Linked In, Doc Lab, 87798, on Enter/Exit UTI PCR

 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.

Two Senior CMS Officials on "Saving Costs" - June 2026

MedCityNews, June 9, 2026 (Katie Adams): CMS Dr. Oz on Making Healthcare Affordable
https://medcitynews.com/2026/06/dr-oz-cms-healthcare-affordability/

MedCityNews, June 8, 2026 (Katie Adams): Casey Mulligan on Healthcare Cost Incentives
https://medcitynews.com/2026/06/hhs-affordability-healthcare-costs/

For experts, these two pieces in MedCityNews are less “two cost-control plans” than two different levels of the same policy stack. Oz is giving the CMS administrator’s operational/political affordability agenda: fraud, drugs, IT, prevention, deregulation. Mulligan is giving the HHS economist’s causal theory of cost growth: distorted incentives, especially Medicaid financing mechanics, propagate through the whole system.

Core thesis of each

Oz: CMS can make care more affordable by attacking visible sources of excess cost and friction: fraud, waste, drug prices, antiquated claims infrastructure, chronic disease burden, and regulatory overhead. His framework is program-administrative and public-facing: identify large “fixable” domains and mobilize CMS authority around them.

Mulligan: Healthcare costs are not primarily a coverage problem; they are an incentives problem. He wants policy analysis to separate health, healthcare, and insurance, and to ask who pays, who benefits, and what behaviors are induced. His concrete target is Medicaid provider taxes and state-directed payments, which he portrays as fiscal machinery that inflates spending and spills over into commercial premiums, wages, Medicare, and taxpayers.

Where Oz and Mulligan overlap

They overlap most strongly in diagnosis by incentives rather than entitlement expansion. Neither frames affordability as “more insurance coverage” or “larger subsidies.” Both emphasize that current financing and administrative structures generate avoidable cost.

They also overlap on patient control and information, though with different emphases. Oz’s app-library and interoperability discussion points toward consumer access, portability, and data liquidity. Mulligan’s version is more economic: patients need data, price transparency, genuine choices, and freedom to compare competing medical claims.

They share a deregulatory skepticism toward legacy systems. Oz criticizes quality-measurement burden and welcomes a 10-for-1 deregulatory mandate. Mulligan, as chief regulatory officer, focuses on regulatory impact analysis: measuring costs, benefits, distributional effects, and incentive consequences.

They also both imply that federal healthcare costs are embedded in cross-market systems. Oz says Medicare fraud alone could dramatically affect the trust fund. Mulligan says Medicaid payment games spill into commercial prices, employer premiums, wages, Medicare spending, and taxpayers. Both reject siloed accounting.

What is unique to Oz

Oz’s agenda is broader and more operational. His five buckets are:

1. Fraud, waste, and abuse — especially DME in South Florida, hospice clustering in Los Angeles, and personal care services employment in New York and California. His Covid-era point is politically important: emergency spending and weak tracking taught new actors that healthcare fraud was accessible.

2. Drug pricing reform — especially Most Favored Nation pricing, with a claimed $600 billion ten-year savings estimate, plus GLP-1 access for certain Medicare beneficiaries with obesity-related conditions at $50/month.

3. Technology modernization — replacing Medicare’s COBOL-based billing infrastructure with cloud systems, plus the Medicare App Library and data-sharing networks.

4. Preventive health and nutrition — especially obesity and chronic disease, nutrition education in medical schools, and revised dietary guidance.

5. Deregulation and measurement reform — less faith in quality-measure proliferation, more concern about administrative burden.

Oz is therefore speaking as an agency head trying to communicate a portfolio: enforcement, payment policy, IT modernization, prevention, and deregulation.

What is unique to Mulligan

Mulligan’s piece is narrower but more theoretically pointed. His distinctive contribution is the “supply-side health economics” frame: do not confuse insurance expansion with health improvement or cost reduction. He wants to analyze delivery-side incentives.

