The Future August 20 CAC - A Journalist's Time Travel

 Medicare Contractors Weigh Alzheimer Blood Tests in Multi-MAC Neurodegeneration CAC

Medicare contractors took a major step toward confronting one of the fastest-moving areas in laboratory medicine on August 20, convening a multi-contractor advisory committee on laboratory testing for neurodegenerative disease. The Noridian-led meeting focused heavily on blood-based biomarkers for Alzheimer disease, an area where commercial testing has advanced rapidly but Medicare coverage policy has remained conspicuously silent.

The session was chaired by Aparna Rajadhyaksha, MD, MBA, a Noridian medical director, and included participation from several MolDx-associated Medicare Administrative Contractors. Still, the meeting was not formally labeled a MolDx CAC, a distinction that mattered throughout the discussion. MolDx policies traditionally address DNA- and RNA-based molecular diagnostics, while the Alzheimer and Parkinson tests under discussion were protein biomarker assays, including phosphorylated tau, beta-amyloid ratios, neurofilament light chain, GFAP, and alpha-synuclein seed amplification assays.

The immediate question was not whether Medicare would cover any particular test. Dr. Rajadhyaksha made clear that the CAC was advisory and declined, when asked directly, to promise whether or when a local coverage determination would follow. But she also said the discussion had been “extremely helpful” in clarifying where the evidence is strong, where it remains uneven, and what future coverage criteria might need to address.

Seven Experts, One Central Question: Is the Field Ready?

The seven-member panel included dementia neurologists, geriatricians, laboratory medicine experts, and movement-disorder specialists: Elena Marquez, MD, University of California San Francisco; Jonathan Price, MD, Washington University in St. Louis; Meera Seshadri, MD, Mayo Clinic; Thomas Hwang, MD, University of Pennsylvania; Rachel Stein, MD, PhD, Duke University; Samuel Osei, MD, Emory University; and Katherine Bell, MD, University of Michigan.

The panelists broadly agreed that Alzheimer blood tests have moved beyond the “promising research tool” stage, at least in selected clinical settings. Several argued that high-performing plasma p-tau217-based assays, especially when combined with amyloid ratios or used in two-threshold algorithms, can meaningfully improve diagnostic workups for patients with objective cognitive impairment.

The consensus was more cautious for broad primary-care use. Panelists repeatedly distinguished symptomatic patients already undergoing dementia evaluation from asymptomatic screening. There was little support for Medicare coverage of population screening in cognitively normal older adults. But there was substantial support for using blood tests as triage tools to decide which patients need amyloid PET, CSF testing, or referral to a memory-disorders specialist.

Points of Contention and Surprise

One of the day’s sharper debates concerned whether a sufficiently accurate blood test could replace amyloid PET or CSF in some patients, rather than simply triage them. Several panelists said that for tests meeting high sensitivity and specificity thresholds, substitution is already reasonable in specialist settings. Others urged a transitional approach, with confirmatory PET or CSF still expected in ambiguous cases, before anti-amyloid therapy, or when test results do not fit the clinical picture.

A second point of contention was equity. Some panelists warned that limiting coverage to neurologists or memory clinics could worsen access, particularly in rural areas and underserved communities where specialist wait times are already long. Others countered that unrestricted ordering could lead to misinterpretation, overdiagnosis, and patient anxiety unless clinicians understand pretest probability, comorbidities, kidney disease effects, and the difference between Alzheimer pathology and clinical dementia.

A surprise was how frequently the discussion returned to operational details: specimen handling, assay cutoffs, intermediate zones, laboratory quality systems, and whether Medicare policies should be analyte-based, performance-based, or test-specific. The panelists appeared wary of both extremes: a policy so broad that weak tests ride along with strong ones, or so narrow that it freezes coverage around today’s first-generation assays.

Dr. Rajadhyaksha pressed the panelists with unusually detailed literature-based questions, asking how they would handle discordant plasma and PET findings, whether two-cutoff approaches should be expected, how often repeat testing would be clinically justified, and whether negative blood tests should redirect workups toward non-Alzheimer causes of cognitive impairment. Several panelists remarked that the questions reflected a close reading of the field rather than a generic Medicare coverage exercise.

Parkinson Testing Enters the Conversation

Although Alzheimer disease dominated the meeting, the CAC also addressed Parkinson disease and related synucleinopathies. Here the panel was more direct. Experts described CSF alpha-synuclein seed amplification testing as clinically ready, particularly because it detects underlying synuclein pathology more directly than current clinical diagnosis or dopamine transporter imaging.

Panelists emphasized that DATSCAN can support a diagnosis of parkinsonism but does not identify alpha-synuclein biology itself. By contrast, CSF alpha-synuclein assays were described as exceeding the current practical gold standard for confirming biological disease in appropriate patients. The strongest use cases included diagnostically uncertain Parkinson disease, atypical presentations, and differentiation of synucleinopathies from non-synuclein movement disorders.

By the end of the meeting, the direction of travel was clear even if the policy timetable was not. Medicare contractors appear to be preparing for a coverage framework for neurodegenerative biomarkers, likely beginning with symptomatic patients and specialist-informed diagnostic pathways. The unresolved question is how quickly coverage can catch up with a field that, in the view of many panelists, has already entered clinical medicine.

