Friday, April 20, 2018

Kaiser News: Medicare Diabetes Prevention Has Rocky Rollout

April 19, 2018, Kaiser Health News has a long-form story on the "rocky" rollout of a Diabetes Prevention Benefit at Medicare.   CMS doesn't say much, but admits that so far, and since January 1, only 3 DPP programs are enrolled to provide the new preventive benefit to its 40 million beneficiaries nationwide.   Story by Judith Graham here.

Small Policies Generate Colossal Rules and Policies

You can read about the DPP problems at Kaiser.   My take on it, is that it's surprising how often relatively simple concepts at CMS explode into huge rulemaking activities.  I'm not blaming CMS at all; it may be intrinsic to the job.   But let me give a few examples.

Diabetes Prevention Program

The Medicare Center for Innovation can create demo programs at will, evaluate them, and extend them if they improve quality and don't increase costs.  They ran a Diabetes Prevention Program demo - these are CDC-endorsed programs - and found it improved quality and saved costs. 

The program itself is simple: the provider has to be a CDC-certified provider of DPP.   The beneficiary has to meet a couple criteria for weight and blood glucose.   Then they get about 16 sessions over a year in a group-learning format.  Got it?

Rulemaking and policy making involved literally hundreds of pages of fine print in the Federal Register over a period of two years, pages of new regulations, and many other pages of application forms, criteria, rules, and penalties.   This takes hundreds of pages and several years to implement. 

Sepsis Early Intervention Program for Hospitals

In 2015, CMS initiated hospital requirements for sepsis intervention programs.  The core rules are very simple: if a patient is septic, a few key actions like blood tests and starting fluid should occur within 3-6 hours.

This took a several years to implement, has generated a crescendo of complaints in the peer-reviewed policy literature, and has a 160-page manual of rules and definitions plus a legacy of long town hall meetings, question/answer sessions, and transcripts.   See the thorny story in an article by Faust here and one by Rhee here.

CMS NCD for Genomic Testing in Cancer Patients

In March 2018, CMS issued a National Coverage Decision for the use of next generation sequencing tumor panels in patients with advanced cancer.   This document is only a month old, and the "coverage" section of the document is only a few paragraphs long (275 words).

However, it's already foreseeable that interpreting it in the context of the great range of possible cancers, tests, and drugs is going to be very complicated, and there at least several likely dilemmas or unintended consequences caused by the way the short policy is written.   See my own blogs on this topic here and here

MIPS/MACRA Physician Quality Reporting

I've listed this one last; you kind of know that Physician Quality Reporting and financial penalties are going to be complicated in any health system.  But of note this week, a new report by the main internists' association - the Amercian College of Physicians - finds that many of the laboriously implemented quality metrics don't even make sense Here.   This isn't a new topic; Richard Nixon gave a speech to the AMA in 1971 promising to reduce the government' s "burden of bureaucracy on physicians."

New Letter in SCIENCE Comments on CMS NCD for Cancer NGS Testing

Phillips et al. publish a letter in SCIENCE about the recent CMS NCD on gene panels in oncology.  Phillips published an op ed on this topic in JAMA a few days ago.

Last November 30, CMS released a proposed NCD requiring coverage with evidence development in a large sector of Medicare cancer patients.  Concurrently on December 1, Rebecca Eisenberg of University of Michigan Law School and Nobel laureate Harold Varmus of Weill-Cornell Medical School published an article in SCIENCE urging insurance coverage for gene panel tests in oncology patients, but under the umbrella of a coverage with evidence development paradigm.*

The NCD was finalized on March 17 without any coverage with evidence development component. 

  • Earlier this week, on April 16, JAMA published an op ed on the NCD by Kathryn Phillips of UCSF - here.    
  • Today, April 20, SCIENCE publishes a multi-author response to the Eisenberg & Varmus article - here.   This letter is by Phillips and ten co-authors (I am a co-author).   
    • Will private payers follow the CMS coverage policy?
    • Coverage for Medicaid patients is uncertain.
    • CMS didn't consider risk-benefit or economic tradeoffs.
    • CMS and other federal agencies need to view this as a beginning of wise oncology policy making, not a conclusion.

* The coincidence of the SCIENCE op ed and the CMS NCD is interesting, if you expect that CMS policies must be secret and not released outside the agency ahead of publication; here.

Thursday, April 19, 2018

Medicare LCD for BRCA Testing in Ashkenazi Populations Raises Costs Unnecessarily - While Wasting Time

This morning, I was reviewing the First Coast (FCSO; Florida) Medicare LCD for BRCA testing in women with a personal history of breast cancer.

If the woman has an Ashkenazi history, the LCD requires her to first have founder mutation testing (CPT code 81212, $440) and then if it is negative, to proceed to regular BRCA sequencing (81211+81213, $2948.84). 

Financially this doesn't make sense, and in terms of screening efficiency it obviously doesn't make sense.

The rate of being BRCA-positive in Ashkenazi women with breast cancer has a base rate of 25%.  It is higher (30%) in women < 45, and lower (18%) in women > 45.  Medicare populations are almost entirely > 65, so the rate would be below 18% in a Medicare population.

Running these numbers for FCSO's LCD at current Medicare rates, at the overall population rate of 25% positive, screening testing followed 81211/13 testing would cost $265,163.    Running the numbers with the lower 18% rate for the over-45 population, testing would cost $285,805.   However, if FCSO simply directed patients immediately to BRCA comprehensive sequencing (code 81162), total costs would be $225,293. 

In short, the screen-first policy wastes BOTH money AND time.  Thanks, Medicare.

It's not in the short term interest of a Florida lab to poin tthis out and request a revision, as the lab gets more money under the policy.  (The policy is financially break even for Medicare only if the BRCA-positive rate is higher than 40%.)

Data below.
click to enlarge

The LCD requires 81212 testing in all patients then reflex to 81211+81213.  If it reflexed to 81162, it would still lose money in the >45 population, and waste just as much time.

Wednesday, April 18, 2018

White Paper: Three Rubik's Cube Puzzles of the CMS NGS NCD

We're celebrating one month after the publication of the final NCD from Medicare on the use of NGS testing in advanced cancer patients.   I've written up a 10-page white paper on three puzzles of the NCD.    Find the white paper online here.  Click the "Down" arrow to download.

Based on incoming questions that I hear, andbased on some of my own puzzling, here are the three topics.  The short version is this blog; the long version is the online white paper.

     1.  Why does FMI assert pan cancer coverage under the NCD?
     2.  How does the NCD text limit the scope of the NCD?
     3.  Possible implications of the "advanced cancer" definition in the NCD.