His most concrete policy target is Medicaid provider taxes plus supplemental/state-directed payments. The mechanism he describes is:

States tax hospitals, nursing homes, or managed-care plans; use the revenue to draw down federal matching dollars; then return funds to providers through supplemental or state-directed payments. Mulligan argues this is not benign fiscal plumbing. It changes provider incentives, increases the cost of delivering care, shifts resources, raises commercial prices and employer premiums, affects marketplace premiums and wages, and even spills into Medicare.

That is the more technical article. It is less about “CMS can modernize X” and more about “federal-state financing arbitrage creates systemwide price inflation.”

Do they disagree?

There is no direct contradiction in the excerpts. The articles are complementary, not adversarial.

The closest tension is one of emphasis:

Oz says major savings can come from fraud enforcement, drug pricing, modernization, prevention, and deregulation. Mulligan says the deeper affordability problem is incentive design, especially financing mechanisms that inflate provider payments and prices.

A second mild tension is that Oz’s agenda includes some expanded access/payment policy, such as cheaper GLP-1 access for Medicare beneficiaries with obesity-related conditions. Mulligan’s lens would ask whether that policy improves health enough to justify costs and what incentives it creates. But the excerpt does not show Mulligan criticizing GLP-1 coverage, and Oz frames it as affordability/access.

A third tension is philosophical: Oz’s prevention-and-nutrition discussion is clinician-population-health oriented; Mulligan’s is economist-incentive oriented. Oz talks about chronic disease burden and medical education. Mulligan talks about regulatory impact, price spillovers, and financing distortions. These are different explanatory languages, not contradictions.

Expert read: what this signals

Together, the articles suggest a Trump-era HHS/CMS affordability message built around five themes:

First, anti-fraud enforcement will be framed as trust-fund solvency policy, not just program integrity.

Second, drug pricing remains central, especially through international reference-pricing rhetoric.

Third, CMS modernization is being cast as cost policy, not merely IT housekeeping.

Fourth, chronic disease prevention is being absorbed into affordability policy, with nutrition and obesity as cost drivers.

Fifth, Medicaid financing reform may become one of the most consequential technical battlegrounds, because Mulligan is explicitly tying provider taxes and state-directed payments to commercial premium inflation, employer costs, wages, Medicare spending, and federal taxpayer exposure.

For a policy expert, Mulligan’s piece may be the more important tea leaf. Oz lists the visible agenda. Mulligan identifies a technically specific target with large distributional stakes: the provider-tax/supplemental-payment ecosystem. If HHS acts on that theory, hospitals, states, Medicaid managed care plans, and employer purchasers will all care deeply.

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DR OZ ON SAVING COSTS

The 5 Areas Where Dr. Oz Says CMS Can Make Healthcare More Affordable

https://medcitynews.com/2026/06/dr-oz-cms-healthcare-affordability/

CMS Administrator Dr. Mehmet Oz outlined the agency's strategy for making healthcare more affordable during a Tuesday address at the HFMA Annual Conference, touching on everything from Medicare fraud to drug pricing to nutrition.

Dr. Mehmet Oz

CMS Administrator Dr. Mehmet Oz is optimistic about Washington’s ability to bend the healthcare cost curve, he said during a Tuesday address at the HFMA Annual Conference in National Harbor, Maryland.

“It’s not all rosy, but there’s some opportunities. As a clinician, I’ll tell you, if you have an opportunity to fix a problem, it gives you more hope than if you think the issue is terminal. We’re definitely not terminal,” he declared.

During his talk, Dr. Oz outlined a few key areas that CMS is targeting to make healthcare more affordable. Below are the main pillars of the agency’s affordability agenda.

Fraud, waste and abuse

Eliminating fraud from the Medicare program alone would double the trust fund’s lifespan without raising taxes, Dr. Oz argued.

He cited examples of large-scale fraud cases that the federal government has busted in recent months — an outsized number of durable medical equipment suppliers in South Florida, a disproportionate share of the country’s hospices concentrated in Los Angeles, and inflated personal care services employment in New York and California. 

