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COVID-19 Surge Presents Labs With Turnaround Challenges, Complicating CMS Billing

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NEW YORK – With COVID-19 case numbers rising and the Centers for Medicare and Medicaid Services set to implement new reimbursement rules at the start of the year, managing SARS-CoV-2 test turnaround times will become even more urgent for clinical laboratories.

Last month, CMS announced that as of January 1, 2021, it would pay its highest reimbursement rate, $100 per test, to labs that complete high-throughput testing within two calendar days of specimen collection. For tests taking longer than two days, the reimbursement rate will be $75 per test.

Additionally, to receive the higher rate, a lab must have completed the majority of its total high-throughput SARS-CoV-2 testing from the previous month in two days or less, not just its testing for Medicare patients. High-throughput testing means testing done on a platform capable of processing at least 200 specimens a day.

After struggling to ramp up capacity in the early days of the pandemic, most labs managed to bring SARS-CoV-2 test turnaround times to within two days by the end of the summer. Rising case numbers could lead to longer turnaround times heading into the new year, however.

Last week, for instance, Quest Diagnostics announced that due to the nationwide surge in COVID-19 cases, the average turnaround time for its SARS-CoV-2 molecular testing had increased to "slightly more" than two days. It added that while it was working to increase capacity, it was facing increased constraints on supplies, "including test kits and reagents on high-end platforms as well as pipettes and other goods needed to provide testing."

This means labs will need to keep a close eye on turnaround, both to maximize reimbursement and to avoid having to pay back fees for tests they mistakenly billed at the $100 rate, said Dustin Suntheimer, vice president of sales and marketing at consulting firm Vachette Pathology.

"Absolutely, labs are thinking about this, because you have to think that is a 25 percent hit right off the top" for tests receiving only the $75 payment, he said. "If you think about losing 25 percent of your income, you're going to mitigate that  loss."

He noted that Vachette's clients and prospective clients have begun closely tracking their turnaround times in anticipation of the new CMS rules, adding that most of the high-complexity labs that would be performing molecular SARS-CoV-2 testing have lab information systems that can collect and deliver this kind of information fairly easily.

For labs, it's not just a matter of maximizing the number of tests they are able to bill at $100, but also making sure they aren't overbilling CMS for tests.

"We have to figure out how to correctly do the calculations required and make sure they are billed correctly and defensible from an audit perspective," said Kyle Fetter, executive vice president and general manager of diagnostic services at revenue cycle management and lab informatics firm Xifin.

Suntheimer said that Vachette has been advising its clients to put money aside to pay back to CMS in case of overbilling. He said labs could also be required to make penalty and interest payments.

With regard to avoiding the latter, Ann Lambrix, VP of client relations at Vachette, said that documentation of good practices for tracking turnaround time and billing is key.

"What I'm recommending is that [a lab] is documenting what [its] process is in terms of how is [it] validating that you are within that two-day turnaround," she said. "If you are making a good-faith effort to monitor your system and bill appropriately, that protects you, I believe, against potential false claims" charges.

On the other hand, labs that incorrectly bill CMS for SARS-CoV-2 tests at the two-day rate and don't have documentation of practices in place to avoid this kind of overbilling "are at potential risk of false claims and penalties," Lambrix said.

Vachette CEO Mick Raich said that this issue will likely be exacerbated by the fact that many relatively low volume labs have dramatically expanded their testing to address the pandemic.

"Labs that used to do 1,000 tests per week are now doing 20,000 tests per week and struggling not only with turnaround time but also with getting correct information and demographics and billing," he said, adding that he expected that 2021 would be "the year of the lab audit."

The biggest challenge for labs, Lambrix said, would be timely tracking of when they were either hitting or missing the two-day turnaround requirement and adjusting their billing appropriately.

If a lab's "volume picks up this week and they aren't getting turnaround time within two days, how do they report that and stop" billing at the $100 rate, she said. "And then when they get back to that turnaround, how do you make sure you [bill at the $100 rate]. That's the biggest administrative challenge that we are looking at."

Such swings can come on rapidly, Fetter said. "Labs can end up getting hit with [high test] volume pretty quickly depending on the region they are in, and that [turnaround] number can swing down from 80 to 100 percent [in two days] to around 40 percent pretty quickly."

Fetter said that while turnaround challenges might in theory provide an incentive for labs to process tests for CMS beneficiaries first, labs were unlikely to act on it.

"No lab has told us they would change any part of their clinical practice because of this payment schema," he said. "They are just more cognizant right now of where their overall percentages are."

Robert Boorstein, medical director at Brooklyn-based Lenco Diagnostic Laboratory, said the CMS payment rules could influence the way a lab prioritized samples, particularly in the case of tests that were being done for screening rather than diagnostic purposes.

"Samples that are not diagnostic samples, that are commercial screening, bulk samples, they may have a lower revenue level than the CMS rates, and so, those would probably go to the back of the queue," he said.

Boorstein said, though, that he believed labs were by and large expanding capacity to handle the increasing test volumes while maintaining a two-day or better turnaround time.

"We've been sort of level for about three months in terms of test volumes, and we are up between 20 percent and 50 percent this month, but we are adding capacity as we speak," he said.

He added that turnaround time wasn't just an issue from the perspective of the CMS reimbursement policy.

"A lot of our customers are very turnaround-time sensitive, and we work very hard to meet those turnaround times," he said. "I think people who have slow turnaround times, I'm not sure that is going to be competitive."

Vachette's Raich said, though, that he expected labs would still take on increased SARS-CoV-2 test volumes even if it meant they might not be able to hit the two-day turnaround target required for the higher CMS payment.

"They are still making money," at $75 per test, he said.

Fetter and the Vachette team said they expect private payors to follow CMS' lead in establishing a two-tier reimbursement policy in the near future.

Lambrix suggested that one reason private payors haven't yet put such a system in place is that they need to build out the capacity on their end to distinguish between and pay for tests done with rapid or slow turnaround. It is likely coming, though, she said.

"By Q2 [2021] most payors will probably have some similar requirement," she said. 

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