1. No category

A Molecular Diagnostic Perfect
Storm
V.M. Pratt, PhD, FACMG
Regulatory and Reimbursement
• FDA oversight
• Coverage and
reimbursement
• Will precision
medicine survive?
2003: Human Genome Completed
• International consortium published draft
sequence
http://www.genome.gov/11007569
Public Attitude
• Increased benefit and potential use of
genetic testing
• People more interested in own genetic
make-up.
European Journal of Human Genetics (2013) 21, 793–799; doi:10.1038/ejhg.2012.271; published online 19 December 2012
US Diagnostic testing impact on health
care
• Trend towards
more precision
medicine
Estimated US spending on molecular
diagnostics and genetic testing, 2011
Bench to bedside
New and timely approaches for
establishing analytical and clinical
validity as well as FDA and CLIA
regulatory review merit
consideration to ensure timely,
high quality patient care
Chin et al. Nature Medicine 17, 297 (2011)
Wave of changes in Healthcare
• Lack of stakeholder agreement
• Increased cost pressures; ambiguous transition to
new CPT codes; more stringent reimbursement
decisions
• Increased role of CLIA testing with concordant
decrease in contribution of IVD products because of
pace of medically validated associations
• Narrower subsets of patients eligible for targeted
therapies
• Increased roles of EMR evidence that lacks quality of
randomized controlled trials but perhaps sufficient for
initially narrowly targeted patient management
FDA
• Companion diagnostic tests
• Proposed LDT oversight
FDA Oversight
• Ensure safety and effectiveness
• “device” to include any ‘… in vitro reagent, or
other similar or related article, including any
component’ “(2) intended for use in the
diagnosis of disease or other conditions, or in
the cure, mitigation, treatment, or prevention of
disease, in man or other animals” (21 U.S.C. §
321)
• Traditionally applied to medical device
manufacturers
Draft Guidance for Oversight of
LDTs
• 60-day to Congress on 31 July 2014
• Notice by the Food and Drug
Administration on 10/03/2014 in federal
register
• Goal to ensure analytical and clinical
validity
FDA Oversight of LDTs: Phased and
Risk-based
Operational issues
• Conflicts between CLIA and FDA
regulations
FDA restriction of off-label promotion versus
CLIA allows clinical consultation
CLIA regulation versus FDA’s quality system
regulation (QSR)
Laboratory service directory versus package
insert
Malpractice versus product liability insurance
Regulatory Experts Needed
Jobs Available in Clinical Labs!
FDA Medical Device Process
Presubmission
process
Concept and
Design
Preclinical
development
24-36 mo
Clinical trials
3-9 mo
IDE (PMA)
9-36 mo
Limited
FDA
Patient
submission Access
FDA review
Broad
Patient
Access
CPT code
assignment
510(k) 3-9 mo
12-24 mo
121 day ave (2011)
PMA 12-24 mo
360 day ave (2010)
FDA Companion Diagnostics
• Drug and test are approved together
• Currently promotes one test per one
instrument
Constrains laboratory infrastructure
Labs and Test platforms
• Many tests to a single platform
Reduces capital equipment costs
Reduces maintenance costs
Optimizes competency and training
Utilizes space efficiently
LDPs highly regulated
 CLIA Certification
 State law (eg, NYSDOH, CA)
 Accreditation (eg, CAP)
 ISO 15849
Modification of IVDs
• Often related to specimen type or stability
• Now considered LDTs
Will require FDA review in proposed
framework
• Permitted under CLIA [CFR §
493.1253(b)(2)]
Laboratory Professional Service
• Designing and validating test
• Purchasing manufactured products and
instrument
• Interpreting results
Promotes patient safety
CMS
•
•
•
•
New MolPath CPT codes
Non/limited-coverage decisions
Lack of reimbursement in 2013
Technology assessments required by
some MACs
CMS
• Pays for approximately 50% health care
• Laboratory testing
<5% hospital costs
1.6% of all Medicare costs
Skyrocketing healthcare costs