“Much of this started during Covid, because what we taught fraudsters in Covid was, we’re going to give a lot of money away from the federal government, and we don’t really have a way of tracking it, so we can’t really tell if you used it the right way, and we can’t get it back if you didn’t. Because of that, we brought a lot of people into the health ecosystem who never thought of defrauding healthcare before — but now that they know it’s possible, they’re loving it,” Dr. Oz remarked.

Drug pricing reform

Dr. Oz highlighted the Most Favored Nation pricing initiative, which requires pharma companies to charge Americans no more than what developed countries pay abroad. He projected that the policy will result in $600 billion in savings over 10 years. 

He also noted that Medicare beneficiaries with obesity-related conditions will be able to access GLP-1 medications for $50 per month starting July 1.

Tech modernization

CMS is replacing Medicare’s COBOL-based billing system with a cloud platform, marking the first upgrade in more than 50 years. Dr. Oz said this change will speed up how Medicare processes and adjudicates claims.

He also noted that CMS launched its Medicare App Library in April, which seeks to create a more consumer-driven, app-based health data infrastructure.

Under the initiative, patient data doesn’t stay siloed within individual apps. Instead, participating companies connect to CMS-backed data-sharing networks — including health information exchanges and interoperability frameworks — that allow data to flow directly into clinicians’ workflows. Nearly 800 health tech companies have signed onto the initiative, Dr. Oz said.

Preventive health and nutrition

The country’s high chronic illness burden — particularly obesity — has a huge impact on rising healthcare costs, Dr. Oz pointed out.

To help fix this, CMS is working to embed nutrition education into medical school curricula. Dr. Oz noted that more than 50 schools have pledged 40 hours of nutrition training.

“The problem is that we don’t teach people going through their training about things like nutrition, so they don’t think they matter. It turns out if you want to deal with the chronic illnesses that drive at least 70% of all healthcare costs, you have got to be able to address basic realities of preventive medicine, including nutrition,” he remarked.

Dr. Oz also cited the recently revised food pyramid as a meaningful step toward correcting decades of flawed dietary guidance that he said has contributed to the obesity crisis.

Deregulation

Under a White House executive order, CMS must eliminate 10 regulations for every new one it introduces.

Dr. Oz said he welcomes this mandate. He argued that much of the current quality measurement apparatus creates administrative burden without actually improving care. 

“Not everything that you can measure matters, and not everything that matters can be measured,” he stated.

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Casey Mulligan on Saving Costs

https://medcitynews.com/2026/06/hhs-affordability-healthcare-costs/

HHS Affordability Czar Says Healthcare Costs Stem From Incentives, Not Coverage

Healthcare affordability czar Casey Mulligan laid out the economic philosophy guiding the Trump administration's approach to healthcare costs during a recent conference address. He argued that provider taxes and state-directed payments inflate healthcare spending far beyond Medicaid and ultimately raise costs for employers and taxpayers.

By Katie Adams on June 08, 2026 8:24 pm

Healthcare spending is one of — if not the largest — financial burdens facing Americans, federal health regulator Casey Mulligan said during an address on Monday at the HFMA Annual Conference in National Harbor, Maryland.

HHS Secretary Robert F. Kennedy Jr. appointed Mulligan as chief economist and chief regulatory officer of the agency in April. Mulligan said that his work at the agency focuses heavily on how to make healthcare more affordable — and that this requires a focus on healthcare delivery, not just insurance coverage

He uses a framework he refers to as “supply-side health economics” — which insists that healthcare, health outcomes and health insurance are distinct concepts.

“Yes, insurance matters, but it’s not the endpoint. The endpoint is better health and lower costs with more control in the hands of patients and families,” Mulligan declared.

In his eyes, policymakers spend too much time debating insurance coverage and not enough time addressing the underlying drivers of patient outcomes and healthcare costs. Moving forward, he thinks patients should have more information and control.

Mulligan believes patients need access to their own health data, transparent information, genuine healthcare choices and the freedom to evaluate competing medical claims.

He described one of his primary responsibilities as conducting regulatory impact analysis. To do this well, he thinks policymakers should carefully measure costs and benefits — as well as who bears those costs and how incentives are created by policy decisions.

