Tuesday, December 26, 2017


On November 30, 2017, CMS released a 65-page, 45,000 word NCD proposing an entirely new policy approach to all uses of next generation sequencing in oncology.

I've had the chance to talk to a number of stakeholder groups and read the NCD several times, as well as underlying documents such as the FDA approval review for FMI F1 CDx. 

Here, I post a 20 page (7000 word) white paper on the NCD and its potential implications.

Version: 03, January 2, 2018.  * HERE *  - click arrow upper right to download.

This white paper was downloaded 450 times (December 25-January 5).   More after the break.

Sunday, December 24, 2017

Friday, December 22, 2017

Very Brief Blog: J Mol Dx Article on History of Genomic Reimbursement & Coding

New online at Journal of Molecular Diagnostics (included with Association for Molecular Pathology membership).   Hsiao, Mansukhani, Carter, and Sireci of Columbia University have written an in depth study of actual changes in reimbursement (and coverage) in their molecular laboratory as policy, coding, and fee schedules have rapidly evolved in recent years.

The in press manuscript is online here.  Don't miss the interesting graphics from page 20 forward.


Changes in coding and coverage create uncertain reimbursement environment for molecular pathology laboratories. 

We analyzed our experience with two representative molecular oncology tests: a T-cell receptor (TCR) beta rearrangement test and a large (467 gene) cancer next-generation sequencing panel the Columbia Combined Cancer Panel, CCCP. 

Prior to 2013, the TCR beta test was coded using “stacked” current procedural terminology codes and subsequently transitioned to a tier 1 code. CCCP was coded using a combination of tier 1 and 2 codes until 2015, when a new Genomic Sequencing Procedure code was adopted. A decrease in reimbursement of 61% was observed for the TCR beta test upon moving from stacking to tier 1 codes. No initial increase in total rejection rate was observed but a subsequent increase in rejection rates in 2015 and 2016 was noted.

The CCCP test showed a similar decrease (48%) in reimbursement following the adoption of the new genomic sequencing procedure code and was accompanied by a sharp increase in rejection rates both on implementation of the new code and over time.

Changes in coding can result in substantial decreases in reimbursement. This may be a barrier to patient access due to the high cost of molecular diagnostics. Revisions to the molecular code set will continue. These findings help laboratories and manufacturers prepare for the financial impact and advocate appropriately.

Sample graphic:

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Thursday, December 21, 2017

Health Executive Adam Boehler Might Head CMMI Next

According to a tweet from PoliticoPro, health executive Adam Boehler might become the new head of the billion dollar Center for Innovation at Medicare (the CMMI).   Tweet here.

Boehler's Linked In is here.  He's also listed at Bloomberg biographies here, and his profile as CEO of Landmark Health is here.

Boehler comes out of the Wharton School and has had both venture capital and operational roles.  He was previously involved with a 25-lab network with 3000 employees, aLabs.  According to Bloomberg, he's Chair and President at Landmark; Executive Chairman at Avalon Health. 

Landmark Health, where he's currently CEO, is designed to provide superior, next-generation home health care and home based medical care to patients "24/7/365."   Earlier this month, Landmark recently hired Christopher Goldsmith (of Optum and with an INSEAD MBA) as President.

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Previous CMMI director Dr Patrick Conway stepped down in mid-year to join North Carolina BCBS.  CMMI is rebooting itself for new directions under the new administration.

Feds Release Surprisingly Affordable Report on Excessive Drug Prices

On November 30, 2017, the National Academy of Medicine released a free 200 page report on the problem of excessive drug prices. 

Drug costs have been a concern for generations; Senator Kefauver of Tennessee began hearings on drug price-fixing when he was told (in 1955!) that two different antibiotics at his corner pharmacy both cost exactly $3.    (This vendetta eventually transformed and morphed into the Kefauver FDA amendments of 1963). 

The NAM press release is here and the PDF report is available here.  It comes with a one hour panel media presentation as archived video, here.

Coverage at:
This National Academies project is different than a mid November GAO report on drug profits compared to R&D spending; see the 70 page GAO report here and the Endpoints blog on it here.

Bonus reading.

For Bloomberg December as "Diabetes as the Messiest Drug Market," here.   Also from Bloomberg in December, "FDA Targets Insulin" for excessive prices, here.  Fpr a summer article at Bloomberg on "Crazy Math Behind Drug Prices," here.

CMS Extends Comment Period on NGS/Cancer Proposed NCD

CMS has extended the comment period to January 17, 2017, on the currently debated National Coverage Determination for all uses of next generation sequencing in cancer.   The NCD provides coverage only for PMA-approved tests used on-label in the relevant cancers.   The NCD would cover patients who are part of clinical studies (coverage with evidence developments) for other uses of PMA- or 510(k)-approved NGS tests.

