Thursday, December 29, 2016

CMS Tweaks Hospital Outpatient Lab Test Bundling Rules

In November 2016 rulemaking for hospital outpatient policy, CMS tweaked its rules for the bundling of laboratory tests related to hospital outpatient encounters.

The 14-day rule has been in effect since around 2007 and required that only hospital outpatient facilities could bill for tests performed on hospital outpatient specimens.    In 2014, CMS upped the game by defining all hospital outpatient lab tests as "bundled" and not paid separately, not even to the hospital outpatient center, with a few exceptions.

I've put the new rulemaking for CY2017 in the cloud, here, and discuss after the break.

Monday, December 26, 2016

NYTimes' Story on Acthar Pricing: The Errors and Missing Medicare Policy Pieces

On December 23, the New York Times ran a story on the Medicare payments for a fairly costly drug, Acthar.   The story was triggered by a Hill report on "Sudden Price Spikes in Off Patent Prescription Drugs;" see the Hill 130-page report here, and representative stories here (at USA Today) or here (at Endpoints industry blog).

The NY Times story contains some errors that can't be ascribed simply to journalistic brevity.  To bring more clarity to the actual policy levers on Acthar, this blog provides some background.  More after the break.

Friday, December 23, 2016

CMS Releases Lab/Pathology Correct Coding Guidance for CY2017

For a number of years, CMS has issued and updated a national coding policy manual called "The NCCI Policy Manual for Medicare Services."  This is the written part of the Correct Coding Initiative, which also issues enormous Excel spreadsheets that limit the number of units of service of some codes (MUE edits) or block certain codes from being used simultaneously (PTP edits).

See all these forms of instructions online at CMS, here.

Changes in the 2017 Path/Lab policy manual, after the break.

CMS Releases Final Lab Fee Schedule for CY2017

CMS released the CY2017 CLFS pricelist on December 22, 2016.

  • The home page for CLFS for recent years, including CY2017, is here.
  • The newly released CLFS for CY2017 is here.

  • I also provide a cloud copy of the December CMS spreadsheet, except, I have added a "column D" which shows test name much closer to the code column and price column. 

Also released on December 22 was Transmittal R3682CP/CR9909, discussing the new fee schedule, here.  This transmittal includes "mapping information" for crosswalks between new codes and older codes, e.g. "New code 84410 is priced at the same rate as the sum of codes 84402 and 84403."

Thursday, December 22, 2016

MoldX Releases Bonanza of Nine LCDs for 1Q2017

On December 22, 2016, via the CMS website and the Palmetto MAC, the MOLDX program released eight new LCDs.

The first three LCDs extend broad gene-panel profiling to patients with colorectal cancer, malignant melanoma, and ovarian cancer.

In addition, three brand-specific LCDs offer coverage is offered to Castle Biosciences for its DecisionDX test for high and low risk uveal melanoma, the VitaRisk pharmacogenetic test for acute macular degeneration, and Xpresys lung cancer diagnostic test for classification of uncertain lung nodules.  In an expansion of coverage, the seventh LCD extends Prolaris test coverage from low risk patients to include intermediate risk patients.  Finally, in the eight LCD, Medicare proposes to revoke coverage of the Myriad Vectra test. (Click photo to enlarge).

In a twist, the new LCDs do not have "CDD."  In addition, modifying a ninth LCD, MolDX has deleted the registry requirement from its existing lung cancer genomic LCD (here).

Coverage at Genomeweb here and here.  Details and links after the break.

February 2017 CPT Agenda Out; Multiple Codes for BRCA and Multi Cancer Risk

For several years, the AMA CPT has released public agendas of codes-in-play prior to their public CPT editorial panel meetings.  After the meetings, the AMA CPT also releases a summary of decisions made.

The agenda for the February 2017 meeting is here. [Link will change if updated; see main page here.]

Several codes address hereditary risk testing.

According to Tab 18, there is a proposal to revise BRCA1/BRCA2 codes 81121 and 81162.   The former is a legacy code for BRCA sequencing, priced by CMS at about $2195 for CY2017.   The second code includes a composite of BRCA sequencing and dupdel analysis, priced by CMS at about $2503.    These BRCA sequencing codes contrast sharply with a newer panel codes, that currently includes BRCA1/BRCA2 sequencing AND 12 or more additional breast and ovarian cancer genes.  This code, 81432, is priced by CMS at $931.   In payer circles, this is called a "rank order disparity" in pricing - a code that involves more work, including the same work, is priced far lower than another code.   According to tab 18, 81121 would be defined for Sanger sequencing and 81162 would be defined for next gen sequencing.

