Saturday, November 19, 2016

Dark Report Cracks the Mystery on PAMA Pricing; Genetic Coverage Still Tough Going

In a special 24-page issue devoted entirely to PAMA, Dark Dilay (November 7, 2016) provides the largest insights yet available as to what will happen under PAMA CLFS price reporting.  Dark Report is available by subscription only; here.

CMS requires US labs to report pricing by payer and by test for tests paid in 1H2016; reporting occurs in 1Q2017, and CMS will announce results around August/September 2017.   Until now, some data was published in a government report (OIG, here) and a report by ACLA/Avalere (here).  Dark Report goes into far more detail and is probably more relevant.  In collaboration with XIFIN, the articles assess average commercial pricing for general independent labs, hospital outpatient labs, special genomic labs, and drug tox labs.  In general, commercial prices are circa 20% lower for independent labs, relative to the CLFS, and circa 20% higher for other lab categories.   The special issue will probably be mandatory reading for industry observers.

However, there is considerable variation.  For example, in the specialty genomics category, of 20 top genetic codes, commercial average payments in the Xifin database on a per-code basis vary from -65% to +230% relative to the CLFS.  This suggests that contracts are not made solely as flat percents of the CLFS.       (More after the break).

Coverage Still Critical

According to Lale White of Xifin, when genomic tests are paid by payers, labs receive the average pricing reported in Dark Report.  But it's not that simple.  As few as 25% claims may make payment.  Appeals may be protracted.
The issue is not unique to labs; the pharmacy consultancy Symphony Health Solutions reports that  new patients prescribed PCSKg inhibitors were rejected by payment systems 88.4% of the type (appeals may have followed; here.)
See also some payer coverage data in Myriad's public investor presentation August 9, 2016, for specialty tests (online here as of 11/19/2016).  For example, the Vectra test, which has been available for several years, has limited commercial coverage (see pie chart on page 18, left).  On page 28, the company emphasizes that there is much headroom for revenue growth if tests provided for Prolaris, Vectra, and Genesight were more likely to later be reimbursed by payers (see bar chart on page 28, right.)  The tests are being ordered and used, so revenue would be at the company's fingertips with more complete coverage.  But the glass-half-empty view of the same bar graph is that many tests are currently delivered and used in healthcare without adequate payment.



The GAO's first report that CMS lab test prices were too high appeared in 1991, here.  This report was requested by legislation in 1987, 30 years ago.


The reference to the Symphony Health Solutions white paper, cited above, comes from New York Times in an article on payer denials of high cost drugs; November 19, here.