Comparing DPA 2023 blog and 2026 blog

CHAT GPT 5.5 

Here is the comparison I would use. My bottom line: the 2023 article is a technical reimbursement primer with some advocacy ambitions; the 2026 article is a much shorter but more institutional “we are organizing for battle” statement. It does look like a restart, but the restart is more about governance, policy capacity, and payer-facing evidence strategy than about new technical reimbursement theory.

The two articles

2023: Pathways to Direct Reimbursement for Slide Digitization and Digital Pathology/AI Technologies — posted 10/10/2023 by the DPA Reimbursement Task Force.

2026: Full Speed Ahead: Shaping the Future of Digital Pathology Reimbursement in 2026 — posted 04/06/2026 by the DPA Reimbursement Task Force.

https://digitalpathologyassociation.org/blog/author/id/66

High-level contrast

The 2023 article is reimbursement-mechanics heavy. It begins with the then-current and upcoming Category III slide digitization codes, explains why they had no payment rate, and warns that converting Category III codes to Category I codes may be neither fast nor necessarily sufficient. But it is not only about Category III codes. It also discusses CMS authority to price Category III codes, CMS divergence from AMA/RUC valuation, OPPS treatment of AI/software add-on codes, and the awkward interaction between AMA CPT codes and CMS-created HCPCS codes such as G0416 for prostate biopsies.

The 2026 article is much less a coding tutorial and much more a mobilization statement. It frames reimbursement as a critical barrier to adoption, states a DPA mission to “define and shape” reimbursement pathways, highlights a pending AI validation/implementation recommendation statement, and announces a strategic partnership with McDermott+ to monitor and influence CMS, AMA, Congress, and other policymakers.

What the 2023 article was really saying

The 2023 piece was not naïve about Category III codes. In fact, it was surprisingly nuanced. It acknowledged that 43 digital pathology Category III codes would soon exist, but that they had no national payment rates and that CMS and payer perception of the codes remained unclear. It emphasized that one rationale for using the codes was to demonstrate utilization, creating a data trail that might support eventual Category I coding.

But the article also warned against assuming that Category I conversion was the magic door. It noted that Category III codes can be paid locally, that Category I codes may not get better rates, and that CMS—not AMA—ultimately controls Medicare payment. The article gave examples where CMS created national payment rates for Category III codes, ignored or modified RUC recommendations, created alternative HCPCS Level II codes, or used OPPS payment logic for AI/software services.

So, while the headline emphasis was slide digitization Category III codes, the deeper message was broader: digital pathology should not put all its chips on the AMA/RUC/Category I pathway. CMS has multiple routes to recognition and payment, but stakeholders must bring data, valuation evidence, and advocacy.

What the 2026 article adds

The 2026 article does not revisit the technical coding map in detail. Instead, it shifts from “here are the possible payment pathways” to “here is the infrastructure we are building to act on them.”

Two elements stand out.

First, DPA links reimbursement to a formal evidence strategy. The article describes a pending recommendation statement for validation, implementation, and clinical application of AI in the clinical laboratory. DPA frames this as both a clinical roadmap and a payer-facing evidence base: labs need a standardized blueprint, and payers need proof that AI is safe, validated, and essential for patient care.

Second, DPA announces the McDermott+ partnership. This is the clearest difference from 2023. In 2023, the Task Force said it was initiating CMS engagement and would comment on CMS and MAC policies. In 2026, DPA says it has hired specialized Washington policy capacity to monitor CMS, AMA, Congress, and other decision-makers and to make DPA an “active and recognized stakeholder” through official comment and direct agency engagement.

That is a materially different posture. It is no longer just “the community should understand reimbursement pathways.” It is “DPA intends to shape them.”

Continuity between 2023 and 2026

There is real continuity. Both articles identify reimbursement as a barrier to adoption. Both are issued by the DPA Reimbursement Task Force. Both see CMS and AMA policy as central. Both argue that the digital pathology community must generate evidence and engage policymakers.

The 2023 article already closed with a pledge that DPA would contribute actively to reimbursement momentum and build a unified advocacy effort. The 2026 article essentially says: that effort now has a public mission statement, an AI-evidence publication strategy, and outside policy counsel.

Key difference in tone

The tone is strikingly different.

The 2023 tone is cautious, lawyerly, and explanatory. It is full of caveats: Category III may help, Category I may not be enough, CMS may or may not assign payment, stakeholders must provide data, and multiple pathways exist.

The 2026 tone is promotional and action-oriented. Phrases like “Full Speed Ahead,” “North Star,” “not a year for wait and see,” and “tangible, measurable progress” give the article the feel of an organizational relaunch. It is not a detailed policy memo; it is a signal to members and external stakeholders that DPA intends to be more visible and organized.

My clean blog-ready interpretation

A fair way to say it:

DPA’s October 2023 reimbursement article was a sophisticated but technical map of possible payment pathways, centered on the then-new Category III slide digitization codes but extending into CMS authority, HCPCS alternatives, OPPS software payment, and the need for valuation data. The April 2026 article is different. It is shorter, less technical, and more strategic. Rather than explaining the maze, it announces that DPA is building the machinery to navigate it: a validation/evidence statement for AI, a more explicit reimbursement mission, and a policy partnership with McDermott+ to engage CMS, AMA, Congress, and other decision-makers. In that sense, the 2026 piece reads less like a reimbursement tutorial and more like an organizational reboot.

