Monday, November 12, 2018

Next AMA PLA Conference Call on New Codes: November 19, 2018

Get the holiday Thanksgiving week off to an exciting start by listening in on the quarterly AMA PLA Applications public conference call, November 19, 2018.

With a warning that these links may be updated by AMA, the home page for PLA code policy is here  The listing of current long descriptors (circa 79) as finalized in September for October 1, 2017, is here.

The next public panel call is November 19, 2018, at 7 pm CT (8 pm ET).  Register by Friday November 16 via thilani (dot) attale (at)  .   This is also on the PLA home page cited above.

The Public Agenda for this November PLA meeting is here.  There are 7 new codes and one minor text revision on the docket.  If I read the calendar correctly (here). this round of applications was due October 9 and posted publicly by AMA on October 16, with a window until October 23 for public comment submissions.  The PLA subcommittee voted on November 6, which is not a final AMA vote but rather, sends recommendations forward to THIS public hearing on November 19.   You can listen in, just like you can attend and watch a CPT meeting, but often these final public calls are pretty brief ("Questions?  Hearing none, please vote.") 

These 4Q2018 PLA codes are finaled and public on January 1, but I believe CMS requires a quarter of cycle time before adopting them on April 1.


I noted in a previous blog that this PLA cycle is sort of like a solar eclipse - it is the shortest possible cycle time between getting a PLA code and getting a market based PAMA rate.   Your code will be active in Q2 2019 (for CMS purposes.)   Let's say you envision a market price of $1000, but in July 2019, CMS crosswalks your code to $200.    That $200 price will hold for CY2020.  However, in early 2020, CMS will collect your market price data - let's say it is $1000 per payment for your private payers during Q2-2019.   That private payer rate of $1000 will then become your CMS PAMA payment in CY2021, 2022, 2023.   You will only be exposed to the CMS low crosswalk price of $200 for one year (CY2020).    This is the shortest possible exposure to undervaluation, according to current PLA and PAMA cycles.

Tuesday, November 6, 2018

Very Brief Blog: Google AI System Speeds Surgical Pathology Work

In the field of radiology, Qure AI has raised over $30M to bring AI methods into radiologic diagnostics (here), and the impact of AI on radiology is widely discussed (here, here, here).

The Dark Daily news blog this week highlights a publication in Am J Surg Path finding that pathologists self-report faster and easier detection of lymph node micrometastases with AI-assisted vision.   Dark Daily here.  (Includes numerous links of further interest).   The new article is open-access at Am J Surg Path; see here by Steiner et al.

It's AI work coming of Google/Verily.   Verily has a college-campus-sized set of glass buildings in South San Francisco, just north of SFO and just west of the Genentech campus.


For a trade journal article on pharma investments in digital, here.

For November 2018 trade press on "Deep Lens" and affordable AI for pathology, here.

Very Brief Blog: Scott Gottlieb Discussed FDA's New Vision at Milken Institute (October 2018)

On October 24, 2018, as part of the Milken Institute Future of Health Summit, Scott Gottlieb gave a detailed interview on his vision for the FDA, interviewed by Tanisha Carino, executive director of Faster Cures.

See the Milken agenda here.  See a detailed transcript and links to the Youtube video interview here.


Gottlieb, a physician with a background ranging from federal policy to investing, and a cancer survivor himself, dicussed keeping FDA focused on a "values oriented strategy" and one that incorporates patient perspectives.

He noted that FDA will soon release new guidance on incorporating digital apps and monitors into drug approvals.  (See also an open access article at ISPOR, here.)  He noted that digital tools could also have post-market or post-regulatory roles.   (For a November 2018 trade journal article on pharma investments in digital, here.)

He discussed the new for new regulatory tools in areas like neurologic diseases, and improving cognitive tools in Alzheimer's. 

He noted that FDA was restructuring the drug pipeline and wants to move things like filling spreadsheets away from expert medical reviewers and let them focus on high-impact medical decision making during the review process.  He also noted that the FDA needs much better knowledge management systems in house.   This is the classic dilemma in organizations, "How do we know what we know?"  The agency is also committed to more objective public disease-specific guidances (less need to rely on tacit experience or to reinvent the wheel.)   The agency will create "problem based review memos based around "critical questions."

He discussed the wave of pending retirements and that the FDA is a highly technical working agency, not just one that assigns and passes through money.

He referred to the agency's commitment to areas of self-regulation or self-certification (e.g. in some areas of digital health) and to the 70 pages of comment FDA recently submitted to Congress proposing new legislation for regulating LDTs.

There was a discussion, pivoting off of a Harvard economist Amitabh Chandra presentation, the R&D in pharma wasn't well aligned to major public health needs (e.g. too directed to orphan diseases rather than pneumonia and heart disease).   Some disease areas are piled high with "good-enough generics" that are a barrier to new research.

He noted, as he has in several recent speeches, that sometimes we don't get reimbursement right, and that is a barrier to progress as well.   He raised the concern that some areas may get stuck with "natural monopolies" of one or two drugs and it's too hard for more diverse new entrants to get a foothold.

Very Brief Blog: Resources on Pharma Digital Disruption (McKinsey); Opioid Addiction Digital Disruption (Rock Health)

Citations to two detailed white papers today.

Digital Disruption in Pharma 

McKinsey provides a whopping 204 page collation of its articles on digital disruption in the biopharma industry, online here.

Digital Disruption in Opioid Addiction

The Hill passed opioid addiction funding and legislation in October - 98 to 1 in the Senate, 393 to 8 in the House (here).  Funding breakout here

Rock Health provides a very up-to-date 12-page (or 50 iPhone screen) review of digital medicine and startups in the field of addiction treatment, online here.  

