NOTE L — SUBSEQUENT EVENTS

On October 31, 2014 the Centers for Medicare and Medicaid Services (“CMS”) released CMS-1612-FC, a new final rule with comment period (the “Proposed Rule”) entitled “Medicare Program; Revisions to Payment Policies under the Physician Fee Schedule, Clinical Laboratory Fee Schedule, Access to Identifiable Data for the Center for Medicare and Medicaid Innovation Models & Other Revisions to Part B for CY 2015”. This 1,185 page Proposed Rule contains a number of provisions that may adversely impact the level of reimbursement for a variety of fluorescent in-situ hybridization (“FISH”) and Immunohistochemistry (“IHC”) tests for which NeoGenomics receives reimbursement from the Medicare program beginning on January 1, 2015. Among other things, CMS is proposing to utilize the following new and modified Current Procedural Terminology (CPT) codes for FISH & IHC that were recently released by the American Medical Association (“AMA”):

Modified CPT Codes (modifications shown in italics):


88342 –		Immunohistochemistry or immunocytochemistry, per specimen; initial single antibody stain procedure

88367 –		Morphometric analysis, in situ hybridization (quantitative or semi-quantitative), using computer assisted technology, per specimen; initial single probe stain procedure

88368 –		Morphometric analysis, in situ hybridization (quantitative or semi-quantitative), manual, per specimen; initial single probe stain procedure

New CPT Codes


88341 –		Immunohistochemistry or immunocytochemistry, per specimen; each additional single antibody stain procedure

88344 –		Immunohistochemistry or immunocytochemistry, per specimen; each multiplex antibody stain procedure

88369 –		Morphometric analysis, in situ hybridization (quantitative or semi-quantitative), manual, per specimen; each additional single probe stain procedure

88373 –		Morphometric analysis, in situ hybridization (quantitative or semi-quantitative), using computer assisted technology, per specimen; each additional single probe stain procedure

88374 –		Morphometric analysis, in situ hybridization (quantitative or semi-quantitative), using computer assisted technology, per specimen; each multiplex probe stain procedure

88377 –		Morphometric analysis, in situ hybridization (quantitative or semi-quantitative), manual, per specimen; each multiplex probe stain procedure

Although no formal guidance has been issued by the AMA yet with respect to how/when to apply the above new/modified CPT codes, we believe NeoGenomics will be required to separate out the first FISH probe staining procedure from additional probe staining procedures or “multiplex” probe (ie, multiple probes contained in the same vial of reagent) staining procedures. This framework is similar to the framework introduced by the National Correct Coding Initiative (NCCI) in December 2013, which NeoGenomics has been voluntarily following, except that a new CPT code for multiplex FISH probe staining procedures has now been introduced. Under this framework, we believe that modified CPT Code 88367/68 (automated/manual) will be required to be used for the first single probe staining procedure and new CPT code 88373/69 will be required to be used for each additional probe staining procedure unless multiple probes are applied to a slide simultaneously, in which case the new multiplex CPT Codes 88374/77 will be required to be used.

The IHC framework is similar to this new FISH framework. We believe that modified CPT Code 88342 will replace CPT Code G0461, and the new 88341 CPT Code will replace CPT Code G0462 unless a multiplex antibody stain (multiple antibodies in the same vial of reagent) is being applied to an IHC slide, in which case the new multiplex CPT code 88344 will be required to be used.

Although, final reimbursement rates for the Physician Fee Schedule (“PFS”) for 2015 have not been released yet, Addendum C of the Proposed Rule contains the “Interim Final Relative Value Units (RVUs)” for each of the above codes. Although we are still assessing the Proposed Rule, if the Interim Final RVUs contained in Addendum C of the Proposed Rule are enacted as drafted, we preliminarily estimate that that there could be a 20-30% further reduction in our FISH reimbursements for Medicare Beneficiaries in 2015. During the first 9 months of 2014, we recorded approximately $4.4 million of FISH revenue for tests performed for Medicare Beneficiaries.

The Proposed Rule including the Interim Final RVUs is subject to a 60 day comment period, ending on December 30, 2014, and we are in the process of preparing a comment letter with our feedback. We also plan to collaborate with the American Clinical Laboratory Association and other industry participants to voice our strong opposition to the Proposed Rule.

The final CY 2015 PFS is not expected to be issued until January 2015, and it is likely we will not know the final rates for the above modified and new CPT codes until that time.