1.  Why does FMI assert pan cancer coverage under the NCD?

The NCD provides coverage for tests that are NGS based, FDA-authorized CDx tests, when used in a patient who has an indication for that test.   FMI has two indications.  One indication for use as a CDx in several genes and several cancers (such as EGFR, lung, CDx).   A second indication is for "tumor profiling to inform the physician in solid cancers."   If a Medicare patient has lung cancer, the CDx for EGFR checks both boxes: the test is a CDx test, and, has an indication (EGFR) in that patient.   If a Medicare patient has bladder cancer, or skin cancer, or thyroid cancer, the test is still a CDx test (box 1) and it has "an indication" for that patient, e.g. tumor profiling to aid the physician in a solid cancer.   This analysis concords with FMI statements in several press releases.

click to enlarge
Getting a pan cancer definition isn't easy; FMI provided 80,000 blocks across 43 cancers, and MSK IMPACT provided >10,000 blocks across 17 cancers.

2.  How does the NCD text limit the scope of the NCD?

The proposed NCD had clear cut exclusionary language, which CMS simply deleted from the final version.  In addition, CMS deliberately added several additional sentences for the public, regarding the "scope" of the NCD:

click to enlarge

This language seems initially clear, then a little murky (to exactly what do some terms refer?) on closer reading.  I provide an analysis under Section 2 of this white paper. 

As I've said earlier, trying to read the NCD (including the text above) as broader and more exclusionary collides with common sense and lands in arbitrary and capricious.  For example, applying the NCD to unrelated NGS topics other than cancer therapy would be just like doing an NCD on cardiac devices, limiting the scope to valves, and then concluding that pacemakers aren't covered by implication.

3.  Possible Implications of the CMS "Advanced Cancer" Definition

The title of the NCD is "NGS testing in advanced cancers" and CMS provides coverage for targeted therapy NGS testing only in advanced cancers.  CMS seems to take pains to provide an explicit operational definition of "advanced cancers:" cancers that are recurrent, relapsed, refractory, metastatic, or Stage III or Stage IV. 

Is the NCD Language too restrictive?  For example, a new aggressive leukemia isn't relapsed or recurrent - it's new - and it's not refractory, because we're going to treat it for the first time.  Leukemia isn't usually called "metastatic" or "stage III or IV."  (There are staging systems for leukemia but they're unrelated to the metastatic Stage III/IV in solid tumors).   Could some auditor assert the leukemia doesn't meet any single one of the entrance criteria?

Can the LCD language in some cases too generous?  There's no question that skin cancer is a cancer, and millions of them are "recurrent."  When they recur, patients will certainly want "a therapy" (be it excision, radiation, topical drug, etc).   So here we go: The patient has a "cancer' and it is "recurrent' and he needs "a therapy" (not otherwise specified by NCD), so the skin cancer seems to qualify.  And if he has several (left hand, right hand, forehead) each is a distinct primary eligible for testing.   I'm not recommending this, I'm just reading the NCD.

Monday, April 16, 2018

Very Brief Blog: Behind The Headlines, Ongoing Life for "Tumor of Origin" FDA-Cleared Test

In a Genomeweb article this week, we read that Cancer Genetics (which has been in the news for financial problems) has gotten a special 510(k) clearance for its Tissue of Origin test.   Tissue of Origin tests are useful in cases where a patient presents with metastatic cancer of unknown or uncertain origin.   (Terms include tissue of origin test, tumor of unknown origin TUO, cancer of unknown primary CUP; see one recent review here.)

Genomeweb does not mention the long journey of this test, which classifies 15 tumor types. 

Pathwork Diagnostics developed the test just about ten years ago, and got FDA de novo clearance in June 2010.  (t's not clear yet just what kind of update the "new" FDA clearance represents.)

Pathwork  was folded into LA-based Response Genetics in August 2013.  This was described as "salvaging" the Pathwork test for a mere $1.3M.   According to Crunchbase, during its lifespan, Pathwork Diagnostics had garnered $64M in investments.

Response Genetics, in turn, was in bankruptcy when it was acquired by Cancer Genetics in August 2015, here

Currently, in April 2018, Cancer Genetics is the focus of lawsuits and is working to leverage its strategy and access for ongoing business operations.  CGIX stock has slipped from about $18 to about $1.50 over four years, with a current market cap of $40M.  Revenue has been circa $25-30M the past two years against net income of -$15M to -$20M.

JAMA Publishes Rapid Op Ed on CMS NGS NCD (Kathryn Phillips, UCSF)

Noted health economist and expert on precision medicine policy, Kathryn Phillips of UCSF, has published a rapid op-ed in JAMA on the March 2018 Medicare National Coverage Determination for uses of next generation sequencing testing in cancer.

The op ed is open access and online here.

Phillips notes the NCD provides coverage for NGS tests in all Medicare patients with advanced cancer.  However, it doesn't yet come with a "national health policy" for where we are going.  The impact on Medicaid populations or on commercial populations is unknown and remains to be developed.   She notes that a number of studies have asserting that panel NGS testing is "not cost effective," and that the coverage has been rapidly expanded across solid tumors with no kind of tracking or information collection such as could occur under coverage with evidence development.

Phillips will give a talk on the topic at Stanford on April 27.

Phillips directs a longstanding NIH-funded precision medicine policy program at UCSF, TRANSPERS, here.

Very Brief Blog: Harvard Case Study Provides Window into US Health System & Payers

Harvard Business School Case Studies have been famous for decades for providing a concise window into all sorts of businesses and scenarios and the challenges faced by management.   As a med school assistant professor taking MBA classes in 1999, I was struck by my first contact with these and it took a while to "get it."  Typically, a company is presented, some options or dilemmas or even a crisis, and then a portfolio of information and data.   There isn't a right answer; it's like giving you two-thirds of a novel and asking what happens next.

Rebecca Henderson and colleagues at Harvard Business School have published an unusually thorough, 32-page case in February 2018 called, "Aetna and the Transformation of Health Care."  It's available for a few dollars here.    For example, the authors frame a dilemma the CEO faces: 
"Bertolini wondered whether Aetna needed partners to make this strategy work. Should it partner with a firm like Google, Amazon, or Uber—entities that understood digital platforms and had strong consumer brands? Should Aetna double down on its investment in local communities by exploring a relationship with a company that had a major retail presence, such as Walmart, CVS, or Walgreens, or by expanding collaborative relationships with local providers?"  
The case provides background on the CVS-Aetna acquisition that is currently working through the legal channels (e.g. here).

Other interesting Harvard cases recently include the crash and fix of (podcast here, case study here) and a case study on precision medicine and the business strategies of cooperative networks for adaptive and basket trials, here.

Friday, April 13, 2018

A Watershed Moment in Healthcare and Reimbursement? FDA Greenlights Auto-Detection of Diabetic Retinopathy

FDA and health tech business IDx announce authorization to market the IDx-DR device, the first artificial-intelligence based diagnostic system.