Friday, November 2, 2018

Very Brief Blog: CMS Publishes Notice of Future Rule on Innovative Medical Devices

Over the past several months, summer/fall 2018, there have been several "tips" dropped in the press that CMS is planning to produce a rulemaking change to encourage faster coverage of innovative devices.

A full year ago, back about 12-18 months, there were rumors that Advamed and other stakeholders and CMS might shortly come up with a new special program for breakthrough devices and rapid coverage.  But the topic went radio silent, at least on the CMS side, around the beginning of 2018.  (I summarized this in a February 2018 blog, here.  The CY2017 keywords for this topic included "EXCITE" and "PACER.")

Now in late 2018, Holland & Knight's Ethan Jorgensen-Earp has a great pick-up in a new essay on CMS device innovation policy.   Here.    He reports that CMS has published notice of a "proposed rule" (meaning a future publication) for streamlined Medicare coverage of breakthrough technologies.  It will be called CMS-3372-P and has a notification webpage, here.  All we know, is that this is a new rule in the CMS rule pipeline.  We don't know when it will appear.

click to enlarge

Don't Confuse with Recent LCD Rules Update 

In early October, 2018, CMS released a wide set of updated LCD process rules, to be effective on or before January 1, 2019.  Here.  These were touted as "speeding the LCD process" but I don't see it at all. 

For example, LCD reconsideration requests under the current rules, must get a yes/no reply within 90 days.  

Under the "new rules," the MAC is now only allowed to respond that it has accepted the reconsideration and that...wait for it...that the MAC may or may not do an LCD, which may or may not be favorable, and may or may not occur at any unknown time in the future.  Not an improvement to my eye.   I believe the motivation was to avoid any risk of pre-public leaks of financially important information (see trial about CMS leaks, with criminal convictions,  here), but the net result of not knowing the LCD reconsideration review decision, perhaps ever, is unsatisfactory.

...All the MAC now has to do is reply, after receipt, that they may or may not do an LCD that may or may not be positive and may or may not occur at any unknown time int he future.   A perverse or overworked MAC would hardly even have to read the data to send back such a "Dear John" letter. and it would be a "true" letter, and would conform to the new rules.

Thursday, November 1, 2018

Very Brief Blog: Access CMS Final CY2019 Rules for Physician Fee Schedule, Outpatient Fee Schedule, ESRD/DME

On November 1, 2018, CMS released final rules for CY2019 for ESRD & DME, and for the Physician Fee Schedules.   Final Federal Register typeset versions will appear later in November.
  • Fact Sheet, Physician Fee Schedule, here.
    • Rule (inspection copy), here.
  • Fact Sheet, Outpatient & ASC Fee Schedule, here.
    • Rule (inspection copy), here.
  • Fact Sheet, ESRD/DME, here.
    • Rule (inspection copy), here.
For the lab industry, CMS will somewhat liberalize rules for hospital reporting under PAMA including use of hospital outpatient UB1450 claim information (see inspection copy, p. 706ff).  CMS noted it received conflicting comments on this issue.   Genomeweb summarizes the PAMA changes, here

A side note, CMS has proposed in July a huge bubble in the price of several key ISH/IHC reagents, but generally walked these back in November (here).

For physicians, CMS will substantially revamp E&M payments (deferred to 2021) and provides new codes for some digital health services.  For a trade journal report, Healthcare Dive, here.  For insights into the degree this helps digital health, MedCityNews, here.

CMS entertained comments on new approaches to DME gapfill pricing for new products that would be less adverse to innovators but drew no conclusions (see inspection copy, p. 440ff).

Wednesday, October 31, 2018

Consortium Paper Sets High Water Mark for a Diagnostics Strategic Landscape (Case Study: AST)

A new paper in Nature Reviews Microbiology sets a high standard for thinking about the dynamics and strategies of commercialization of a class of novel diagnostics.

It's a case study based on an active area of innovation, antibiotic sensitivity testing.  However, I'd emphasize the the scope and logic of the thinking applies to other kinds of diagnostics (or even other kinds of medical innovation) as well.

  • Nature Reviews open access paper here.
  • Nature Reviews tweet here.
  • Blog by coauthor John Rex here.

Tuesday, October 30, 2018

Very Brief Blog: Bay Area "Business of Personalized Medicine Summit" - December 6, 2018

Thursday, December 6, 2018, is the 15th Annual Business of Personalized Medicine Summit, to be held at the SFO Westin.

Sponsors include Foley Lardner, Personalized Medicine Coalition, Analysis Group, Deloitte, BIO, and Slone Partners.

See the home page here and the agenda page here.   (I'm speaking on a panel in the afternoon). 

Highlights include:

  • Keynote by Helmy Eltoukhy, Co-Founder, Guardant Health
  • Investments and Exits, Jonathan Norris, Silicon Valley Bank
  • Finance and VC Panel
  • Big Data Panel
  • Disruptive Innovation Panel
  • FDA & Regulatory Panel
  • Payment and Reimbursement Panel
  • Clinical Integration Panel
  • Closing Keynote: Harry Glorikian

Register here.

Very Brief Blog: CAP Today Highlights Revenue Cycle Management

With the excitement of the World Series behind us, we can turn attention to the excitement of revenue cycle management.

One of the most remarkable statements I've seen in 2018 was a quote in the Foundation Medicine final investor report before it was wholly absorbed into Roche:
"Most of the commercial third party payors that reimburse us do so based upon CPT codes, or based on other methods such as percentages of charges or other formulas that, to our knowledge, are not specific to us and not made known to us." 
Pretty amazing financial facts for a company being bought for $2.4B !

Addressing rationale responses to the bizarre world of laboratory economics and claims processing, see a detailed article in CAP TODAY for October 2018 - "Revenue Cycle Services," here.   

The article focuses on one industry player, Telcor, but the pains are industry wide.   Good article.


