SMDL #01-005  
January 8, 2001 
Dear State Medicaid Director: 
This letter provides information about two relatively new laboratory tests for the 
management of Human Immunodeficiency Virus (HIV) disease to assist State 
Medicaid agencies in establishing policies regarding coverage, coding, and reasonable 
payment for these tests. The two tests are genotype human immunodeficiency virus 
type-1 (HIV-1) testing (mutation analysis) for drug resistance and phenotype HIV-1 
drug susceptibility (commonly referred to as resistance) testing. 
Because the technology to perform these tests has only recently become widely 
available, State Medicaid Agencies and other public and private health insurers are 
now faced with many complex issues concerning coverage, payment, and coding. 
Laboratories, manufacturers, community-based AIDS organizations, public health 
researchers, and health insurers have also asked HCFA for guidance and assistance 
regarding these tests. 
Standards of Care
On January 19, 2000, a panel of experts convened by the U.S. Department of Health 
and Human Services and the Henry J. Kaiser Family Foundation updated their 
guidance on clinical practices for the treatment of HIV infection, entitled "Guidelines 
for the Use of Antiretroviral Agents in HIV Infected Adults and Adolescents." The 
Guidelines are generally accepted as the standard of care in the United States. With 
regard to drug resistance testing, the Guidelines state that both the genotype and 
phenotype drug resistance assays are recommended in certain circumstances. 
The guidelines recommend resistance testing in two situations: (1) When the patient 
presents with virologic failure during Highly Active Antiretroviral Therapy (HAART), 
and (2) When the patient has suboptimal suppression of viral load after initiation of 
antiretroviral therapy. The Guidelines state that resistance testing is generally not 
recommended with chronic HIV infection prior to initiation of therapy, after 
discontinuation of drugs, and when the patient's plasma viral load is less than 1000 
HIV RNA copies/mL. In the presence of acute HIV infection, the Guidelines state that 
the provider should consider resistance testing. Since the publication of the 
Guidelines in January, two additional studies have been completed that confirm the 
effectiveness of genotypic testing. 
Coverage
While there has been concern that none of the available genotype and phenotype 
tests have received approval from the Food and Drug Administration (FDA), only 
"test kits" for interstate commerce require this approval. Currently, most genotype 
and all phenotype testing is being performed under the "homebrew" status and 
therefore is not subject to FDA approval. Some manufacturers are currently seeking 
FDA approval for genotype test kits. One manufacturer has a genotype kit that has 
received an FDA status of Investigational Device Exemption (IDE). The FDA regulates 
how these non-FDA approved laboratory tests can be used, marketed, and 
distributed.  While this information is important to States, HCFA and State Medicaid Agencies are 
not responsible under Federal regulations for knowing whether laboratories or 
manufacturers are complying with FDA requirements or for ensuring compliance with 
these requirements, nor is FDA approval of a test/procedure a prerequisite for 
Medicaid coverage. A State Medicaid agency can decide to cover an FDA-approved or 
non-FDA approved laboratory test if the agency determines the test to be medically 
necessary and if the test is provided by a qualified Medicaid laboratory that is 
certified in accordance with the Clinical Laboratory Improvement Act (CLIA) to 
perform such tests. In some States however, the Medicaid program is required by 
State law to cover only FDA-approved products and therefore, the State Medicaid 
agency must follow its own regulations. 
If you have any questions that relate to FDA compliance requirements for HIV tests, 
you may contact the Food and Drug Administration, Center for Biologics Evaluation 
and Research, Office of Compliance & Biologics Quality, Division of Case 
Management, 1401 Rockville Pike, suite 400 South, HFM-610, Rockville, MD 20852, 
(301) 827-6201. 
Cost
Reimbursement for the genotype assay test and phenotype assay test range from 
$250 to $500 and $625 to $900, respectively. State Medicaid agencies choosing to 
cover these tests should determine an adequate payment amount with the providers 
in their States to assure appropriate access to these tests. Payment should meet 
Federal requirements of economy and efficiency while assuring appropriate access to 
these services. Section 1903(i)(7) of the Social Security Act and section 6300 of the 
State Medicaid Manual provide that Medicaid payments cannot exceed what Medicare 
would pay for these tests (the 'Medicare upper limit') when Medicare establishes a 
national limitation amount (NLA). HCFA has set an NLA for the Medicare program for 
these two tests effective January 1, 2001. Instructions on the fee schedule, 
(Medicare Program Transmittal AB-00-109), can be found at 
http://www.hcfa.gov/pubforms/transmit/AB00109.pdf. 
Coding
The American Medical Association (AMA) has developed three new Current 
Procedural Terminology (CPT) codes for the resistance tests. The effective date for 
these codes is January 1, 2001. Genotype testing has one CPT code (87901). 
Phenotype testing has two codes. The primary (87903) covers the first ten drugs 
that are tested. The second code (87904) is to be used for each additional drug, up 
to five drugs. The CPT manual specifies that code 87904 must be used in conjunction 
with 87903. 
Conclusion
Based upon the information contained in this letter, the technical attachment, and 
the Guidelines regarding the recommended and optimal use of resistance testing, 
State Medicaid agencies should provide coverage of these tests under the specific 
clinical conditions outlined in the Guidelines and should determine what 
reimbursement is reasonable to assure appropriate access to care.  We have enclosed some technical information about these tests that we believe will 
be helpful to you and your State in establishing coverage and reimbursement. The 
Guidelines are available upon request by calling 1-800-448-0440 or may be 
downloaded from the Internet at http://www.hivatis.org/guidelines/adult/text/. We 
hope that this information proves useful in your implementation of this new 
laboratory test. If you have questions, please call Kurt Hartmann at (410) 786-0400. 
Sincerely, 
/s/  
Timothy M. Westmoreland  
Director 
Enclosure 
cc: 
All HCFA Regional Administrators  
All HCFA Associate Regional Administrators Division of Medicaid and State Operations  
Lee Partridge, Director, Health Policy Unit - American Public Human Services 
Association  
Brent Ewig, Senior Director, Access Policy - Association of State and Territorial 
Health Officers  
Julie Scofield, Executive Director - National Alliance of State and Territorial AIDS 
Directors  
Joy Wilson, Director, Health Committee - National Conference of State Legislatures  
Matt Salo, Director of Health Legislation - National Governors' Association 
 
