. Providers should register via the DEX® Diagnostics Exchange at dexzcodes.com. For more information, contact DEX customer service or UnitedHealthcare through their provider portal.
Update (6/1/24) UnitedHealthcare began the implementation of the Z-code requirement on June 1, 2024.
Update (4/1/24) UnitedHealthcare has postponed the rollout of the new mandate for utilizing Z-codes in reimbursement processes. The revised implementation date is now set for June 1, 2024, giving providers extra time to integrate Z-codes into their claims procedures.
Beginning April 1, 2024, UnitedHealthcare commercial plans will require DEX Z-Codes® for certain molecular diagnostic test services on facility and professional claims for the claims to be considered for reimbursement. Z-codes are alphanumeric codes that facilitate the identification and tracking of specific laboratory tests. In the context of molecular tests, Z-Codes help standardize the reporting and billing processes, ensuring that each test is accurately documented in medical records and claims. The Z-code requirement will initially cover 133 CPT codes and 104 proprietary laboratory analysis codes.
Providing the Z-Code on a claim, with the appropriate CPT code may reduce the administrative burden labs may encounter surrounding billing for these services as it provides a means for the payer to automate adjudication or pre-authorization of claims. To ensure the seamless integration of these tests into the healthcare system, it is vital to assign Z-Codes appropriately.
FDA's Proposed Rules on LDTs
Industry experts anticipate that the Food and Drug Administration (FDA) is on track to finalize the proposed rule on laboratory-developed tests (LDTs) as early as April 2024.
Christine Bump, the Principal and Founder of Penn Avenue Law and Policy, recently shared insights on LinkedIn regarding Senator Bill Cassidy, M.D. (R-LA), who, as the ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, has raised concerns about the FDA's proposed rule to regulate LDTs as medical devices. Senator Cassidy recognizes the potential negative impact on innovation and patient care, highlighting that the proposed rule may exceed the FDA's statutory authority. He is seeking feedback from stakeholders on how to modernize current regulations in a way that supports both innovation and patient safety.
Bump stated, "(The) FDA needs to publish the final rule by April to request resources under the next cycle of user fee legislation. However, lawsuits to stop the implementation and enforcement of the final rule are forthcoming. These actions by Congress may be steps toward serious re-consideration of the VALID Act. VALID was not ideal, but the IVCT framework and grandfather clauses present fewer burdens to laboratories than FDA’s planned regulation."
Furthermore, Rep. Cathy McMorris Rodgers (R-WA), Chair of the House Energy and Commerce Committee, along with Rep. Brett Guthrie (R-KY), Chair of the Subcommittee on Health, held a hearing on March 21. The hearing, titled “Exploring Strategies for Regulating Diagnostic Tests and the Ramifications of the FDA’s Proposed Rule,” delve into the implications of the FDA's proposed rule. They have expressed concerns that the FDA's proposed regulation is based on questionable legal, economic, and public health arguments, surpassing the boundaries of existing legislative suggestions and potentially jeopardizing access to crucial diagnostic tests. Read Chair Rodgers opening remarks on the regulation of diagnostic tests here.
SALSA
The American Clinical Laboratory Association (ACLA) is calling on Congress to pass SALSA in 2024, emphasizing the urgent need for legislative action. The Saving Access to Laboratory Services Act (SALSA) is focused on tackling enduring obstacles in the laboratory services sector, promoting fair access to vital diagnostic services, and advancing public health initiatives across the United States.
Background: In 2014, Congress passed PAMA to reform the Medicare CLFS to a single national fee schedule based on private payor rates. However, the initial data collection failed to include key laboratory segments, leading to significant payment reductions for labs. Despite four interventions to prevent further cuts, up to 15% reductions are set to resume in 2025. Steep Medicare cuts for clinical laboratory services risk reducing patient access to testing, hindering innovation, and undermining the nation's critical testing capacity and infrastructure essential for healthcare needs, especially in underserved communities.
A key solution to address PAMA challenges and ensure stable Medicare reimbursement is for CMS to gather precise data from all lab sectors serving Medicare patients. Implementation of SALSA would usher in essential reforms to Medicare rate-setting for commonly requested laboratory services, delivering crucial, life-saving insights for healthcare providers and patients on a daily basis. Importantly, it would also support innovation in the next generation of diagnostics and preserve the nation’s clinical laboratory infrastructure. Targeted sampling, as outlined by SALSA, will help collect accurate private market data for sustainable Medicare rates. Failure to intervene this year could force labs nationwide to make difficult choices, potentially limiting patient services and hindering investments in cutting-edge diagnostic technologies. If Congress fails to act by January 1, 2025, the next round of Medicare cuts would impact about 800 commonly ordered tests, resulting in additional cuts of up to 15 percent for tests that are widely used to screen and manage many serious and chronic diseases. Long-term reimbursement stability for lab services is essential to fortify clinical infrastructure, ensuring patient access, public health protection, and driving innovation in diagnostics for a healthier tomorrow. Take action at stoplabcuts.org
CLIA Reform
A reform initiative is currently in progress to modernize and enhance the Clinical Laboratory Improvement Amendments of 1988 (CLIA). Spearheaded by the Clinical Laboratory Improvement Advisory Committee (CLIAC) and overseen by the Division of Laboratory Services at the federal Centers for Disease Control and Prevention (CDC), this effort aims to bring about crucial updates and improvements to laboratory standards and practices.
The Centers for Medicare & Medicaid Services (CMS) and the CDC released a final rule updating CLIA fees and clarifying CLIA regulations. This final rule, published at the end of 2023 and went into effect on January 27, will specifically:
- Establish a process for long-term funding for the CLIA program by implementing a biennial two-phase escalation of CLIA fees.
- Revamp the histocompatibility and personnel guidelines within CLIA to address antiquated regulations and incorporate technological advancements.*
- Revise the guidelines on alternative sanctions, such as civil fines, corrective action plans, targeted corrections, and state monitoring, to allow for the enforcement of penalties against non-compliant labs operating under Certificates of Waiver. This update broadens the scope of sanctions beyond just revocation, suspension, or limitations of a lab's CLIA certificate.
Furthermore, updated guidance was issued to Medicare Administrative Contractors (MACs) to notify them of newly FDA-approved CLIA-waived tests. As these tests hit the market post-approval, CMS must inform its contractors promptly to ensure accurate claims processing, with a total of 104 newly added waived complexity tests.
*The histocompatibility and personnel requirements are scheduled to take effect on December 28, 2024.
Next steps
Ensuring compliance with regulatory mandates and industry standards is crucial for laboratories to succeed in today's healthcare environment. With a mix of regulatory mandates, accreditation criteria, and data privacy regulations, a comprehensive approach to compliance management is essential.
“Effectively navigating through the evolving landscape of regulatory requirements demands a strategic approach from healthcare stakeholders," emphasized Tom Cronin, Senior Vice President of Revenue Cycle Strategy and Analytics. "At Quadax, our primary objective is to partner with our clients on changes impacting the claims reimbursement processes. By staying updated on regulatory changes, ensuring coding accuracy, and meeting documentation requirements, we proactively streamline reimbursement procedures, reduce the chances of claim denials, and optimize revenue streams. This ultimately ensures financial security while maintaining the highest standards of patient care."
If you find yourself grappling with the complexities of these regulatory challenges, get in touch. We can help you navigate these turbulent times.
