Genetic testing
Rapid advancements in testing for various genetic disorders and diseases have led to exponential growth in genetic testing services. As a result of the rapid development of these services, lagging government regulation in this area and high charges associated with many of these services, genetic testing has become a ripe area for potential improper billing by some health care providers and laboratories. These ever-changing conditions and advancements in medicine also have made it challenging for payors to develop and update medical and payment policies for these services.
In October 2023, the U.S. Food and Drug Administration (FDA) published proposed new rules regarding laboratory-developed tests (LDTs), which if implemented will help curtail some potentially improper billing practices related to genetic testing by treating LDTs like other FDA- regulated devices. Should these rules be adopted, and given that they will not be fully implemented until April 1, 2028, there's an opportunity to enhance existing payment policies. Considering the medical reasons and cost-efficiencies associated with specific genetic testing, such as for certain types of cancer or advanced maternal age pregnancies, payors should continue to consider further developing existing payment policies for genetic testing to help reduce potentially improper billing for these services.
One interim recommendation is the development of payment policies for genetic testing requiring the use of “Z-Codes” for genetic tests. Medicare has required the use of Z-Codes since 2015. Use of those codes allows a payor to request additional information as a corresponding claims data element, thus enabling the payor to assess the circumstances of the lab testing services. Payors may also want to consider developing fee schedule payments for genetic testing services that are tied to specific Z-Codes, similar to what Medicare and many payors have implemented regarding payments for urine drug testing and the use of “G-Codes.” Development of payment policies consistent with this payment structure will help disincentivize potential improper billing for these services while helping to ensure that legitimate services are being paid.
Durable medical equipment
DME billing is a second target area for close review. One potential billing risk is that certain providers and DME suppliers may be engaging in tactics to circumvent payors’ bundled payment policies. Payors should be vigilant anytime a provider or DME supplier bills for equipment using a Place of Service Code 12 or 13 as that may be an indication of improper unbundling. Some DME suppliers have developed a strategy where they will ship the equipment to the member ahead of providing services to the member (such as a surgery at a surgery center) and then instruct the member to bring the equipment to the facility where they are obtaining services. Had the facility supplied the equipment directly to the member, no separate payment would be issued for the equipment as it would be subject to most payors’ bundled payment policies. Braces used to stabilize a patient’s knee or elbow are common examples. However, there is concern that this type of scheme could proliferate to where providers will use the same unbundling tactic by applying it to more expensive equipment or other high-cost items. Thus, payors should be aware of situations where providers bill for codes that make it appear that the device is being directly provided to a member at their home or assisted-living facility, but then there is a separate claim for surgical care billed by the same or a separate provider during or around the same time period.
A second example of where some providers are potentially improperly billing for DME is through the use of unspecified CPT codes. Some providers have started to make use of ambiguity in payor contracts or reimbursement policies by billing for these services under catch-all provisions that apply to any services being billed using unspecified CPT codes. Payors are advised to scrutinize these types of claims as some of these providers may be using incorrect codes to bill for the equipment. In a number of instances, the equipment should be billed using codes specified by the medical device manufacturer, and approved by the FDA, as opposed to using general catch-all unspecified service CPT codes that have elevated payment rates.
Another way to support correct billing in this instance is to develop a medical policy specifying that any time an unspecified service or equipment CPT/HCPCS code is billed, such as E1399, the claim will be pended or otherwise soft denied pending receipt of additional information from the provider. The additional information will help the payor assess what DME is being provided and whether the provider was using the correct code. Payors may also want to create pre- or post-claim audit teams specifically trained in the review of DME claims as there can be specialized issues regarding the technology underlying these services.
Medical spas
Some medical spas have faced issues around questionable services and/or potentially improper medical billing. For example, some medical spas have “hired” a doctor to serve as the spa’s medical director for the purpose of using the doctor’s in-network status with a payor and billing credentials to bill for services. In such instances, the doctor is often not on-site at the spa and not seeing members, but then the spa bills for services to the payor as if the doctor is rendering the care. A new twist on this arrangement is the spa using the doctor’s credentials to prescribe high-cost drugs such as various weight loss medications. This then allows the spa to bill and obtain payment for the services despite there being no connection with the member. Effective use of claims data analysis is one way to help identify these potentially improper billing arrangements.
