Thursday, November 30, 2017

CMS, FDA ANNOUNCE APPROVAL, COVERAGE OF FMI CDX TEST; NCD ALSO CONTROLS ALL CANCER NGS TESTING

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 comment period extended to January 17.
    • 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...POSTED DECEMBER 18.
    • The Foundation One PMA Webpage is here, posting >100pp of FDA review documents on December 18.
    • 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.  Most of the applicants get the code they ask for.

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




UPDATE:
CMS ISSUED INSTRUCTIONS TO PROVIDERS AND CONTRACTORS 
THAT SIMPLY POINT EVERYONE TO "STATUS INDICATOR A" 
FOR GUIDANCE, THUS OVER RULING ALL THE 
WEIRD MIS STATEMENTS IN ACTUAL RULEMAKING.


See later blog January 9 2018, here.


ORIGINAL BLOG FOLLOWS



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.

CMS CLFS 2018: Final PAMA Prices (No Suprises) and Final CW/GF on 127 Codes

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, [19 or 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 FDA.gov 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.

Very Brief Blog: Technology for Precision Health Summit, SF, December 12, 2017

Health 2.0, a HIMSS "innovation company," brings the Bay Area a one day conference called "Technology for Precision Health."   The venue is the Julia Morgan Ballroom in the SF financial district.   Registration is $899.[*]

Conference website here.   Agenda here  Promo for the conference at THCB, here.

The conference summary is here:
     Precision Medicine has come a long way in the last 10+ years thanks to advances in diagnostics, computing, and consumer tools. The ongoing quest to better understand disease predisposition and prevention through genomic and environmental factors is key to increasing the quality and length of life. Technology for Precision Health will explore how technology can help.
     How can we think differently about gathering, analyzing and sharing information? Which incentives can be offered to structurally change the system toward longer term care of patients? Which mechanisms will empower patients with their data and create virtuous partnerships with providers to truly drive value? Conference delegates will learn about the latest tools in Precision Medicine and Health as well as be part of the discussion on new ontologies and policy changes needed to bring these technologies to patients.



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[*] A discount is offered for joint registration in this summit and the January 8-10, 2018, Medtech and Digital Medicine Showcase conference that parallels JP Morgan in SF.

Tuesday, November 14, 2017

Very Brief Blog; Ceratto & Halamka Release Book on Precision Medicine

This fall, Academic Press has published a new serious book on precision medicine by Paul Cerrato and John Halamka.   Halamka is CIO of Beth Israel Hospital in the Harvard system. 

The book is available from Amazon here

See interviews with the author at MedCityNews here,  and at Healthcare IT News, here.


See two other books in November 2017 on related topics, MONEY BALL MEDICINE by Harry Glorikian and FOURTH WAVE: Digital Health, by Paul Sonnier.  Links here.

Brief Blog: AMA Supports New Policies for Precision Medicine

See an article in the November 14, 2017 FierceHealthcare covering a new 15 page report by the AMA House of Delegates supporting better access to precision medicine. 

  • FierceHealthcare article, here.
  • Full AMA report online at AMA, here.
  • Cloud version of the 15 pages re: Precision Medicine, here.
The report in part collates existing AMA positions on precision medicine, and adds new material.   For example, the new report highlights AMA's (and CAP's) support for the "LCD Clarification Act," see prior blog here.   The report discusses AMA's (e.g. CAP's) unhappiness with some Palmetto GBA (i.e. MolDx) LCDs.   

The report recommends some homework for AMA:  collating and merging 7 existing policies in precision medicine.   It also cites some allied topics, such as the need for precision medicine integration with EHR's and digital health.   The report concludes with 13 recommendations and has a 22 publication bibliography.    


Thursday, November 9, 2017

Very Brief Blog: Most Active Investors in Diagnostics & Tools (Silicon Valley Bank Report)

At the SoCal Bio digital health conference this week I had the chance to talk to staff from Silicon Valley Bank, who pointed me to their mid-year investments report.   The report is available online here.   A screenshot show the most active investors in diagnostics & tools, by number of deals.

