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Biotechnol Healthc. 2010 Winter; 7(4): 16–20.
PMCID: PMC3008387

Seeking a Coding Solution For Molecular Tests

Managing the estimated 1,700 molecular tests now on the market is impossible without a unique CPT code for each test. What’s at stake? The future of personalized medicine.
BOB CARLSON, Senior Correspondent

Health insurance companies have been complaining for years about not being able to manage the utilization of molecular tests or to track what they pay for them. Payer claims systems are designed to use the Current Procedural Terminology (CPT) codes, but for most molecular tests, there still are no unique CPT codes.

It’s not just the payers who are vexed by this curious gap in a system that handles millions of transactions daily. Clinical laboratories, pathologists, pharmacy benefit managers (PBMs), test developers and vendors, and outcomes researchers, among others, are all being adversely affected in one way or another.

“It’s a problem for everybody,” says Jeffrey A. Kant, MD, PhD, professor of pathology and human genetics and director of the Division of Molecular Diagnostics, Department of Pathology, at the University of Pittsburgh Medical Center (UPMC).

When a requisition for, say, a KRAS test comes in, the laboratory director may code as follows:

  • Perform lysis of colorectal tumor tissue cells in paraffin sections (CPT 83907)
  • Extract highly purified nucleic acid (CPT 83891)
  • Perform eight nucleic acid probes (CPT 83896x8)
  • Perform eight allele-specific PCR reactions (CPT83898x8)
  • Interpret test results and write a report (CPT83912)

Laboratory coding and reimbursement personnel then program these CPT codes in their electronic claims submission system, and the stack is submitted to health plans for each KRAS test. Nothing about this code stack says that a KRAS test was performed. Moreover, one or more of the CPT codes could appear on claims for other molecular tests. The payer claims system simply multiplies the negotiated reimbursement amount for each CPT code by the units of service for each code and adds it all to get a claims total. But another laboratory might develop a different CPT code stack for a KRAS test and get a different claims total. The Table on page 17 shows yet a third possible code stack and reimbursement amount for a KRAS test.

One molecular test, three labs, three different CPT code stacks, three payment amounts

“Different labs don’t code the same assay the same way,” Kant explains. “You have to select the proper codes for the method that you’re using, and that method could vary. For KRAS, you might do it by some sort of direct hybridization assay or by a sequencing method, or by another method. That’s pretty confusing to a payer.”

This happens thousands of times daily for scores of molecular tests, and it drives payers crazy. The whole point of a KRAS test, for example, is to determine if metastatic colorectal tumor tissue has certain mutations in the KRAS gene. Multiple trials have shown that patients with these mutations (between a third and half of all patients tested) do not benefit from the epidermal growth factor receptor (EGFR) blockers cetuximab (Erbitux) or panitumumab (Vectibix), but some patients with a “wild-type” KRAS gene do. Because it’s impossible to identify a code stack as a KRAS test, it’s also impossible for a payer to make sure that a course of cetuximab or panitumumab is not inadvertently prescribed if a patient tests positive for KRAS mutations.

“Over 2,000 tests fit into this category of molecular testing, and that number is growing at a rate of about a thousand per year,” said Lee Newcomer, MD, MHA, senior vice president of oncology at United Healthcare, in a conversation for a recent Biotechnology Healthcare article1. “The hard fact of the matter is we can’t identify them because of current flaws in CPT coding — the coding system simply doesn’t allow it.”

Catching up with reality

CPT codes work fine for thousands of procedures and tests — and have since 1966, when the American Medical Association published the first CPT code set. This code set shows a unique CPT code for every medical and surgical procedure and clinical laboratory test in use but not for any molecular tests.

Molecular testing is the fastest-growing segment of the clinical laboratory industry. According to Stephanie Murg, managing director of Washington G-2 Reports, the market has more than doubled in just 5 years, growing from an estimated $3 billion in 2005 to $6.2 billion in 2010. Molecular testing includes scores of assays for genetic conditions, such as cystic fibrosis, factor V Leiden, fragile X syndrome, and Huntington’s disease, and more genetic tests are being developed as the correlations among genes, gene mutations, and human diseases are validated. Pharmacogenetic tests and pharmacogenomic assays, such as AmpliChip CYP450, HER2, BRCA, Oncotype DX, and PathFinder TG, are generating more interest these days because these are the tests that make personalized medicine possible. Reimbursement for KRAS tests usually is less than $500, but other molecular diagnostic tests can cost several thousand dollars.