As part of his work at HHS, Mulligan has closely examined provider taxes and state-directed payments.

He argued that many states use a financing mechanism in which they tax hospitals, nursing homes, or managed-care plans, and then this tax revenue is used to draw additional federal Medicaid matching funds. Mulligan said the combined funds are usually returned to providers through supplemental payments or state-directed payments.

“Medicaid financing gimmicks spill over to commercial prices, employer premiums, marketplace premiums, wages and Medicare spending,” he remarked.

Mulligan argued that these financing arrangements end up driving up healthcare costs far beyond Medicaid. And he believes provider taxes typically increase the cost of delivering care, while supplemental Medicaid payments encourage providers to shift resources toward Medicaid patients. 

Together, these dynamics put increased pressure on commercial insurance premiums and Medicare spending, he said. 

Mulligan contended that limiting these arrangements would help lower healthcare costs for taxpayers.

For him, addressing healthcare affordability requires policymakers to focus less on insurance coverage and more on the incentives that actually shape how healthcare is financed and delivered.

Photo: Malte Mueller, Getty I

Names of 87798-billing labs in 2024 vs names of other labs not billing 87798

Claude Opus 6 9 2026

 I dug into both tabs. A quick structural note first: the "Clean_Labs" tab is actually the full universe of 1,561 labs that don't bill 87798 (zero overlap with the 590 on the 87798 tab), so the two lists are cleanly disjoint and directly comparable. Two confounds are worth flagging up front, because they shape the raw word counts:

• The 87798 list contains the national giants — Quest Diagnostics (≈19 entity variants) and LabCorp / "Laboratory Corporation of America Holdings" (≈20 variants). These are not fly-by-night labs; they're legitimate megalabs that of course run NAAT. So apparent enrichment of "America," "Quest," and "Holdings" in the 87798 group is an artifact of corporate-subsidiary naming, not a fraud signal. I stripped them out and the real signal held.
• The clean set carries a large Puerto Rico contingent (~13%, "Laboratorio Clínico…"), which is entirely absent from the 87798 list and inflates the clean group's distinctiveness. Stripped that too.

With those removed, here are the differences that survive.

Entity type is the single sharpest split. The 87798 labs are overwhelmingly LLCs; the clean labs lean toward Inc.

Suffix	87798 labs	Clean labs
LLC	50.5%	30.0%
Inc / Incorporated	27.8%	39.4%
PC / PA / LLP / PLLC	~1.0%	~5.7%

An LLC is the cheapest, fastest entity to spin up and dissolve, which fits the pop-up profile. Notably, the professional-corporation forms (PC, PA, PLLC) that signal physician-owned pathology/medical practices are almost entirely on the clean side.

"Modern molecular" branding vs. traditional/institutional naming. This is the clearest onomastic pattern. After removing the confounds above:

• Words like Diagnostics, Molecular, Genomics, Genetic, Precision, DX, Bio, Sciences, Solutions, Advanced, Labs appear in ~39% of 87798 names vs. ~21% of clean names (roughly 2×).
• Words signaling an established institution — Pathology, Pathologists, Physicians, University, Hospital, Medical, Associates, Clinic, Family, Community, plus personal surnames — appear in ~33% of clean names vs. ~19% of 87798 names.

So the 87798 set tilts toward the language of a new molecular-testing venture; the clean set tilts toward the language of a practice, hospital lab, or reference lab embedded in a care setting.

Register: "Labs/Lab/Diagnostics" over "Laboratory/Pathology." The 87798 group favors the informal, brand-forward Labs (10.3% vs 4.5%), Lab (11% vs 6.2%), and Diagnostics/Diagnostic (21% vs 10%). The clean group is where Pathology (7.0% vs 2.9%), Physicians, University, and Pathologists concentrate.

