Wednesday, December 13, 2017

The CMS Proposed NCD for NGS Testing in Cancer: Playing It Out for MSI & Keytruda

On November 30, CMS released a proposed NCD that regulates the use of NGS testing in advanced cancers.   In brief, the NCD provides three tiers of coverage:
  1. PMA Tests Used for On-Label Cancers.
    1. These tests are covered for advanced cancers if the cancer is on label for at least one gene.   Foundation One CdX is covered for paients who have either breast, melanoma, lung, or colon cancer [at least one gene is CDx in each].   ThermoFisher Scientific Oncomine Target Dx is covered patients with lung cancer.
  2. PMA Tests Used in Off-Label Cancers *OR* all uses of 510(k) Cleared Tests (such as MSK IMPACT)
    1. These tests are covered only by concurrently enrolling patient in a detailed, long term clinical registry (CED) including ongoing RECIST objective response and PFS imaging.
  3. All Other Tests (e.g. LDT NGS)
    1. Covered only in NCI trials.
How would the NCD play out for solid tumor patients and Keytruda?

In May 2017, FDA approved immuno-oncology therapy Keytruda for all patients with solid cancers.  While there are several test methods (NGS, PCR, immunohistochemistry), none to my knowledge are FDA cleared.  Nonetheless, use of the cancer drug is on label if used with CLIA MSI testing.  In short, currently, FDA approves a major cancer drug for several hundred thousand US patients without an FDA PMA approved diagnostic.  

Patients can get (1) non-FDA approved immunohistochemistry testing, (2) non-FDA approved PCR, CPT 81301) or (3) non-FDA approved NGS MSI (MSI is found on the Foundation One test but not with CDx status).   For example, the MolDX article for test coverage is here.

Under the NCD, patients with breast, lung, colon, or melanoma have access to MSI testing under the Foundation Medicine test, since the test has one approved gene in each cancer, even though MSI is a supplemental report, not a CDx test.   

Using deaths from cancer as a proxy for advanced cancer, I assumed for sketch purposes that half of cancer deaths were in the Medicare population.  This yields the numbers shown below, assuming the Foundation CDx test is paid at $2900 (81455) and the MSI PCR test (CLIA) at $356.    

64,215 patients with advanced lung, breast, colorectal cancer or melanoma could get the FMI test for MSI, at $186M.   (Had they got the PCR test 81301 for MSI, which CMS also covers, $22.8M).   

More interesting is the other cancers - endometrial, renal, liver, etc.   Here, about 71,470 Medicare patients could get either the FMI or IMPACT tests, at $2900 each, for $207M.   Each patient would cost perhaps $10,000 in CED, for an additional $714.7M, totalling $921.9M.   (Had these 71,470 patients had PCR MSI testing and no CED, costs would be $25.4M.)   

click to enlarge
Before the NCD, total cost of testing of all patients would be $48M under CPT 81301 PCR.   With the NCD, total cost of testing (and CED) is $1.1B, with about $400M being cost of testing for MSI.  

How Much Does CED Cost?  Who pays?

The CED required in the NCD is pretty elaborate, such as RECIST imaging for objective response (OR) and progression free survival (PFS), the latter of which could go on for a year or more.   In addition, I'm assuming that it's not rigorous PFS without monthly imaging.  The imaging would not be required for clinical care, so it would not be covered by the Clinical Trials NCD.   So let's say it is $10,000 per year.   No regular lab could afford that (based on $2900 test payments).  Maybe wealthy medical centers could fund it, for a limited number of select patients.   Since much of the cost is imaging, it could be billed to patients under an ABN as "medically unnecessary services," but few patients could pay the cost.   I am not an attorney, but it seems like CMS might be able to cover the imaging costs under CED - the whole point of CED is to cover non medically necessary costs.  However, so far CED has only been used when the service under CED is "the" medical therapy, and RECIST imaging is not "the" medical therapy under CED research.

Monday, December 11, 2017

Very Brief Blog: LInk to December 11, 2017 ACLA lawsuit against CMS over PAMA (33p)

ACLA sued CMS over PAMA rules and changes in the lab fee schedule.   A link to the PDF lawsuit is here.

The corresponding press article at Reuters is here.   The ACLA press release is here.

The case has been written by Mark Polston of King & Spalding LLP in Washington.

Congress required CMS to collect private payment payer rates from laboratories which receive "the majority of its revenues under the Medicare program from the CLFS or the PFS."  CMS also interpreted that it had authority to set rational size limits for reporting laboratories (e.g. excluding a physician office lab that reporting 25 urinalysis to CMS a year).

Reverse Engineering CMS's Position, Unpleasant Though It Seems

CMS bundles the payments for all DRG inpatients and the vast majority of the lab test payments or allocated budget for hospital outpatients as well.   So none of those CMS payments are from "CLFS or PFS."   CMS probably felt that figuring out the "majority of payments rule" for a lab administratively embedded within a hospital would be very difficult (some mix of CMS payments - completely unspecified and unpriced - for inpatients and outpatients, and then also, CLFS or PFS revenue for reference lab activities.)   Perhaps throwing out the baby with the bathwater, CMS ruled that applicable reporting labs had to be those that were, already, receiving or reporting all CMS payments under their own NPI.   This left a set of ... almost nobody.    However, it's easy for CMS to say exactly what proportion of payments such labs get from CLFS if it's based on an NPI: CMS can just look up its own computer NPI records.  (Actually, it might not be that easy, because the lab might have its own NPI, bill CMS for reference lab tests, yet the "same lab" also get some revenue from a hospital cost center through internal financial transfers for running some tests on inpatients, AKA Medicare origin revenue). 

Very Brief Blog: Trade Journals on 2017 Changes in 14 Day Rule

Two trade journals have discussed the CMS 14 Day Rule scheduled to become effective on 1/1/2018.

There was a story in the recently created web news agency AXIOS, here.  It actually appeared in mid July 2017.   Note this Axios article links to a 16p cloud deck used in May to successfully explain the problem to CMS.

The news website DARK DAILY follow up with an extension of the storyline, on December 11, here.

image as seen in DARK DAILY article (see link in text)
I believe there is at least one major error in the TEXT of the rulemaking, which I discussed in a prior blog.   The new regulation and the basic concept of the rulemaking is to have Medicare "molecular pathology tests" - which they have been defining in practice for several years as human DNA RNA tests - be billable by the "performing lab," whether that be the hospital or an outside lab.   However, the body of the rulemaking discussion says that this change in billing excludes "genomic sequencing procedures" which makes no sense, and excludes PLA codes, which of course may be genomic sequencing procedures, tests of human DNA, and so on.   I  try to tell the story in a 4 slide online deck PDF, here, and the summary or finale slide is this:


For nerds, I discuss the communications methods used in the CMS deck obtained via AXIOS, here.

Sunday, December 10, 2017

CMS Code Edits for CY2018 Block Use of BRCA Code 81211 At Same Time as BRCA Code 81213

Each quarter, CMS updates its "Correct Coding Initiative" edits, typically with a larger update for each new calendar year.

CMS has released its Procedure to Procedure Edits for lab codes for CY2018, available at the CMS CCI website, here.