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SIDEBAR - Membership

The Reimbursement Committee at DPA ( Membership, $100/yr) has 25 members and two co-chairs.  in sharp contrast to reimbursement or leadership councils at AMP or CAP, only a couple of the committee members are in academics rather than business.   (Businesses incllude Roche, Leica, Proscia, Hologic, Astrazeneca, etc).   

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CLAUDE OPUS 4.8

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Both pieces carry the same byline ("DPA Reimbursement Task Force") and invoke the same premise — reimbursement is the gating barrier to adoption — but they are different genres written for different purposes, and reading them back-to-back tells you more about strategy than either does alone.

At a glance

Dimension	Oct 2023	Apr 2026
Genre	Analytical white paper (≈6 pp + 6 figures)	Membership newsletter / advocacy update (≈1.5 pp)
Center of gravity	Slide digitization (WSI creation)	AI (algorithm validation)
Core argument	Contrarian: Cat I conversion is "neither necessary nor sufficient"; CMS has alternative pathways	Aspirational: momentum, evidence-building, professionalized advocacy
Flagship deliverable	Intellectual: a map of CMS payment mechanics	Two assets: a submitted AI validation statement + a McDermott+ retainer
Evidentiary style	No citations, dense with checkable regulatory specifics (code numbers, APCs, rulings, years)	Two academic citations (Zarella 2023, Bessen 2025), otherwise assertion
Posture	Teaching / diagnosing	Reassuring / recruiting
Tone	Dry, technical, skeptical of consensus	"Full Speed Ahead," "North Star," "Forward together"

What the 2023 piece actually was

It's easy to file the 2023 article as "the Cat III piece," but its intellectual core was heretical for its moment. 

The stakeholder consensus then — and arguably now — was that the path to payment ran through converting the 43 slide-digitization Category III add-on codes into Category I codes with RUC-set RVUs. The Task Force, in 2023, quietly argued the opposite: that Cat I is neither necessary nor sufficient, that conversion carries real downside (years-long timelines, the 5-year archive guillotine, the risk that a revised Cat I descriptor lands at the same payment with nothing added for digitization, contagion to the rest of the code family, and loss of MAC local-pricing flexibility), and that CMS has repeatedly paid by other routes entirely. It then enumerated those routes with specificity — national rates set directly on Cat III codes (glucose 0446–0448T, HeartFlow FFR 0503T, ERG 0509T); CMS overriding the RUC on valuation (the HeartFlow consolidation to a single Cat I code with a technical component crosswalked back to the 2018 OPPS price); OPPS "Software as a Service" add-on parity (Liver Multi-Scan, Optellum, QMRCP, with the 0648T/0649T standalone-plus-add-on structure as the template); and CMS bypassing the AMA altogether via HCPCS Level II (G0416 for prostate biopsy, whose missing add-on is the reason digitization can't be captured on those claims).

[BQ CMS had bypassed RUC several times, but reluctantly and these were viewed as rare high-touch workarounds awaiting a long term and scaleable fix]

That is a genuinely sophisticated document. It is teaching the reader how the machine works and, implicitly, telling them the field had picked the wrong lever.

What the 2026 piece is — and what's missing

The 2026 article contains none of that. The codes aren't mentioned. The payment mechanics aren't mentioned. The alternative-pathway thesis — the most original thing the Task Force had published — has vanished. 

In its place are two items, both of which are inputs rather than outcomes: a recommendation statement on AI validation that has been submitted (not published, "in the review phase"), [silverburg now published June] and a signed consulting engagement with McDermott+.

This is the analytically important point, and it's where I'd gently push on the defibrillator framing you offered. [I joked 2026 was like a defib ER reboot of 2023's motionless body.]   A defibrillator restarts the same rhythm. What 2026 shows is closer to a restart on a different operating model. The 2023 strategy was bottom-up code engineering — get the codes, generate utilization, feed CMS RUC-like cost data, exploit the alternative pathways. The 2026 strategy is top-down — build a clinical/evidentiary foundation (the AI statement) and buy sustained Washington access (the lobbying firm). Read uncharitably, the silence between them plus the quiet abandonment of the coding-mechanics narrative is a tacit concession that the 2023 approach didn't convert: the Cat III codes were, as you put it, ill-fated — no rates, unclear uptake — and the Task Force has stopped litigating that problem in public and pivoted to firmer ground.

So the heart did get jolted back, but it woke up with a new care plan. And notice what a victory lap would have looked like and isn't here: no new code, no payment rate secured, no LCD, no reported CMS response to the 2023 "meeting this quarter," no status update on the 43 codes. 

For a Task Force whose 2023 piece promised "regular updates" and imminent agency engagement, the 30-month flatline is itself data, and "Full Speed Ahead" is doing a lot of rhetorical work over a re-launch from roughly zero.

The drift that should matter to you specifically

The most consequential shift for a Leica/Danaher read is the migration of the subject: from digitization to AI. The 2023 piece is fundamentally about paying for the scan — the act of turning glass into a WSI, which is Leica's (Aperio's) core business and the unglamorous foundation everything else sits on. The 2026 flagship deliverable is about validating algorithms in the clinical lab — the application layer where Paige, PathAI, and the pure-play AI vendors live.