MedCityNews writes,
    The marketing clearance follows the FDA’s decision to approve a “breakthrough device” designation for IDx-DR, accelerating the review process for the product based on its ability to address an unmet medical need....
    “The FDA’s authorization to market IDx-DR is a historic moment that has the potential to launch a transformation in the way U.S. healthcare is delivered,” said Dr. Michael Abràmoff, founder and president of IDx, in a company news release. “Autonomous AI systems have massive potential to improve healthcare productivity, lower healthcare costs, and improve accessibility and quality. As the first of its kind to be authorized for commercialization, IDx-DR provides a roadmap for the safe and responsible use of AI in medicine.”
MobiHealthnews here.  Medscape here.  FDA press release here. Company website here.

On its website, the company writes:  "IDx is developing algorithms that can detect disease across a number of imaging modalities, with a focus on fundus photography and optical coherence tomography (OCT).  Current prototypes exist for macular degeneration, glaucoma, Alzheimer’s disease, cardiovascular disease, and stroke risk."

CMS Follows FDA.....

Reimbursement?  Coverage?  New Coding?  RVU's?   To be continued....

CEO Gary Seamans and I are both speaking (no relation) at the MedCity INVEST conference in Chicago May 1-2, 2018 - here.


IDX is based in Coralville, Iowa, on the other side of Des Moines from the farm where I grew up.

Brief Blog: The NUB Regulation as a Form of CED in Germany

You learn something every day.   Today I heard about the German NUB regulation, which has some features of CED.   

It stands for Neue Untersuchungs- und Behandlungsmethode : New Investigation & Therapies Methods, basically.

NUB was introduced after Germany discovered post 2003 that its DRG inpatient system made it hard for hospitals to innovate.   (USA Medicare has a "New Technology Add-on Payment" or NTAP for our DRG system.)

It's a more hospital-based system in which a hospital can contract for one year or two of special payment for a new device while data is collected.  The device must be CE marked and used less than 3 years in Germany and cost > €500.

NUB Sources
  • Sebastian Gaiser, formerly with St Jude, now at J&J, has a 14 slide deck from 2014 about the NUB system available open access on line.  It's not entirely in favor of NUB, and sees flaws, but gives you an introduction. Here.   
  • See also a 19 page, 2009 deck about NUB from Henschke et al., here.   
  • The group "Assessment in Medicine" has a 24 page PDF from 2017 that discusses NUB.  Here.
  • Cloud zip file for the above, here.

Once you've heard of NUB, you start to see it in press releases, e.g. this 2018 press release for the BIOVENTRIX transcatheter device.

There seems to be another German system called "137E" which I've seen cited as supporting rollout of cancer drugs, e.g. here.  See also a 2014 article by Olberg et al. on CED/137E in Germany, here.  NUB is a limited DRG focused program, 137E is a broader CED concept.


Hoffman et al. have just an conference abstract on NUB in Value in Health 2016.  Here.

ISPOR has a 2011 detailed webpage on the whole complexity of the German System (includes a bit on NUB).  Here.

The 24-page Assessment in Medicine (AIM) document is on the website of IGES, a technology institute that may be a university spinout, here.

The main German health technology assessment group is called IQWiG, here.

Thursday, April 12, 2018

Policy Collaboration with Medicare Agency (Case Study: IDSA, Antibiotic Stewardship)

This month, an active federal prosecution in New York is generating press about how CMS makes decisions, and how information on the decision process might leak.  See e.g. Bloomberg here.

The normal process doesn't make much news or generate big court cases, but it's interesting to see how it can work successfully.

In July 2016, CMS released a special standalone rulemaking specific to a proposed requirement for antibiotic stewardship programs at US hospitals.

 For background see here and here and here.  Remember that antimicrobial resistance and better controlled use of antibiotics are major national and global health priorities.

Google helps us reconstruct some back-story.

June 2014
In June 2014, the Infectious Diseases Society of America (IDSA), along with the Society for Healthcare Epidemiology of America (SHEA), sent a 20 page letter to CMS asking them to create a "condition of participation" for hospitals that they must have formal antibiotic stewardship programs.   See the letter online here

Back to 2012
The letter describes multi stakeholder consensus workgroups that go further back, to 2012, and helped support creation of the 2014 request. 

Forward to 2016
Fast forward 24 months, and CMS produced the hospital rule proposal on June 16, 2016 (81 Fed Reg 39448-39480, CMS-3295-P), here.  Comment docket here.  201 comments were submitted.  I've put about a dozen comments in the cloud as a zip file, highlighting "major" ones with XXX in the file name, here.  Interestingly, whereas IDSA and SHEA submitted a joint letter in 2014 requesting the rule, it looks like they commented in 2016 three times: as a joint letter, as a single IDSA letter, and as a single SHEA letter.  Other major groups like AHA commented (see zip file).

And Today: 2017-2018

  • CMS hasn't finalized the rule yet; one might expect that at 6-12 months, but the agency has up to several years.   Perhaps it was viewed as excess regulation by the new administration; perhaps it's in somebody's inbox for sign off.
  • Meanwhile, Joint Commission has created guidelines for its hospital accreditation process to help fulfill "best practices" for having an antimicrobial stewardship committee.  See JC webpages starting here.   
  • There's also a February 2018 article (by Cornell authors Kapadia et al.) in the JC journal, here; open access.    
  • A quick search of Pubmed for "antimicrobial stewardship programs" has over 400 hits, here.  
  • There's a Presidential Council of advisors here.   (See various work products; the next meeting is May 16).
  • CDC is involved here.  
  • Lots of stuff at IDSA, enter the webpages here.
June 2019
  • Based on SSA 1871, the proposed rule issued in June 2016 will expire unless finalized.
I could go on, but the point is, if you view the center of the wheel as the CMS proposed rule in 2016, you can quickly find several years of predecessor and follow-up events that are part of understanding what CMS is thinking.

click to enlarge

Not directly related to CMS rulemaking pathways, but see an April 2018 CDC presentation on the ongoing threat of microbial resistance, here here here.   The public health issues continue even if the bureaucracy stalls.

FDA Releases NGS Review Guidances: NGS Databases and NGS Germline Review

In 2016, FDA released draft guidances on new review practices for NGS, including the use of public variant databases, here.

On April 12, 2018, FDA released final versions of guidances for NGS databases and for review parameters for NGS germline testing.

See FDA press release here.  Trade press at Endpoints here.  Genomeweb here.

Database guidance here.   Note that FDA has set up an elaborate voluntary FDA recognition process for databases; see this new FDA webpage here.  Eventually FDA says it could use third-parties to certify variant databases for FDA recogntion.

Germline guidance here.  Discussion includes choice of indication, expected frequent downclassification from PMA to 510(k) and future use of that (growing library of) 510(k)(s) as a predicate for others, and rolling-on modifications especially under 510(k).