  • CMS has changed the edits to block joint use of BRCA Sequencing (81211) and the add-on or stacked code 81213 (BRCA dup del analysis).   CMS has altered the rationale to "HCPCS/CPT procedure code definition."   
  • I believe the underlying rationale has to be that if you do BOTH, BRCA sequencing and BRCA full dup-del analysis, they are replaced by the comprehensive AMA CPT code 81162, which is for full BRCA sequencing with full Dup Del analysis as one code.   

This has important fiscal implications for CMS, because under PAMA, the price for the code stack (81211+81213) rises (to about $2900 total) but the price for 81162 as a comprehensive code falls steadily.

81162 will pay $2253 in 2018, and $2018 in 2019, and $1825 in 2020.

Fiscal Impact for CMS

For example, at 20,000 BRCA cases per year, for CY2020 CMS would have paid $58M at the code stack rate; but only $36M at the comprehensive code rate, an instant savings of $21M.  Private insurers may follow CMS edits like this, but are not required to.

Screen shot from the 2018 CMS edit instruction:

click to enlarge
Manual for 2018 Available

The CMS CCI staff also released a manual of instructions (in PDF text form) in December, available online here.  See the link at bottom of the CMS webpage for NCCI Policy Manual (zip file of PDF chanters).

The "1" modifier in the table means that the edit can, or could, be overridden, but CMS manual instructions state only to allow that in uncommon circumstances where a special circumstance is justified by review of the medical record.

Note that CPT code 81432 (BRCA panel sequencing) is NOT blocked against 81433 (BRCA panel Dup Del) because there is no single code that represents the services 81432+81433.  

Friday, December 8, 2017

The Foundation Medicine NGS NCD: Did CMS Accidentally Roll Over Leukemia and Liquid Biopsy?

On November 30, 2017, CMS released a detailed and complex NCD that originated in a Parallel Review assessment of the newly FDA approved Foundation Medicine CDX test based on paraffin block analysis in solid tumors (here).

The NCD, which is under comment until December 29, provides coverage for PMA-approved NGS tests as long as they are used in a patient with an on-label cancer for that test.  It covers the Foundation One PMA CDx test, as well as other PMA-approved NGS tests like the Thermo Fisher OncoMine Target Dx tests.  Tests are defined as covered now and on a rolling basis in the future.

However, the NCD states that it governs use of testing in all advanced cancers when NGS testing is used.   The NCD doesn't mention differences between solid tumors paraffin based tests and liquid biopsy based tests, and it doesn't call out any differences for tests in hematopoeitic cancers (leukemia/lymphoma.)  The NCD would have unexpected results for patients needing a liquid biopsy test under NCCN guidelines, for all patients who have leukemias or lymphomas, and for all Medicare patients with have cancers outside the top 4 or 5 like lung and colon.  (Medicare Advantage patients could get medically necessary tests in these categories, but no available coverage would be possible for patients in Traditional Medicare.)  The NCD works differently for each group, as presented below.


Here is an overview of the landscape.  (FIGURE 1).   Working from the bottom of the chart upwards, there are solid cancers, and hematopoeitic cancers.   Solid tumors can be assessed with paraffin block tissue; or NCCN recommends oncologist consider liquid biopsy when solid tissue isn't available.   Testing has progressed from single gene tests (e.g. BCR ABL alone) to multiple gene separate tests to gene panel tests.   NCCN guidelines cover all of this, and there are pretty tightly written LCDs.   Overall usage of gene panel codes is not high, about 1000-3000 uses for codes 81445, 81450, 81455 in Medicare data for 2016.  This indicates that LCD controls are tight.  As FIGURE 1 shows, in the upper left, the chart culminates in 2017 with the FDA approval for several paraffin block based, solid tumor NGS tests.

click to enlarge

AFTER the FDA had issued PMAs for several paraffin block test, and in coordination with the FDA, CMS created the NCD, as shown in FIGURE 2.

click to enlarge

So far so good.

The tricky part is, CMS waited until there were several paraffin NGS panel tests on the market before releasing the NCD.   But the NCD provides coverage ONLY for PMA approved tests, and the FDA' library of PMA-approved tests is currently very incomplete compared to the wide range of major human cancers.   Over half of cancers have no PMA approved CDx, immediately shunting hundreds of thousands of patients into complex and very costly "CED" immediately, on the day the NCD is finalized.


Yikes.  There aren't yet any PMA approved NGS panel tests for hematopoietic tumors, or for liquid biopsy in refractory scenarios in solid tumors, or for over half of the incident U.S. cancers (pancreatic, leukemia, lymphoma, kidney, etc).  So we get FIGURE 3:

click to enlarge

The text of the NCD provides de facto coverage only for paraffin tumor block NGS tests used in a small number of solid tumors, because these are the only type of PMA tests approved by FDA so far

Wait, what about the CED coverage in the NCD?   

CMS provides back-up coverage by allowing Coverage with Evidence Development (CED) clinical trials for gene panel tests, if they have NYS and FDA 510(k) clearance.  But there are still two big problems, big enough to make this channel essentially impossible.

Problem 1:  Many gene panel tests are NYS approved, but FDA hasn't even created a 510(k) pathway for leukemia, or lymphoma, or liquid biopsy tests.  Nor has FDA approved any tests in these several broad categories.  That's a pretty big problem.  These are the entry points for the CED channel, and they're not even opened yet. 

click to enlarge

In the preceding pie chart, I estimated incidence of advance cancers based on NCI death rates; mapped the cancers with at least one PMA NGS CDx gene (green); categorized other solid tumors as CED (red); allow about 5% for solid tumor liquid biopsy per guidelines (pink); and separately show the population for leukemia/lymphoma (maroon).   The total pie chart in the US represents 450,000 advanced cancers (deaths); as a rule of thumb you could estimate 1/2 of that is the Medicare, >65 population.  So far circa 100,000 Medicare patients, the NCD covers the $3000 NGS test; for the rest of the circa 100,000 patients, it would cover the $3000 FMI NGS test off label but require ?$10,000 or $20,000 of CED as well.  If it was all paid for, it would be 100,000 PMA NGS patients for $300M (green slice), and circa 100,000 off label CED patients at a similar $300M for testing and perhaps 100,000 x $10,000 or $1B for CED.

Problem 2:  In addition, in all practical terms, CED trials for 510(k) gene panels tests and off label PMA tests will be impossible as proposed.

The most severe issue is that the CED requires RECIST testing (special whole body imaging tests, typically conducted monthly) in order to have accurate ORR and PFS data.  This could mean monthly, $1000 scans surveillance imaging (MRI or CT) - $12,000 in the first year.  Obviously, a lab can't spend $10,000-20,000 on CED research in return for the patient's Medicare payment of $600-$2900 test.  It's a non starter.[*]   This concern - that CED is impossibly costly - also applies directly to all the Medicare cancer patients who are unlucky enough to have each and all of the many solid tumors that aren't approved at the PMA level on Foundation's test.
Cost of Proposed CED?  I peg the cost of the CED section of the NCD at two billion dollars. NCI lists about 450,000 patients dying each year of the 13 major cancers.  Of these, about 250,000 have NGS CDx tests (lung, colon, etc).  About 200,000 do not.   If half of these advanced cancer patients are Medicare patients, it's 100,000.  If the CED with monthly RECIST studies costs $20,000 per year, the cost of the CED research would be  $2B annually.   See my table based on NCI data, here.  
An additional problem, for Medicare patients with leukemia, is that the CED is written to require mandatory RECIST testing, which is impossible for these patients.  Dr. Gottlieb of the FDA strongly supported the NCD in testimony on the Hill on December 7; but today if he was a Medicare patient and had a relapse of his lymphoma or a recurrence as leukemia, he couldn't get any genomic testing.  So either CMS envisions no genetic testing in leukemias, or, would have to admit to substantially mis-writing the basic scope of the NCD and/or major high level requirements of the CED, despite the NCD being the result of a 2-year process.