Parts of the article reminded me of Jonathan Bush's 2014 book, "Where Does It Hurt," about founding the large company Athena Health based on building up software and rulebooks that understood the bizarre world of payer claims processing.  In October 2018, Athena's market cap was about $5B, revenue $1.2B.

ISPOR Value in Health Journal: Six Article Set on NGS and Value

Value in Health is the official journal of ISPOR, the international society for pharmacoeconomics and outcomes research.   (See their international conference in Barcelona November 10-14, 2018).

The September 2018 issue has a special six-article set on next generation sequencing and clinical value.  (Subscription required).  See the home page for Value in Health, September 2018, here.   
The articles are headlined by an op ed by Kathryn Phillips PhD, head of the TRANSPERS NIH-funded program at UCSF for translational genomics. 
For more on precision medicine in health policy, see also the special issue of Health Affairs, which appeared May 2018.
I'll be highlighting some of these publications in a webinar on value in genomics, November 27, here.

click to enlarge

Very Brief Blog: DHealth Conference for SoCalBio - November 9, 2018

SoCal Bio, an LA-focused biotech and medical device association, holds its second annual Digital Health conference on November 9, 2018, in Long Beach.   (Last year's first annual conference, held at USC, was outstanding).   The theme is medical grade wearables.

The conference website is here and the extensive online agenda is worth checking out.

Very Brief Blog: California Clinical Lab Association Meeting; MolDx Speakers

The California Clinical Lab Association annual conference will be November 7-9, 2018, in Costa Mesa, California [Orange County].   See the conference website here.   Download the agenda here.

The October-30-version agenda is below; check for updates.    Both of the new MolDx medical directors, Dr. Bien-Willner and Dr. Gerrard, are on the agenda for Thursday November 8.  They are also speaking the prior day, November 7, in San Diego at the AdvaMed Dx West Coast Summit (here).   

On a separate note, November 9 is the SoCalBio digital health 2nd annual conference, to be held in Long Beach; last year's first annual DHealth conference was excellent.

October 30 Version (click to enlarge)

Thursday, October 25, 2018

Very Brief Blog: MolDx Posts Job Opening for Another Medical Director

The MolDx program recently brought on MD-PhD molecular pathologist Gabriel Bien-Willner as medical director (here).  As circulated within AMP and elsewhere, MolDx (part of South Carolina BCBS) has posted a position for another medical director who is a pathologist.

BCBS job posting here.  I've clipped text below the break.

Very Brief Blog: Trump, Azar Propose Lower Drug Payments in US Medicare - Original Documents

In an October 25, 2018, press briefing, President Trump and Secretary of Health Alex Azar proposed for public comment several new programs to lower drug payments in Medicare, such as simply and directly benchmarking Part B prices to an international drug price index.
  • See New York Times here.  Business Insider here.  The Hill here.  Axios here.  MedCity here.  Fiscal Times here.  "Who Loses Most," at BioPharmaDive, here.
  • See CMS quite detailed press release here.
  • See 12-page Federal Register PDF of "advance notice of rulemaking" here.
    • This federal document specifically introduces the program as fulling President Donald Trump's vision.
    • Public comment will be taken for 60 days.  
    • Document CMS-5528-ANPRM, RIN 0938-AT91, 83 Fed Reg 54546-61.
  • See also the 19-page HHS ASPE report on international drug prices, vis a vis US prices, here and here.
  • Trump speech on Youtube at this link, here [13 min].

One feature of the programs will be to create a reference price list, the International Pricing Index Model, IPI, based on a range of other countries.  This is not proposed rulemaking; it is a generalistic description of a model that will be posted soon for official comment, and might, at the earliest, lead to CY2020 implementation.  Actual rulemaking would likely be extremely complex.

The program will be enacted through the wide-ranging authority of the Center for Innovation (CMMI) to conduct demonstration programs that waive existing Medicare law.*   The Obama administration proposed less sweeping changes to drug pricing, via CMMI, which were canceled weeks after the Trump election, though before the inaugural.


In his 13-minute comments, Trump thanks Secretary Azar, and called out attendees Seema Verma and Scott Gottlieb.  He noted that it "had been decades" since a President came to HHS and noted that Obama never gave a speech there.  He referred to the May 2018 Drug Pricing Blueprint and noted the accelerated approvals of more generics at FDA.  He also referred to the new Know the Lowest Price act.   He noted that Americans are benefiting from the new drugs but other countries have them too at far lower prices.  (He did not mention that American companies might choose not to release the drugs elsewhere at too-low prices.) 

He noted that for "an eye drug that prevents blindness" Medicare pays $1B but at international rates would pay $187M.    He referred to "a cancer drugs that is seven times more expensive" in the US.  He noted another part of the new system will be paying doctors a flat rate when delivering expensive drugs (not a price-based supplement).  He noted that Part D and Part C/Medicare Advantage premiums are going downward and "this is a word you haven't ever heard" in healthcare.  He decried a socialistic health plan in the House and by Dems that would destroy Medicare and Medicare Advantage (presumably the Medicare for All ideas.) 

On a separate note, he dropped a comment "we will always protect pre-existing conditions."  He summarized by characterizing the work of HHS staff as "brilliant and complex."
  • Senator Kefauver in the 1950s began Senate drug industry hearings because he was appalled at the high and uniform prices charged in his local pharmacy for antibiotics (about $5); these hearings later morphed into the FDA Act of 1963.

The CMMI program would initiate new federal contractors who would be paid a fixed (e.g. European) price to acquire drugs in the US and provide them to doctors for Medicare patients.   It appears that sales from biopharma to these contract venders at low Euro benchmark prices would be voluntary.   (However, biopharma might actually be incented to undershoot the federal price to give the venders margin and drive utilization....)   Doctors would be required to collect copays from patients (based on the Euro benchmark price times 20%) and return the copays to the venders.   The pilot program would be regionalized, raising the possibility that large health systems might get full prices on one side of a zip code or county line and much lower prices on the other side. 