 I've clipped the FDA press release below the break.


You Can't Be Too Rich or Too Thin or Issue Too Many Guidances on IDE Dx Tests

In addition, over the past several years, the FDA has repeatedly revisited the meaning of "investigational use only" and the requirements for registering LDTs or RUOs used in clinical trials as "investigational devices" or IDE's.  Most recently in December 2017, here.  FDA issued another draft guidance in this series on April 12; here.   Generally, FDA has wanted to be sure that IRBs approving local clinical trials ensure that LDTs used in those trials are IDEs.  Perhaps out of IDE exhaustion, this draft guidance is only 7 pages.

Wednesday, April 11, 2018

Very Brief Blog: Cancer Genetics (CGIX) Describes Payer Write-offs on MoPath Testing

Cancer Genetics (CGIX) is in the news this week due to several investor lawsuits, which follow in short order from CY2017 financial disclosures around April 1. 

CGIX went public with a fairly small IPO ($7M) in 2013.  At the time, its businesses included "a joint venture with Mayo Clinic."  Its business focused on molecular testing both for biopharma R&D and for clinical applications.  It acquired Gentris, a biopharma genomics provider, in 2014.  It acquired LA-based Response Genetics in 2015.   Previously, it had acquired Pathworks, and in April 2018 received 510(k) for the tissue of origin test (here).

According to Yahoo Finance, its stock price has slide from over $11 in mid 2015 to about $1 today.   According to the company's April 2 financial announcement, 2017 revenue was 63% biopharma/discovery, "supporting over 220 clinical trials."   2017 full year revenue was $29M, against a 2017 net loss of $21M.  (E.g. about $50M in costs to generate $29M top line revenue).

Cancer Genetics changed CEO's in February 2018.  On April 9, Genomeweb and other news sources covered a pair of new class actions lawsuits (here).

What's interesting, and familiar to anyone who tracks the messy chase for revenue in clinical molecular laboratories, are the following descriptions:
A major area of concentrated focus during the first quarter of 2018 was the careful evaluation of the Company’s accounts receivables, which had increased to approximately $16 million on the balance sheet prior to any adjustments. 
A significant reason for the increase was disruptions in collections in its Clinical Services business. While the Company continues with its collections efforts on all claims, in the fourth quarter it recorded a bad debt expense of $4.4 million and wrote off $1.8 million of its accounts receivable, with a significant portion of the bad debt expense and write off related to collection issues with respect to the accounts receivable recorded subsequent to the 2015 acquisition of Response Genetics Inc
Payors have declined to reimburse the Company on certain performed Clinical services due to: 
  • delays in filing its claims, 
  • the demands by payors for copies of patient medical records or diagnosis codes which have been difficult to obtain, and 
  • reimbursement challenges for certain of our next generation sequencing tests by Medicare and 
  • third-party managed care plans, among other reasons. 
  • As such, the Company has made a prudent decision to write these off in the fourth quarter. Management believes that its current outstanding accounts receivables are collectible, net of the allowance for doubtful accounts.

[Bullet-points added by me for clarity.   The report also notes that accountants had made a "going concern" warning].


See also my blog in January 2018 about an executive leaving Hudson Alpha with the quotation, "The reimburesment [for advanced sequencing] is just not there" - here.

Tuesday, April 10, 2018

Very Brief Blog: Reasons to Join Personalized Medicine Coalition: Great Speakers (CMS NCD)

One benefit of membership in the Personalized Medicine Coalition in Washington:  great conferences and speakers. 

For members, on April 24 they are hosting Katherine B. Szarama PhD, lead analyst for the CMS National Coverage Determination on Next Generation Sequencing in Advanced Cancer.

According to the PMC website, she's speaking at a members event April 24 in DC.   See the PMC website here.   See the events calendar here

Other PMC events coming up include its 14th Annual State of Personalized Medicine luncheon (May 23).  In other news, PMC recently released its 2018 Strategic Plan, online here.

Very Brief Blog: EY Releases 60 Page Report on Life Sciences, Big Data

EY has released a 60-page report on life sciences, capturing value, and big data/digital health. 

Is this real?  When Roche buys Flatiron for $2B - yes.

The EY report is online here and PDF here.

See Q1.2018 reports on digital health investments at RockHealth here [$1.6B], StartUpHealth here [$2.8B].  Trade press at MedCity here, MobiHealth here.    Funding varies with the categorization of companies in genomics; by one tally, Dhealth deals included HeartFlow $240M, Helix $200M, Oscar $100M.   (See my blog on Medicare policy wins for Heartflow, here.)

In March, Bloomberg reported Israel was poised to investment $275M in digital health.

EY Life Science Data White Paper 60pp

See a new April 2018 MedCity article on what pharma has learned from efforts to collaborate with Dhealth, here.

Federal Courts Continue to Blast CMS CGM Policy as Arbitrary and Capricious

For years, Medicare did not cover continuous glucose monitors (CGM) as a medical device, and the rationale was amazingly scanty - such as limited passing remarks that CGM was "preventive" rather than "medical."   (If the CGM shows your glucose is way too high or low, it's a medical problem, not some kind of opportunity for prevention.)

I blogged in July 2016 that Administrative Law Judges were treating the CMS position as nonsensical, here

CMS came out with a narrow ruling allowing CGM in some cases (an "Administrator's Ruling," January 2017, here.   The implementation is painfully complex; I don't track every nuance but have one blog on that, from March 2017, here.

The Parrish Law Firm has won a long line of cases, both administratively and in federal court; see their press releases here.   In April 2018, they won an additional court case, Lewis v Azar in Federal District Court of Massachusetts.   I've clipped the press release below the break.  Parrish writes that three district court cases now support the medical use of CGM, and this follows "more than sixty favorable ALJ rulings" as well.   She adds that, "In the last six months, three different district courts have issued three decisions finding that Medicare’s denial of coverage of a continuous glucose monitor is either just plain wrong or arbitrary and capricious and not supported by substantial evidence."

As Dexcom began rolling out products in August 2017 to Medicare beneficiaries, here's another twist, according to Parrish:
Medicare further stated that it would not cover a CGM if a Medicare beneficiary used a cell phone app to share glucose readings with caregivers or family members. This has forced Medicare beneficiaries to choose between Medicare coverage and sharing glucose levels with those who could intervene in a crisis. 
This position against advanced medical software on smartphones echoes a ruling on assistive speech generating devices, which can run on smartphone-like devices as DME but only if every possible function of the device is disabled, other than the medical speech generating function.

As a sidebar, see my April 2018 article on how the digital cardiology company Heartflow won a several year battle about misclassification as a non payable medical device.

