CMS Establishes Laboratory Demonstration Project

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  • July 15, 2011
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The Centers for Medicare & Medicaid Services (CMS) announced July 5 in the Federal Register an opportunity for hospital-based and independent laboratories to participate in the Treatment of Certain Complex Diagnostic Laboratory Tests Demonstration.

Under the demonstration, as mandated by Section 3113 of the Affordable Care Act, separate payment may be made to laboratories performing tests billed with a date of service that would, under standard Medicare rules, be bundled into the payment to the hospital or critical access hospital (CAH). The purpose of the demonstration—which will last two years and includes a $100 million payment limit—is to assess the impact of such a payment arrangement on access to care, quality of care, health outcomes, and expenditures.
Eligible organizations are laboratories that perform complex diagnostic laboratory test with respect to a specimen collected from an individual during a period in which the individual is a patient of a hospital or CAH, if the test is performed after such period of hospitalization and if Medicare would not otherwise have made separate payment to the laboratory for that test.
A “complex diagnostic laboratory test” is defined as diagnostic laboratory test:
(A) that is an analysis of gene protein expression, topographic genotyping, or a cancer chemotherapy sensitivity assay;
(B) that is determined by the secretary to be a laboratory test for which there is not an alternative test having equivalent performance characteristics;
(C) which is billed using a HCPCS Level II code other than a not otherwise classified (NOC) code under such coding system;
(D) which is approved or cleared by the Food and Drug Administration (FDA) or is covered under title XVIII of the Social Security Act; and
(E) is described in section 1861(s)(3) of the Social Security Act.
Interested, eligible laboratories may obtain a temporary code for tests currently billed using a NOC code but that would meet the criteria for a complex diagnostic laboratory test. Supporting information to request a temporary code is due to CMS by Aug. 1. The purpose of the August deadline is to allow CMS time to determine whether the test meets the criteria for a complex clinical laboratory test, and to determine appropriate payment amounts for tests paid under the demonstration. Payment under the demonstration will begin Jan. 1, 2012.
A fact sheet and other information on the Treatment of Certain Complex Diagnostic Laboratory Tests Demonstration may be found on the CMS website.

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