The proposal notes that it builds on prior public comment on the May 2016 Drug Pricing Blueprint and the July 2018 Outpatient Proposed Rule CY2019, which requested input on drug pricing models. E.g. see the Pew Foundation response supporting CAP and other approaches to cutting Medicare prices, as telegraphed in summer rulemaking.

In a separate scenario, earlier this week FDA admnistrator Scott Gottlieb spoke at a Washington symposium and expressed concern over CMS policies that pay only a fraction of the cost of CART drug payments.  He noted this could stifle new entrants and leave CMS and the US, ironically, with only monopoly pharma providers.  

ASPE Screen Shot - and Azar tweet -

The logo for the presentation was "American Patients First."

Of related interest, the WSJ recently covered the Arnold Foundation's high multi million dollar investment in various entities and NFP's which aim to reduce high drug prices - here.

For an essay, "Why Does Humira Cost Less in Europe?," here.


* Recall that in 2016, Hill Republicans were asserting that CMMI's authorities exceeded the constitution and ought to be canned.  Times change.  Here.

Wednesday, October 24, 2018

National Webinar November 27: "Genomics Beyond The Hype"

I'm please to be invited to be a co-presenter on November 27 (1 ET, 10 PT) for a webinar,  Beyond the Hype: Where Genomics is Having an Impact on Outcomes.  

It's cosponsored by Quest.   Speakers include Drs. Patrick James and Felicitas Lacbawan of Quest, and myself.   The full website and registration enrollment are online here.

Monday, October 22, 2018

Very Brief Blog: MolDx Deletes Its "Excluded Test" Spreadsheet (M00047)

The MolDx program has special webpages for "covered tests" and "excluded tests," in addition to those coverage decisions memorialized as LCDs.

For several years, at least, through October 2017, MolDx had an online Excel spreadsheet listing hundreds of "excluded tests."  This was their document M00047.   The most recently download I have is from October 2017; I wrote about the Excluded Tests policies in detail in January 2015 (my article here, cloud spreadsheet here.)

As of October 2018, MolDx does still have a webpage for an online collection of articles about "excluded tests."  Here.  However, this page no longer appears to display the excel spreadsheet M00047, which was many of hundreds of entries long.

All of the articles about excluded tests on today's MolDx website refer to articles in the CMS MAC article database, with CMS document numbers (such as "A53457.")  No spreadsheets.

The last version of the former spreadsheet that I have on file - 10/2017, "M00047, V15" - has some 1,200 entries naming excluded tests.  Some 600 were named examples of Tier 2 codes (within 81400-81408) that were non covered.

JPEG of October 2017 file copy of M00047 - no longer displayed by MolDx

Saturday, October 20, 2018

Very Brief Blog: New Report that Medicare's New Diabetes Prevention Counseling is Underfunded

Last year, CMS finalized rulemaking to create a novel national benefit for diabetes prevention counseling classes for qualified and at-risk patients (e.g. borderline blood sugar or obesity).   This is one of the first projects completed by the Medicare Center for Innovation, and although the idea is simple enough, executing it took literally hundreds of pages of rulemaking spread over two years.  Enrollment (for a novel class of pre-diabetes education providers) began in April 2018.

A new report suggests the program may be so underfunded as to be hard for the service to actually be delivered.

See a trade journal report at Health Payer Intelligence here, and a peer-reviewed, open-access economics article here.   The authors delivered a real-world diabetes prevention program to underserved beneficiaries from 2013 to 2017; real costs averaged $800 per participant, but the current funding level and rules would net a provider only $138 per participant. 

Since this is a 2018 program, following the agency's routine data practices, Medicare might not have to release annual national Part B utilization data for the new DPP codes until November 2019, or release provider-specific code use until May 2020.

Virtual DPP?

Medicare declined to allow CDC-accredited DPP providers who use virtual classes and materials to participate in its program. 

Likely, that technology may be more cost-effective than the brick and mortar classes described by Ritchie et al.  See an article on Virtual DPP here.   (Disclosure: I've worked as a consultant for Omada, which probably has the best-validated virtual program in the Medicare-age population.)

This isn't the first negative spin on the program.  Early press in Spring 2018 carried headlines like "Diabetes Program Stumbles at Roll-out," here, here.

Friday, October 19, 2018

CMS Posts Final Gapfill Codes for CY2019: Whole Genome Raised from $349 to $5031

On Friday evening, October 19, 2018, CMS published the final contractor gapfill pricing, which are effective 1/1/2019.  (Proposed prices had been released in early June with comments due in early August). 

The 18 codes were placed into the gapfill process last fall; some were codes with no pricing through PAMA and a few were new codes that couldn't be assigned a fall 2017 crosswalk.
  • On the CMS CLFS webpage here, see the final "2018 Final Gapfill Determinations."
CMS provided summary rationales for each price.  MACs varied more from one another in the final price proposals than in the preliminary ones in June.  However, the final price is set by the median, which is controlled by MolDx-system MACs which essentially act as a voting bloc of 30 states.

Most of the codes being gapfilled were either "PLA" (new rapid) codes, ending in "U" such as 0001U, or administrative MAAA codes (ending in M, such as 0001M).  See table below.

Whole Genome Analysis

The biggest price change was for whole genome analysis (81425), sibling/family member analysis (81426), and reanalysis (81427).   These rose from a uniform first recommended price of $349 (?!) to $5031, $2709, and $2337, respectively.   (Over 20 comments letters were submitted to CMS, if I can summarize, generally portraying the $349 price as ridiculous.) 