AME Cloud Ventures is led by Jerry Yang, co-founder of Yahoo.  Investments in genomics include Color Genomics, uBiome and Whole Biome.  Khosla Ventures manages investments in genomics firms like Color Genomics, Genalyte, Guardant, and Whole Biome.

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Footnote: San Diego-based  Genalyte is the company working on a one-drop-of-blood compact fast multi analyte test that isn't Theranos.

Wednesday, November 8, 2017

Very Brief Blog: Nature Reviews: Flurry of Articles on Tumor Evolution and Resistance

Nature Reviews publishes a flurry of articles on tumor evolution and drug resistance.  Some appear in Nature Reviews Cancer, focusing on biology; others in Nature Reviews Clinical Oncology, focusing more on therapy.

An open access article by Maley et al reviews "evolutionary and ecological features" of cancers.  This is an open access article that includes proposals for new terminology and standards.  Here.

Dagogo-Jack and Shaw review the general topic of tumor resistance and heterogeneity, here.   Rotow & Bivona review development of resistance specifically in NSCLC, here

Along this line, see also a new paper by Blakely et al. in Nature Genetics on the complexity of EGFR and passenger mutation profiles in NSCLC; here and Genomeweb here.    

Her2 Patients Should Be Subdivided
Also in the field of precision and biomarkers, Gingras et al. argue we have to get into subdivisions and precision within the class of Her2-positive cancers, here, describing the status quo as "lost in translation" and creating a plateau in patient benefit that we shouldn't accept.  Nishino et al. update readers on the current state of checkpoint biomarkers (and confusion) in immuno-oncology, here.

$205M for Women's Molecular Diagnostics: $125M Progenity, $80M Counsyl

Within hours of each other, two molecular labs focusing on women's health raised collectively $205M.

Counsyl raised $80M (here).  Progenity raised $125M (here). 

In other news, on November 7, a publicly held company in germline genetics, Invitae, had a stock pop of 13% based on growing revenues (here.)   Invitae announced a $73M private placement offering a couple months ago (here).  Germline genetics company Ambry recently sold to Konica Minolta in a deal valued up to $1B (here).

Tuesday, November 7, 2017

FDA Announces "Pre-Certification Route" to Genetic Test Approvals for Germline Risk Tests

On November 6, 2017, FDA announced a new rout to review of "genetic health risk" germline tests.

Detailed article at MedCityNews, here.  Genomeweb here.  AND: The FDA's press release, here.  Coverage at Sidley, including links to the FDA final orders and a concurrent comment request, here.  

See recessive carrier screening downclassification order, 82 FR 51567, here.   See also 82FR51560, here, and a Request for Comment on downclassification processes, 84FR51633, here. (Comment due by 1/8/2017).  I've put these in one cloud zip file, here.

Flagged Online at FDA on September 26

Gottlieb actually flagged this Pre-Cert approach clearly in late September, but few picked up on it.  See my blog entry on September 26, here.  In a speech at Advamed, which was reported by MedCityNews and others at the time, Gottlieb said that "we need some legislation" on LDTs. 

However, if you dug around on the FDA website at the time, you could see the "official prepared remarks" -- which were a little different from the actual speech.  Here's what we found at the time.

In the "official prepared remarks," online at FDA.gov, Gottlieb had a script for talking about the newly released "pre cert" process for digital health software, and was to have remarked verbally that this would be a "basis for a modern legislative approach" to LDTs.  However, this sentence didn't appear to occur in his verbal remarks from the Advamed podium.

For an FDA press release on the Digital Health Software Pre Certification Program, see here.  The FDA will hold a January 30-31, 2018 conference on Precertification (here).

FDA's Key Text Released November 6

Returning to the new genetic health risk (GHR) framework, here's a quote from the new FDA press release:
Today, the FDA is taking steps to implement a novel regulatory approach for the regulation of GHR tests that applies proper oversight in a flexible, new way. It builds on the important lessons we learned from the FDA’s authorization of the first GHR and carrier screening tests sold directly to consumers. Specifically, today the agency issued a notice of its intent to allow GHR tests to be exempted from premarket review under certain conditions. If and when finalized, manufacturers of these types of tests would have to come to FDA for a one-time review to ensure that they meet the FDA’s requirements, after which they may enter the market with new GHR tests without further review. The agency also established special controls for these tests in a separate de novo classification order, which outline requirements for assuring the tests’ accuracy, reliability and clinical relevance and describe the type of studies and data required to demonstrate performance of certain types of genetic tests. This approach is similar to the proposed firm-based, pre-certification model that we developed for digital health technologies.