PBMs also want to make sure that the correct therapy is being dispensed when a prescription is filled. But PBMs rely on health plan data, which is close to nonexistent when it comes to therapies indicated by pharmacogenetic and pharmacogenomic tests.

“The increase in molecular diagnostics, not just over the last few years, but also the anticipated increase in volume for these tests, really warrants more transparency,” says Felix W. Frueh, PhD, vice president of personalized medicine research and development at Medco Health Solutions, and formerly associate director for genomics at the U.S. Food and Drug Administration. “I think the only way to create that transparency is by being able to identify what the test is, precisely, and CPT codes really haven’t been catching up with this new reality.”

It makes sense to prescribe a therapy only if pharmacogenetic and pharmacogenomic test results show that a patient will respond to the therapy. But does this personalized medicine approach actually result in better long-term outcomes? And which tests are most cost-effective?

“As we move to evidence-based medicine, and as our system becomes more oriented to outcomes research, there’s interest in tracking the contributions molecular testing is making and the positive impact those tests are having on outcomes,” says David Mongillo, vice president for policy and medical affairs at the American Clinical Laboratory Association (ACLA).

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“The coding system really should be transformed so that someone can look at the information in that system and say OK, this patient has received this particular test for this reason,” says Felix W. Frueh, PhD. “Currently, that’s just not possible.”

Flexibility with granularity

“It’s clear that the CPT stacking method for molecular diagnostics has outlived its usefulness. We have to come up with a more specific system,” says Mark S. Synovec, MD, who co-chairs the CPT Molecular Pathology Workgroup with Claudia Bonnell, BlueCross BlueShield Association, and Andrea McGuire, MD, America’s Health Insurance Plans (AHIP).

Synovec, a pathologist with the Topeka Pathology Group in Kansas, got involved in the AMA CPT coding effort in the early 1990s as a member of the Professional Affairs Committee of the College of American Pathologists, and is now a member of the AMA CPT Editorial Panel and co-chair of the CPT Molecular Pathology Workgroup. The work-group includes organizations, such as the College of American Pathologists, American Society of Clinical Pathology, ACLA, AHIP, Centers for Medicare and Medicaid Services, BlueCross BlueShield Association, American College of Medical Genetics, Association for Molecular Pathology (AMP) and laboratory equipment manufacturers, among others. Synovec emphasizes that the workgroup is not a standing committee — its sole purpose is to address the problems associated with code stacking and to build a comprehensive base of codes for molecular tests. That effort actually goes back to 2005, when the first generation of the CPT Molecular Pathology Work-group launched two-digit alphanumeric modifiers to identify which gene and, therefore, which test, was represented by a stack of CPT codes. Payers were part of that first work-group, but “we obviously didn’t have the right payer representation,” says Synovec. Payers did not accept the alphanumeric modifiers and neither did anyone else.

“We never said we were going to solve it for forever,” Synovec recalls. “We knew it was an evolving technology, and we didn’t want to stifle that by setting a specific code for any one test because we didn’t know if that test today would be the same one tomorrow. So we tried to allow some flexibility along with the granularity, and it just never matured.”

Recent news stories report that the current CPT Molecular Pathology Workgroup, convened in 2009, is considering a two-tier coding system proposed by AMP. Frequently ordered tests, such as KRAS, warfarin response, and cystic fibrosis, would be in one tier, and tests that analyze multiple exons within a gene would be in another tier. Synovec declines to comment on these reports, citing the confidentiality agreement that all AMA CPT Editorial Panel participants sign.

“We’re trying to create a system within the traditional construct of CPT that will allow the granularity necessary for communication by the provider to the payer and also for researchers to get the information they need and that won’t be abused,” Synovec states. “The goal of the work-group is to have new CPT codes available on Jan. 1, 2012.”

