In December 2013, the Centers for Medicare and Medicaid Services (CMS) issued new guidance through their National Correct Coding Initiative (NCCI) Policy Manual(1) (the “NCCI Manual”) which could potentially change how laboratories account for the quantity of FISH probes being billed to CMS. A newly added Section K, Paragraph 9 of this NCCI Manual directly contradicts previously issued guidance contained in Section J, Paragraph 6 regarding FISH testing, which had established the current practice of reporting and billing one unit of service for each reportable FISH probe(2).
According to the new guideline in Paragraph K(9), if two or more probes are applied to a sample at the same time, a single unit of service is now to be billed, because the two probes are part of the same “probe staining procedure”. Although the definition of “probe staining” is not clear, it appears that the intent is for CMS to reimburse $0 for a second, third or fourth FISH probe contained in the same vial of reagent. As the cost of reagents from suppliers is substantially greater when multiple probes are incorporated, and technician and pathologist time required to perform and analyze the test is significantly greater when multiple probes are involved, the effect of this guideline may be significant.
NeoGenomics, like other laboratory providers, may choose not to perform FISH tests if costs exceed expenses. NeoGenomics believes FISH is an essential test to inform whether cancer is present, define the subtype of cancer, and help Physicians decide how to effectively treat the disease. In the event the language in Paragraph K(9) of the NCCI Manual is not clarified or changed, it would have the effect of reducing reimbursement for a number of the Company’s FISH testing services that utilize multiple FISH probes that have been pre-mixed into the same vial of reagents by the probe suppliers.
NeoGenomics has contacted Medicare carriers, FISH probe suppliers, reimbursement experts and competitors in the lab industry and there seems to be universal confusion about this new guideline. This new policy was promulgated to the laboratory industry without any notice or the opportunity to comment and has an effective date of January 1, 2014. NeoGenomics has written a letter to the Medical Director of the NCCI as well as CMS, requesting clarification on this issue, but it has not yet received a response or had an opportunity to discuss its concerns. A copy of this letter can be accessed through the homepage of the Company’s website by clicking on the button marked “Recent NCCI Edits”.
While the Company is hopeful that the NCCI and CMS will reconsider their current stance, in the event they do not, NeoGenomics would be forced to alter its billing practices for the affected FISH testing services or reconsider providing the affected FISH services for Medicare beneficiaries.
While NeoGenomics is still determining the impacts that might arise from a negative resolution of the NCCI FISH edit issue, the Company preliminarily estimates that it may result in a reduction of approximately $3 million of revenue and $0.04 per share of net income for the full year 2014, and a reduction of approximately $1.0 million of revenue and $0.02 per share of net income for the first quarter of 2014.
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