CMS should defer imposing either [non coverage or $20,000 CED registries] on cancer patients before there are at least several PMA approved test for that patient's category of cancer.  

Issues of quality are over-rated in the NCD.   Recall that FDA now equates NYS approval with FDA clearance and clinical use of tests (e.g. the MSKCC IMPACT test was cleared in this new pathway).  And tests like Foundation One are essentially the same before and after the FDA approval.  And all cancer patients in Europe, Canada, Japan, Australia are getting NGS testing without FDA PMA approval.   And the FDA has regularly approved major on-label drugs on a rolling basis (based on KRAS, ROS1, MSI testing) ahead of the existence of any PMA approved test, suggesting the FDA isn't as concerned as CMS is.  Concern about test quality has a place, but doesn't need to be directed against presently NYS and CAP approved tests that are in NCCN guidelines and are in pipelines for FDA approval.  (CMS also seems to conflate the medical necessity of gene-drug pairs that have been FDA endorsed, like ALK-Xalkori, with the function of analytically accurate tests for the same gene).  For broad categories of patients that have no PMA-approved gene panel test, in the short term, over the couple of years, LCD coverage has already proved to be stringent and frugal and it will be enough to control overuse.

Note on Process.  NCD clearly directly only to solid tumors in its body.  CMS didn't justify "non coverage" in these additional cancer areas (shown in red).  CMS studied the NGS literature in paraffin tissue from solid tumors, using Pubmed search keywords like "lung cancer" or "melanoma" (not leukemia or lymphoma) and assisted by Foundation Medicine publications on its paraffin based test use in solid cancers.

Also, as mentioned above, CMS demands that all patients in CED must have RECIST studies, which makes no sense in leukemia patients, and suggests the NCD authors were not actually thinking of applying the NCD to leukemia/lymphoma.  This implies that CMS may have miswritten the legal scope of the NCD (all cancers) relative to the available body of facts and research inside it (some cancers).

Another Note on Process.  NCD predicated on today's 510(k) & PMA terminology, while FDA is racing ahead to other concepts.  The NCD is based on the current 510(k) and PMA processes.  These have been changing substantially; for years, FDA refused to give 510(k) approval based on accuracy of genetic testing in CDx tests, and then it opened the 510(k) pathway in cancer for analytically accurate tests with NYS approval in November.   The FDA is also opening up important non-PMA, non-510(k) pathways for germline human genetic tests, such as for hereditary recessive genes, an enormous change in policy based  fundamentally on the accuracy of modern NGS testing and sequencing (82 Fed Reg 51560, 51563, 51567, links here).  The NCD doesn't contemplate these recent FDA publications.  In addition, if Congress passed a new diagnostics law, it would create terminology and approval categories other than PMA and 510(k) for diagnostics, which the NCD doesn't contemplate.

A final note on Access and Process.   CED Channel is Burdensome, but FDA itself approves drugs ahead of their CDx tests. Sometimes by a couple years.   The NCD has only a VERY burdensome CED channel, and it's available only to 510(k) or PMA approved tests, but is triggered whenever a cancer is off label (e.g. outside the top 4 cancers).  However, on a regular basis, FDA has released drug approvals ahead of any PMA test.  For example, there was approval for use of KRAS testing a full couple years before a PMA KRAS drug.  There was approval for ROS1 drugs long before  a PMA ROS1 test (the Oncomine test in June 2017).   There is currently approval, right now, for MSI based drug use for Keytruda, but no PMA test.  (MSI is in the FMI test, but it's not PMA CDx).  All of these categories of gene-drug get shunted into burdensome or impossible CED if and when the FDA drug approval precedes the PMA test approval by a year or two.   Another example of problems in this category would be the discovery of important genes that act on the effectiveness of generic drugs, or limit the optimal population for an existing drug.  These aren't going to be funded and researched by wealthy biopharmas and will never reach on-label PMA gene tests, no matter how strong the evidence and how wide the use.   No one is going to spend $50M out of their pocket getting FDA PMA approval for a generic gene on a generic drug.

[*] Technically, CMS can cover $20,000 in RECIST research costs or other costs implied by the rigorous CED.  Congress gives CMS carte blanche to cover costs related to research that furthers any purposes of AHRQ (which is to study and improve the health of the US population).  If it's $20,000 per CED cancer patient x 100,000 patients, that's $2 billion.  I don't believe CMS has ever attempted to cover research costs in CED rather than only medical costs, but CMS can pay for costs that are not medically necessary but are necessary for AHRQ research.

AMA Has Pre-Posted Lab Codes for Feb CPT Meeting; Will Post All Codes Posted December 8 for Comment

AMA  posts a universal calendar of key dates for upcoming CPT meetings (here).  For the February 8-10, 2018, meeting, all code titles will be posted on December 8 for a brief public comment period.

Look for "next-meeting-specific" PDFs and links, posted and updated by AMA on a rolling basis, here.

In addition, the Pathology application titles are posted even earlier, December 1.  These have an early comment period til December 8, I believe to facilitate December subcommittee meetings for lab codes.   Here.   However, I believe that despite this early December 1-8 cycle, the Path Codes are also included in the universal comment cycle that begins when all codes are posted together for comment on December 8.

The lab specific early posting (which may get updated)  calendars tabs 13-21 for lab codes.   These include (13) BRCA coding, (14) NUDT15 tier 1 gene, (15) SMN1-SMN2 set of 3 codes, (16) TERT Tier 1 gene for glioblastoma, (17) Tier 1 status for over a dozen triple repeat disorders being moved from Tier 2 to Tier 1, (18) a MAAA for bladder cancer recurrence, (19) a MAAA for bladder cancer risk, (20) a MAAA for thyroid cancer risk, (21) finally a dyhydrotestorerone chemistry test described as "reinstate code 82651."

The purpose of posting agendas and code titles is to allow public stakeholders to request copies of the CPT applications and submit comments.  However, the comment periods are short.

Thursday, December 7, 2017

Very Brief Blog: Speaking at MEDCITY / INVEST2018 (May 1, Chicago)

Agenda just posted for the MEDCITY - INVEST2018 conference in Chicago, May 1-2.

Overview of the conference in a MedCityNews article here.  Agenda for the conference here.   Clip of my session title and agenda, below.

click to enlarge

Show me the Money: How Investors Are Seeking Robust Reimbursement

A well-thought out regulatory pathway alone cannot win venture capital dollars. More and more, VCs are requiring entrepreneurs articulate the business model and reimbursement plan for their novel idea. Hear from experts about how startups need to develop their health economics chops.

Bruce Quinn, M.D., Ph.D., 
Principal, Bruce Quinn Associates LLC, 
Senior Strategic Advisor, Faegre Baker Daniels

FDA issues Major New Digital Guidances, Like Clinical Decision Support

On December 7, 2017, FDA issued three new guidances on digital health topics.