Tab 21 is related to the hereditary breast cancer "panel" code, 81432, $931.  It is currently defined to include an EXACT gene panel set, suggesting if any one gene is left out, the panel code at $932 will not apply.   Absent a panel code, labs would presumably use unlisted codes or stack individual gene codes, which could total to circa $4000.   Tab 21 suggests revising the code to always including BRCA1 and BRCA2 and to encompass 10 or more genes "typically including" a gene set, so that if one or two genes were left out or substituted, the panel code might still apply.

Finally, according to the agenda, Tab 22 is Genomic Sequencing Procedure for Multiple Cancer Syndromes.  This would be germline hereditary panels that include genes selected from among multiple cancer syndromes.    If accepted, such a code would enter the next CMS gapfill/crosswalk pricing process.  Since the AMA CPT doesn't appear to have a clear rule in the text about when stack coding should stop and an unlisted code should be used, in the absence of this new code, there would either be a lot of use of high level stack coding or high use of unlisted codes (which tallied 1/3 of Medicare's molecular payments in CY2015!!!!).  

In a webinar sponsored by PMC and AHIP on December 15, a major payer described frequently getting genetic stack code claims with 20 or more codes submitted.  In the case of BRCA testing under codes 81211, 81162, 81432, bringing the coding together with CMS fee schedules, in some cases Medicare may be paying $932, in some cases $2300 or more.  President Trump would probably tweet - "Bad deal - must change!"

Thursday, December 15, 2016

Brief Blog: Medicare's Financial Scale and Scope in 2017

HHS has remarkably clear and easy to navigate budget pages.  For example, the FY2017 Budget in Brief for Medicare is here.  Note that while 2017 is imminent, projections for 2017 budget were made early in CY2016.

Medicare's total benefits spending in FY2017 is projected at $709B, with about $100B covered by direct premiums.   Administration for Medicare is budgeted at $9B, or just over 1%.  Part A will be $202B, and Part B will be not much less, at $193B.

Enrollment grows slowly, at about +1.7% per year, with 58 million total beneficiaries.  Of these, 49 million are age 65 and over, 9 million are disabled.

However, note that of these 58 million beneficiaries, 20 million will be in Medicare Advantage aka Medicare Part C.   Part C has doubled in the last 10 years, from 10 to 20 million.

Part D comes in at about $110B, with average monthly premium of $41 (and deductible of $360).

Teeny Tiny Savings Ideas

Medicare projected that from 2021-2031, it would save $10B from new bundled post acute care, not much since Medicare payments would be at least some $7 or $10 trillion during those ten years (my own conservative guess).  Similar, CMS projected that more use of telehealth in Medicare Advantage could save $160M over ten years, pretty tiny to the many trillions CMS spends every 10 years.   For contrast, it looks like some LCDs on CYP testing carved $100M-plus out of the CMS molecular pathology budget between CY2014 and CY2015 - in  just one year (here).


From the HHS budget link provided, you can easily navigate back up into costs for other divisions of CMS or costs for other parts of HHS like FDA and NIH.

Medicare's CY2015 Molecular Test Payments Assessed

In early December 2016, CMS released excel data files for CY2015 CPT code utilization.  For the full data set, here.

I have pulled out the molecular codes 81161-81599, and cross-sorted it by CPT code, by Utilization, by Dollars Allowed, and by Price per Test.   See the manipulated Excel spreadsheet in the cloud, here.

I've also pulled the top ten codes in each category and added code names, here.

High Level Interesting Findings:

  • My impression is that total molecular code billing fell from about $650M in CY2014 to $480M in CY2015.
  • CMS use of the Unlisted Code rose from about $70M to $165M.
  • Tumor (somatic mutation) gene panel codes 81445/81450/81455 were barely used at all.
  • Use of CYP codes roughly halved from CY2014 to CY2015.

Overall Utilization in CY2015

This is CMS data, not representative of all clinical uses of genetics.

That said, there were only 25 codes that were used >5000 times.  They captured 95% of all CMS molecular payments.

Of the other 5% of CMS payments:  25 codes 1000-5000 times, and 90 codes < 1000 times (65 codes < 100 times).

High Utilization Codes 

Three codes were used >150,000 times.  Six codes were used > 100,000 times.

CYP Codes Down
Utilization of codes like CYP2D6 and CYP 2C19 apparently halved from CY2014 levels, as reported here.  (See also table at bottom of this blog entry).  (All tables can be clicked to enlarge.)