The tracking and dates page is here.   The NCD is here.

Comment deadline has been revised (old, Dec 29, new Jan 17)

Tuesday, December 19, 2017

Regulatory Nerd Corner: Medicare Review Board Decision Narrows Scope of ALJ Review of LCDs

A section of law  called BIPA 522, more than a decade old, gives a channel whereby a beneficiary can appeal an entire LCD rather than just his personal claim.   The decision is fast-tracked to an Administrative Law Judge (ALJ).

In past cases, ALJs have ruled that there can be "constructive LCDs" - for example, if a contractor says in an Article that Service XYZ is not reasonable and necessary and is non-covered, that may not be formally called an LCD by its MAC author, but it is a de facto LCD, and can be appealed through the BIPA 522 channel.

A 2017 Medicare review board case reversed an ALJ who had broadly construed his ability to call something a constructive LCD based on a reasonable and necessary decision.  In the case, a DME MAC had ruled that continuous glucose monitors were "not a benefit category" because they were "precautionary"  to check for low glucose levels.  The ALJ ruled this was equivalent to saying they were not reasonable and necessary and found the CGM should be covered.   CMS escalated the case to a panel of review judges, who ruled that the decision of the MAC was a "benefit category decision" and therefore not accessible by the LCD review process, which is only for "reasonable and necessary" decisions.

  • I describe in more detail here and provide links.   
  • DME benefit category decisions  can have close overlap with reasonable and necessary decisions because categorizing something as DME invokes some steps that involve its medical use and purpose.

The potential adverse affect is for devious MACs to couch decisions in articles rather than in LCDs and switch to terms like "experimental and investigational" or as "precautionary" or as "benefit category decisions" with an eye to avoiding the textual keywords that would allow review by ALJs under the LCD review channel.   I never understood the reasoning around "precautionary" - all glucose tests are precautionary for an abnormal glucose finding, INR tests in warfarin patients are "precautionary" for an abnormal INR finding.   An MRI in a unilateral headache patient could be styled as "precautionary" for discovering if he has a brain tumor, and so on.

The particular decision about CGMs is of historic interest now as later CMS decisions allow coverage of some CGMs.

My Article on "DIGITAL GENOMICS" Is UP at Journal of Precision Medicine

Over the past year, I produced a white paper and gave several talks and chaired two panels on "Digital Genomics."   A corresponding article is now online (open access) at Journal of Precision Medicine.

See the journal homepage here.   See the PDF article here.

The article has two parts.  The first part talks about labs that are creating an elaborate digital ecosystem around the traditional molecular lab services - "Lab 3.0."  The second part talks about companies that are being established without any wetlab, and dedicated to providing digital genomic services like state of the art outsourced software, analytics, and bioinformatics pipelines. 

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This continues to be an active area of investment, e.g. a $58M investment in DNANexus was announced on January 2, here.

Monday, December 18, 2017

Very Brief Blog: FDA Releases Two Draft Guidances re Biomarkers for Rare Subsets and IDE IVDs in Clinical Trials

One December 18, 2017, the FDA released two draft guidances (both open for 60 days comment) on precision medicine.
  • The FDA's press release is here.
  • Coverage at Genomeweb here.
  • The FIRST guidance, on biomarkers for rare disorders in clinical trials, is here (8pp).
    • This codifies some of the principles used in the May 2017 approval of Keytruda in all solid cancers with high MSI (here).  The pivotal labeled study involved 90 colorectal cancer patiens and 59 other patients, such as 11 biliary, 9 gastric, and as few as 1 or 2 for a number of cancers.  
    • It was far from conventional "proof" that Keytruda works in "all" solid cancers.
    • This guidance is paired with and timed to an FDA article in Nat Rev Drug Devel (12/2018) by Schuck, Pacanowski, Woodcock, and Zineh, here The FDA guidance and the Schuck et al. article are mutually explanatory.
  • The SECOND guidance, on requirements for Investigational Device Exemption when biomarkers are used in clinical trials, is here (26pp).  For example, an FDA approved KRAS biomarker used off label in a different tissue trial may require IDE.
    • To my eye FDA has already offered this rigorous view of the need for IDE status in clinical trials, but FDA pointedly notes that perhaps not all IRBs and investigators got the point.
    • FDA immediately tags this upgraded regulatory enforcement by adding it is looking to "streamline the review of oncology products and [oncology] IVDs" through additional guidance and in the near future.

Regulatory Nerd Corner: The Regulation for the MSK IMPACT test does not exist in the CFR


For regulatory nerds, the MSK IMPACT test, recently cleared by the FDA as a de novo Class II test, has a product code (PZM) and a regulatory classification, 21 CFR 866.6080.