The guidances include two in draft, one final, and follow naturally from recent initiatives such as the "Digital Health Innovation Action Plan" *8pp) of the FDA.   Guidances today include:
  • Clinical and Patient Decision Support Software (draft)
  • Policy Changes per 21st Century Cures Act (draft)
  • Software as a Medical Device (final)
For full information and links, see the FDA's heavily hotlinked press announcement, here.  I've also put the 3 guidances and the Innovation Action Plan in one open acess cloud zip file, here.

Coverage at Fierce Healthcare, here. RAPS here.

The FDA has also announced a two day workshop (January 30-31, 2018) on its software precertification program.  Note that, Dr. Gottlieb has previously flagged the precertification program may be increasingly applicable to diagnostics at some future point.

Extra credit assignment; See Bradley Merrill Thompson's detailed multi page (web) essay on CDS history at FDA, here.  Although undated, I believe from internal references it may cover until 2012, e.g. "there will be changes in 2012."  It's a reminder that the issues in play in today's guidances have percolated many years.

See also links about the recently formed "Digital Therapeutic Alliance," here.

Wednesday, December 6, 2017

Very Brief Blog: Old School Lab Fraud: Strip clubs and bags of cash in NJ

A few years ago, I was talking to a senior lab industry colleague about trends in Medicare fraud.  Old school, I said, was giving the physician a brown paper bag full of $50 bills.   New school, was having the physician enrolled as a "consultant" for a "registry" and giving him $200 per head or some other figure.  (See 2014 OIG bulletin here).    My colleague said, "Well, there's still plenty of the Old School approach, in New Jersey."  Total earnings of the lab were >$100M during its run.

For a colorful article on the colorful and seamy side of the clinical chemistry business, see a December 5, 2017 article in New Jersey Dot Com, here.  (Medicare payments to the lab were only $2.1M in 2015, available via here; but that's 2 years after initial arrests made in 2013; BCBS cases against the lab dated to 2009).

Tuesday, December 5, 2017

Brief Blog: MOLDX Statement of Work (Jurisdiction M, 2014)

In the past month two different people have asked me about the MOLDX statement of work.  It's online at a federal RFP website, and I've clipped it here on my documentation blog.

Features of the SOW include:
  • pricing of tests not priced on the CLFS, 
  • maintaining a test code registry (e.g. Z codes), and 
  • providing standard formats for evidence and conducting systematic evidence review.   
  • MolDX is also to advise CMS on new national edits.  
  • There's an interesting section that very clearly authorizes "coverage with evidence development" or "coverage with data development," although LCDs from MOLDX do not currently use that. 
MOLDX has some policies which don't trace as easily to the SOW, which I discussed here.  These included (1) altering prices of codes that do have CLFS prices, (2) not using CMS CPT codes for two or more tests, because they become "panels," and (3) employing local edits (such as blocking payment of 81433 when 81432 is used) that have not been migrated to "national" edits in the public CCI system.

Monday, December 4, 2017

Very Brief Blog: Silicon Valley Bank "Diagnostics and Tools," November 2017

In mid-November, Silicon Valley Bank issued a 22 page report specific to "Diagnostics and Tools," subtitled, "NGS and AI drive Moonshot Investments." 

The SVB home page for the report is here; the PDF is online here.

A few weeks ago, we highlighted their more general mid-year 2017 report on health investment trends (here).

Friday, December 1, 2017

Very Brief Blog: Harry Glorikian Releases New Book on Data Driven Healthcare with Coauthor Malorye Alyson Branca

Harry Glorikan, a well-known consultant and expert on the diagnostics and biopharma industries, has released a new book titled, "MONEYBALL MEDICINE: Thriving in the New Data-Driven Healthcare Market," coauthored with  Malorye Alison Branca 

In 2016, Glorikian published, "Commercializing Novel IVDs: Comprehensive Manual for Success," here.

The book already sold out its first printing on Amazon; but ebooks currently are available.  See the Amazon website here.

From the Amazon summary:

MoneyBall Medicine: Thriving in the New Data-Driven Healthcare Market, which includes interviews with dozens of healthcare leaders, describes the business challenges and opportunities arising for those working in one of the most vibrant sectors of the world’s economy. Doctors, hospital administrators, health information technology directors, and entrepreneurs need to adapt to the changes effecting healthcare today in order to succeed in the new, cost-conscious and value-based environment of the future. The authors map out many of the changes taking place, describe how they are impacting everyone from patients to researchers to insurers, and outline some predictions for the healthcare industry in the years to come.

Two other books on related topics in the recent weeks include FOURTH WAVE: DIGITAL HEALTH by Paul Sonnier (here), and REALIZING THE PROMISE OF PRECISION MEDICINE: Patient Data, Mobile Technology, Consumer Engagement, by Paul Cerrato and John Halamka (here).

Very Brief Blog: New Paper on Competitive Dynamics of Precision Medicine in Pharma Development

For years, there has been much ink used in discussing when biopharma should develop mass market drugs and when CDx targeted drugs are a better investment and focus for R&D.

Berndt & Trusheim have released a new 40-page paper on the topic.   The paper is available for $5 from the National Bureau of Economic Research Archive (NBER).   See this link.

New pun = "Pharms race."

I've included the title and abstract below.  It was presented at a national conference on "Economic Dimensions of Precision Medicine" in September 2017.

 The Information Pharms Race and Competitive Dynamics 
of Precision Medicine: Insights from Game Theory

Ernst R. Berndt, Mark R. Trusheim
NBER Working Paper No. 24020
Issued in November 2017

Precision medicines inherently fragment treatment populations, generating small-population markets, creating high-priced "niche busters" rather than broadly prescribed "blockbusters". It is plausible to expect that small markets will attract limited entry in which a small number of interdependent differentiated product oligopolists will compete, each possessing market power.

Multiple precision medicine market situations now resemble game theory constructs such as the prisoners' dilemma and Bertrand competition. The examples often involve drug developer choices created by setting the cut-off value for the companion diagnostics to define the precision medicine market niches and their payoffs. Precision medicine game situations may also involve payers and patients who attempt to change the game to their advantage or whose induced behaviors alter the payoffs for the developers. The variety of games may predictably array themselves across the lifecycle of each precision medicine indication niche and so may become linked into a sequentially evolving meta-game.

We hypothesize that certain precision medicine areas such as inflammatory diseases are becoming complex simultaneous multi-games in which distinct precision medicine niches compete. Those players that learn the most rapidly and apply those learnings the most asymmetrically will be advantaged in this ongoing information pharms race.

Thursday, November 30, 2017

CMS, FDA Announce Approval and Coverage of Foundation Medicine Test

On November 30, 2017, CMS and FDA jointly announced coverage of the Foundation Medicine Gene Panel Test through the Parallel Review process and the PMA approval.