As another sidebar, in CY2017, Medtronic attempted to get a HCPCS code for its advanced FDA approved artificial pancreas device.  Such a code would distinguish the product for twenty-year-old insulin pump technology.  CMS declined to issue a code to Medtronic

Saturday, April 7, 2018

Very Brief Blog: Nerd Note, Pricing of KYMRIAH and YESCARTA - Behind the Headlines

BioPharmaDive and other sources reported this week that CMS had set payments for Gilead's YESCARTA at $400,000 and Novartis' KYMRIAH at $500,000.    See BioPharmaDive here, Reuters here.

These are outpatient prices; inpatient drugs are bundled unless and until they achieve "new technology add on payments" or NTAP payments in the hospital DRG system.

Here are some brief research notes.  I'm calling this, Kymriah and Yescarta: Behind the Headlines, but what is behind the headlines is mostly Excel spreadsheets, links, and footnotes.

Are These Prices Posted on the CMS ASP Webpage?
First, I assumed this prices were probably represented in the April 2018 (2Q2018) drug fee schedules from CMS.  These price spreadsheets are found here, under "HCPCS" codes when there are specific codes, or under a spreadsheet of prices as "NOC" codes when there is no HCPCS code. 

Medicare doesn't "set" or "negotiate" biotech drugs or other injectable drugs; it assigns prices based on ASP, or average quarterly US sales price, net of discounts, reported quarterly to CMS by the manufacturer. 

However, I didn't find either KYMRIAH or YESCARTA on these ASP tables.    Maybe next quarter?  Sipuleucil (Provenge) is there with a price around $45,000 per dose.  (CMS CY2016 public data showed Part B payments for Q2043, Provenge, at 3700 doses at $140M).

Do These CART Drugs Have HCPCS Codes?
The two CART drugs have Q-codes.  Kymriah (tisagenlecleucel, up to 250M car positive T cells, including leukapheresis and preparation, Q2040), and Yescarta (axicabtagene, up to 200M Anti CD19 CART cells, including leukapheresis and preparation, Q2041); see code listing here.


Both drugs had presentations at the public NTAP meeting on February 18, 2018; the agenda is still online hereThe full webpage for the February NTAP meeting is here and it is archived on Youtube at 4h53m hereQuite a few Youtube videos have auto-transcripts (by clicking the little three horizontal dot button) but this one doesn't.

Will New Special Policies for KYMRIAH and YESCARTA Appear?

CMS will release inpatient rulemaking regarding the NTAP decisions about April 15-20, 2018.   For most products, NTAP is hard to get, requiring first to be a "new product" (including as "new" that it is not too similar to a prior product).  Second, the medical product must have substantial clinical impact.  And third, the cost must be more than 50% of the DRG.   All three criteria are an easy hurdle for these two CART drugs.  However, the add-on payment atop the DRG is only 50% of the added cost of the new product under existing rules.

Any new outpatient policy for these drugs would appear about July 1 in OPPS rulemaking (unless there's any CMMI action that appears separately).


I pointed out in some blogs last September that there was a lot of sudden excitement and frankly, "hype," about CMS having set special pricing agreements with Novartis --- but there was no detail or facts at all about what that was, or how it was being doing administratively.  Here.

There still isn't.   My point at the time was, that there are laws governing the flow of funds for drugs at Medicare, and the Administrator of CMS can't just create new deals and shake on it and sign the line with a biopharma CEO.   (However, when some lead time, CMMI could craft creative deals as a "demo drug pricing project.")

It remains to be seen if any creative dealmaking - other than the regular rules for NTAP and ASP - will occur in April 2018 Inpatient rulemaking or June 2018 outpatient rulemaking, or in a CART-specific innovation program from CMMI.

Friday, April 6, 2018

Medicare Nerdism and Heartflow's $240M Funding Round

Heartflow is a Bay Area medtech company with unique, advanced bioinformatics approaches that use CT scans to determine cardiac bloodflow. 

In November 2017, Heartflow reached a $1.4B valuation after a $150M funding round, and that round, its Series E, peaked at $240M by February 2018.   Total funding has reached circa $500M; see WSJ in February 2018 here.

In a June 2017 blog, I talked about a range of favorable events for Heartflow, but also discussed and linked to a spring 2017 Medicare Administrative Law Judge Decision that the company was not eligible to even enroll in Medicare - here.

What happened?   Here's a chain of events.  It's an important case study for the start/stop way that CMS is handling digital health and bioinformatics.   

From public data, at least through mid 2017, the company's Medicare contractor Noridian declined to enroll the company in Medicare as a provider, on the basis that its service (bioinformatics on the imaging) was not reimbursable.  See my June 2017 blog above.

But the company had several AMA Category III CPT codes.   These codes are always reviewed and categorized by CMS central office for the hospital outpatient system, the "Ambulatory Payment Classification" system.

CMS initially ruled the codes were not payable or not separately payable (and thus not classifiable into any payable APC).   In November 13, 2017, rulemaking, with four pages of discussion, CMS ruled that the Heartflow key codes were payable, and in fact priced them circa $1500.  See 82 Fed Reg 52422-52425, in the cloud here.

Heartflow's 9-page September 2017 comment letter is here.  Given that the CMS favorable ruling was rapidly followed by $240M of fundraising, one could joke that the comment letter was worth about $25M a page. 

Footnote:  In 2017, Heartflow lobbying spending was $170,000, according to OpenSecrets, most of which to Hogan Lovells.

Coverage, Coding, and Payment

Close readers of reimbursement policy will note that it includes "coverage, coding, and payment" and the CMS ruling in November is about "coding and payment."   I'm don't claim to know exactly what the status of Medicare coverage of Heartflow is and it could be evolving rapidly.  One LCD in the cardiac imaging topic area says simply that "it does not address Heartflow determinations" (Palmetto, L33423, here.)  But Heartflow CPT codes seem to be within a covered payment category in a large group of Category III codes in a Noridian article (A55607, here.)   

Heartflow regularly updates announcements on its covered population with major payers (e.g. see January 2018 update here.)

Thursday, April 5, 2018

Very Brief Blog: New Article Reviews History of NIH Guideline Committees 1977-2013

Anyone working on healthcare coverage knows that guidelines have become more and more important; "payers will talk to you after you're in the guideline."  At bottom also find an Easter Egg quote from William Harvey.

Annals of Internal Medicine has an article this week by Todd Olszewski of Providence College on the checkered history of guidelines committees aka "Consensus Development Programs" at NIH from 1977 to 2013.   Find the article here.

As Olszewski describes, these NIH panels were efforts to develop consensus guidelines on major medical topics and were developed over several days with presentations, panel discussions, public input, and draft positions (later fully drafted and finalized and published).   The program was wound down around 2011 and completely disbanded by 2013.

Olszewski cites two books on evidence based medicine as a process and guidelines, one of which I've read and one of which is on my bookshelf:  Timmerman & Berg (2003): The Gold Standard: The challenge of evidence based medicine; and Solomon (2015) Making Medical Knowledge.   (Another book of interest, not well known, is Milos Jenicek's "Foundations of Evidence Based Medicine," 2010).