Unlisted Code Up
In other headlines, Unlisted Code 81479 rose to 35% of all $483M of payments, capturing $167M out of $480M.  CY2014 spending appeared to have been higher, at $650M, here.

Tumor Gene Panel Code Ignored
Code 81455 (5-50 gene panel, tumors) was used only 65 times (!).

More data cuts after the break.

Brief Blog: CMS Publishes CY2015 CPT Code Utilization in Part B

Each year, about November or December, CMS publishes Excel spreadshees of CPT code utilization in Part B nationally for the prior year.

  • CMS has just released CY2015 data on its National Part B Utilization website, here

The file structure is a little unusual.  Download the "CY2015" data link on this webpage.  This will give you a folder with a 2015 Readme PDF and another folder, CY2015 data.  Inside the folder for CY2015 data, you will now see a 2014 Readme PDF and another folder CY2014 data.  However, inside THAT folder, are about two dozen HCPCS and CPT code utilization files, labeled Y2015...XLS.   Therefore, I believe these must be Y2015 files.

Although the total data is only about 2 MB, CMS breaks it into very small CPT code series, so about 20 excel files are there.

Will Gigabyte Physician Level Data Appear Again?

For the last several years, each April or May, CMS has released vastly larger data sets, including data broken down by physician, laboratory, and other Part B billing entities.  (E.g. - you can look up that your Dr. Smith on Oak Street billed Medicare for 845, 30 minute office visits.  That data homepage is here.)   CMS began releases this gigabyte-sized data after a court ruling that it could be obtained by third-party entities through FOIA.

AMA has not liked this release of physician data.  If the new administration is more AMA-friendly, it might discontinue the physician-level data dumps.

Category III Codes

These data tables list about 140 Category III codes.  8 were used 230,000 times for $166M   The rest - the other 135 codes - were used for a total of $2.5M, and only a couple dozen used more than 100 times.  The vast majority of all Category III dollars in 2015 went to 0191T, anterior segment drainage device, 52,000 uses, $64M, and electronic brachytherapy 0182T (later split into several newer codes), for 50,000 uses at $87M.

Wednesday, December 14, 2016

Brief Blog: Harry Glorikian Publishes Book, "Commercializing Novel IVDs"

Industry expert Harry Glorikian has published a book (available January 5, 2017) called, "Commercializing Novel IVDs: A Comprehensive Manual for Success."

The book will be available as a specialty industry report from Insight Pharma Reports, with a current list price of $695.

The executive summary is online here.  Book homepage and table of contents, here.  Estore, via Cambridge Healthtech Institute, here.

Publisher's Description after the break.  For a September 2016 interview with Glorikian, see Slone Partners, here.  For a February 2017 interview at Genomweb(subscription), here.

Brief Blog: Biz Coalition Urges New Administration to Stay the Course on "Value Based Care"

According to Forbes, December 8, a 43-member coalition for "Value Based Care" (e.g. capitated, managed like ACOs, driven by quality metrics) wants the new administration to go further in this direction.

For the article by Bruce Japsen, here.  For the home page of the Health Care Transformation Task Force, here.   The coalition includes the largest insurers (Aetna, BCBS; large health plans like Advocate; large employers like Boeing.)

The group posted a 7-page letter to the President-Elect on December 6, here.

The HTTF was announced almost two years ago, in January 2015, here.
For its part, and separate from HTFF, Medicare is part of a "Health Care Payment Learning and Action Network," of HCP-LAN, which "brings together providers, payers, and others in the health care system."  HCP-LAN has a website, here.

Tuesday, December 13, 2016

Brief Blog: Scott Gottlieb as Possible FDA Chief (Reuters, December 12)

On December 12, 2016, Reuters reported that Scott Gottlieb is a short list candidate for head of FDA.

Gottlieb, an MD, was a senior advisor at both CMS and FDA (2002-2004).   He is currently a partner at New Enterprise Associates, a top-tier VC firm, and also a managing director at investment banking firm T.R. Winston.  As a conservative, he is associated with the American Enterprise Institute.  Gottlieb is a recurring op ed writer for Forbes (here) and for the Wall Street Journal (e.g. here, on FDA, August 2016; and here, on Obamacare, December 2016).

See the Reuters story, here.  Gottlieb has 35K followers on Twitter, here.

  • December 9, STAT, here. (subscription)
  • December 12, Fast Company, here.
  • December 13, FierceBiotech, here.
I give him 3:1 odds for the nomination.