The test is called Foundation One CDx or F1CDx.
  • The CMS press release is here.
    • Scott Gottlieb, head of FDA, assured Congress on December 7 that FDA is cooperating with CMS and this NCD will guarantee payment at CMS for all NGS cancer labs that cooperate with voluntary FDA PMA approval.
  • FMI press release here.  (Includes quotes from Lungevity and CTCA.)  
    • FMI press conference on the NCD, see the Genomeweb report, here.
    • FMI share price up 10-12% ($60>$65).
      • That brings share price back up to the 1Q2015 level.  In 2Q2016 it sank as low as $20.
      • Over the first week, FMI price has gone from $53 to $70 to $58 to $67.
    • 5 cancers or all cancers?  Since the CMS coverage includes all CDx tumors, and the FMI test includes MSI, and Keytruda and MSI are valid for all solid tumors, you might think the NCD would cover FMI in all solid tumors via the CDx MSI.   
      • Apparently not.  
      • Apparently MSI is reportable but doesn't have CDX status yet, because FMI is only claiming new patients under the NCD for a few cancers like lung, not for all cancers via the MSI angle.
  • Coverage at MedCity News here.  Xconomy here.  Genetic Engineering News here.  Fierce Biotech here.  Genomeweb here.  Blog by CureOne [Med-C] Dane Dickson MD, here.  Coverage at New York Post, here.
  • The CMS NCD is on the web here 
    • PDF hereTrack public comments here.
    • This is a "draft" NCD, with 30 days public comment through December 29.
    • At 46,000 words and some 62 pages (as PDF), it's one of the longest NCDs ever.
  • The FDA press release is here.
  • FMI FDA PMA Review Documents...Missing in Action.
    • The Foundation One PMA Webpage is here, but as of December 8, only the summary data is posted, none of the FDA review PDF documents.
    • The PMA number is P170019, the Class III PMA Product Category is PQP.
    • Summary of FMI versus Oncomine labeling, here.
  • Weird fun fact.  The 11-page NCD request (from FMI) is dated November 17, 2017 (!).
  • Scope and cost.  The FMI NCD request estimates a potential annual volume of 46,000 cases (at 20% penetration into the relevant CMS advanced tumor population of 230,000 incident cases.)  
    • At $3000 per test, that's about $140M dollars per year.  
    • But if you included all surviving patients backwards a few years, and for example all women with a 1 cm breast cancer and 1 positive lymph node in the last 5 years, the patient population would be much bigger.
  • This NCD provides another reason to fix the goofy update to the 14 day rule that appeared recently.  
    • The 14-day rule was liberalized to provide better CDx access to Medicare cancer patients, but "excluding genomic sequencing procedure" tests [!], which the F1CDx test is.   More about 14 day rule brouhaha here.
  • Huge dive for MSK 510(k) IMPACT test.
    • The MSK IMPACT test was FDA de novo cleared by FDA last month with huge fanfare.  However, the NCD gives much lower status to this clearance route, covering it only in onerous CED trials.  (For example, do a RECIST study monthly at $1000/month for one year and you've spent $12,000.)
    • I think CMS wanted to distinguish somehow between PMA and 510(k) gene panel tests, but the NCD proposes to make 510(k) tests use impossibly costly registries.  Of course, it's not just the labs, it's all the cancer patients who don't have a cancer specific PMA gene and NGS test available.
The FDA writes that with 324 genes and "two signatures," the F1CDx  test can identify which patients under 5 tumor types may benefit from any of 15 FDA targeted treatments.  The two "signatures" are for MSI and for total mutational burden.  Thus, the test creates an FDA-approved route to a TMB assay result.

CMS coverage is for patients "with advanced cancer, e.g. metastatic," with no prior NGS test, who "continue to seek further cancer therapy."  "Coverage" occurs when there is at least one on-label FDA approved diagnostic and at least one CDx drug in that kind of cancer.   "Coverage with Evidence Development" occurs in other situations, which are complex but generally distinguish one track of CED for FDA approved/cleared tests used in registries, and and another CED track for LDT tests used in NCI trials.

Synchronized Harold Varmus Op Ed in Science

In parallel, coordinated but subscription-only editorial by Harold Varmus appeared in Science today, arguing that payers should require CED in genomic test coverage, as well as use of genetic data registries.   See Science here, see Genomeweb here.

Much more detail after the break.

Very Brief Blog: Mandatory Hospital-Physician Demo's Thrown Overboard by CMS

It's been pending since Thomas Price was (briefly) head of HHS.   For those who protested and/or despised mandatory regional CMS bundling demonstration programs, such as for hip replacement, they're gone.

CMS announced today that several mandatory demo projects were being thrown overboard and the Federal Register announcement is December 1.   The demonstration programs required countless thousands of manhours and many hundreds of pages of federal rule-making to set up.

Read about it at CMS press release, here, and Fierce Healthcare, here, MedCity News here. CMMI will continue to do demonstration programs, but not mandatory ones.  (See recent "reform CMMI" articles here).

Tuesday, November 28, 2017

Brief Blog: 2018 HCPCS Coding Decisions Released; Another Bad Year for DME; Diabetes Strike-Out

Each January, CMS accepts applications for new HCPCS codes.   CMS holds a public meeting in May-June, releases preliminary decisions in early September, and releases final decisions about Thanksgiving.

The only easy category is codes for new intravenous drugs, and each year there are quite a few of those.

For other therapies and equipment, it's a cold harsh process.    CMS has released its coding decisions for CY2018, on the HCPCS website, here.   I've also put the 5 PDFs in one zip file in the cloud, here.

It was a strike-out for all three diabetes technology codes I was tracking.  No code for the Medtronic 670G artificial pancreas; no code for the associated, PMA-grade glucose strips or high accuracy PMA-grade meters, and no code for a telemedicine scale used in diabetes prevention programs.   Dexcom also lost its attempt for more specific battery coding for the Dexcom G5.  Nearly all of several dozen other equipment or supply code applications failed.

Monday, November 27, 2017

Very Brief Blog: Medicare Advantage Gets Multiple New Rules, Policies, Demo's, and VBID Time two

In mid-November 2017, CMS had two rounds of announcements that update the Medicare Advantage program.

Rulemaking for MA 2019

On November 16, 2017, CMS released Medicare Advantage and Part D policymaking for CY2019.   The CMS press release is here.   The Federal Register website is here.  The typeset rule will publish on November 28.  The index for recent MA policy documents is here.

MA and Provider Enrollment.  One change that will affect all Medicare Advantage providers: CMS pulls a rule, issued last fall, that would require all downstream MA providers to be enrolled in Medicare.   Rather, CMS will only require that MA providers "not" be on a CMS preclusion/exclusion list.   This applies to Part D as well. 

Bringing VBID into General MA.   Another change is that CMS will allow many features of "Value Based Insurance Design" (such as reduced copays for selected services) to occur within Medicare Advantage plans.  However, plans are forbidden to advertise VBID features.  They can respond to VBID questions if asked, making cross-plan research very difficult for patients.

Narrowing the Definition of Marketing.  CMS is required to by statute to closely scrutinize "marketing" materials of MA plans.  It will define this more narrowly so that only advertising directly aimed at driving a patient's plan selection will be "marketing."

Trade press on MA rulemaking at National Law Review here, Lexology here.

CMMI Demo for MA VBID Expands 

Shortly thereafter, on November 22, CMS  announced an expanded Demo Program for Value Based Insurance Design test models in 25 states.   For example, diabetes patients might get free eye exams, though other types of patients wouldn't get free eye exams.   For the MA-VBID expansion, see the press release here, the fact sheet here.  More detailed policy documents and application guidance at the CMMI MA VBID homepage, here.

