Reimbursement: New Medicare 2021 Pay Rule Penalizes Labs for Long COVID-19 Test Turnaround Times

Publication Date: Oct 26, 2020

On October 15, CMS announced new Medicare reimbursement policies designed to cut turnaround time and speed up processing of COVID-19 tests.

Medicare Reimbursement of COVID-19 Testing

When the public health emergency first began, Medicare paid labs $51 per test for high throughput COVID-19 diagnostic tests. Recognizing that the rate was inadequate, CMS raised it to $100 per test. However, new effective January 1, 2021, labs will only qualify for the $100 payment rate if they complete the test within two calendar days of collecting the specimen. Labs that take longer than two days will be paid only $75 per test.

The Way It Works

Technically, the amended Administrative Ruling (CMS 2020-1-R2) lowers the base rate payment amount for COVID-19 diagnostic tests run on high throughput technology to $75. However, labs will qualify for a $25 add-on payment if:

They complete the billed test in two calendar days or less; AND
They complete the majority of high throughput COVID-19 tests in two calendar days or less for all of their patients (not just their Medicare patients) in the previous month.

Labs that qualify will use HCPCS code U0005 to bill for the add-on payment. Labs that fail to meet the add-on payment criteria will receive only the $75 base pay rate.

The new payment policy “supports faster high throughput testing, which will allow patients and physicians to act quickly and decisively with respect to treatment decisions, physical isolation, and contact tracing,” notes CMS Administrator Seema Verma in the announcement press release.

Takeaway

Really, CMS? Nobody disagrees that rapid COVID-19 testing is essential and that turnaround times are far too long. However, the implication that a 25 percent add-on payment will get labs to speed up the process is ill-informed and even downright insulting. Further adding insult to the injury is that what’s being presented as an incentive is actually a price cut, just the same way it would be if your boss cut your salary by 25 percent and offered you the opportunity to earn back the reduction amount as a “raise” by working faster.

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This article originally appeared in G2 Intelligence, National Intelligence Report, October 2020

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