A lot of uncertainty

Uncertainty and waste are unintended — but costly — consequences of the absence of unique CPT codes for molecular tests.

“Putting code stacks together is extra work, and it’s not always clear-cut what to use,” says UPMC’s Kant, who chairs the AMP Economic Affairs Committee and is a member of the CPT Molecular Pathology Work-group. “There’s a lot of uncertainty in how to utilize a specific code, because there’s just a two-line descriptor in the CPT book — and if you’re lucky, a parenthetical explanation that follows it. Sometimes those parentheticals aren’t completely clear.”

Other uncertainties plague laboratories and payers. Kant cites the example of a test for neurofibromatosis (NF) type 1, which involves amplifying and sequencing 58 possible regions in the NF1 gene. “When a payer sees 58 units of service, the assumption is it’s an error or someone’s trying to pull a fast one,” Kant explains. “That has led to Medically Unlikely Edits, or MUEs, a program CMS started about four years ago, because CMS doesn’t want to pay for clerical errors or abuse.”

Laboratories can waste time trying to get paid by resubmitting the same claim with, say, 48 units of service, then with 38, 28, and so on, until the units of service don’t trip the payer’s MUE trigger. If enough laboratories complain, a payer may reprogram its claims system to accept suspected MUE CPT code stacks if they are accompanied by an International Classification of Diseases Revision 9 (ICD-9) code. But linking CPT codes to ICD-9 codes means that other legitimate claims that use the same CPT codes are inadvertently denied. Kant says it usually takes an appointment with the plan medical director to try to untangle the whole thing. “It’s a huge waste.”

Billions of dollars in fines

Confusion about which CPT codes to submit can cost a lot more than an unreimbursed claim, according to Charles B. Root, PhD, founder and president of CodeMap, the reimbursement and coding consulting company in Schaumburg, Ill. CodeMap maintains a massive database of Medicare fees, coverage policies, and payer edits, which are automatic computer queries designed to weed out incorrect, noncovered, and erroneous claims. CodeMap also advises clients on how to apply for a new CPT code and how to negotiate a Medicare payment for that code. Those are two critical steps for developers and vendors of new molecular tests, because Medicare determines the reimbursement amounts for all new CPT codes, and private payer reimbursement is typically a percentage (e.g., 105 percent) of the Medicare payment.

“We try to guide people through that process, and we’ve been doing that for 15 years,” says Root, who also is the coding consultant for the American Association of Clinical Chemistry and serves on its government relations committee. “It’s an art, not a science, and we’re responsible for at least half the new CPT codes in the IVD [in vitro diagnostics] area that get published.”

Different laboratories use different methodologies to perform the same test, resulting in different but legitimate stacks of CPT codes on their claim forms. Even laboratories using the same methodology to perform the same test may not necessarily submit an identical stack of CPT codes. If Medicare is the payer, though, the consequences can include stiff civil fines, even if there is no intent to defraud.

“You have to guess or you have to make assumptions, and that’s always dangerous because when you take money from the government, you’re subject to onerous fraud and abuse rules,” says Root. “The worst is the False Claims Act, which says that if the government pays you more than you’re entitled to [which could occur if you chose the wrong code set], they can bring civil fines of $11,000 per CPT code. Suddenly you can have millions of dollars in fines, and all they have to show is that you received money you weren’t entitled to.”

Root adds that billions of dollars in fines already have been extracted from the laboratory industry. The new Patient Protection and Affordable Care Act provides for a new industry of Recovery Audit Contractors, or RACs, who are paid a contingency fee based on the alleged overpayments they recover for Medicare.

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Developing new CPT codes is “an art, not a science,” says Charles B. Root, PhD, founder and president of CodeMap.

A unique, unprecedented issue

“Our goal is to complement the CPT process,” asserts Matthew B. Zubiller, vice president of Advanced Diagnostics Management (ADM), launched in 2009 by McKesson Health Solutions. “We believe that the CPT plays an important role in healthcare today, but there really needs to be a code in place to identify the diagnostic test in order to measure and manage as well as help to build evidence for that test.”