These Important Wheels Starting Turning in February 2015

Note that this process builds on groundbreaking approaches to genetic test policy created for 23andMe a couple years ago.   We described this as a sea-change in the FDA's approach to molecular approvals in a deep dive essay back in February 2015.

Labs Could Get More Money Under PAMA Law Than They Lose !!

This is a sexier title for the prior article.   In famous scene from the movie and musical "The Producers," the accountant says, "Under the right circumstances, you can make more from a flop than a hit."

Labs lose several hundred million dollars under PAMA price cuts. But ACLA has argued that PAMA overrides a panel pricing policy for clinical chemistry tests.   These panels are a big deal, logging $710M in payments in CY2016.   The arcane panel price rules cost industry about $45M in CY2016 relative to a la carte analyte prices, and they would recover this money immediately under PAMA if panel prices rules stop in 2018.

But wait, there's more.  If there was any rise in the delivery and billing of the newly and colossally profitable N-1 panels paid at a la carte prices, CMS could pay out "billions" more, depending on the frequency of ordering N-1 Panels.  For example, Panel 80053 pays $13 under PAMA 2018, with 15 analytes; but any 14 analytes pay about $75.   32M tests at $13 are around $500M but 32M tests at $75 are about $2.5 billion. 

See the prior article for charts and details, here.

2016 CMS Savings Under Chemistry Panel Pricing Rule; Strategic Impact in 2018

In 2016 and 2017, at the summer Clinical Laboratory Fee Schedule meetings, CMS discussed the impact of pending PAMA pricing law on its use of special "panel pricing policy" in clinical chemistry.  CMS has manualized policy (not statute or regulation) that caps the prices of analytes at no more than the price of a corresponding panel.   For example, if a 10-analyte panel is $20, and each analyte is individually $8, and you order 9 analytes, you might hope to be paid 9x$8 or $72, but CMS has special calculations that will cap your price at less the $20.   The CMS rules are complex, but that's enough to understand this article.

In August 2016, NILA and ACLA argued that CMS must discontinue panel pricing rules if and when PAMA sets the laboratory fee schedule in January 2018.  Rather, CMS must pay each code at the PAMA price.  While it may take courts and lawyers to decide, I think ACLA has a pretty good argument.

How much would this cost CMS?   I think there are two answers, one is calculable and one could only be guessed at.   We used 2016 utilization data, released recently by CMS.

In 2016, CMS spent $709,291,438 on clinical chemistry panels.  The vast majority of this was for codes 80053 (comprehensive metabolic panel) and 80061 (lipid panel), which totaled 85% of all panel spending at $604,854,656.


Exactly Calculable Savings from Panel Rule

CMS spent $43,026,852 on payments for the 24 analytes  in 2016.   However, if they had been paid at their fee schedule rates, payments would have been $87,262,430, about twice as much.  Cash savings appear to be $44,235,578 per year for the panel policy. [FN *]

click to enlarge

But Don't Miss The Impossible to Exactly Predict Impact

The above savings are in the existing panel pricing system, where labs have no incentive at all to submit claims for, say, 9 analytes on a panel of 10.   However, if the panel pricing rule vanished like a Penn & Teller trick (the PAMA Panel Vanishing Act), then labs would have a lot of incentive to submit analytes that don't match a panel definition and price.  For example, now, if you drop one code from a $20 panel, you get (say) $18.   Without the panel pricing rule, if you drop one code from a $20 panel, you might get $50 or more at the a la carte rate (e.g. 9*$6). 