Other Lost Stories of Evidence-Based Medicine History Besides NIH Consensus Committees

Another story of a temporary governmental evidence assessment effort was the Office of Technology Assessment.  It lived from 1972 to 1995.  See its Wikipedia page here, and a scholarly history article by Sadowsky at ASU here.   See recent articles on it from Atlantic (2012, here) and New York Times (2015, here).   Part of its work was medical, Google as: [ "office of technology assessment" medicare ] or here.

Particular to health care, there was a "National Center for Health Care Technology" which produced a particularly horrible report negative to transgender surgery in 1981, used for a CMS NCD (here, here).   (Bizarre these issues are still active in 2018; see March 2018 AMA letter to Department of Defense re transgender issues, here; also here, here.)   See an article on the history of the NCHCT in NEJM, 1982, here, and an old JAMA article, here

My Favorite Quote about Medical Evidence Indeterminancy!

Somewhere over the years I ran into: "Society and Medical Progress," by Bernhard Stern, 1941.  There are these glorious quotes from William Harvey on medical evidence, pp 186-87:
"Scare a day, scarce an hour, has passed since the birthday of the circulation of the blood that I have not heard something for good or evil said of this discovery.  Some abuse it as a feeble infant, and yet unworthy to have seen the light.  Others again thing the bantling deserves to be cherished and cared for.  These oppose it with much ado, those patronize it with abundant commendation.  One party holds that I have completely demonstrated the circulation of the blood by experiment, observation, and ocular inspection, against all force and array of argument.  Another thinks it scarely yet sufficiently illustrated - not yet cleared of all objections.  Detractors, mummers, and writers defiled [the theory] with abuse...The authority of Galen is so great with all, that I have seen several hesitate greatly [even] with the experiment before them."  
He added that "no man over forty was found to adopt the doctrine of circulation of the blood."

Harvey here of course foresee's "Planck's Principle" that scientific ideas flourish only because their opponents eventually die (here).  Cloud copy of Stern 1941 here, see 186-87.

International Journal of Technology Assessment in Healthcare ran a special supplement on "history of HTA" in 2009; here.

Partly for my own reference, I note here that I used to show a series of slides on logic & reasoning & evidence based medicine, citing a number of not too well known authors, Miettinin, Dickinson, Jenicek, whom I was reading at the time; in this old 2012 deck from page 19 fwd.

Tuesday, April 3, 2018

Very Brief Blog: AMA Posts Agenda for May 2018 San Antonio CPT Meeting

AMA has setup a webpage for registration and information on the May 17-18-19, 2018, San Antonio CPT meeting, here

Check for updates at AMA, but the initial agenda is here

There are about 40 "tabs" or action items.  One of the reasons for posting these is PUBLIC COMMENT IN ADVANCE.   Stakeholders can request a copy of the full CPT application (about 20 pages) and provide written comments that will be incorporated in the reviewer files.   Pathology runs on an early schedule (request application by March 29, comment by April 3.  This is due to the early cycle of pathology subcommittee meetings.   Comments can still be submitted after this, however.  For other codes, request applications by April 27 and submit comments by May 4.

Quite a few are editorial revisions to existing codes.   Some are quite eclectic (tab 19, transanal hemorrhoidal dearterialization.)  A code at tab 33 for "Holistic system therapy" is described in summary as "add a code to report mystical medicine." 

In the lab industry, Tab 29 proposes to cover liver fibrosis MAAA codes from 0001M to a Category I code 815XX.  A new "small dense LDL" test is proposed.  That's a light code list for labs.

CMS Releases New AMA CPT Lab Codes for CY2019 (Gearing Up For Crosswalk Meeting)

At the end of March, CMS announced the annual new lab test public meeting for pricing would be June 25, and a national webinar for the lab advisory panel would be July 16-17 (here).  Registration for the June meeting opens on April 4 on the CMS CLFS website; for presentations, powerpoints are due June 11.

On April 3, CMS posted the new AMA CPT lab codes for CY2019.  See the CMS home page for the annual meetings and scroll to the bottom for "CODE UPDATES" and "CY2019."  Here.  You'll get an excel spreadsheet. 

Don't be surprised if CMS updates it from time to time, however.

  • I  am pretty sure this list is NOT COMPLETE, as it includes 
    • two "reconsidered" codes (81334 RUNX1, leukemia; and 81326, PMP22, myelin, Charcot-Marie-Tooth; see below), and 
    • 27 PLA codes, and 
    • 3 "Administrative MAAA" codes (0011M, 0012M, 0013M).    
  • Today it includes "zero" regular Category I new codes.
  • Over the past year, AMA CPT has also generated a number of regular Category I CPT lab codes for CY2019 (I think > 50).
  • I assume the CMS spreadsheet will be updated with those at some point.  
    • See the rolling releases of CPT actions in recent quarters here.
Here comes my informal list, from various AMA actions, of 2019 Cat I Lab CPT Codes that I don't see on the initial CMS code list.  There may be as many as 54 new Cat I lab CPT codes, driven in part by the 30 new Triple Repeat codes.

If I'm correct, the meeting will be handling the 32 new codes (PLA, etc.) already released by CMS plus another 50-odd new Cat I lab codes, or a total count in the 80s.

My informal count of new CPT lab codes for CY2019

Reconsidered Codes: 81326, 81334 (PMP22, RUNX1)

Last September and November, CMS announced its preliminary and final crosswalks for these two codes.

81326 is "Known familial variant" for PMP22 (Charcot Marie Tooth).  Commenters recommended crosswalk to 81215, BRCA1 known familial variant.  Based on PAMA data, this known variant test is priced quite a bit higher than most other known variant tests ($375). 

CMS crosswalked instead to the 81322 PTEN known familial variant ($53).    CMS stated tersely, "We disagree with the crosswalk to 81215 because we believe that crosswalk to 81322 appears to be a similar type of test (methodology, gene analysis, known familial variant) to code 81326."   Of course, by itself, this explanation doesn't distinguish between the choices at all, both are gene analysis of known familial variant.

81334 is targeted sequence analysis exons 3-8 of RUNX1, used clinically in leukemia.   Panel recommended 2x81235 (EGFR common variants).  Another proposal was 1.5x81272 (KIT exons 8,11,13,17,18).   CMS chose the KIT crosswalk but said "there was insufficient rationale for a 1.5 multiplier."

Thursday, March 29, 2018

CMS Public Lab Meeting Monday June 25, 2018; Advisory Panel Webinar-Only, July 16-17

Each summer, CMS convenes an annual public comment meeting for its pricing of new laboratory codes (e.g. codes that will be active in January, 2019). 