That drift tracks where FDA/CMS attention and perceived novelty-value have moved, and it's defensible as advocacy positioning. But it arguably leaves the boring, vendor-critical question — who pays for the digitization itself, and through what code structure — unaddressed in the very document that should own it. If you're advising Leica, the watch-item is whether the DPA's reimbursement agenda is quietly becoming an AI-reimbursement agenda, in which the scanner-and-platform layer is assumed rather than funded. A whole-slide image with no payment path doesn't become more reimbursable because an algorithm later reads it.

Net

There's real continuity — same byline, same "reimbursement is the barrier" premise, same CMS/AMA advocacy posture (the 2023 piece already described comment letters and CMS meetings, so the posture isn't new; its professionalization and funding via McDermott+ is). The McDermott+ engagement is a genuine maturation signal worth taking seriously. But on substance, 2026 is thinner, more promotional, and strategically narrower-but-different than its predecessor. The 2023 piece was the smarter document; the 2026 piece is the better-funded one. Whether that trade pays off depends entirely on outputs the April article conspicuously cannot yet point to.

If it'd be useful, I can pull the DPA blog archive to confirm whether anything reimbursement-related actually ran between these two posts, or check the current status of the AI validation statement and the 43 Cat III codes — that would let us test the "flatline" read against the record rather than inferring it from the two documents alone.

Invitae, LabCorp, and Illinois

Genomeweb article, https://www.360dx.com/business-news/labcorps-invitae-illegally-shared-genetic-data-upon-acquisition-class-action

Prompt at bottom

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 I think your intuition is basically right: this cannot be analyzed as “genetic data was sold like a mailing list.” A clinical lab archive is not a pile of surplus hard drives; it is part medical record, part laboratory compliance record, part ongoing patient-care infrastructure, and part corporate asset. The harder question is whether Illinois GIPA creates a consent requirement that is stricter than the ordinary HIPAA/M&A rule.

Under HIPAA, the ordinary answer is fairly friendly to acquisitions. HHS has long treated transfer of records in a sale, merger, consolidation, or asset transfer to another covered entity — or to an entity that will become a covered entity — as a form of “health care operations.” The point is continuity: otherwise every hospital, lab, pharmacy, or physician practice sale would require consent from thousands or millions of patients before the buyer could safely operate the business. HHS commentary specifically says PHI may be exchanged for due diligence and transferred to the new owner on completion of the deal, with the successor then bound by HIPAA duties. (Bricker)

So if this were only HIPAA, Labcorp’s position would likely be: Invitae was a covered health care provider/lab; Labcorp is a covered health care provider/lab; the records moved as part of a going-concern acquisition approved in bankruptcy; Labcorp needed the archive to continue testing, issue amendments, support reinterpretations, answer patient/provider questions, satisfy CLIA/state record duties, and operate the acquired clinical genetics business. That is not the same as selling identifiable genetic data to an advertiser, pharma marketer, data broker, or unrelated AI platform.

But the complaint is smarter than a generic HIPAA complaint because it invokes Illinois GIPA. GIPA says that no person may disclose the identity of a person tested or the results of a genetic test in identifiable form except to specified permitted recipients, including the test subject or a person designated in a specific written authorization. (Illinois General Assembly) It also provides eye-catching statutory damages: $2,500 for negligent violations and $15,000 for intentional or reckless violations, plus fees and other relief. (Illinois General Assembly) That is why this is a class-action magnet.

However, GIPA also has HIPAA-like carve-outs. Section 31 allows a covered entity, without patient consent, to use or disclose genetic information for its own treatment, payment, or health care operations, and to disclose genetic information to another covered entity for certain payment and health care operations activities under specified conditions. (Illinois General Assembly) It separately permits covered-entity disclosures to business associates under HIPAA-style written safeguards, and permits de-identified and limited data set uses under HIPAA standards. (Illinois General Assembly) So the plaintiffs cannot simply say, “genetic data moved; therefore illegal.” They have to defeat the statutory exceptions or frame the transaction as outside them.

The “law professor” issue is probably this: was Labcorp merely the successor clinical custodian/operator of the Invitae lab archive, or was there a distinct disclosure of identifiable genetic results as a monetized asset beyond clinical operations? If Labcorp acquired the Invitae clinical testing business as a going concern, and the same archive was necessary for ongoing lab operations, Labcorp has a strong policy argument and probably a strong HIPAA argument. Labcorp and Invitae announced that a bankruptcy court approved Labcorp’s acquisition of Invitae assets in May 2024; contemporary reports described it as a $239 million going-concern acquisition of the medical-genetics business. (Labcorp)

Your GeneDx example is apt. Clinical genetic labs do not become amnesic every time the corporate wrapper changes. GeneDx could be inside BioReference, then sold or spun into a new public-company/SPAC structure, but the clinical archive remains clinically necessary. Variant reinterpretation, amended reports, family testing, clinician support, billing disputes, audits, malpractice defense, CLIA retention, and state lab requirements all presume that somebody has custody of the old data. If every transaction required fresh written consent from every prior patient, it would be nearly impossible to transfer a genetic laboratory as a functioning clinical enterprise.

Bankruptcy adds a second layer. Health care bankruptcies have special patient-record problems precisely because the records cannot simply be abandoned, auctioned casually, or destroyed without process. Bankruptcy law has procedures for patient-record disposal when a debtor lacks funds to store them, including notice and attempted patient contact; the existence of those rules reflects that patient records are not ordinary inventory. (Haynes Boone) But a going-concern sale to a qualified health care successor is usually the cleaner privacy solution, not the dirtier one, because it preserves custody, access, and compliance.