• Unhealthy lifestyles
Obesity
Lack of exercise
Diabetes, Type 2
IU.edu
Sequencing cost going down
• Relative to cost of human genome
Reagent cost – YES
• Infrastructure – NO
• Personnel - NO
Avalere study 2012
• Commissioned by ACLA
• Compared private market and Medicare
rates
• Medicare paid lower than private nongovernment health plans
CBC: commercial $20.26, CMS $11.02
Drugs screen: commercial $69.48, CMS
$25.57
• Payment differences higher in rural areas
compared to large metropolitan cities
New MolPath CPT codes
• AMA created new codes in response to
payers
Analyte-specific codes (Tier 1)
Level of complexity code (Tier 2)
• Implemented 1 January 2013
• Placed on CLFS
• Gap-filled
Year-long process to determine
reimbursement
Coverage decisions
• Some CPTs not applicable to Medicare
population (65+)
• Many other insurers (eg, Medicaid,
private) follow Medicare decisions
• Reimbursement lower than cost of IVD
Medicaid
• States generally pay for services through feefor-service or managed care arrangements
• States may develop their fee-for-service
payment rates based on:
- The costs of providing the service
- A review of what commercial payers pay in
the private market
- A percentage of what Medicare pays for
equivalent services
http://www.medicaid.gov/medicaid-chip-program-information/by-topics/financing-and-reimbursement/financing-and-reimbursement.html
Protecting Access to Medicare Act
2014
• Designates up to 4 MACs to establish
coverage policies
• Labs must report market data to
determine CLFS prices
Huge fines if fail to report
• Constrains Medicare from dropping
prices for any given test (limited to 55%
over 6 year period)
PAMA
Year
Theoretical
reimbursement
Reduction
2016
$100.00
10%
2017
$90.00
10%
2018
$81.00
10%
2019
$72.90
15%
2020
$61.97
15%
2021
$52.67
15%
2022
$44.77
15%
PAMA Advanced Diagnostic
• The test is an analysis of multiple
biomarkers of DNA, RNA, or proteins
combined with a unique algorithm to yield
a single patient-specific result
• The test is cleared or approved by the
FDA
• The test meets other similar criteria
established by the Secretary
PAMA Advanced Diagnostics
• Assignment of temporary HCPCS code
• 1st 3 quarters reimbursed at list
• Application of market rates after initial
period
Requires payback if overpriced
PAMA Advanced Diagnostics
• If FDA oversight of LDTs
• Would MolPath panels (eg, NGS tests)
get CPT code?
• CMS would have to cover test
• Private payors may not cover test
OIG: Comparing Lab Test Payment Rates: Medicare Could
Achieve Substantial Savings
https://oig.hhs.gov/oei/reports/oei-07-11-00010.asp
Percentage of All
Medicare- Allowed
Tests in 2010
Total Medicare- Percentage of Total 2011 Medicare National
Allowed Amount Medicare- Allowed Limitation Amount per
in 2010
Amount in 2010
Test
HCPCS*
Code23
Description
Number of MedicareAllowed Tests in 2010
80048
Metabolic panel, total calcium
9,355,762
2.30%
$94,325,286
1.90%
80053
Comprehensive metabolic panel
27,232,042
6.60%
$319,935,253
6.50%
80061
Lipid panel
20,970,947
5.10%
$310,596,151
6.30%
$18.85
6,709,626
1.60%
$30,435,748
0.60%
$4.45
4,416,987
1.10%
$16,008,487
0.30%
$3.60
4,805,501
1.20%
$15,435,365
0.30%
$3.16
81001
81002
81003
Urinalysis, automated, with
microscopy
Urinalysis, nonautomated, without
microscopy
Urinalysis, automated, without
microscopy
$11.91
$14.87
82306
Vitamin D, 25 hydroxy
5,333,420
1.30%
$223,366,966
4.60%
$41.66
82570
Assay of urine creatinine
4,362,909
1.10%
$32,023,975
0.70%
$7.28
82607
82728
Vitamin B-12
Assay of ferritin
3,334,018
4,361,621
0.80%
1.10%
$71,897,559
$84,963,813
1.50%
1.70%
$21.21
$19.17
83036
Glycosylated hemoglobin test
12,652,264
3.00%
$175,307,639
3.60%
$13.66
83540
83550
83880
Assay of iron
Iron binding test
Natriuretic peptide
5,455,091
4,297,065
1,135,239
1.30%
1.00%
0.30%
$49,960,956
$52,653,538
$54,491,238
1.00%
1.10%
1.10%
$9.12
$12.30
$47.77
83970
Assay of parathormone
3,582,472
