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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. - PowerPoint PPT Presentation
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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
Chin et al. Nature Medicine 17, 297 (2011)
New and timely approaches forestablishing analytical and clinicalvalidity as well as FDA and CLIAregulatory review meritconsideration to ensure timely,high quality patient care
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Draft Guidance for Oversight of LDTs• 60-day to Congress on 31 July 2014• Notice by the Food and Drug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 regulationsFDA 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
24-36 mo 3-9 mo 510(k) 3-9 mo121 day ave (2011)
PMA 12-24 mo360 day ave (2010)
IDE (PMA)9-36 mo
12-24 mo
Pre-submission process
FDA submission
Limited Patient Access
Broad Patient Access
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 CertificationState 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 non-
government 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 fee-for-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
HCPCS* Code23
DescriptionNumber of Medicare- Allowed Tests in 2010
Percentage of All Medicare- Allowed
Tests in 2010
Total Medicare- Allowed Amount in
2010
Percentage of Total Medicare- Allowed
Amount in 2010
2011 Medicare National Limitation Amount per
Test
80048 Metabolic panel, total calcium 9,355,762 2.30% $94,325,286 1.90% $11.91
80053 Comprehensive metabolic panel 27,232,042 6.60% $319,935,253 6.50% $14.87
80061 Lipid panel 20,970,947 5.10% $310,596,151 6.30% $18.85
81001Urinalysis, automated, with
microscopy6,709,626 1.60% $30,435,748 0.60% $4.45
81002Urinalysis, nonautomated, without
microscopy4,416,987 1.10% $16,008,487 0.30% $3.60
81003Urinalysis, automated, without
microscopy4,805,501 1.20% $15,435,365 0.30% $3.16
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 Vitamin B-12 3,334,018 0.80% $71,897,559 1.50% $21.21 82728 Assay of ferritin 4,361,621 1.10% $84,963,813 1.70% $19.17
83036 Glycosylated hemoglobin test 12,652,264 3.00% $175,307,639 3.60% $13.66
83540 Assay of iron 5,455,091 1.30% $49,960,956 1.00% $9.12 83550 Iron binding test 4,297,065 1.00% $52,653,538 1.10% $12.30 83880 Natriuretic peptide 1,135,239 0.30% $54,491,238 1.10% $47.77
83970 Assay of parathormone 3,582,472 0.90% $211,655,094 4.30% $58.08
84153Assay of prostate-specific antigen,
total 3,651,490 0.90% $96,028,772 2.00% $25.89
84443 Thyroid stimulating hormone 14,728,086 3.50% $353,395,445 7.20% $23.64
85025Complete blood count with
automated differential white blood cell count
31,930,801 7.70% $351,630,565 7.20% $10.94
85610 Prothrombin time 22,020,091 5.30% $123,445,269 2.50% $5.53 87086 Urine culture colony count 4,610,965 1.10% $53,112,711 1.10% $11.36
https://oig.hhs.gov/oei/reports/oei-07-11-00010.asp
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?
• Medical pathology training?• Proficiency testing?• Translation of bench to bedside?• Innovation?
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
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