Where the plaintiff’s case may have traction is Illinois specificity plus genetics sensitivity plus “asset” rhetoric. GIPA is not merely HIPAA. It was written against fear that genetic results will be disclosed without consent or used discriminatorily. Plaintiffs will argue that “Labcorp bought Invitae’s assets” is not the same as “Invitae disclosed results for treatment/payment/operations under a patient relationship.” They may say Labcorp had no relationship with B.W. at the time of transfer, that the disclosure was for corporate acquisition value, and that the genetic archive was integrated into Labcorp’s broader “data assets,” not merely held as a locked clinical-record archive.

The defense answer is that this is too formalistic. In an acquisition, the successor steps into the acquired lab’s shoes. The patient relationship, at least for record custody and ongoing clinical obligations, should travel with the business. Otherwise, GIPA would disrupt ordinary clinical-lab continuity in a way HIPAA expressly tried to avoid. Also, GIPA itself recognizes covered-entity treatment, payment, operations, business-associate, limited data set, de-identification, HIE, oversight, and research pathways; it is not an absolute “fresh consent for every downstream handling of genetic data” statute. (Illinois General Assembly)

The scariest fact pattern for Labcorp would be if the complaint can show that identifiable Invitae genetic data was not merely migrated for continuity of clinical testing, but was pooled into Labcorp analytics, commercial data products, pharma partnerships, AI development, or non-care research without a valid authorization, IRB/privacy-board pathway, de-identification, or other statutory basis. That is a different case. There is already a wave of Illinois genetic privacy litigation around acquisitions and downstream data use, including a 2026 Tempus/Ambry-related lawsuit framed around acquisition of a genetic-testing database and alleged downstream sharing. (Fisher Phillips)

My bottom-line read: as a pure “Labcorp bought Invitae and inherited the clinical archive” claim, the lawsuit feels overbroad and somewhat artificial. But as a class-action pleading under GIPA, it is not frivolous, because Illinois law creates a more plaintiff-friendly textual hook than HIPAA and very large statutory damages. The decisive line should be: successor clinical custody and operations, likely permissible; sale or repurposing of identifiable genetic data as a separable data asset, much more vulnerable.

A good blog sentence might be:

The legal problem is not that Invitae’s clinical archive followed the laboratory business to Labcorp; that is exactly what one would expect in a going-concern lab acquisition. The real question is whether identifiable genetic results were transferred and used only as successor clinical records, or whether they were treated as a freestanding monetizable data asset outside the patient-care and health-care-operations framework.

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Prompt

I can understand that if a clinical laboratory goes bankrupt, it cannot simply auction off hard drives full of patient data. But mergers and acquisitions seem different. If one laboratory acquires another, the clinical archive presumably has to go somewhere, and often it must remain available for clinical, regulatory, and patient-care purposes.    I would quickly get lost trying to think through all the legal angles, but surely this issue has arisen before. One example might be BioReference/GeneDx: GeneDx was sold off and merged with a SPAC, creating what was legally a different company, yet there remained one continuous GeneDx clinical archive.       Think this through like a HIPAA law professor. This cannot be the first time the issue has come up.   

Labcorp’s Invitae Illegally Shared Genetic Data Upon Acquisition, Class Action Complaint Alleges  / Jun. 17, 2026 | Adam Bonislawski .......

TLDR: Medicare's 34 page letter to States about New 2027 Budget Neutrality Regs for 1115

 Blogger-safe source: CMS, State Medicaid Director Letter SMD #26-003, “Budget Neutrality and Certification by the Chief Actuary of CMS for Section 1115 Medicaid Demonstration Projects,” June 11, 2026.

URL: https://www.medicaid.gov/federal-policy-guidance/downloads/smd26003.pdf

TL;DR

This 34-page CMS letter is not just “guidance.” It is a transition blueprint for moving Medicaid §1115 demonstrations from a historically negotiated budget-neutrality regime to a statutory, prospective, Chief-Actuary-certified regime beginning January 1, 2027.

The big message to states is: start preparing your data, classifications, financial models, and waiver strategy now, because CMS intends to propose regulations revising 42 CFR Part 431 Subpart G, and if those regulations are not final by January 1, 2027, CMS still expects to apply the approach in this letter provisionally.

What readers really need to know

1. The old world was “budget neutral” by CMS policy; the new world is budget neutral by statute.

CMS emphasizes that Medicaid §1115 demonstrations have long been expected to be budget neutral, but under the old approach this was a CMS policy and STC-based test. States and CMS used Without Waiver/WOW and With Waiver/WW expenditure calculations, Medicaid Expenditure Groups, expenditure caps, rebasing, mid-course correction, and retrospective assessment. If the state exceeded the cap, it had to return excess federal funds.

The new §1115(g), added by Public Law 119-21, changes the character of the test. Beginning January 1, 2027, CMS may not approve a new Medicaid §1115 demonstration, amendment, or renewal unless the CMS Chief Actuary certifies that the project is not expected to increase federal Medicaid expenditures compared with the no-demonstration baseline.

The practical shift is from:

• “We negotiated a cap and will see later if the state stayed under it”

to:

• “The Chief Actuary must certify up front that the demonstration is not expected to increase federal Medicaid spending.”