The "Dx" tell and coined brand names. "Dx" as a token is ~3.5× enriched (1.4% vs 0.3%), and qualitatively the 87798 list is where you find the coined/portmanteau startup-style names with "Dx" fused on or abstract single-word brands: Sozo Dx, Citizensdx, Helixbiodx, Northstar Dx, Ipsum Diagnostics, Prescience Diagnostics, Proteus Molecular, Truth Diagnostics, Gezunt Diagnostics, Applied Ingenuity Diagnostics. This invented-brand register is much rarer in the clean set, which skews toward eponymous (surname-based) and place-or-institution-based names.

What does not discriminate. I'd caution against over-reading aspirational adjectives — premier, elite, precision, advanced, prime, apex — as a fraud marker. They appear in both groups at similar rates (e.g., "precision" is actually slightly more common in the clean set, 10 vs 4), so they're noise here despite the intuition. Name length and word count are also essentially identical (≈3.6 vs 3.8 words). And explicit state words (Texas, Florida) are only mildly enriched in the names themselves — the TX/FL concentration you've described lives in the address/PECOS data, not the lab name.

The honest summary: the differentiating signal is entity form (LLC) plus a "molecular-startup" lexical register (Diagnostics/Molecular/Genomics/DX/Labs, often as a coined brand), as against the clean set's institutional/eponymous/professional-corporation register (Pathology/Physicians/University/Medical/surnames, plus PC/PA forms). 

It's a meaningful descriptive contrast and a reasonable screening prior, but it's correlational onomastics, not a classifier — plenty of legitimate molecular labs (and the national giants sitting right there in your 87798 list) use the exact same modern vocabulary.

If useful, I can build a scored feature set from this (LLC flag + molecular-token flag + Dx flag + absence-of-institutional-token flag) and run it back over the 590 to rank the names by how strongly they fit the pattern — though you'd want to validate any such score against your billing-fingerprint and geographic-concentration signals rather than lean on the name alone.

CMS 2021: Why Not Price Cat III. Why Hard to Price Software.

 

 86 FR 65039 (small section from 65038)

November 19, 2021  Final PFS rule for CY2022

65039-40

For the PFS, we 

typically assign contractor pricing for 

Category III codes since they are 

temporary codes assigned to emerging 

technology and services. We followed 

this established process for Category III 

codes by assigning and listing them as 

contractor pricing in Appendix B in the 

CY 2018 PFS final rule

#############

Comment: Several commenters 

expressed concern that CMS repeatedly 

stated that software and analysis fees are 

not direct expenses. Commenters 

disagreed and stated that software that 

is directly attributed to a specific 

physician service is a direct expense, 

and furthermore that there are multiple 

examples of the implementation of such 

costs. Several comments provided a list 

of current CPT codes that they stated 

included software as a direct PE input, 

such as CPT code 95905 (Motor and/or 

sensory nerve conduction, using 

preconfigured electrode array(s), 

amplitude and latency/velocity study, 

,,,, Several commenters raised the 

issue of software as a medical device 

(SaMD) and stated that it should be 

considered a direct PE expense similar 

to other medical equipment. 

Commenters stated that even though 

SaMD does not require physical space 

in an office or administrative staff hours 

to maintain it, SaMD does require 

ongoing upgrades, improvements, and 

security mitigation, as well as the same 

regulatory oversight by the Food and 

Drug Administration (FDA) as hardware 

medical devices. Commenters stated 

that the legal, regulatory, and financial 

burdens incumbent of a SaMD 

manufacturer are no different than those 

of hardware medical device 

manufacturers. 

Response: We appreciate the detailed 

feedback from the commenters 

regarding the issues surrounding 

software and analysis fees. We agree 

with the commenters that there have 

been occasions in the past where we 

have finalized the inclusion of software 

as a direct PE expense if it met our 

criteria as typical and medically 

necessary for the service in question and 

could be individually allocable to a 

particular patient for a particular 

service. For example, we included the 

sheer wave elastography software 

(ED060) as a direct PE input for CPT 

codes 76981–76983 in CY 2019. In this 

case, the sheer wave elastography 

software was an additional resource cost 

added to the general ultrasound room 

(EL015) equipment without which the 

service cannot be performed. We have 

been more hesitant to classify software, 

licensing, and analysis fees that are not 

associated with physical equipment 

used in the performance of a service as 

they pose more significant challenges 

for our traditional PE methodology. 