This new perverse incentive could affect anywhere from 0% to 100% of the sixty million panels tested in 2016.   While it represents an absolute extreme, if 80053 with 32M uses per year now pays $13 in 2018, but any 14 analytes pay $75, the difference is huge.  32M uses x $13 is about $500M, but 32M uses of a 14 analyte panel x $75 is about $2.5B.   .[FN **]

Of course, despite the new incentive to submit "N-1" panels, labs in the US wouldn't submit all the panel tests at "N-1" a la carte prices.  So let's say this second effect is 10% of panels, or 10% of $700M, or about $70M.   The two effects together would tally about $110M.   Or more? [FN***]  All this offsets a substantial part of the several hundred million dollar savings caused by the rest of PAMA.

Point of Care Too

Another example is that today, if a point of care test company makes a kit that matches an existing ten test panel, a physician office lab will get about $20 from Medicare for it.  But if ACLA is correct that CMS must pay each analyte at its list price in 2018, if the device company makes an N-1 or nine-test panel, the physician might get, say, 9*$6 or $54 for that.

Excel for the above in the cloud, here.

Comparison to BRCA Panels

CMS performs roughly 25,000 BRCA tests per year.   If they are all coded at the 2018 rate for BRCA1-BRCA-2 as 81162, this would be 25,000 * $2253 or $56,325,000 payments.   If they were all paid at the BRCA Panel Rate (10 genes including the 2 BRCA genes), this would be 25,000 * ($838+$542) or just $34,500,000 payments, giving CMS a CY2018 savings of $21,825,000.   

(If BRCA were stack-coded as 81211+81213 that cost would be 25,000 * ($2396+$553) or $73,725,000 payments, so the savings under the panel code policy would rise to $39,225,000Recall from above that savings from the whole national panel chemistry pricing policy in 2016 were $44,235,578.  (If the new Secretary of Health would use either type of savings, he could pay for an extra $400,000 of charter jet flights every 3.6 days and it would be revenue-neutral.)

PAMA and MAC data for 2016 show that BRCA testing was: variably billed as 81211, or as 81211+81213, or as 81162, or sometimes 81432+81433, but other times 81432, the latter probably only under a MolDx policy that "prohibits payment for dup del analysis unless only it is dup del payment for 81213 on top of 81211").  CMS 2016 billing patterns used the full spectrum of somewhat ambiguous current CPT coding choices:




Policy Note

If ACLA is correct that lab tests must be paid at literal fee schedule prices under PAMA law in 2018, it could affect several MolDX local policies that variably act to upgrade and downgrade payments from fee schedule rates (here).

___

[FN *] Actual direct cash savings might be a bit less because some states pay a bit less than the fee schedule normal price.  However, I believe this is a small effect on a few codes in a few states, whereas the total affect is 50% over all codes and all states.

[FN **] Relative to 2016 fee schedule prices, in 2018, both panel and a la carte prices will typically drop 10%, but again, this is not a main driver of the large effect I'm discussing.  Note that 2018 utilization could probably be 10% higher than 2016 utilization.  I've used 2016 prices throughout the clinical chemistry section of this blog.

[FN ***] Hundred million dollar values aren't without precedent at all.  Recall that in 2014, CYP genetic testing shot up to $270M before being fought back down to only $25M in 2016.  CMS doesn't detect unprotected vulnerabilities quickly.   It has no current defenses against N-1 testing, because until December 31, they've paid 10% less, not 300% more.

Monday, November 6, 2017

Counsyl Raises $80M For Genetics

In an announcement November 6, 2017, COUNSYL announced it has raised new $80M in funding.

Press release here.  Funding is from NYC-based Perceptive Advisors.



Counsyl Celebrates 10 Year Anniversary 

With New Financing and New Board Member


SOUTH SAN FRANCISCO, Calif.--()--Counsyl today announces 10 years of growth with $80 million in financing from Perceptive Advisors, a New York-based life sciences investment firm, and the addition of Lily Sarafan, chief executive officer of Home Care Assistance (HCA), to the company’s board of directors.
“We’ve dedicated the last decade to developing products and services that provide actionable information to guide women and their families as they make important health decisions,” said Ramji Srinivasan, co-founder and chief executive officer of Counsyl. “This financing will support our continued growth with an eye toward making expanded carrier screening as routine as taking folic acid, non-invasive prenatal screening as routine as an ultrasound, and hereditary cancer screening as well-known as a pap smear.”
[More after the break]

Sunday, November 5, 2017

Very Very Very Brief Blog: PAMA and Weighted Median

The briefest note.  I've seen some sources I would think know better, criticize CMS for calculating PAMA prices at Weighted Median rather than other calculations like Average. 

