Genetic Testing Claims Are Complex and Ripe for Fraud, But Solutions Exist

March 26, 2021

In recent years, genetic testing has become much more common. Researchers in 2018 estimated that there were 75,000 genetic tests on the market with as many as ten new tests launching each day. Genetic tests now exist for prenatal and newborn screening, as well as various types of cancers, cardiac conditions such as cardiomyopathy and arrhythmia, and neurological diseases like epilepsy.

According to Global Market Insights, the worldwide market for genetic testing in 2019 was valued at more than $13 billion with North America representing 58% of the market. Market research experts expect growth in the genetic testing market to continue. This is consistent with what we’ve seen in our HMS client data. Based on analysis, we’ve seen spending on genetic testing increase more than 30% year-over-year.

Health plans are grappling with the complexities of genetic testing claims

While genetic testing is beneficial for many individuals, it is also costly. In 2018, for example, Medicare paid over $1 billion for genetic tests – an amount that is more than double what Medicare paid in 2015 for these diagnostics.

Healthcare payers must decide which types of genetic testing to cover, but that’s not the only challenge. Many organizations also struggle with the knowledge and skills needed to handle these types of claims.

Although tens of thousands of genetic tests are currently available, only a few hundred Current Procedural Terminology (CPT) codes exist for genetic testing. In addition, genetic tests are often coded inconsistently. For example, one lab may code a genetic test for Down syndrome one way, while another lab may use a completely different code when testing for the same condition. In many instances, labs and providers end up billing genetic tests under miscellaneous codes.

All of these factors make it more difficult to identify the genetic tests being performed, which may result in incorrect payment of claims.

Fraud, waste and abuse are also concerns with genetic testing

The American Bar Association has discovered a variety of ways that labs and providers fraudulently bill for genetic tests. Two examples are upcoding and unbundling. With upcoding, labs or providers bill for a more expensive genetic test than they actually administered to the patient. With unbundling, labs or providers separate out various components of a single genetic test, in hopes of higher reimbursements.

Another type of fraud is linked to medical service organizations (MSOs) that act as an intermediary between labs and referring physicians. Genetic testing labs may use MSOs with physician investors or physician managers to launder kickbacks.

In some cases, labs will unilaterally waive or lower patient copays for genetic testing without legitimately considering the patient’s financial condition. Alternatively, providers may have a standing order to administer genetic tests to all patients, claiming that it is the standard of care.

The unfortunate reality is that despite health plan utilization management and preauthorization programs, incorrect payment of genetic test claims persists.

The good news is that payment accuracy for genetic testing can be improved

HMS’ Genetic Testing solution uses claims-filtering algorithms and payment integrity rules to ensure that health plans don’t overpay for genetic test claims. The first step is to identify which genetic tests have been performed by leveraging claim rules.

The second step is to determine which coverage and payment policies should be applied to genetic testing claims. Payment integrity rules identify experimental, investigational and unproven tests and categories for the majority of recovery opportunities. These rules also detect inappropriate code combinations and incorrectly billed volumes.

Edits can be analyzed and identified pre- and/or post-pay. There’s no need for medical record reviews, since the solution focuses on reviewing payment policies, rather than medical necessity or clinical appropriateness.

If you’d like to learn more about how to prevent genetic testing fraud, waste, and abuse through payment analytics, feel free to contact us.

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