Therefore, we wish to clarify that 

although we have typically considered 

software costs to be indirect PE under 

our methodology, as these costs were 

not individually allocable to a particular 

patient for a particular service, there 

have been exceptions to this general 

principle where software costs have 

been included directly in the service 

under review. 

As we stated in the proposed rule, we 

believe that costs associated with 

software, licensing, and analysis fees are 

not well accounted for in the PE 

methodology. Unlike a piece of 

equipment, such as the retinal camera, 

an analysis fee for software does not 

require physical space in an office or 

administrative staff hours to maintain it. 

These types of costs were much less 

prevalent when the Physician Practice 

Information Survey (PPIS) was last 

administered in 2007 and 2008 and of 

course did not exist at all in the case of 

AI-based services. We remain concerned 

that if we were to consider software 

analysis fees and software as a medical 

device expenses to be direct costs in all 

cases, we may inadvertently allocate too 

many indirect costs for supplies that 

may not require additional indirect 

expenses. The data underlying the PPIS 

assumes that direct expenses will 

require costs associated with physical 

space and physical maintenance that 

may not appropriate for these new types 

of software. However, we do recognize 

that practitioners are incurring resource 

costs for purchase of the software and 

its ongoing use, which is why we 

proposed the crosswalk to CPT code 

92325 to capture these resource costs for 

CPT code 92229. We believe that the use 

of this crosswalk and other similar 

crosswalks are the best way to value 

services that make use of software, 

licensing, and analysis fees at the 

moment while we explore ongoing 

potential updates to the PE 

methodology. 

AI Assesses CMS Pricing History of 92229

 [Direct AI research - not verified]

Please use agentic research and determine how CMS set the price for code 92229, retinal scan and auto diagnosis. In the AMA RVU RUC database, they allot about 15 minutes of technician time at 50 cents per minute or about $8, and they alot a trivial capital equipment charge, like 50 cents (a $14000 device with 5 year life used for 15 minutes yields only amortized pocket change). Did CMS see this and nonetheless assign 92229 an artificial value like around 1 RVU ($30-40). How did CMS justify that.

###

Bottom line: Yes. CMS saw the ordinary RUC-style direct practice expense inputs for 92229 — staff time, retinal camera time, etc. — but concluded that the usual PE machinery did not adequately capture the core cost of the service: the autonomous software/AI analysis. CMS first made 92229 contractor-priced for CY 2021, then in CY 2022 created a national price by crosswalking 92229 to CPT 92325, a PE-only eye-code, yielding about 1.36 RVUs and roughly $45.69 national payment in 2022.

Here is the sequence.

In the CY 2021 PFS final rule, CMS described 92229 as retinal imaging with point-of-care automated analysis using AI, with no ophthalmologist interpretation. Therefore, CMS assigned it 0.00 work RVUs and treated it as a practice-expense-only service. CMS explicitly said the RUC had recommended a $25 “per click” analysis fee, but CMS rejected putting that fee into direct PE, saying it looked more like an indirect PE/service fee rather than an item allocated as a direct cost to one patient encounter.

CMS then got pushback. Commenters argued that the AI analysis fee was directly attributable to each patient and that, without the software analysis, there was no 92229 service. CMS accepted the conceptual problem but not the RUC input method: it said AI/software costs should be accounted for, but that AI applications were “not well accounted for” in the current PFS PE methodology. Rather than create a direct PE software fee, CMS finalized contractor pricing for 92229 for CY 2021.

In the CY 2022 proposed rule, CMS made the broader policy admission you are circling around: the PPIS indirect PE data were from 2007–2008, before software, licensing, algorithmic analysis fees, and similar cost structures were typical. CMS said its existing PE method was built around clinical labor, supplies, equipment, and indirect office expenses, and was a poor fit for services whose real cost was a software algorithm or analysis fee with minimal hardware cost.