It's a dead issue.  The 2014 PAMA statute clearly required calculations solely for: Weighted Median.  It wasn't a CMS option to do otherwise.

Medians can be above or below the average.  If the data is 1,5,10, the median and average are nearly the same.  If the data is 1,3,10, the median is well below the average.  If the data is 1,8,10, the median is way above the average.

Could the MolDx Program Be Even Better with Increased Transparency?

On a cross country flight this week, I was reading CMS's two 1200 page November policy documents on PFS and Outpatient 2018 policies (here, here).   I was struck by a section in the PFS policy about new approaches to coding and pricing biosimilars, aimed squarely at improving the marketplace for biosimilar development and encouraging market entry once the statutory exclusivity of the original product has expired.   The particular policy will provide more specific coding, and product-specific ASP price setting, and the text about Medicare's desire to support innovation and avoid underpayment is inspiring.  (See CMS text here).  The upshot, which you can read for yourself, is that CMS strongly takes a position both toward encouraging the first innovators (e.g. the first Avastin), but equally, to thereafter encouraging market entry by new companies in the same area.

The MolDx program, which will soon operate in 28 states, handles nearly 90% of CMS molecular test payments as of 2015.*   The program has strongly supported innovators and its coverage policies are all available on the CMS website as LCDs.   MolDx has published extensive documentation about its coverage process.  By 2016, the lion's share of CMS national molecular test payments are MAAA tests covered by MolDX, making it a very important program:

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If so much of Medicare's mopath payments flow through special MolDx rules (see rest of article), it is hard for the CMS Actuary, MedPAC, OIG, or other policymakers to predict what payments will be based on the CMS rules and CMS fee schedules held at Baltimore and on the cms.gov website.   Even if you study and click around the MolDx website for a long time, you may not know what local payment rules you haven't found or how large their impact might be.

While I am a strong MolDx supporter, some stakeholders such as College of American Pathologists have had concerns about MolDx (see their most recent 2017 infographic here).   The MOLDX statement of work is online at a government RFP website (here). 

MolDx also has at least three programs that raise or lower the price of tests on the CLFS national fee schedule.  These policies are not on the CMS website and are much harder to find and understand than LCDs.   However, as CMS shows in its new innovation-oriented biosimilar rulemaking, payment rules are important important.  I describe the three unique MolDx payment policies here, and offer three practical ways that each policy might be - not so much changed, but made more transparent.

MolDx Payment Policy One:  Raising CPT Code Payments


**  NOTE ***
BY DECEMBER 2017, MOLDX HAD DROPPED ITS 
SPECIAL PRICING RULES 
FOR FDA CDX TESTS LIKE EGFR.  UPDATE HERE.

MolDX has several articles describing use of CMS modifier 22 - for extended services - to flag genetic tests performed with FDA approved kits.   See the "Approved Genetic Tests" webpage at MolDx.  (MolDx here, archive here.)  As of November 5, I count 6 genetic tests flagged with the -22 modifier:  Roche Cobas tests BRAF, EGFR, KRAS (81210, 81235, 81275), Qiagen tests EGFR and KRAS (81235, 81275) and bioMerieux test BRAF (81210).   

MolDX describes its authority for repricing FDA approved genetic tests here.  A discussion of the MolDX negotiated up-pricing of a Qiagen EGFR assay in Genomeweb, May 2014, here.

While no payment amounts are specified, CMS Open Data for 2015 and 2016 suggests that bonus payments ran as high as 2X ($600 for EGFR; 81275; Genoptix 2015; see my deep dive article on an OpenData view of the MolDX Mod-22 program, here.)

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More after the break.