The Class II decision memorandum is here (DEN170058).   The product code PZM webpage at FDA is here.

  • However, the US Code of Federal Regulations or CFR has no regulation under 21 CFR 866.6080.  Regulations stop at 866.6060.  Here.
  • Yet, the FDA has a webpage saying that 866.6080 was created on April 1, 2017.
    •  (Ha ha?  Not only was that April Fool's Day, but it was a Saturday, when the Fed Reg doesn't publish).  Here.  
  • In short, the regulation as numbered on the FDA CFR webpage at FDA fail to foot to any actual regulation in the real Code of Federal Regulations, which would be here.    
The solution to the puzzle is not entirely satisfying, but here it is.  In order to clear a product as a de novo 510(k) product, there has to be a classification order which means there has to be a 510(k) category to put the product "into" such as 21 CFR 866.nnnn.    (See the FDA guidance on de novo classification processes, October 2017, here.)     So yes, the FDA internally created 21 CFR 866.6080 (sic), but will (eventually) publish an article in the Federal Register creating that regulation, at which point the new category will appear in the national CFR that everyone can access.  In the guidance (UCM080197), FDA says (a) it will issue the order to the sponsor and classify the device in that letter, and (b) "we will then publish a final order in the Federal Register, etc.   So it gives the appearance that the "regulation" exists on the FDA website before it appears in the FR or CFR.  And in this case, the FDA regulatory creation is dated April 2017, the Sloan Kettering first example of a product is November 2017, and the Federal Register publication will be December 2017 or in 2018. 

I suppose a Sherlock Holmes FDA sleuth could have figured out that something big was up if they tracked the sudden mystery appearance of 866.6080 on the FDA website as a Class II gene panel test last spring, but he wouldn't have known it would contain oncology genes that are otherwise PMA level CDx biomarkers.

FDA.gov web page for the regulation, 21 CFR 866.6080 ("Created April 1")

Actual 21 CFR 866.nnnn Section at Federal CFR (Dec 18 2017)

FDA has a page on procedures for Direct Final Rulemaking, but it is predicated on publication in the Federal Register, which I've been unable to find for 866.6080.  Here.

FDA Commissioner Gottlieb was sworn in May 11, 2017.

Very Brief Blog: FDA Posts the Approval Documentation for Foundation CDX



See also all documents in one cloud zip file (Dec 18):

The Approval Order is 5pp; the Safety & Effectiveness document is 58pp; the Labeling is 43 pp.   

Four conditions of approval include (1) "clinical concordance data to support the performance of your device within the appropriate clinical contexts." [?]  (2) Response for NSCLC patients with EGFR T790M mutation mutant allele frequency (MAF) < 5%.  (3)  "Provide additional results from clinical samples to establish the analytical performance characteristics "for all variant types and genomic signatures." This includes MSI, TMB, CNA, rearrangements.   (4)  Software documentation for: validating and implementing software design changes.

The FDA specifically segregates "test output" or reporting into Category 1 CDx claims, Category 2 output of genes with "evidence of clinical significance," and Category 3 claims of "potential" clinical significance (the latter including e.g. animal studies or other rationales).  See FDA explanation here.  (510K gene panels have only Category 2&3 claims.)

The test runs on an Illumina HiSeq 4000.  It uses paraffin block inputs and must have 55 ng of genomic DNA.   The S&E documentation includes a "Table 5" which lists all FDA approved CDx (in any format, e.g. FISH) that parallels a CDx gene on the FMI label.   Table 7 compares concordance of "F1 LDT" and "F1 CDX" (it's high.)    There are many tables of comparisons to prior PMA tests (therascreen, cobas, etc).   The product was not referred to an advisory panel "because the PMA substantially duplicates information previously reviewed by the panel."   All statistics were based on "non inferiority testing."   

Since the device was classified as a Breakthrough Device, the FDA's review expectations included "a balance of pre and post market data."   The FDA concludes that because F1 CDX was "non inferior" to existing CDx tests, it "does not  introduce additional risks."  (Thus the reporting of Category 2 and 3 results, unavailable from prior single CDx's, were seen as not being germane to additional risks.)   FDA concludes: "The probable benefits outweigh the risks."  [Quotes from S&E document, P170019B.)


FMI's own FMI CDX webpage is here.

Sunday, December 17, 2017

Very Brief Blog: CMS Published CY2018 Full Final CLFS Fee Schedule

It seems anticlimatic after a hectic year of lab policies, unprecedented volumes of crosswalk decisions, PAMA crises and lawsuits...but in 1H December, CMS published the "final CLFS fee schedule" for CY2018.   It's hereDownload the zip file to access the CLFS Excel spreadsheet.