The whole genome price of $5031 is a little higher than the whole exome price of $4780, as set by market rates under PAMA.  Use of these tests is likely to be rare in the Medicare population but a growing literature has documented the usefulness of whole genome in special cases including gravely ill newborns.

How the different MACs priced WGS-related codes is shown in the next table.   By my count, 32 MolDx-related CLFS zones proposed $5031 for 81425.  Novitas and FCSO had 14 zones, at $4780.   NGS MAC had 12 zones at $349.   See table:

click to enlarge
These are "final gapfill prices" but CMS is "accepting comments" until November 19 at .  Elsewhere CMS refers to this as an (ill defined) chance to "appeal" the gapfill final amounts.  If CMS takes any action on such "appeals" there is not much outside evidence of it other than the final prices on the 2019 CLFS in November would be different than those shown here in the "final gapfill" values.  (And note that the November 19 deadline for comment means it is very close to the lockdown of 2019 fee schedules anyway).   This is in contrast to an appeal of a final crosswalk value, which kicks the whole code back into the next summer public meeting again.

Disclosure:  I served as a consultant this summer to several entities working to raise the median price from the initial $349 to $5000 or better.


See the original CMS spreadsheet at the link early in the blog.  I've put a slightly tricked-out Excel with highlighted tabs for short summary views and comments views in the cloud, here.

MAC rationales for 81425, 81426 were stated to be:

Some contractors based initial recommendations on laboratories with similar test with charges of $349.00. Upon further review, however, several contractors revised their recommendations.  Some contractors looked to similar tests on the CLFS, specifically 81415, a Whole Exome Sequencing code, and adjusted the payment rate based on input from several laboratories.  Other contractors simply followed public recommendations to use CPT 81415 as a similar test on the CLFS to recommend a payment rate. 

MAC rationales for 81427 were stated to be:

Initially, several contractors felt this code represented interpretation only and thus averaged two comparable codes (G0452-26 and 88291).  Upon further review, some contractors followed public recommendations to use CPT 81417 as a similar test on the CLFS. Others did not recommend this similar payment rate and instead estimated a professional labor rates for the code. 


The average price of clinical grade WGS was $5225, almost the CMS price for 81425, in a 2018 Harvard study (here).


DTC testing on Amazon - for you and maybe your dachshund too...

Very Very Brief Blog: The Rise and Fall of a Valuation Bubble for Q-IHC, FISH

This blog, posted on October 19, 2018, reflected data in Summer 2018 CMS proposed rulemaking, as well as data collated and posted by CAP.   The data proposed a marked increase in some CPT codes such as 88360, 88365 and others.  This was due to a Medicare-proposed spike in supply payments.

In the final rulemaking, November 1, it looks like most of the "bubble" has been unwound.  I haven't done a full analysis, but one screen shot from CMS final rule carries most of the message.   For example, SL493 Estrogen Receptor Cocktail, spiked from $14 to $322 and then final downward to $16.  Another reagent, SL497, DNA Probe Cocktail, spiked from $8 to $420 and back to $8.  CMS table here:

The original October 19 blog is left as-is below, describing what CMS proposed before we knew what CMS would finalize.



This past summer, CMS announced a massive revamping of capital equipment and supply inputs used to value Part B services in relative value units (RVUs).   This follows 2018 law in PAMA Part 218, allowing CMS to commission or require a wide range of information resources to value capital equipment and supplies.   The massive new pricing system was announced fairly briefly in July 2018 proposed rulemaking, but engendered comments by many groups.

College of American Pathologists published a chart showing that some selected ISH and FISH codes are proposed to rise sharply in price between CY2018 and CY2019:

For example, the payment  for 88360 rises from $136 to $289 (+112%) and the technical component of ISH, 88365, rises from $137 to $304.


RVU prices are based on incredibly complex "bottom up pricing" that includes line items for minutes of physician time, minutes of staff time, minutes of use of capital equipment, and all supplies large and small (e.g. a surgical tool one time use supply might be $800 while an alcohol swab might be one-half penny).

While it's not elegant Excel, below I show a snippet of the supply inputs for 88360.  This previously used 2 units of estrogen receptor monoclonal antibody SL493 at about 2x14 ($28.94), and now uses two units at a new unit price of $91.45, or $192.41.   Just a few of the supplies used to total $49.91, but now total $206.33, or about +$156.

(Note that there is some significant price compression before these item prices are converted to CMS payment RVUs. Through complex math and rules, the prices are stored in dollars, converted to RVUs, and then multiplied by about $30 per RVU to convert back into dollars).

For 88365, similarly, EBER DNA Cocktail Probe rises from $13.71 to $178.31, along with some other increases.

In 2017 data, code 88360 had about 110,000 uses, so at +$150 per payment, total payments would rise by about $16M.

With apologies they are very simplistic, I store the Excel worksheets I used in the cloud here.

Very Brief Blog: New Medical Director at MolDx Program, Dr. Bien-Willner

This past summer, MolDx positioned a new medical director, Dr. Paul Gerrard (blog here).   Dr. Gerrard continues to work on MolDx issues, and MolDx has added a full time medical director, a molecular pathologist, Dr. Gabriel Bien-Willner.

Dr. Bien-Willner's Linked In page is here.   He started as MolDx medical director in September, 2018.   He became chairman of the molecular pathology practice, Bien Willner Physician Group (BWPG), in 2015.   He served as Executive Medical Director for Molecular Health GmBH from June 2014-May 2018.

Bien-Willner holds an MD-PhD from Baylor and completed his residency and molecular genetic pathology fellowship at Washington University.

See an interesting ten-page interview with Dr. Bien-Willner, conducted in November 2016, at American Journal of Managed Care, here.