2. The Chief Actuary becomes a front-end gatekeeper.

CMS says plainly that the Chief Actuary previously had no role in reviewing Medicaid §1115 demonstrations or certifying their budget neutrality. That changes. The actuary must now provide an independent actuarial determination, using sound methods and reasonable assumptions, that the demonstration will not cost the federal government more than Medicaid would have cost without it.

This is why the letter is so consequential. The state cannot simply make a policy case that the waiver is good, popular, innovative, or consistent with Medicaid goals. It must also make a credible fiscal case that passes actuarial review.

3. CMS is largely abandoning the old WOW/WW cap structure.

The letter’s Table 1 is the best one-page summary. The current approach uses WW/WOW expenditure analysis and budget-neutrality expenditure limits. The new approach uses actuarial, economic, statistical, or comparable rigorous analysis of individual demonstration activities, with Chief Actuary certification before approval. 

CMS says the new approach would not use the old budget-neutrality cap in the same way; instead, a demonstration expected to increase federal Medicaid expenditures would simply not be approved.

That is a very different review culture. It will be more granular, more analytic, and likely more time-consuming.

4. Every waiver must be broken into “activities.”

CMS introduces “activity” as the unit of analysis. An activity can be a waiver authority, an expenditure authority, or a set of authorities grouped around a program objective. For example, an uncompensated care pool might be one activity; a targeted HCBS package plus a delivery-system design might be another.

States must classify each activity into one of two buckets:

• MAPS — Medicaid Authorizable Populations and Services.
• These are populations and services the state could otherwise cover under the Medicaid state plan or another Title XIX authority. MAPS activities are treated as having a net financial impact of zero for budget-neutrality purposes, but they do not generate savings.
• §1115-only activities.
• These are activities that could not otherwise be done under the Medicaid state plan or another Title XIX authority. These drive the real budget-neutrality analysis. States must estimate direct costs, administrative costs, utilization changes, savings, and other financial effects.

5. “Hypothetical expenditures” are being narrowed and renamed.

This is one of the most important technical changes. Under the old approach, something could be treated as “hypothetical” if either the population or the service could otherwise be covered. CMS now reads §1115(g) as referring to populations and services — not population or service — meaning the specific combination must be otherwise coverable under Medicaid authority to count as MAPS.

That means some items that previously fit into the budget-neutrality machinery as hypothetical expenditures may now become §1115-only and require a full financial-impact analysis.

Examples CMS gives:

Authority	New treatment
IMD services for SUD/SMI/SED that would be Medicaid-coverable but for site of service	MAPS
Pre-release services for incarcerated people that would be Medicaid-coverable but for inmate exclusion	MAPS
Infrastructure for reentry or HRSN demonstrations	§1115-only
HCBS for people who meet the relevant §1915 criteria	MAPS
HCBS beyond what §1915/state plan authority would allow	§1115-only
Marketplace/QHP subsidy payments	§1115-only
Uncompensated care pools	§1115-only

6. Different-site-of-service is a protected carve-in.

CMS gives special treatment to some services that are Medicaid-like but are blocked by site-of-service rules. The key examples are IMD services for SUD/SMI/SED and pre-release services for certain incarcerated individuals. CMS says these can be treated as MAPS because the services and populations are otherwise Medicaid-type services and populations, but for the different site of service. Infrastructure, however, is not included in that favorable treatment.

7. Administrative costs now count.

This is easy to miss but important. CMS reads §1115(g)’s reference to “federal expenditures” broadly. Therefore, administrative costs caused by a demonstration must be included in budget-neutrality analysis. CMS says this is a change from the current approach, where administrative costs were not included in the budget-neutrality determination.

8. Renewals will require both backward-looking and forward-looking analyses.

For a new demonstration, the state provides a prospective analysis. For a renewal, the state must provide two analyses: a historical analysis of the current demonstration period and a prospective analysis of the upcoming period. CMS gives the example of a renewal for demonstration years 6–10: the state submits actual/historical analysis for years 1–5 and projected analysis for years 6–10.

That matters because old waiver renewals often leaned on accumulated budget-neutrality savings. Under the new system, states will have to show what actually happened and what is expected to happen next.

9. Savings rollover is being tightened.

Under the new policy, savings can roll over only from the current demonstration period, or the most recent five years, whichever is shorter. Temporary-extension periods do not count. Savings can be used only in the immediately following renewal period, not carried forward indefinitely. CMS says this will likely give states access to less rollover savings than under the prior 2018/2024 approach.

There is a transition rule for the first renewal after January 1, 2027. CMS will allow a one-time use of savings calculated under the 2024 methodology, but limited to the most recent five years. This gives states one renewal cycle to adapt, but it is not a permanent grandfathering of the old savings regime.

10. Amendments after January 1, 2027 can trigger a full budget-neutrality reckoning.

This is a major “brace yourself” point. If a state seeks an amendment after January 1, 2027 and the demonstration has not yet been Chief-Actuary-certified, CMS expects the actuary to certify the entire demonstration, not just the amendment. That means the state may have to provide analyses for all activities, including activities not being amended.

If the demonstration has already been certified, then CMS expects review mainly of the amended or affected activities, but the Chief Actuary still certifies budget neutrality for the entire amended demonstration. Also, once a post-2027 amendment is approved and certified, the state stops generating savings under the old 2024 SMDL methodology.