So for CY 2022, CMS proposed not to rely on the literal camera-amortization-plus-technician-time calculation. Instead, it proposed a crosswalk to CPT 92325, “Modification of contact lens … with medical supervision of adaptation,” because 92325 was a PE-only eye code that CMS believed reflected comparable overall resource costs in the physician office setting. CMS openly acknowledged the services were not the same, but said the total resource costs were similar, and that the crosswalk would recognize the purchase and ongoing use of software that “would not typically be considered direct PE” under the current methodology.

In the CY 2022 final rule, CMS finalized that exact approach. Commenters supported the crosswalk, noting that 92325 was not clinically similar but had a total direct practice cost similar to the RUC-recommended total direct PE cost for 92229. CMS rejected alternative crosswalks such as 95249 and 92977 because those would include additional resource costs and produce a higher valuation. CMS then finalized values for 92229 based on a direct crosswalk to 92325.

The resulting payment was not a “work RVU” payment and not a payment for 15 minutes of technician time alone. It was a PE-only proxy payment for a service whose dominant cost was software/AI analysis. CMS’s own general PFS explanation is that payment is derived from RVUs for work, PE, and malpractice, multiplied by the conversion factor; for CY 2022, the conversion factor was about $33.59. (CMS) Industry reporting based on CMS’s published RVUs put 92229 at about $45.69 nationally in CY 2022, consistent with roughly 1.36 total RVUs. (Eyenuk)

So the clean interpretation is:

CMS did not simply “see $8 of technician time and 50 cents of equipment and then mysteriously pay $40.” Rather, CMS saw that the ordinary PE inputs badly understated an AI service because the real cost was a per-use software/analysis cost. But CMS was unwilling to accept the RUC’s per-click software fee as a direct PE input. It therefore used the old-fashioned Medicare workaround: contractor price first, then crosswalk to a roughly comparable PE-only code.

For your policy point, 92229 is a useful early example of CMS saying, in effect: our PE methodology has no good slot for software-as-the-service, so we will use a pragmatic crosswalk until the PE methodology catches up.

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Version with citations

Sure — here is the same text in ordinary prose, with the full plain-text source link at the end of each relevant paragraph.

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Bottom line: Yes. CMS saw the ordinary RUC-style direct practice expense inputs for CPT code 92229 — staff time, retinal camera time, and similar items — but concluded that the usual practice-expense machinery did not adequately capture the core cost of the service: the autonomous software/AI analysis. CMS first made 92229 contractor-priced for CY 2021, then in CY 2022 created a national price by crosswalking 92229 to CPT code 92325, a practice-expense-only eye-code. The resulting national Medicare payment was about $45–46 in 2022, consistent with roughly 1.36 total RVUs. Source: CMS CY 2021 PFS final rule, https://public-inspection.federalregister.gov/2020-26815.pdf ; CMS CY 2022 PFS final rule, https://www.federalregister.gov/documents/2021/11/19/2021-23972/medicare-program-cy-2022-payment-policies-under-the-physician-fee-schedule-and-other-changes-to-part

Code 92229 describes retinal imaging for detection or monitoring of disease, with point-of-care automated analysis and report, unilateral or bilateral. In the CY 2021 Medicare Physician Fee Schedule final rule, CMS treated 92229 as a practice-expense-only service, with 0.00 physician work RVUs, because the code does not involve a physician or other qualified health care professional interpretation in the usual sense. CMS noted that the RUC had recommended a $25 “per click” analysis fee, but CMS rejected the idea that this software or analysis fee should simply be put into direct practice expense as a patient-specific input. CMS said the “per click” fee looked more like an indirect practice expense or service fee rather than a conventional direct input such as clinical labor, disposable supplies, or equipment time. Source: CMS CY 2021 PFS final rule, https://public-inspection.federalregister.gov/2020-26815.pdf

CMS then received comments arguing that the AI analysis fee was directly attributable to each patient and that, without the autonomous software analysis, there was no 92229 service. CMS accepted the broader conceptual point that AI and software costs had to be recognized somehow, but it did not accept the RUC’s proposed direct-input method. Instead, CMS finalized 92229 as contractor-priced for CY 2021. This allowed Medicare Administrative Contractors to establish payment locally while CMS considered how to handle AI/software costs more generally under the Physician Fee Schedule. Source: CMS CY 2021 PFS final rule, https://public-inspection.federalregister.gov/2020-26815.pdf