Brief Blog: Rise of Digital Health: At Advamed and at JP Morgan

It's only a several years ago that the term Digital Health came to replace terms like medical software and EHRs and telemedicine to reflect a comprehensive umbrella for things digital or virtual in healthcare.

This month, Advamed announces "ADVAMED DIGITAL," a separate program within Advamed, just as it has the separate Advamed Diagnostics program created in 2010.

Advamed Digital

  • Press release announcing Advamed Digital, here.
  • Homepage for Advamed Digital, here.
  • Medcitynews article on Advamed Digital ("Bringing the Sexy (back) to Medtech"), here.
  • Homepage for the March 2, 2016, Advamed Digital Conference in San Francisco, here.

Digital Medicine Showcase (alongside JP Morgan)

Separately, alongside the longstanding JP Morgan life sciences conference in San Francisco in January, the conference group EBD will run a "Digital Medicine Showcase 2017."   January 10-11, website here.

Friday, December 9, 2016

New Rulings on the Massive CMS Appeals Backlog

The Medicare appeals backlog crisis has been going on for years now.  I wrote a blog in early 2014 that HHS couldn't possibly meet its stated backlog clearance goals (the math was crystal clear, and the HHS public statements were nonsensical.)  I updated after an HHS press release in June 2016.

The HHS backlog is back in the news in early December, 2017.  A court has ordered HHS to clear the backlog "by January 2021," according to Modern Healthcare.   2021 - remember, HHS was claiming it could clear the back log in a couple years, in 2014.

A detailed article with numerous links to legal documents was published by Kristin Walter at McKnight's on December 9.

  • McKnight article on the backlog, here.  Citations therein include:
    • HHS brief in appeal, 29pp, here.
    • The court's opinion, 7p, here.
    • For a link to 2015 proposed legislative fix, AFIRM, here.
    • For HHS's own 11 page public-facing explanation of the issues, June 2016, here.
      • For a response article entitled, "Feds Peddling Fiction on Medicare Appeals," here.
  • Coverage at Reuters here, at Becker's Hospital Review, here.
  • Medicare awarded new RAC contracts in November, here.

Brand Expansion at New England Journal: NEJM CATALYST Webinar (January 19)

In October 2015, NEJM announced a joint project on health care innovation and outcomes with Harvard Business Review.   The kickoff article is here; the HBR website is here.

Since then, I haven't noticed much about NEJM-HBR, but in January 2017, NEJM will hold a half day free webinar on health innovation, cosponsored with Providence St Joseph Health System.  The overall effort is branded as NEJM CATALYST, home page here.  The agenda and registration for the free January 19, 20176 webinar is here.

NEJM Catalyst runs a health policy blog dating back to December 2015, here.

House Holds Hearing on USPSTF; Legislation Floated; UNIQUE TRANSCRIPT HERE

The Affordable Care Act requires US health plans to cover, without a copay, services endorsed by the United States Preventive Services Task Force.   In addition, CMS can adopt any or all such endorsed services if it runs an NCD process that finds the service is reasonable and necessary for prevention in Medicare populations.

This has led to instances of confusion (USPSTF recommendations sometimes be cryptic to implement as specific insurance rules and policies.)  This fall, New England Journal ran an opinion piece on the USPSTF-and-payers topic (Johns & Bayer, November 3, 2016, here.)

Possibly lost in the post election explosion of health and political news, on November 30, the House held a hearing on how well the USPSTF preventive services benefit is working, or not working.


  • Unofficial Transcript Based on Youtube Webcast: here.
    • 28pp, 14,000 words
  • Single Zip File with Agenda, Witness Testimony Files, Transcript, Draft Bill, here.
  • Above documents in one single PDF, here.
    • 155 pp.

  • New items at THE HILL, here.
  • House Energy & Commerce press release, here.
  • November 30 Hearing Website, with streaming video and linked testimony documents, here.
  • Home page for the USPSTF Transparency and Accountability Act (proposed; Blackburn and Rush; 2015), H.R. 1151, here.
    • An updated draft of the legislation is here.

Thursday, December 8, 2016

Brief Blog: Trump Considers Libertarian FDA Commissioner?

STAT offers this news article on December 7, 2016:
President-elect Donald Trump is weighing naming as Food and Drug Administration commissioner a staunch libertarian who has called for eliminating the agency’s mandate to determine whether new medicines are effective before approving them for sale. 
“Let people start using them, at their own risk,” the candidate, Jim O’Neill, said in a 2014 speech to a biotech group.
STAT's article online here.  Others hope that current Commissioner Califf, recently confirmed by a Republican congress, may stay on.