0.90%
$211,655,094
4.30%
$58.08
3,651,490
0.90%
$96,028,772
2.00%
$25.89
14,728,086
3.50%
$353,395,445
7.20%
$23.64
31,930,801
7.70%
$351,630,565
7.20%
$10.94
22,020,091
5.30%
$123,445,269
2.50%
$5.53
84153
84443
85025
85610
Assay of prostate-specific antigen,
total
Thyroid stimulating hormone
Complete blood count with
automated differential white blood
cell count
Prothrombin time
2014 PFS
• CMS proposes to bundle all lab testing to
hospital outpatient fee visit
Exception is genetic tests
Controls over utilization
Promotes “across the street” testing
Palmetto MolDX Program
• Pilot program
• McKesson-owned Z-codes
Assigned based on laboratory and method
Designed to complement current CPT codes
Allows differential reimbursement based on
test
• Must submit technical assessment to Palmetto
Reviews analytical validity, clinical validity
and clinical utility
If labs close, what happens to
precision medicine?
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Medical pathology training?
Proficiency testing?
Translation of bench to bedside?
Innovation?
Path forward
• Oversight for most LDPs should remain at
CLIA
improve to explicitly require clinical
validity, transparency regarding
individual tests, and adverse event
reporting.
• FDA should eliminate the one test – one
drug pair, approved or cleared in concert in
the current companion diagnostics
paradigm
Path forward
• The FDA should use comment and notice
rulemaking for substantive policy
changes regarding LDPs
conduct an economic impact study
draft guidance documents that fail to be
finalized after a defined time limit
should be withdrawn.
Path forward
• Regulator and payer policies should also
reflect the contribution laboratories to
medical training and the necessary
interaction between laboratory
professionals and clinicians to support
proper ordering and utilization of tests.
Path forward
• CMS should authorize payment for all
claims previously filed using Tier 1 and
Tier 2 molecular pathology CPT codes,
retroactive to January 1, 2013, without
requiring submission of an appeal for
every claim unless a MAC has issued a
Local Coverage Determination (LCD) for
non-coverage that complies with existing
regulatory requirements, including codespecific notice and comment.
Path forward
• For any new molecular pathology CPT
code, share the same disposition of any
other new Medicare service and should
presumptively be covered.
MACs should continue to have the
authority and discretion to create
exceptions, i.e., non-coverage or
limitation on coverage determinations,
through the existing LCD process.
Path forward
• a single MAC should NOT make
recommendations or administer pricing,
coverage
this will undermine the LCD process and
render all such determinations NCDs.
Path forward
• CMS should abandon the use of unique
identifiers that discriminate among tests
within a CPT code based on any criteria
(beyond the identification of the gene), e.g.,
based on the methodology, FDA
approval/clearance status, or laboratory
performing the test.
Path forward
• CMS should provide state Medicaid
departments with information that will
assist their coverage and pricing
determinations so that the most vulnerable
patients do not suffer lack of access to care
Path forward
• Congress should provide additional
oversight as CMS implements the
“Improving Medicare Policies for Clinical
Diagnostic Laboratories” provision (Section
216) of PAMA.
The reporting requirements and penalties
will be burdensome
Which one is better?
•
•
•
•
Local restaurant
Caters to locale
High quality
FDA regulated
supplies
• Health
Department
inspection
•
•
•
•
National chain
National menu
High quality
FDA regulated
supplies
• Health Department
inspection
Conclusion
• Laboratories are important partners in
innovative precision medicine
• Changes in regulation and
reimbursement will cause labs to shut
down → Loss of precision medicine