 
 
Resistance Testing  
Technical Information 
 
Why Resistance Testing
Since the discovery of HIV in 1983, an explosion of research has begun in the area of 
retroviral genes. HIV mutates frequently causing errors in the HIV genetic material 
(genome). These genetic mutations enable the virus to become resistant to 
previously effective antiretroviral drugs. Even with the development of HIV "drug 
cocktails" when three or more drugs designed to impede replication of the virus at 
different life-cycle stages are initially successful, the HIV virus mutates and 
eventually becomes resistant to these drug regimens. To date, over 140 HIV 
mutations have been identified which lead to drug resistance. The genotype and 
phenotype tests provide information to the clinician about the various mutations and 
the effectiveness of drugs on the virus. The U.S. Department of Health and Human 
Services/Kaiser Family Foundation HIV treatment guidelines state that HIV resistance 
testing is recommended to guide antiretroviral therapy in certain circumstances.  Genotypic Assay Test
Genotyping assays detect drug resistance mutations that are present in the patient's 
HIV viral genes (i.e. reverse transcriptase (RT) and protease). Some genotyping 
assays involve sequencing of the entire RT and protease genes, while others utilize 
probes to detect selected mutations that are known to confer drug resistance. 
Genotyping assays can be performed relatively rapidly, such that results can be 
reported within 1-2 weeks of sample collection. Knowing which drug resistance 
mutations are present may provide the clinician with valuable information when 
selecting or changing therapy for a particular individual. Genotypic testing has a 
number of advantages over phenotypic testing such as: 
  it is faster and easier to perform,  
  it can be performed at significantly lower cost,  
  and it is more widely available throughout the United States.  
 
Disadvantages include: 
  lack of sensitivity for detecting drug resistant minor variants, and  
  an imperfect relationship between resistance genotype, phenotype, and 
clinical outcome.  
 
