Wednesday, September 21, 2016

The Awesome Complexity of Billing US Payers for Genomics:

I'm giving two talks in Europe this fall on the complexities of the US policy frameworks for genomics laboratories, one issue being the complexities of billing US payers.

It's a commonplace that US administrative costs soar above the costs of other countries; see for example here and here and here.   This complexity may be at its worst, a perfect storm, for genomics laboratories.   For "efficiency," US healthcare ranks at the bottom of 11 developed nations.

While their goal is laudable - to help labs understand and cope with the US system as-is - a new article by Lennerz et al. of MGH shows how awful the system is in excruciating, academically documented detail.   See "Healthcare Infrastructure for Financially Sustainable Clinical Genomics," here (not open access).

It remains unfortunate that an otherwise meticulous AMP-funded documentation of NGS lab costs, published in May 2016, left out overhead and administration costs because they seemed too difficult or variable to calculate precisely (Sabatini et al., open access, here).   Medicare pegs gapfill genomics prices to the numbers they see ("$592.45"), and the colossal costs that tower over Lennerz' work are absent in the cost tabulation of Sabatini et al.

It's a terrible gap, because in general, Medicare does indeed pay for overhead costs, in hospital inpatient, outpatient, physician fee schedule, and other systems.  Even the most efficient large labs, like Quest and Labcorp, have overhead costs that are about equal dollar for dollar to "costs of goods sold," the costs documented by Sabatini et al.  It's probably worse than that for genomic tests, as presented but not dollarized by Lennerz et al.

Addendum (September 27): A new article in Clinical Chemistry also looks at lab costs for advanced genomics such as exomes and again underplays necessary overhead and management costs; van Nimwegen et al., here; Genomeweb commentary, here.


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