Trade press on CMMI VBID at Fierce Healthcare here, at Modern Healthcare here, at Becker's Hospital Review, here.

For a new November 27 article on VBID in general, Fierce Healthcare, here.
It would take a full time expert to dissect the differences between the VBID expansion proposed in annual rulemaking for all 2019 MA plans, versus the VBID expansion described at the CMMI website.  Maybe one difference is that the CMMI expansion is already locked and loaded, but the rulemaking version for everyone might get delayed or derailed in notice-and-comment policymaking.  But clearly, CMS is taking on VBID and promoting it across multiple policy channels.  The new main arms of VBID are reduced copays for existing benefits, and creation of narrowly available special benefits only for certain patients.  If the special benefits are outside of Traditional Medicare, they must also be treated as "special benefits"

Update: December 5, 2017: United Healthcare launches more VBID MA programs, here.

Very Brief Blog: Flurry of Sources on Liquid Biopsy including FDA-AACR Conference

In October 2017, the FDA and AACR held a joint full day conference on promises and challenges in the Liquid Biopsy field.  The workshop was co-chaired by Carlos Arteaga and Pasi Janne for AACR; and Julia Beaver, Gideon Blumenthal, and Reen Philip for FDA.  (This was the second FDA-AACR workshop; the first was in July 2016).
  • Full workshop transcripts and slides have now been posted, as well as video.  Here.
    • The consolidated slide deck is 12 mb, 236 pp.  The transcripts total 117 pp.
    • Agenda here.
  • For subscription meeting coverage at Genomeweb by Molika Ashford, here.
In addition, both Genomeweb (subscription) and the Next Generation Technologist summarized some AMP discussions of Liquid Biopsy at the recent Salt Lake City conference in November 2017.   Genomeweb here; Next Gen Technologist, here.

See also a long article in CAP TODAY in October 2017 on liquid biopsy, here.


MedCity News had coverage of highlights from the June ASCO conference, here; Genomeweb here.  Genomeweb also covered reference materials issues last summer (here).

Wednesday, November 22, 2017

Very Brief Blog: Updated Resources for "Center for Innovation" Reform & New Directions

In September, with a WSJ editorial, CMS Administrator Seema Verma kicked off an open comment period on ways that CMS could adapt and improve the Center for Innovation (aka CMMI).   (Here).

The comment period closed on November 20, and several public comments are available now.
  • The Center for Healthcare Quality and Payment Reform issued a 20 page whitepaper, here.
  • Hospitals:
    • The American Hospital Association made its CMMI comments public in a 17 page letter, here.
    • Federal of American Hospitals, 17 pages, here.
  • Digital: 
    • Healthcare Informatics trade journal, here
    • Electronic Health Record Association (EHRA), 3 pages, here.  
    • American Telemedicine Association (ATA), 4 pages, here.
  • Premier made public a 19-page letter, here.
  • Personalized Medicine Coalition 6-page letter, here.
  • Physicians:
    • Review of physician group comments, at MedPage Today, here.  
    • Internists' viewpoint at MedicalXpress, here.  ACR, here.
  • See a short review at Fierce Healthcare, here.  And at Healthcare Dive, here.  Becker's Hospital Review, here.
    • Blog by Micklos & Wrobel at Health Affairs, here
    • Open access article by David Pittman at Politico, here.
    • I haven't found any consolidated, open access database for all comments.
  • Kaiser Health News says that Canada admires the CMMI, here.
Get the cited public comments in one zip, here.

To my eye, there are three general topics that CMMI should address to speed all its projects.   

First, CMMI has an amazing (an legally un-tested) authority to waive any Medicare law in the process of doing a demonstration.   However, this legal authority seems clearly pointed (to this non-attorney) at only its demonstration authority, not its permanent project implementation authority.  CMS should figure this out and take a clear position. 

Second, Congress allows CMMI to implement permanent projects when they are certified to be cost neutral or cost saving, and quality neutral or quality improving.  From the extremely limited use of this certification process in six years, there don't seem to be clear guidelines as to how certain is certain enough for certification (no model can perfectly predict later costs and outcomes in a nationwide population).

Both the above topics are fundamental to all CMMI model designs, tests, and expansions, and leaving them fuzzy means that the designers and evaluators don't have clear guidelines and guardrails and targets in the business of  planning for and achieving success.

Third, CMMI has always stated it does not intend to test technologies and services, but rather broad schemes like ACOs.  Yet there are all kinds of technologies that fall outside current narrow or dated rules, and this could be a very fruitful use of CMMI projects.  For example, the Diabetes Prevention Program (DPP) has been the first program shifted by rulemaking into a new, innovative benefit, and it's a technology-or-service.  GAO has encourged CMS to look at cost saving new technologies even when they slip outside current benefit structures (here), but CMS poo-poo'd the recommendation.  

It's easy for some projects to be cost-saving and yet be bogged down in Congress for years.   Congress and CBO rated a telehealth expansion (targeted to fixing certain nuances of Medicare Advantage financing rules) as cost-saving for CMS and taxpayers yet it's bogged down on the Hill for several years without passing.  Dumb!   (It might be moving now, by extracting current HR 3727 from a slow moving Senate bill CHRONIC, and then tacking HR3727 onto a pending Medicare Extenders omnibus bill.)  The point is it takes the Hill 3 years or more to pass even an endorsed, cost-saving slam dunk bit of legislation, and CMMI could accomplish this in two hours.  

Tuesday, November 21, 2017

Very Brief Blog: ACLA Again Asks CMS to Stop PAMA Implementation

CMS released final PAMA rates on November 17; ACLA has issued an urgent press release  asking CMS to stop implementation of PAMA.   See ACLA webpage, here; PR Newswire here.

How To Comment on CMS 14 Day Rule Revision Errors

On November 2, CMS released outpatient hospital final rulemaking for CY2018.   CMS revised the "14 Day Rule," with the general intention that genomic tests that are currently billable by the hospital, on outpatients, in less than 14 days, can be billed by the performing reference laboratory.  Thus, the rule should be cost neutral while shifting the pains and burdens of billing MACs to the reference laboratory.

However, CMS struck some unusual positions in the rulemaking. 

The rule hinges on "molecular tests" (which CMS does not define very clearly in the first place), while excluding "PLA code tests and genomic procedures."   Since CMS has already been classifying genomic PLA code tests and GSPs as "molecular tests" that are billable by the hospital, "Status A," and CMS has introduced no new modifiers or status indicators for implementing the new 14 day rule revision, the exclusion by of some Status A tests by"text" and the inclusion of the same tests by "status indicator A" in tables is confusing. 

In addition, CMS had proposed in the original rulemaking that it would include ADLTs of the MAAA type (Type 1) but exclude ADLTs of the FDA approved type (Type 2).   You would only have noticed this if you had read the proposed rule citations and cross-references to regulations by number extremely carefully.   The world is still waiting for CMS to create ADLT application forms, but some tests would qualify for both Type 1 and Type 2 ADLTs, or shift from Type 1 to Type 2 based on a new FDA approval, and since all ADLTs are sole source and not performed by the hospital, the rationale is unclear.  Also, why classify ADLTs as in or out based on FDA approval when other molecular tests are "in" (such as EGFR or BRAF tests) regardless of FDA approval.