Very Brief Blog: MolDx Retires LCD for LDT Lung Cancer Tests; "Obviated by NCD"

On September 24, 2018, MolDx posted a notice that it was retiring its LCD for gene panel testing in non small cell lung cancer, effective 10/1/2018.   A link to the retired LCD is here.  Several key screen shots are listed below.

In March 2018, CMS released an NCD covering FDA-approved gene panel tests (NGS tests) in advanced cancer.   However, MACs are allowed to write their own LCDs for LDT-type tests that are not FDA approved, if they choose to. 

Based on publicly available announcements, Foundation Medicine's Foundation One LDT test was covered under this Palmetto LCD when the LDT test was run at Foundation's North Carolina center.   The non-FDA FMI LDT test was discontinued on September 28, 2018, according to an FMI announcement.

See screen shots below.

Rationale: Need for LCD obviated by NCD.

Wednesday, October 17, 2018

Very Very Brief Blog: CMS and FOIA (Freedom of Information Act)

The usual cliche' about getting Freedom of Information Act materials from CMS is that "it takes forever - it takes years."   In the past year, I've gotten several document sets from CMS (or a MAC) and typically in a couple months.  They require submission of FOIA requests by mail - on paper and with a postage stamp.

Each MAC has a FOIA process page.  CMS also has a rather gaudy consumer-facing FOIA page, here.

What I had never noticed, CMS has a "FOIA Reading Room" with some interesting documents.  It's here.  There is a 26-page PDF guide to the CMS FOIA process, here.   Requests can be escalated higher in the agency, if denied. 

From the opposite perspective, avoiding information release under FOIA,  CMS's 26-page PDF discusses exemptions from release (primarily FOIA exemption #4, trade secrets or confidential information.  Stamp your documents accordingly.)   However, DOJ has a webpage stating that courts expect FOIA exemptions from release (under 5 USC 552(b)) to be narrow, not wide (here).  National Parks v Morton, 1974, et seq.   You can't gratuitously claim that everything you send to CMS is exempt confidential information.

What caught my attention this morning, CMS maintains public line item FOIA logs monthly back to 2015.  For example, the most recent is a FOIA log for June 2018 (here).  It looks like they get over 150 requests a month.  Requests come from law firms large and small, newspapers, research groups, and other entities as diverse as the health plan Oscar, the Democratic National Committee, Buzzfeed, and Providence St Joseph health system.  In addition to the FOIA spreadsheet reports, the 26-page CMS PDF notes that "CMS receives the highest number of FOIA requests of any FY2011, CMS received over 52,116 FOIA requests."

click to enlarge
So if you do submit a FOIA request to CMS, within a short time, CMS will post your request in a table such as the one clipped above.


I've always heard that FOIA allows requests for existing documents (e.g. all emails with keyword X from person A to person B) but never requires the agency to undertake creation of new documents.


FOIA exemption 2 exempts "internal personnel rules and practices" from release.  I used to hear that this allowed an agency to refuse to release its own internal "deliberative" documents.   However, the CMS 26 page PDF (here) on page 10 informs us that based on a 2011 Supreme Court case, this exemption-from-release has now been read to apply solely and literally to personnel rules.   Thus, it now is understood as exempting release of [personnel rules and personnel practices] and no longer read as broadly allowing the agency to withhold [personnel rules and (internal agency) practices (of all types).]


FOIA responses aren't necessarily internally consistent.  I once asked MolDx under FOIA for its scope of work (statement of work), and received a reply this was a confidential internal agency document.  However, the very same request to CMS got me a copy of the MolDx statement of work in a couple weeks (here).

Monday, October 15, 2018

Very Brief Blog: CMS Issues One of the Most Unusual CMS Regulations Ever (Drug Pricing on TV)

On October 15, 2018, CMS released proposed regulations that would require TV advertisements to include drug pricing information, if they are drugs that are covered under Medicare "directly or indirectly."
  • See a trade journal article here.  Follow-up trade journal here and here.
  • See the actual 42 page proposed regulation here
    • Seema Verma press release here.
    • Seema Verma same week at AHIP, here.
Since this new regulation is directed at consumer ads, it is a bit surprising to see it as falling under CMS's legal authority rather than e.g. some other part of HHS or maybe the FTC.   The regulations on price advertisement will be tucked among other routine CMS regulations at 42 CFR 403.1200ff.

CMS Works to Justify Why It Can Do This

Anticipating reactions between skepticism and surprise, CMS dives directly into a long and elaborate discussion of whether it has authority to regulate content of TV ads because it pays for drugs. 

Many pages of the regulation read like an overcaffeinated litigator's legal brief, citing a dizzying cascade of court cases and precedents.  For example, we learn that Massachusetts Law 94 295C requires retail dealers of motor fuel to public display on each pump the price per gallon.  Well, yes.  And that 7 CFR 59.301(a) and (b) require that meat packer processing plants must daily report to the Secretary of Agriculture the sale price for lambs.  (Quiz later.)   The authors reach back to a 42-year old economics article on drug pricing (by John F. Cady, then an assistant professor at Harvard MBA school and today still in service at Indiana University).

The authors then start running down a list of federal court citations like Colorado Indian River Tribe v Indian Gaming Commission 466 F 3d 134, 139, and Thorpe v Housing Authority of Durham, 393 US 268, 277 (see esp. n. 28).   At this, point, Lexis was threatening to overheat.

Pivoting the reader toward the argument on the table, that CMS can regulate the TV display of drug prices, CMS notes that Section 1102(a) of the SSA allows CMS to make "such rules and may be necessary to the efficient administration of functions" under the SSA.   Section 1871(a) allows CMS to "prescribe such regulations as may be necessary to carry out the programs."

CMS "has concluded that the proposed rule has a clear nexus to the Social Security Act."   They note that CMS spent $174B in 2016 on Part B & D drugs, and $64B on Medicaid drugs.  This $238B was 53% of $448B spent on "retail and non retail" prescription drugs.