Interpretation of test results requires an appreciation of the range of mutations that 
are selected for various antiretroviral drugs, as well as the potential for cross-
resistance to other drugs conferred by some of these mutations (see the http://hiv-
web.lanl.gov web site). Consultation with an expert in HIV drug resistance is 
encouraged to facilitate interpretation of genotypic test results. 
Phenotypic Assay Test
Phenotyping assays measure the ability of the patient's HIV viruses to grow in 
various concentrations of antiretroviral drugs. Automated, recombinant phenotyping 
assays have recently become commercially available with turn-around times of 2-3 
weeks, but generally turn-around time is 6 to 12 weeks. In addition, the phenotype 
assays are significantly more costly to perform than genotypic assays. Recombinant 
phenotyping assays involve insertion of the RT and protease gene sequences derived 
from patient plasma HIV RNA into the backbone of a laboratory clone of HIV either 
by cloning or in vitro recombination. Replication of the recombinant virus at various 
drug concentrations is monitored by expression of a reporter gene and is compared 
with replication of a reference strain of HIV. The concentrations of drugs that inhibit 
50 percent and 90 percent of viral replication (i.e. the IC50 and IC90) are calculated, 
and the ratio of the IC50s of the test and reference viruses is reported as the fold 
increase in IC50, or fold resistance. To date researchers and clinicians have identified 
a number of problems with phenotype testing to include: 
  A national database has not been sufficiently developed to benchmark the 
specific level of resistance (fold increase in IC50) that is associated with 
failure of different drugs;     the reporting time is considerably delayed due to the culture growth stage;  
  insensitivity to minor viral species (less than 20 percent of the circulating 
population);  
  the minimum blood level of drug needed to suppress replication in vivo is not 
known for any drug;  
  and the test is relatively expensive.  
 
Interpretation of phenotyping assay results is complicated by the paucity of data on 
the specific level of resistance (fold increase in IC50) that is associated with failure of 
different drugs; again, consultation with an expert may be helpful for interpretation 
of test results. 
Further Limitations
Both genotyping and phenotyping assays currently lack uniform quality assurance 
standards for performing assays, are done at relatively high cost, and are not 
sensitive to minor viral species (i.e., if drug-resistant viruses are present but 
constitute less than 10-20 percent of the circulating virus population, they will likely 
not be detected by current assays). This latter limitation is of particular importance 
when interpreting data about susceptibility to drugs that the patient has taken in the 
past but are not parts of the current antiretroviral regimen. If drug resistance had 
developed to a drug that was subsequently discontinued, the drug-resistant virus can 
become a minor species because its growth advantage is lost. Consequently, 
resistance assays should be performed while the patient is taking his/her 
antiretroviral regimen, and data suggesting the absence of resistance should be 
interpreted carefully in relation to the prior treatment history. 
DHHS/Henry J. Kaiser Family Foundation Guidelines--Recommendations 
Regarding Drug Resistance Assays
Resistance assays may be useful in the setting of virologic failure on antiretroviral 
therapy and in acute HIV infection. Recent prospective data supporting the use of 
resistance testing in clinical practice come from trials in which the utility of resistance 
tests were assessed in the setting of virologic failure. Thus, resistance testing 
appears to be a useful tool in selecting active drugs when changing antiretroviral 
regimens in the setting of virologic failure. There are currently no prospective data to 
support the use of one type of resistance assay over the other (i.e. genotyping vs. 
phenotyping) in different clinical situations. Only one type of assay is generally 
recommended per sample; however, in the setting of a complex prior treatment 
history, both assays may provide important and complementary information. 
Treatment of acute HIV infection is associated with improved immunological outcome 
and optimization of the initial antiretroviral regimen through the use of resistance 
testing is a reasonable albeit untested strategy. Because of its more rapid turn-
around time, the use of a genotypic assay may be preferred in this setting. However, 
the treatment guidelines state that therapy should not be withheld while awaiting the 
results of resistance testing. The use of resistance testing prior to initiation of 
antiretroviral therapy in chronic HIV infection is not generally recommended because 
of uncertainty about the prevalence of resistance in treatment-naive individuals and 
the fact that currently available resistance assays may fail to detect drug resistant  species that were transmitted at the time of primary infection but became a minor 
species in the absence of selective drug pressure. The currently favored approach 
would be to reserve resistance testing for cases in which viral load suppression was 
suboptimal after initiation of therapy. Although this may change as more information 
becomes available on the prevalence of resistant virus in antiretroviral-naive 
individuals. 
In general, recommendations for resistance testing in pregnancy should be the same 
as for non-pregnant patients: acute HIV infection, virologic failure on an 
antiretroviral regimen, or suboptimal viral load suppression after initiation of 
antiretroviral therapy are all appropriate indications for resistance testing. 
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