To my understanding, CMS's internal definitions of "molecular pathology tests" relative to the 14 day rule have mostly been intuited by reading what tests they do and do not classify as "Status A" for hospital billing purposes on a rolling basis.[*]   Those billing status classifications - including for 2018 - simply don't match the verbal text of the final rule.   Also, it makes no sense to exclude PLA tests that are genetic tests, or genomic sequencing procedures that are generally less expensive than code stacking the relevant single genes.   These comments about excluding PLA and GSP codes appear only in the final rulemaking so the world didn't have a chance to tap CMS on the shoulder until now.

CMS formally only takes comment on "new" things appearing in the final rule.  CMS proposed no regulation in the July rulemaking, so the whole regulatory text for 14 day rule is "new."  Also, it appears CMS has made clear errors in the verbal text relative to the intended concepts.  All CMS remarks about PLA and GSP tests are "new."  The public can make comment to CMS now.

I've made a ZIP file that contains all the documents that might be relevant to a comment.  This includes
  1. The original July rule proposal;
  2. The final November version;
  3. Addendum B, which classifies all CPT codes by outpatient billing status;
  4. Addendum D, which explains the cryptic status indicators;
  5. Current text of 42 CFR 414.510, including the new section created by rulemaking this month.
In Addendum B, I've tried to collate all the U codes, M codes, and molecular CPT codes on one sheet, since they are scattered in different places in the CMS spreadsheet.  I might have missed something, so the entire 16,000 line original table is also there.

The Formal Comment Page is here.
The ZIP FILE is here.


[*] I flagged this obscure phenomenon for readers back in May, 2017, here.  (I also noted then that some of the "A" classifications appear wrong by CMS's own protocols. For example it generally excluded genetic sequencing of pathogens but erratically included one or two.)

Friday, November 17, 2017

CMS To Abandon Longstanding Chemistry Panel Pricing in 2018, Opening a Two-Billion-Dollar Vulnerability

CMS has long had complex, manualized rules (not present in regulations) for pricing clinical chemistry panels. These panels are a "big deal" - $700M a year, and panel pricing saves AT LEAST $50M a year (see my article here), but may save several times that, because of current behavioral incentives not to report partial panels.  And if panels were priced at the summed cost of analytes, with no panel discount, payments would be over $3B, not $700M.

CMS will discard its longstanding chemistry panel pricing in 2018.   While CMS says it will "continue to review the issue," based on 2016 data already available, payments for analytes will go up at least by $40-50M dollars and potentially more, because there will be brand new massive incentives to submit partial panels of analytes for line item payments that are multiples of the panel price.  Why bill a 15 analyte panel for $13 when just 14 analytes will pay $75?  (See analysis at bottom).  

CMS writes,
How will CMS determine the price of automated testing profiles (ATPs) under the private payor rate-based CLFS payment system?
     For CY 2018, payment for tests that were bundled into ATPs will instead be made at the individual HCPCS code level. In other words, we will pay for each appropriately billed HCPCS code based on the CLFS amount for the specific code billed by the laboratory.
     Moving forward we will continue to consider the efficiencies of ATPs and the appropriate payment methods for these tests under the new private payor rate-based CLFS.
     Medicare administrative contractors will continue to apply editing to ensure that if a laboratory panel HCPCS code is submitted and is payable, an individual laboratory HCPCS code that is part of the same panel is not also paid separately
My answer: OK, we'll see how that works for you.

EXAMPLE - Two Billion Dollars of Free Money !

For example, the 15-analyte Comprehensive Metabolic Panel is the most popular panel, with 29M orders in 2016 and $323M in payments (CMS Part B; code 80053).   The new price for 80053 in CY2018 is $13.04, as set by PAMA.

However, at 2018 prices, the 15 analytes add up to $82.88.   If you leave off any one analyte - almost all of which are $5-6 - the remaining 14 analytes will pay about $75.  

Back of envelope math suggests that if, with the maximum behavioral element, all 29M panels were ordered in the 14-analyte format, CMS payments would rise from 29M x $13.04, or $377,000,000, to 29M x $75, or $2,175,000,000 (over $2B).   That's almost two billion dollars of free money in 2018 alone!

Check my math.  It's about $18M more taxpayer money automatically paid out for every 1% of tests converted from 80053 billing to 14-analyte billing, so eventually at the maximum, with 100% converted, the payout is about $1.8B higher.

Click to enlarge.

Note - You'd want to delete a code that disables several panels at once, such as "chloride," otherwise some of the 80053 line items codes would condense around some smaller panels and shrink the payment away from the item maximum. 

Use Secretary of Health Units of Measurement that People Can Understand

Just 5,500 tests converted to N-1 billing (0.01% of tests out of 29M tests) would cost CMS $400,000 - the same dollar amount that Secretary Price was fired over.


On November 17, 2017, after market close, CMS released the final PAMA fee schedule for 2018.   This is a new lab fee schedule based on market rates surveyed over the past year.

CMS also issued final crosswalk/gapfill determinations for new codes for 2018.

See all files online at CMS, here.   Note that the Excel spreadsheet is only PAMA-based prices (codes used in 2016 and priced based on 2016 data; no new 2017/2018 codes).    CMS issued a separate PDF of new crosswalk/gapfill prices.

CMS commented that it is still working on an ADLT application, which is overdue.

Crosswalk/Gapfill: Unprecedented Number of Price Reversals

CMS handled 127 agenda items in the gapfill/crosswalk process.  This included new standard CPT coedes, new PLA codes, codes crosswalked in 2016 and re-crosswalked to the same values again due to a technicality, and codes lacking prices in the PAMA reporting process. 

An unprecedented proportion of codes, 51/127, or almost half, had price changes between the proposed and final version.   This includes about 35 of the first 59 decisions (over half), which were on new or reconsidered codes.[*] 

While only one or two codes were referred to "gapfill" in the initial proposals, 20 are referred to the contractor gapfill process in the final decision.   This includes several codes that seemed to almost spontaneously jump to gapfill, after CMS and panelists had already settled on a crosswalk.    In some cases this made a lot of sense; the "genome" sequencing code was proposed as a $600 crosswalk, even though the "exome" sequencing code had a PAMA price of about $3000.   In the final version, "genome" will be gapfilled.

CMS proposed a number of MAAA tests with list prices in the $3000 range to be crosswalked to the Cologuard test 81528, about $500.   Such codes were finally crosswalked to 81519, Oncotype DX, circa $3400, in the final decision.

Several novel gene panel tests, such as for neuropathies, were crosswalked to the Lynch syndrome or colorectal gene panel test, 81435.  This is unfortunate as this code received an unbelievably low PAMA price of $38 (!), although it will only fall in 10% increments from the 2017 price of about $800. 

PAMA Policy

CMS released a PDF with some comments on its PAMA policy (basically, nothing in the PAMA pricing files or medians changed.)   CMS recognized there were illogical outlieres, like 1 penny or $99,999, but did not discard these because they would have little impact on medians.   CMS discussed again its limited use of hospital reference lab data.

CMS dealt with a few odds-and-ends, such as special price rules when the NLA is 0 but some local fee schedules are grater than zero; and a few special statutory prices such as HA1c and Pap smears.   CMS corrected a few phase-in prices that were wrong due to "transcription errors." 