Most of the CMS regulation is about consumer behavior and consumer advertising, something never directly addressed in the enabling legislation for Medicare and Medicaid.


There is a 60-day comment period (about December 15, 2018). The regulation is CMS-4187-P.


See a trade journal article in MedCityNews - noting that only New Zealand and US allow DTC drug advertising; here.  PHRMA had been discussing voluntary price disclosure guidelines.  For some additional ins and outs of drug price transparency, MedCityNews also here.   Fierce Healthcare notes that most DTC ads have pivoted away form the Lipitor's and Viagra's of the past and towards obscure specialty psoriasis drugs or cancer drugs, here.

Figure: Source here.

For a concurrent article about a Brookings Institute event on drug pricing, including Part B drug pricing, including speeches from Seema Verma and others, here.


Note that this isn't primarily about the drug prices - you can already get many drug prices for free by digging around the CMS website - it's about lifting those prices into TV ads.

CMS also requests comment on whether it should just make drug prices more transparent on its government websites (e.g. imagine  Yes, it could do a lot there, and very fast.

CMS argues that consumers will want to compare prices.  However, if drug prices are so hard to get, seeing the price of just ONE single drug in ONE ad is a terrible way to comparison shop for drugs for your disease.  Would you have to sit in front of a TV all day, all week waiting for the very very rare Crohn's disease commercials (at two a.m.?) and jotting down prices?

Would there be a boomerang effect?  Who dying of heart disease or cancer wants the cheapest drug?  Might they not assume that logically, the more expensive drugs will be the higher quality and more effective drugs they need? 

Very Brief Blog: Tracking Scott Gottlieb's 20-Tweet Tweetorial on Drug Price Competition

This past week, President Trump signed legislation on drug price transparency, including specific authorities for FTC to pursue companies that work to block market entry of biosimilars.  For entry points see CNN here and BioPharmaDive here, BioSpace here.

FDA"s Commissioner Scott Gottlieb is also active in public forums at promoting drug price competition.  This weekend, he released an elaborate 20-tweet "Sunday Tweetorial" on all the efforts he's promoting at FDA to increase U.S. drug price competition, here, by speeding the entry of generics.   Historically, and in most cases, prices fall once there are several generics in a market.
  • You should be able to see and read the Sunday Tweetorial here in sequence.
  • I've put a PDF of the whole tweetorial in the cloud, here.
    • Read as a 15 page PDF.   
  • This is Gottlieb's twitter feed.  @SGottliebFDA
    • As of today, 6220 tweets.

Gottlieb is often outspoken on market entry forces (and the government's role).  See his address on antibiotics policy in mid September 2018 (here) and his views on antibiotics pricing paradigms from June 2018 (here).


See the HHS Drug Pricing Homepage here including the Administration's May 2018 drug pricing blueprint ("Patients First," PDF, 44pp.)

Interestingly, given the rising billions of dollars in biologicals, the Biosimilars Competition Act received an "unofficial 10 year score" from CBO of only $100M, according to one source, here.  See the July House version HR 6478  here.   FDA Law Blog here.


The day after Sunday's Tweetorial by Gottlieb, CMS released proposed regulations requiring advertisements to include drug pricing information, if they are drugs that are covered under Medicare "directly or indirectly."   Since this is directed at consumer ads, it is a bit surprising to see it as falling under CMS's legal authority rather than e.g. some other part of HHS or the FTC.   Here is a trade journal article and here is the 42 page draft regulation in PDF.  The regualations on price advertisement would be tucked among other CMS regulations at 42 CFR 403.1200ff.

CMS dives directly into a discussion of whether it has authority to regulate content of TV ads because it pays for drugs.   CMS notes that Section 1102(a) of the SSA allows CMS to make "such rules and may be necessary to the efficient administration of functions" under the SSA.   Section 1871(a) allows CMS to "prescribe such regulations as may be necessary to carry out the programs."  CMS "has concluded that the proposed rule has a clear nexus to the Social Security Act."   They note that CMS spent $174B in 2016 on Part B & D drugs, and $64B on Medicaid drugs.  This $238B was 53% of $448B spent on "retail and non retail" prescription drugs. 

Wednesday, October 10, 2018

Very Brief Blog: ACLA's PAMA Lawsuit Tossed from Federal Court in September 2018

Last winter, ACLA filed a lawsuit against CMS for inappropriate implementation of the PAMA lab pricing law, resulting in underpricing of new median rates for lab tests.  The primary concern was that CMS had written, interpreted, or implemented the PAMA law's conditions in a way that nearly  excluded reporting by hospital reference labs. 

News sources reported circa September 24, 2018, that a US district court judge had dismissed ACLA's case on the grounds that the court lacked jurisdiction.
  • For the 33 page, December 11, 2017 complaint, see here.
  • For an open access 13 page PDF of the judge's dismissal, see here.
  • For open access reporting on the September 2018 dismissal, see MedTechDive here.  Fierce Healthcare here.  HealthLeaders here.  Seeking Alpha here ("Labcorp down 2%").  Becker's here.  Reuters here.
    • For coverage and quotes at 360DX, here.
  • For ACLA's statement on the dismissal, here.
  • For CAP's statement lamenting the dismissal, here.
  • Follow up: On October 19, ACLA issued a press release that it filed "notice of appeal" with the court. here.