The ADM strategy acknowledges that the CPT and Healthcare Common Procedure Coding System (HCPCS) codes used by Medicare are actually codified in law by the 1996 Health Insurance Portability and Accountability Act. In contrast to these reimbursement codes, the five-digit alphanumeric “Z-codes” proposed by ADM are intended to provide the kind of information that CPT and HCPCS codes don’t.

“Think of our code not as a reimbursement code, think of our code as a code key,” says Zubiller — a code key that unlocks information about the specific molecular test, the laboratory that performed it, the provider who ordered it, the clinical context for the test, and, eventually, the test results themselves. In other words, information that will become increasingly important for payers, clinicians, consumers, laboratories, PBMs, and researchers as molecular tests continue to gobble up more of the diagnostics pie. McKesson’s ADM system is paired with InterQual Imaging and Molecular Diagnostics Criteria that provide point-of-care decision support for hundreds of molecular diagnostic tests now on the market. Medical appropriateness is likely to get even more attention as the number of molecular tests increases.

“The real problem may be the dearth of professional practice guidelines that define the appropriate targets for genetic tests,” says Michael S. Watson, PhD, executive director of the American College of Medical Genetics. He points out the obvious difficulty of using the five-digit CPT format to code the estimated 23,000 genes in the human genome plus mutations.

“The size of the human genome, and the fact that one gene could have multiple types of tests related to it, creates a unique, unprecedented issue for CPT,” Synovec acknowledges. “We’re trying to create a system within the traditional construct of CPT that will allow the granularity necessary for communication by the provider to the payer and also for researchers to get the information they need. We’re not cataloging the entire genome by CPT, because at this point the majority of the genome has no clinical relevance.”

Right now, about a dozen tests comprise 80 percent of all molecular tests being ordered. But that may change sooner rather than later. “Just wait a few years for a whole-genome analysis to completely change the testing paradigm yet again,” Watson cautions.

Some sort of symbiotic partnership between the CPT system and the ADM system may be what is needed to tame the molecular testing genie. For now, every molecular test is a reminder of the inadequacies of the current CPT system.

A perennial problem

One oddity of the CPT system is that it ignores some of the most successful molecular diagnostic tests in use today — Oncotype DX, BRACAnalysis, and Pathfinder TG are processed only by Genomic Health, Myriad Genetics, and RedPath Integrated Pathology, respectively.

“In CPT, we differentiate by the procedure, not by who’s doing the procedure,” Synovec maintains. “We stay away from proprietary names. We talk about medically useful tests and describe what the test is.”

Oncotype DX may be a leading example of a laboratory-developed, Clinical Laboratory Improvement Amendments-regulated pharmacogenomic test that has succeeded in the clinic without a CPT code. Genomic Health developed the Oncotype DX assay, documented its clinical validity and utility, and educated the oncology and payer communities about the test’s value in identifying early-stage breast cancer patients who are likely to benefit from chemotherapy. The company negotiated with individual insurers for a price that reflects the value of the test rather than the sum of the individual steps required to perform the assay.

“A very difficult process, quite frankly,” says Root. “Oncotype DX was the first one to successfully employ this, especially with Medicare. But it’s getting much more difficult now to get a negotiated price out of payers.”

It’s not hard to guess what that difficulty may mean for personalized medicine, for the molecular diagnostics industry, and for the millions of Americans whose very lives may depend on these new technologies.

Sure, there are turf battles between laboratories and pathologists. Of course, there are disagreements about whether Medicare should implement its laboratory fee schedule or its physician fee schedule for molecular tests. And there’s no question that the CPT Molecular Pathology Workgroup is up against a formidable challenge in adapting the 44-year-old, five-digit CPT coding system to a rapidly evolving technology that could soon make the transition to whole genome sequencing. But in the end, the reason it has taken years for CPT codes to catch up with molecular diagnostics may simply be that the way CPT codes are evaluated and assigned hasn’t changed.

“This is a perennial problem,” says Root. “The coding and the payment systems typically lag technology by at least five years.”


1. Carlson B. Payers try new approaches to manage molecular diagnostics. Biotechnol Healthcare. 2010;7(3):26–30. [PMC free article] [PubMed]

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