Panel Pricing Chaos - Or Boondoggle?

The biggest announcement was that CMS will suspend its automated test panel aka clinical chemistry test panel rules effective January 1, 2018.   These rules forced payments for single analytes to always be lower than a corresponding panel.  Now, partial panels can receive a la carte stack prices that are higher than the panel the analytes are found on.   It would not be surprising to see a Congressional fix of 10 or 20 words to repair this, since it will cost CMS $50M or more per year (see here).  For example, 15-test-code 80053 is used about 30M times per year.   The panel payment will be $13, but any 14 analytes will add up to $75 at a la carte prices.  At the $13 rate, CMS payments will be around $380M, but if every doc prudently ordered a smaller, 14-analyte or "N-1" panel, CMS payments would be about $2.2B.   For every 1% of docs that orders the 14-analyte panel, CMS gives out $18M extra.

[*] Action count based on word search of the boilerplate phrase "We initially believed."  Gapfill count based on the phrase "CMS and its contractors..."

Very Brief Blog: CMS Releases Proposed Rulemaking for Medicare Advantage CY2019

On November 17, CMS released annual proposed rulemaking for Medicare Advantage, with updated proposals for CY2019.

The document (713 pp) is online here.   Comments are open until January 16, 2018.   For an early trade journal summary, here.  

CMS expects beneficiary costs to drop, more choices to be available, and enrollment to increase almost 10% to 20.4M.   CMS is also trying to shift cost savings in drug plans to be passed through to beneficiaries rather than to first benefit PBMs.  The rule handles both Medicare Advantage health plans and Medicare Part D drug plans, although the former usually include the latter.

In other news, a House "Medicare Extenders Bill" - a perennial exercise - is in the works.  This is a recurrent grab bag of small renewable "fixes" to the Medicare Act.  Here.

Thursday, November 16, 2017

Brief Blog: Links, White Paper for "Digital Therapeutics Alliance"

In late October 2017, a new digital health organization, the Digital Therapeutics Alliance, was launched.   See trade press at MobiHealthNews here, at Dive Health here.

The organization now has an elaborate website, here.

The Digital Therapeutics Alliance is also holding its European launch in conjunction with the November 16-17 "Frontiers Health" conference in Berlin.  See press release here.

Concurrently, the Alliance has supported a 32-page white paper on digital medicine, "The Future Is In Policymaking, Paying, and Protecting."   The home page to download the white paper is here.

Wednesday, November 15, 2017

FDA Creates New Pathway for NGS Tests in Tumors under 510K Clearances

On November 15, 2017, the FDA and Memorial Sloan Kettering Cancer Center (MSKCC) announced a landmark new approach to NGS diagnostic test approvals.   The pathway will be a special 510(k) approval for genetic tests in tumors. 

Previously, FDA had declined to approve such tests under 510(k) because of the assumption, by the FDA, that the genes reported would serve as drug selectors, and must be approved under the PMA route.  For for the first time, tumor genetic tests will be certified on accuracy rather than requiring a direct correlation between the accurate gene analysis and a clinical outcome.   Just as glucose or sodium tests are approved based on accuracy, this is a positional outcome that was going to come sooner or later for the FDA, but the timing was unpredictable (whether 2014, 2017, or 2020).
The posture the FDA strikes is that the tumor gene analysis (e.g. finding an EGFR mutation or ALK rearrangement) is reportable to the doctor and cancer patient but "is not conclusive for use of a therapy" under a 510(k) test, whereas a PMA test of the same gene with same method and same result would be "conclusive" for therapy.   FDA has decided to live with the fact it has two nearly identical sounding product categories (PQM (of the PMA type) and PQZ (pf tje 510k type)).  Maybe someone at FDA used to say, "We couldn't do that," and now someone else has said, "Sure we can.  We just did."
  • See press release at FDA, here.  
    • See the FDA's new one-page "Fact Sheet," here.
      • The Fact Sheet explicitly compares PMA clearance of Thermo Fisher Oncomine Target Dx and 510(k) clearance of MSKCC IMPACT.  
      • Only the PMA test can make clinical companion diagnostic claims.  (Oncomine approved under Class III Product Code PQP, here.)
      • Apparently, a 510(k) test can assert genes with "evidence of clinical significance" or the lesser "potential clinical significance."
      • Regulatory Category is 21 CFR 866.6080, "NGS Tumor Test," and was created in April 2017.  To my eye, it's found at but not at the federal CFR, which is quirky.
      • IMPACT uses "Product Code PZM," different than the Oncomine product code PQP.  
        • For some deep dive comments and links on 866.6080, PQM, and PQZ, see side blog here.
  • See news at OncLive, here.   At RAPS, here.  At Medscape, here.  At Endpoints News, here.  At Genetic Engineering & Biotech News, here.  At Fierce Healthcare here, including aspects of data sharing.
    • See Genomeweb (subscription), here.   
    • Second Genomeweb article with strategic analysis, here.
      • The second Genomeweb article notes that MSKCC is working on clearance for CNV, dup/del, and total mutational burden (TMB).
  • Specific to the IMPACT clearance and classification:
    • The FDA immediately released its 57-page Decision Summary (here).
      • At least part of the annotation used in IMPACT reflects the OnkoKB database; see article here.
    • The De Novo 510(k) Classification Order (7p) is here.
      • This legally downclassifies the product (and future product category) from PMA Class III to 510(k) Class II via the de novo reclassification and clearance method.
The newly reviewed test, IMPACT, includes 468 genes and MSI testing.  Earlier in November, MSKCC had highlighted its role in the first approval of a drug and gene combination based on a "basket trial," here

FDA recently announced a "precertification" approach to approval of genetic health risk germline tests (here) and a precertification approach to some digital health software (here).

The 510(k) clearance pathway is closely linked to New York State Department of Health approval.  FDA states:
Moving forward, laboratories whose NGS-based tumor profiling tests have been approved by NYSDOH do not need to submit a separate 510(k) application to the FDA. Instead, developers may choose to request that their NYSDOH application, as well as the state’s review memorandum and recommendation be forwarded to the FDA for possible 510(k) clearance. 
The full FDA press release is clipped below the break. 

The tumor sample is apparently run with a matched normal DNA sample "when available" (or else an "unmatched" normal DNA sample.)  The FDA intended use statement is:
The MSK-IMPACT assay is a qualitative in vitro diagnostic test that uses targeted next generation sequencing of formalin-fixed paraffin-embedded tumor tissue matched with normal specimens from patients with solid malignant neoplasms to detect tumor gene alterations in a broad multi gene panel. The test is intended to provide information on somatic mutations (point mutations and small insertions and deletions) and microsatellite instability for use by qualified health care professionals in accordance with professional guidelines, and is not conclusive or prescriptive for labeled use of any specific therapeutic product. MSK-IMPACT is a single-site assay performed at Memorial Sloan Kettering Cancer Center.
Publications for the IMPACT test include Zehir et al. (May 2017, Nature Medicine), finding that 37% of 10,000 patients had an actionable mutation.   Mandelker et al. (September 2017, JAMA), conducted universal screening for germline risk mutations in 1000 patients who were undergoing tumor gene testing anyway.   They found many more germline risk genes than would have been found if only a subset of patients (getting tumor testing) had had guideline-based germline testing.