Discovery and Profitability in Molecular Diagnostics: Patents vs Time Constants of R&D

Recently, Genomeweb ran two articles on patents and molecular diagnostics.   The first article, on November 15, covered discussions at the annual AMP meeting.  Roger Klein MD JD, of Case Western, debated with Timothy Stenzel, COO of Invivoscribe.   In a second article, December 5, the rate of patent applications was assessed by Duke's Arti Rai and Santa Clara University's Colleen Chien.  Rai and Chien studied 27,000 patent applications from 2002 to 2014.  The data was presented at a Utah conference and is not yet published.  (For an earlier Rai publication, here.)

Patents provide a barrier to entry, which can encourage investment by allowing a window of protected time for investment recoupment.   This could be more important in situations where there is a large upfront investment required, but a relatively low ongoing marginal cost, and, where the product could otherwise be easily observed and replicated.

We can draw a line between these articles and a December 8 article, also in Genomeweb, that Interpace Diagnostics (Parsippany, NJ) has obtained coverage for 200M patients, including major payers like Aetna and Medicare and some BCBS plans for its ThyraMir thyroid nodule classifier test.  According to the article, " Molecular testing using ThyGenX and ThyraMir has been shown to reduce the rate of unnecessary surgeries in indeterminate cases."   More after the break.

Wednesday, December 7, 2016

15 FDA Authors on Real World Evidence: NJEM December 2016

With the passage of 21st Century Cures on the Hill (by huge margins), and the likely signing by President Obama, we'll hear more about Real World Evidence.   

While there's been alarmist talk that 21CC will foist poorly validated trials with RWE onto the American health system, all that 21CC does is require the FDA to "look at" RWE and set up some guidance documents if it can.

To get a view on what the FDA leadership really thinks about RWE, see an article in New England Journal of Medicine by Sherman et al., including leadershp such as Jeff Shuren, Robert Temple, Janet Woodcock, and the administrator, Robert Califf.   The article is open access, here.  

The following week, FDA authors Califf et al. wrote a companion NEJM piece but focused on big data, coordination, and the learning healthcare system.

Brief Blog: Trump, Interviewed in TIME, Vows to Take On US Drug Prices

In an interview released on December 7, 2016, PEOTUS Trump vowed to cut drug prices in the US.

  • For the interview at TIME magazine, here.
  • For a summary focused on drug pricing remarks, also at TIME, here.
  • For coverage at Bloomberg. here.
  • For a regularly updated Bloomberg page on Drug Prices: Costs & Outrage, here.
    • Provides multiple links for further reading and resources.
  • For John Carroll's rapid blog on the topic at Endpoints, here.

Genetics Testing Company FULGENT; IPO, S-1, Investor Call

Numerous public (INVITAE) and non public (COUNSYL, AMBRY) companies are growing in the genetic testing space.   Business deals are announced regularly (GOODSTART will be offered through a new alliance with Roche's NIPT laboratory Ariosa.)

Fulgent Genetics is a Los Angeles-area genetics laboratory which moved rapidly from its founding in 2013 to its IPO on September 29 (here), which raised $50M.  It has a market cap of $170M as of early December.

Fulgent provides broad-spectrum genetic testing services.   It had 2014 revenue of $1.3M and 2015 revenue of $9.5M.   It had a net loss in 2015 of $5M from continuing operations, most of which would be represented by a reported $4.3M in R&D.
  • Yahoo Finance Home Page, here.
  • Company website, here.
  • 500 page S-1 filing document, here.
  • November 7, 2016, investor call transcript, here.   

GRAIL Announces Plans for "Circulating Cell Free Genome Atlas"

On December 1, 2016, GRAIL, a life sciences company created in large part by Illumina, announced the "CCGA" - the Circulating Cell-free Genome Atlas.
  • The full press release is here or here.
  • Webpage at, here.
  • Subscription coverage and interviews at Genomeweb, here.
  • See the company's website at
The observational study aims to enroll 10,000 subjects between August 2016 and August 2022, but with "primary" completion date by September 2017 (  7000 patients will have diagnosed cancers and 3000 will be in the non-cancer arm.

The project has some similarities to the NIH-sponsored Cancer Genome Atlas (TCGA, here) but transfers the genomics from solid tumor tissue to circulating DNA in blood.

Besides Illumina, other investors include ARCH Ventures, Jeff Bezos, Bill Gates, GV (Google Ventures), and Sutter Hill Ventures.