Public Comment Meeting Monday June 25

This year CMS holds its annual public meeting on Monday, June 25, 2018, at the CMS headquarters in Baltimore. 

Registration for in person attendance begins April 4 at CMS via its CLFS webpages.

Stakeholders must submit their presentations by June 11, 2018.   Written comments will be accepted until July 9, 2018. 

CMS publishes the code list for the public meeting at least 30 days in advance.  This means the code release date May 25 will be at least 2 weeks before the presentations-due date June 11.

Advisory Panel Meets Later, And Only By Webinar

CMS also will convene its Clinical Diagnostic Test Advisory Panel, but only by webinar.   The panel teleconference/webinar will be accessible to the public on Monday/Tuesday, July 16/17, 2018.

Get the Documentation:

The Federal Register notice for the June 25 meeting is here.

The Federal Register notice for the July 16-17 advisory panel webinar is here.

Read Carefully:  CMS Proposes One-Slide Per CPT Code Per Stakeholder !

In past years, CMS issued instructions in text on what they needed for pricing: the purpose of the test, clinical population, use, cost and charge information (especially for, but not only for, gapfill).   In 2017 they handed out a 5-slide model deck with "test purpose and method," "cost/charge" data, "recommendation."  This year, they issued a one page PDF instruction for how to build your one slide per test, which should look about like this:

Brief Blog: Some Nerdy Aspects of the Lab Gapfill Process

For many years, CMS has used either a "crosswalk" or "gapfill" process to assign prices for new laboratory tests.   This process is still used for new laboratory tests, up until the time the next triennial PAMA pricing exercise occurs.   Right now, in spring 2018, about 19 codes are in the active gapfill process.  Around April/May, CMS will post MAC proposed gapfill prices and trigger a 60 day comment period.  (Sounds like you could base an office lottery on the CMS date).   Final MAC gapfill prices will be posted in September.

For the first time, MACs will be required to display a "rationale" for their gapfill decisions.  Also for the first time, MolDX will have a majority of price proposals, thus controlling the "median" MAC proposed price.

Details follow. 

Recent Gapfill Activity
2015:  About 30 codes being gapfilled; least half got no price.
2016:  About 16 codes being gapfilled, mostly MAAAs; all were priced.
2017:  No gapfill activity this year.
2018:  About 19 codes being gapfilled.  First year requiring "rationales." 

The Gapfill Process in Regulation
The gapfill process was formalized in regulation by CMS in 2007 due to a Congressional request (the 2003 Medicare Modernization Act, Section 942; see 42 CFR 414.508).  PAMA also puts gapfill rules in regulation, although in a somewhat patchy way.   PAMA (c)(2) describes the information that gapfill should concern, but as far as I can see, PAMA doesn't give CMS any stated way of handling the gapfill information (e.g. calculating medians of MACs).   Regulation at 414.508 says CMS will set prices at "the median of contractor specific amounts."

2018: Using MACs rather than CLFS Zones for the Median Price
In recent years, rather than setting payment at the median of "contractor" amounts, CMS set gapfill prices at the median of the 57 CLFS zones

Now, in 2018, CMS has no more CLFS zones, so presumably CMS will set gapfill prices at the "median of contractors" rather than the median of states or zones. 

2018:  MOLDX Owns the Median
MOLDX controls 7 MAC jurisdictions (Noridian x 2, WPS x 2, CGS x 1, Palmetto x2) and there are only 5 other MAC jurisdictions (Novitas x 2, NGS x 2, FCSO), so MOLDX will control the median.

(Alternatively, if you counted MACs only once, it would be 4:3, and MOLDX would also control that method.)

2018: Gapfill and MAC Rationales
In final PAMA rulemaking of June 23, 2016, CMS stated that it would require MACs to provide a "rationale" for gapfill decisions (p. 41086).  There were no codes being gapfilled in CY2017, but presumably now in CY2018 MACs will be required to provide a "rationale" for their gapfill decisions.  The "rationales" for CMS crosswalk prices can be pretty scanty, so don't expect too much from this new requirement for gapfill rationales.

2018:  Crosswalk to "an" appropriate code or "the" most appropriate code?
Whereas regulation 414.508 specifies that crosswalk is to "an appropriate test," statute 1834A(c)(1) requires that CMS crosswalk to "the most appropriate test."   Arguably the statute sets a higher bar for what is an acceptable crosswalk than the regulation.  Often, two or three crosswalks are being debated and have different pro's and con's, and CMS could easily say it had chosen "an" appropriate code among its choices, which was all it had to do.   Proving you have chosen "an" appropriate code rather than "the" most appropriate code....key policy point, or angels dancing on the head of a pin?

Codes in Play for Gapfill during CY2018

Blog deleted.

This blog contained incorrect information and was deleted.

See updated blog 

Monday, March 26, 2018

Very Brief Blog; CMS Appoints Ombudsman for Pharma/Tech Industry, per 21CC

As required by the December 2016 21st Century Cures law, CMS has appointed an ombudsman for "pharmaceutical and technology" e.g. industry, issues.   Section 4011 of 21CC (here) required CMS to appoint an "ombudsman" for complaints, grievances, and requests for "pharmaceutical, biotechnology, medical device or diagnostic products" for which coverage is sought, with respect to "coverage, coding, or payment" concerns.  

The appointment may be from February 2018.   See the Ombudsman webpage for full contact info, here.  The Ombudsman is James Bailey, who is also found on the Ombudsman section of the webpage for Hearings and Inquiries, here.

From the CMS ombudsman page:

We are pleased to announce that James Bailey is currently serving as the new Medicare Pharmaceutical and Technology Ombudsman, a role that was established by the 21st Century Cures Act to help support customer service and innovation in the Medicare program. This Ombudsman will receive, and look into, concerns and questions from pharmaceutical, biotechnology, medical device, diagnostic product manufacturers and other stakeholders regarding Medicare coverage, coding, and payment for products already covered or for which coverage is being sought.   The Medicare Pharmaceutical and Technology Ombudsman will collaborate closely with our other Medicare program ombudspersons in the CMS Offices of Hearings and Inquiries.
In addition to helping stakeholders navigate the Medicare Program, James is also interested in hearing about their experiences and sharing this information with CMS policy makers as appropriate, helping to promote transparency and predictability.
The Ombudsman does not duplicate or replace existing processes such as grievance procedures, appeals, judicial hearings, or other formal avenues stakeholders may access. However, the Ombudsman may look into how procedures were followed in these processes, and bring to the attention of policy makers any feedback regarding what works well and opportunities for improvement. This Ombudsman cannot advocate for new coverage, coding or payment within the Medicare Program, but can facilitate information exchange.

Friday, March 23, 2018

Very Brief Blog: CAP TODAY publishes article on the puzzling 14 day rule

Anne Paxton, one of the lead journalist for CAP TODAY, has published an article on CMS's confusing 14 day rule and its recent changes.  See online open access, here.