The judge's decision is readable and hinges on Congress's statute that shields PAMA 216 from judicial review.   ACLA had attempted to parse the procedures for setting up the rules (which they object to) from the actual fee schedule rates, which were clearly shielded from judicial reviews.  Judge is dismissive of ACLA's position, and uses quotations from the law to show (in her view) the shield from judicial review applies to all of PAMA 216.   This follows an earlier discussion that "federal courts are courts of limited jurisdiction" and rather like a person is innocent until proven guilty, cases are assumed to be outside judicial review until proven they are inside it.   There is an interesting twist on page 12 (that Congress required PAMA implementation through notice and comment rulemaking, so it is inconsistent to shield that rulemaking from judicial review, as it enabled the Secretary potentially to undertake reckless (but required) notice-and-comment rulemaking with no later recourse for stakeholders).*  However, this interesting side-road does not change the decision.

Separately: for ACLA's comment on Summer 2018 Part B rulemaking, which includes extensive comments on PAMA, see here.  AMP's 5-page letter on Part B rulemaking is here.  CAP's website for CMS letters appears to list its September 2016 and September 2017 PFS comment letters but not its September 2018 letter. CAP does have webinar slides on the PFS 2019 proposals (here).


As a non-attorney working full time on federal policy, I've always been puzzled by laws written by Congress which include a clause stating the implementation of the law is "shielded from judicial review."  Checks and balances?

According to news reports, the judge's dismissal hinges on lack of jurisdiction.  Even if the judge had jurisdiction, the section of law regarding which labs can report (with a 50% rule regarding Medicare Part B billings) is (or was or remains) problematic to craft around the issue of hospital labs.  ACLA  offers a mathematical solution on pages 9-11 of its comment letter.

CMS proposed to use 1450 claims forms in regard to its definition of hospital reference lab reporting.  AMP and ACLA seem to take diametrically opposed positions on the wisdom of this CMS suggestion.

From summer proposed rulemaking, 1799 documents to the 2019 rule (CMS 1693 P) cited "PAMA" (here).


* As quoted by judge:  ACLA wrote, "It would raise constitutional concerns of the highest order if Congress were to require the Secretary to promulgate substantive legislative regulations that directly regulate primary conduct on threat of civil penalties but then [also] attempt to insulate those regulations and the Secretary's enforcement of them, from any form of judicial review."   [Decision, page 12].

Tuesday, October 9, 2018

Very Brief Blog: Baker Tilly's Checklist for Medical Devices & Market-Facing Evidence

This week, MedCityNews runs an article on, "What can digital health companies learn from medical devices?" in terms of evidence and reimbursement success.  Here.

Inside that, find a link to a "Market Access Checklist" from Baker Tilly, presented as a one page PDF infographic.   Download it here.

While the checklist is commonsensical to reimbursement experts, it may be an eye opener to newer investors, CEO's, or board members.   Topics include:

  1. Clinical Evidence
  2. Economic Evidence
  3. Medical Society Guidelines
  4. Provider Communications
I would say....Yup.

Regarding communications, I ran across a quote from a 1976 booklet called "Thoughts of Jerry Brown."  Regarding the endless funding requests and justifications that crossed his desk as governor, he wrote:  "Even though they might be right, if they can't clearly state their case such that I can understand it, in the limits of time available, then I'm voting no.  That's my philosophy."   I'd suggest you assume the medical director at CMS or BCBS is thinking the same way.


Baker Tilly is a "full service accounting and advisory firm."  The cited MedCityNews articles is preparatory to a conference and features, among others, an interview with Baker Tilly's principal, David Gregory.  For his 2016 deck, "The Value Driven Provider," here.


If you enjoyed Baker Tilly's four-point evaluation program for market entry and reimbursement, consider these two posts.   The first is a "12 step program" for what VCs should consider when investing in healthcare technology.   The second is about medtech and payers.

Venture Valkyrie blog, 12 steps to VC investment due diligence, here.
Venture Valkyrie blog, medtech and payers, here.

Sunday, October 7, 2018

Very Brief Blog: $28M in All of Us Genomics Awards: Centers Span Coasts, Silicon Valley to Boston

On September 25, 2018, the NIH All-Of-Us program announced plans to sequence 1M genomes via initial funding at $28M to three genomics consortia.

The first brings together Boston's Partners Laboratory for Molecular Medicine, the Broad Institute, and Color Genomics in Silicon Valley. 

The second brings together Baylor, UT-Houston, and Johns Hopkins.

The third is run solo by University of Washington (Northwest Genomics Center). 

Click to enlarge.  Don't bother if you're in a flyover state.

  • See the NIH press release here.
  • See the Broad Institute press release here.
    • Color will analyze, interpret, and report results from the genomic data sequenced at Broad, working in collaboration with the Partners LMM, which will manage an expert team to address the most challenging genomic variants. 
  • Genomeweb here.
    • The funding announcement was issued in May 2018 (see technical Q&A here) with applications due in July 2018.
    • For a December 2017 report on what All of Us expected to be asking for (e.g. including its rising emphasis on exome/genome), here.
I'm not an expert on the greater Harvard system nomenclature, but my understanding is that Partners Lab for Molecular Medicine serves as a central germline clinical genetic center for Harvard-related hospitals.  According to Genomeweb, MLL director Heidi Reim "left for MGH's Center for Genomic Medicine" in August.


Collateral Ideas

If you're interested in All Of us collecting genetic and phenotypic data on huge numbers of people for future use, you might be interested in LunaDNA.  It's "the first people powered platform where you share data, advance science, and take part in the value created" and received $4M from Illumina Ventures (and others) in May 2018.  See a July 2018 article here. LunaDNA will be able to "issue company shares in exchange for genomic data," here.

If you're interested in Partners LMM as a cross-organizational hub for genetics in the diverse health system, you might be interested in the history of the MGH Pathology Department, where the chapters of a recent 300 page book are online as PDFs here.

For interests in The Broad Institute, a May 2018 podcast with Amalio Telenti (a pioneer in the area of molecular multi drug resistant bacteria) on his sabbatical at the Broad, here.