11. “Deemed budget neutral” is mostly going away.

CMS says it no longer anticipates deeming certain expenditures budget neutral. Under the old approach, some authorities were treated as budget neutral as a matter of theory or administrative practice. Under the new approach, CMS does not think that theoretical deeming will satisfy actuarial certification standards. These activities must either qualify as MAPS or be supported by a detailed financial-impact analysis.

This includes categories previously deemed budget neutral such as certain §1115(a)(1)-only initiatives, out-of-state former foster care youth, territories, traditional health care practices, and single managed care plan authorities.

12. Existing demonstrations are not instantly rewritten on January 1, 2027.

CMS says currently approved demonstrations will continue under their existing STCs through the end of their current approval period, even if that period extends beyond January 1, 2027. CMS will still perform a final assessment under the current STC-based budget-neutrality agreement. If there is an overage not offset by available savings, the state must return funds, including through a negative CMS-64 adjustment.

But at renewal, amendment, or a new approval after January 1, 2027, the new regime becomes the gate.

13. CMS wants shorter demonstrations and less reliance on §1115.

CMS intends to propose that demonstration periods generally not exceed five years, except for quarter-alignment reasons. It also encourages states to reduce reliance on §1115 where ordinary Medicaid authorities — state plan, §1915 waivers, etc. — are available. CMS’s message is: use §1115 for real innovation, not as a workaround for things that can be done through regular Medicaid channels.

14. Monitoring and evaluation become more consequential.

CMS says it will use new budget-neutrality monitoring STCs and require corrective action if expenditures substantially deviate from state projections. CMS also says states will need sustained, promising evaluation findings showing that the demonstration is meeting most of its policy goals. If the demonstration is not successful, not meeting state goals, or not likely to promote Medicaid or CHIP objectives, CMS may decline renewal.

That is a second gate beyond actuarial budget neutrality: the demonstration must still be substantively worthwhile.

The real-world meaning

For readers who do not want to wade through 34 pages, the real story is:

CMS is converting Medicaid §1115 budget neutrality from a negotiated spending-limit exercise into a prospective actuarial certification exercise. States will need to break demonstrations into activities, prove which activities are ordinary Medicaid-authorizable MAPS, perform rigorous financial analyses for §1115-only activities, include administrative costs, document savings, and prepare for more intensive review at renewal or amendment.

For states, the practical advice is:

Inventory every current §1115 authority now. Decide whether it is MAPS or §1115-only. Identify which old “hypotheticals” and “deemed budget neutral” authorities are vulnerable. Build activity-level cost and savings models. Be cautious about post-2027 amendments. Do not assume legacy savings will carry you.

This is why the letter feels like a “get ready” document. CMS is warning states that the Federal Register/CFR machinery is coming, but the statutory clock starts January 1, 2027 whether or not the final rule is ready.

From Linked In: From DOC LAB: On Deciding to Enter or Exit 87798 Testing

 https://www.linkedin.com/posts/ashley-zarling_a-great-option-has-opened-for-labs-that-are-share-7470134818580664320-5Ed4/

Some labs are being forced to make hard decisions right now.

If your lab is considering closing, scaling back, or walking away from UTI PCR because of payer pressure, audit risk, coding uncertainty, or reimbursement challenges, we would like to hear from you.

Doc Lab is working with laboratories across the country to help create a more stable path forward.

For some labs, that may mean support and supplies, with a stronger reimbursement and payer strategy.

For others, it may mean a more significant transition. If you are considering closing your lab, selling certain assets, or looking for a responsible group to help take over operations, Doc Lab is open to having that conversation.

Our goal is to help good labs preserve value where possible, reduce risk, protect clinician and patient access, and move UTI PCR toward a more responsible future.

UTI PCR does not have to disappear.

But the way it is offered, documented, coded, and supported by clinical evidence has to mature.

If your lab is trying to decide what comes next, let’s talk. Experience the Doc Lab Difference first hand.

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https://www.linkedin.com/posts/medicare-paid-4425-million-for-cpt-87798-share-7459601659623538688-GEp1/

Medicare paid $442.5 million for CPT 87798 in 2024.

That made 87798 the highest-paid Medicare Part B laboratory test by total spending that year, according to the January 2026 HHS-OIG data snapshot. Spending on 87798 increased 51% from 2023 to 2024, with approximately 1.49 million tests paid and a median payment of $447.05 per test.

That number should get the attention of every lab, payer, and compliance team in molecular diagnostics.

For years, infectious disease PCR has lived in a difficult space: high clinical potential, inconsistent utilization, uneven payer policy, and aggressive billing strategies across the market. When one nonspecific molecular code becomes a nearly half-billion-dollar Medicare spend category, increased scrutiny is inevitable.

This is why the future of UTI PCR cannot be built on provider adoption alone.

It has to be built on:
- Appropriate use.
- Medical necessity.
- Provider education.
- Clear intended use.
- Audit-ready documentation.
- And most importantly, clinical utility data.

At Doc Lab, we believe molecular diagnostics has a strong future, but only if the industry is willing to do the hard work required to earn payer trust. That means trials, data, responsible commercialization, and payer-aligned utilization from the beginning.

Doc Lab has paved the way for partnering labs looking to create a solid foundation for their UTI PCR program backed by clinical trial. Reach out today to talk about partnering with Doc Lab and experiencing the Doc Lab Difference.