The Intro?  "For labs navigating the new billing regulations, some forecasters are predicting confused seas ahead.  “We’ve been reaching out to a number of our customers who I know will be affected by this and saying ‘What’s your take?’ and together just putting our heads around what it really means. But there is still quite a bit of confusion out there,” says Kurt Matthes, vice president, reengineering and service, at revenue cycle management software provider Telcor.

See the full article at CAP TODAY.   They write that "CMS opted against exempting ADLT tests because they are FDA cleared or approved, genomic sequencing procedures..." [sic]  CMS did state that in final November rulemaking, but it sounded goofy then and that doesn't seem to be how CMS is implementing the rule. In the most recent implementation instructions, GSP and genomic PLA tests are categorized in the way that leads to exemption from the 14 day rule.  CMS put up a website for date of service lab policy on February 27, no doubt after the CAP TODAY article had gone to press.

Very Brief Blog: Health Affairs Blog Critiques the CMS NCD on Genomic Tests in Cancer

On March 22, 2018, an open access blog in Health Affairs, by Gail Javitt and Robert Wanerman of the Epstein Becker Green law firm, critiques the recent final CMS NCD for use of next generation sequencing in cancer.  Find the blog here.

While praising some aspects of the NCD, the authors refer to a "regulatory disconnect" and devotes some attention to the different treatment of FDA certified companion diagnostics and 510(k) NGS tests that are required to show high accuracy.   Since the tests authorized by CMS may release large numbers of off-label gene reports for off-label drugs, as I read it, the authors think that CMS missed an opportunity by not including a "more flexible and less burdensome" level of CED.

See also a critique that preceded the final NCD.  On November 30, Rebecca Eisenberg of U Michigan, authoring a SCIENCE Op Ed with Nobel laureate Harold Varmus, praised the use of CED with cancer genomics and was cleared prepped to be released with the NCD (here, here).  On January 10, Eisenberg submitted comment to CMS that the NCD "undermined the benefits of important steps [take by] the FDA."   Eisenberg noted that
"The MSK-IMPACT test uses nearly identical methods to analyze the genes categorized as critical components of companion diagnostics in the F1CDx test. Both tests provide very similar or identical information about variants in very similar sets of genes, with similar implications for clinical care. The MSK-IMPACT test has some notable advantages, including more rigorous validation of the existence of somatic mutations because both tumor and germ line DNA are analyzed. Both tests have been used in tens of thousands of patients and validated by stringent criteria, such as those of the NYSDOH."

Very Brief Blog: CMS Releases Instructions and Calendar for "ADLT" Lab Tests

The PAMA legislation of 2014 created a new category of test, Advanced Diagnostic Laboratory Tests, with special initial and annual payment rules.   Test must be sole source tests, either of the MAAA type (Type A) or the FDA-approved sole-source type (Type B) (42 CFR 414.502).

Somewhat belatedly, on March 23, 2018, CMS released application forms, quarterly calendars, and additional guidance for becoming a MAAA.   Find the CMS webpage HERE.

CMS provides a 17 page application form and a 30 page guidance document.  Half the guidance document is about price reporting (applicable periods, TINs, special cases, etc.)

CMS is planning to enforce a rule (not found in the original law) that the test must provide "new clinical diagnostic information not available from any other test or combination of tests."  The applicant writes this justification itself, and it's not obvious how CMS staff would search the market for tests not named by the applicant (this might take a lot of content knowledge about the industry, available tests, and clinical care pathways), but they will use the Advisory Panel on Clinical Diagnostic Laboratory Tests to assist them (guidance document, page 8).  They don't mention an appeal process yet.
  • The "originality clause."  I never thought this whole "originality clause business" was applicable, since it's not in statute, and even more, the statute explicitly contemplates ADLTs that are 510(k) tests, thus, have a close predicate and often the same intended use.
    • CMS seems to box itself off unnecessarily from value-based purchasing.  For example, if a test replicates a prior ADLT MAAA, but is performed twice as fast at half the cost, it might not be able to be an ADLT because it didn't have a unique clinical purpose.
    • It's unclear exactly how CMS will apply these originality concepts (e.g. for competing breast or prostate cancer MAAAs) or if a test would cease to be an ADLT in the future if a too-close competitor appeared.   
    • If you upgrade your test (from a 50 gene to a 51 gene MAAA) to your reboot the ADLT periods?  If you're an LDT, how do you define and revise your "claim?"  Isn't partly it up to you?
    • Would the FMI F1 test be "original" enough?   Both the FDA approval and the CMS coverage focuses laserlike on its CDx tests, but exactly those are generally available from "one or more other tests on the market."  OK, this is a trick question, because this is a PMA/510k category ADLT ("criterion B ADLT").   
    • It makes the point that for MAAA tests (criterion A) that are also PMA/510k tests (criterion B) it may be better to apply for ADLT under "Type B ADLT" because it avoids review under the originality clause.
  • The "Licensing clause?"  What Licensing clause?  In final PAMA rulemaking, CMS said that a university that licensed-out IP for a test could not be the test developer, but also, that  a lab that licensed-in IP for the test could not have been the sole developer, either, and neither could be an allowable "successor laboratory."   Since almost all tests license some IP from somewhere, this seemed tortuous.   
  • Gratefully, CMS has chosen to simple drop any reference to this perplexing avenue of the original rulemaking.  See 81 FR 41060, column 1, June 23, 2016.
CMS will process applications quickly, e.g. accepted during January, reviewed during February, applicant notified during March, and code and payment active April 1.

Tests must show they have been "covered by Medicare Part B."  This is probably a good thing, because it means early policy benefits won't expire while the newly launched test is just awaiting coverage.

CMS webpage here.

Once tests have coverage, they can apply for ADLT.  ADLT law gives them "market list price" payment for 9 months, then payment at an annually surveyed market median price.   (This latter survey median price is similar to the triennial survey price for regular lab tests).   

Often lab tests (like other health services) have list prices that float substantially above actual prices, e.g. $4000 list, but real world discounted $2200 average price from payers.   

If the gap between the initial "list" payments and the later "average" payment is large (130%), CMS can recoup the difference.  It's not hard for CMS to do this, it's common; MAC just sets up a debit against future payments.   Labs would be incented (in their first nine months) to accept high payments but appeal low payments to ensure only high payments are logged for CMS price setting review.  This pushes the lower priced claims like a bolus into the next fiscal period, but the first fiscal period is weighted most heavily due to the clawback rule.  Want to see in real numbers?   I show an example where a lab gets $21M instead of $13M (net of clawbacks) in years 1 and 2 together, here.


See also Medlearn Article SE1619, 2017, which provides general guidance on CLFS PAMA reporting.