In the CY 2022 proposed rule, CMS was more explicit about the methodological problem. CMS acknowledged that the practice expense system was built around physician work, clinical labor, supplies, equipment, and indirect practice costs, and that its underlying indirect practice expense data were old — based on the Physician Practice Information Survey, collected in 2007–2008. That vintage mattered because the current structure did not fit well with newer services whose dominant cost is software, algorithmic analysis, licensing, or a per-use analytic fee rather than a physician’s time or a large piece of capital equipment. Source: CMS CY 2022 PFS proposed rule, https://public-inspection.federalregister.gov/2021-14973.pdf

For CY 2022, CMS proposed a workaround. Rather than price 92229 by simply adding 15 minutes of technician time plus a few cents or dollars of amortized retinal camera time, CMS proposed to crosswalk the service to CPT code 92325, “Modification of contact lens, with medical supervision of adaptation.” The clinical service is obviously different, but CMS regarded 92325 as a practice-expense-only ophthalmology code with a comparable overall resource profile. In effect, CMS used 92325 as a proxy value that could recognize the resource cost of the software analysis without formally accepting a direct “per click” AI fee as a practice expense input. Source: CMS CY 2022 PFS proposed rule, https://public-inspection.federalregister.gov/2021-14973.pdf

In the CY 2022 final rule, CMS finalized that approach. Commenters supported the 92325 crosswalk, even while acknowledging that 92325 was not clinically similar to 92229. CMS rejected alternative crosswalks that would have produced higher payment, because those codes included additional resource costs that CMS did not think were appropriate for 92229. CMS therefore finalized national values for 92229 based on a direct crosswalk to 92325. Source: CMS CY 2022 PFS final rule, https://www.federalregister.gov/documents/2021/11/19/2021-23972/medicare-program-cy-2022-payment-policies-under-the-physician-fee-schedule-and-other-changes-to-part

The resulting payment was not a physician-work payment and not a literal reimbursement for 15 minutes of technician time alone. It was a practice-expense-only proxy payment for a service whose dominant cost was autonomous software analysis. CMS’s CY 2022 conversion factor was $33.59, and industry summaries based on CMS’s published RVUs estimated the national payment for CPT 92229 at about $45.69. Another ophthalmology coding summary reported a national payment of about $45.36. The small difference reflects rounding and locality/payment-file conventions, but both estimates are in the same range. Sources: CMS CY 2022 PFS fact sheet, https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2022-medicare-physician-fee-schedule-final-rule ; Eyenuk, https://www.eyenuk.com/us-en/articles/eyeart/2022-cms-pfs-final-rule ; Review of Ophthalmology, https://www.reviewofophthalmology.com/article/medicare-whats-new-for-2022

So the clean interpretation is this: CMS did not simply see $8 of technician time and 50 cents of equipment time and then mysteriously assign a $40-plus payment. Rather, CMS recognized that the ordinary direct practice expense inputs badly understated an autonomous AI service because the economically meaningful component was the software analysis. At the same time, CMS was unwilling to accept the RUC’s proposed $25 per-click software fee as a direct practice expense input. The compromise was first contractor pricing, then a national crosswalk to an existing practice-expense-only eye code. Source: CMS CY 2021 PFS final rule, https://public-inspection.federalregister.gov/2020-26815.pdf ; CMS CY 2022 PFS final rule, https://www.federalregister.gov/documents/2021/11/19/2021-23972/medicare-program-cy-2022-payment-policies-under-the-physician-fee-schedule-and-other-changes-to-part

For policy purposes, 92229 is an important early example of CMS saying, in effect: the Physician Fee Schedule practice expense methodology has no clean slot for software-as-the-service. Until that methodology catches up, CMS may use pragmatic crosswalks rather than literal technician-time-plus-equipment amortization.