20260610 CMS CLFS ALM Links

 ALM 20260610

Closed Access Video Archive

Video 1, Tab 01 to 11

https://youtu.be/kglg_X0ZY_E

Video 2, Tab 11 to 20

https://youtu.be/-ErrjxyAlR8

Video 3, Tab 20 to 35

https://youtu.be/JqdDKF3suRw

Video 4, Tab 35 to 42

https://youtu.be/_gdXDgHLQis

Video 5, Tab 42 to 47

https://youtu.be/ScWA-KmeH40

Auto transcript

https://docs.google.com/document/d/1WbXWBXICi_m7ai2Uc6PhO5UfVu0ivU8k/edit?usp=sharing&ouid=110053226805181888143&rtpof=true&sd=true

Two senior officials on "saving costs" - The Claude Opus Summary

See main article, by Chat GPT.

https://www.discoveriesinhealthpolicy.com/2026/06/ai-guest-column-oz-and-mulligan-on.html

Alternate Article: By Claude Opus 4.8

Both talks were delivered at the same venue — the HFMA Annual Conference in National Harbor — within a day of each other, which makes the comparison clean: two senior figures in the same administration laying out adjacent but methodologically distinct theories of where health costs come from.

Oz's pitch is operational and programmatic, organized around five levers CMS is actively pulling. Fraud/waste/abuse is his headline: he claims eliminating Medicare fraud alone would double the trust fund's solvency without tax increases, and he frames the current wave as a COVID-era hangover — emergency money flowed out with weak tracking and no clawback, which recruited a new cohort of opportunistic fraudsters who have since stayed in the game. His geographic examples are the familiar enforcement clusters: DME in South Florida, hospices in Los Angeles, personal-care-services overstatement in New York and California. The other four pillars are drug pricing (Most Favored Nation, a projected $600B over ten years, plus $50/month GLP-1 access for obesity-related conditions starting July 1), tech modernization (retiring the COBOL claims system for a cloud platform, the Medicare App Library, and CMS-backed interoperability/HIE data-sharing with ~800 tech firms signed on), preventive health/nutrition (embedding nutrition training into medical-school curricula, the revised food pyramid), and deregulation (the 10-out/1-in executive order, with an explicit shot at quality-measurement burden — "not everything that matters can be measured").

Mulligan's pitch is a single economic thesis rather than a program list. As HHS chief economist and chief regulatory officer (appointed by RFK Jr. in April), he argues costs stem from incentives, not coverage. His framework — "supply-side health economics" — insists that healthcare, health outcomes, and insurance are three distinct things, and that policy debate over-indexes on insurance coverage while ignoring the delivery-side drivers. His concrete target is Medicaid financing mechanics: provider taxes and state-directed payments. He describes the loop where states tax hospitals/nursing homes/managed-care plans, use the revenue to draw federal matching funds, and recycle the combined money back to providers as supplemental payments. His core claim is that this doesn't stay contained within Medicaid — the distortions spill over into commercial prices, employer and marketplace premiums, wages, and Medicare spending — so curtailing these arrangements would lower costs system-wide. He also frames his own role around rigorous regulatory impact analysis and patient empowerment through data access, transparency, and the freedom to evaluate competing medical claims.

Where they overlap. Both locate a large share of excess cost in misaligned incentives and "money flowing the wrong way" rather than in insufficient coverage — Oz via outright fraud, Mulligan via legal-but-distorting financing gimmicks. Both share the administration's deregulatory instinct (Oz's 10-for-1 and anti-measurement framing; Mulligan's cost-benefit-analysis emphasis). And both nod to patient empowerment and data access as part of the cost solution, though Oz operationalizes it (App Library, interoperability) while Mulligan keeps it at the level of principle.

Where each is unique. Oz owns the entire programmatic/delivery agenda — drug pricing, GLP-1 access, IT modernization, nutrition and preventive medicine, medical education. None of that appears in Mulligan's remarks. Conversely, Mulligan owns the Medicaid-financing critique (provider taxes, state-directed payments, federal-match dynamics) and the formal supply-side framework distinguishing coverage from outcomes — territory Oz never enters. Their genres differ too: Oz is a clinician-administrator selling a portfolio of interventions; Mulligan is an economist selling a diagnostic lens.

Do they contradict? Not directly — the articles record no head-to-head disagreement, and their domains barely intersect (fraud and program operations vs. Medicaid financing economics). But there's a latent tension worth flagging for an expert audience. Oz's nutrition/preventive-medicine pillar is fundamentally an investment-and-coverage move — spend now (GLP-1 access, curricular hours, screening) to bend the chronic-disease curve later — which sits somewhat awkwardly against Mulligan's insistence that the endpoint is "better health and lower costs" through incentives rather than coverage expansion, and that the field over-weights coverage. One could read Oz's $50 GLP-1 benefit as exactly the kind of new coverage commitment Mulligan's framework would want subjected to hard cost-benefit scrutiny. It's a difference of emphasis and method, not an on-the-record contradiction, but the two men are clearly reasoning from different first principles: Oz from clinical opportunity, Mulligan from price-distortion economics.

One caveat: these are conference-address summaries filtered through trade-press reporting, so the figures (the $600B MFN projection, the trust-fund "doubling" claim, the 70% chronic-illness cost share) are as-asserted by the speakers and not independently substantiated in the pieces.