CMS has modified the format from prior years.  There are no longer 57 pricing localities; there is one national price.   All the prices are listed as effective "20180101," so that indicator will be more interesting as the years go by.   CMS now uses the letters "N" and "L" to indicate National or Local pricing, while all the codes with an "L" for local (gapfill) pricing are listed as 0.00 dollars.   Dollar rates are listed in the format 00072.19, for $72.19.   As always, QW stands for Clia Waived (or Qlia Waived?) tests, which have the same price as the standard price.

For additional details, see Transmittal CR10409 (here).  That PDF lists, for example, the final pricing choices behind every price that was crosswalked in summer 2017.   ("New code 81176 is priced at the same rate as code 81218,"etc etc).   New code prices will behave the same as the target code.  Meaning: If New Code is priced to a $200 target code that stays level at $200 each year under PAMA, so does New Code.  But if New Code is priced to a $200 target code that falls by 10% a year under PAMA rules, so does New Code.  By my count 116 codes were crosswalked (many were codes on the CLFS that had no utilization and thus no PAMA pricing). 

18 codes enter the 2018 local gapfill process, in this table:

18 Codes are Class "L for Local" Gapfill in 2018

Thursday, December 14, 2017

Very Brief Blog: At Mid Point of CMS NCD Comment Period, No FDA Documents on FMI CDX Test




* Original Blog December 14 *

On November 30, 2017, CMS released a wide-ranging National Coverage Determination on next generation sequencing in all Medicare cancer patients, with comment period to December 29 January 17.  (The NCD will be edited and finaled by February 28).

The pivot point of the NCD is the newly approved FDA PMA Foundation Medicine CDx test, FDA PMA P170019. 

Confusingly, as of December 14, 2017, the FDA hasn't released any of its PMA safety effectiveness and validation review for the F1 CDx test.

See the product's FDA webpage here.  These webpages appear first as a placeholder with product name and approval date and high-level label (indication).   Thereafter, multiple FDA lengthy review documents are linked on this same page, as well as supplemental PMA documents (sPMA's).   (For a mature FDA webpage, see the ThermoFisher Oncomine Target Dx Test, PMA P160045, here).

Lack of FDA documentation means only publications on the LDT era FMI CDx test are available.   These LDT tests are non covered under the newly proposed NCD (except in NCI trials.)   This makes it hard to comment on the NCD proposal. 

Wednesday, December 13, 2017

MOLDX: Apparently Cancels Instructions for Modifier 22 Billing for PMA CDx Genetic Tests

For several years, MolDx had special instructions if you billed oncogenes like KRAS or EGFR with FDA approved tests:  Add modifier 22.    While MolDx never published fee schedules for added payments triggered by modifier 22, CMS open payment records by lab for 2015 show that some labs, like Genoptix, were paid about 2X the fee schedule rates for some tests (here).

Policies have changed.   The old MolDx covered test instruction page was "Approved Gene Testing, M00041, V16," and it's gone.  (For a November 2 archive of how it was, here.)

The new equivalent article is, "Approved Molecular Tests for Reimbursement, M00149, V1."  It lists "routine" genetic CPT codes that are considered payable, and it also lists those genes inside of Tier 2 codes that are considered payable.  Special instructions about -22 coding are now gone.

Concurrently, MolDx has published coding articles for FDA EGFR, KRAS, and BRAF tests (here, and screenshot below.)  The articles lack the prior Modifier -22 instruction.

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MolDx Likely to Use Flat Tier 2 Prices in 2018 Under PAMA 

It looks like MolDX has also deleted its quirky schedule of very specific and elastic gene by gene prices for Tier 2 codes (cloud archive here) and presumably will price Tier 2 at flat PAMA prices in 2018.

Multi Gene Discount Article Still In Effect

Still active is the MolDx "panel alert" article that if you bill more than two gene CPT codes they should be replaced by 81479 and a Z code, presumably for discount pricing.

The CMS Proposed NCD for NGS Testing in Cancer: Playing It Out for MSI & Keytruda

On November 30, CMS released a proposed NCD that regulates the use of NGS testing in advanced cancers.   In brief, the NCD provides three tiers of coverage:
  1. PMA Tests Used for On-Label Cancers.
    1. These tests are covered for advanced cancers if the cancer is on label for at least one gene.   Foundation One CdX is covered for paients who have either breast, melanoma, lung, or colon cancer [at least one gene is CDx in each].   ThermoFisher Scientific Oncomine Target Dx is covered patients with lung cancer.
  2. PMA Tests Used in Off-Label Cancers *OR* all uses of 510(k) Cleared Tests (such as MSK IMPACT)
    1. These tests are covered only by concurrently enrolling patient in a detailed, long term clinical registry (CED) including ongoing RECIST objective response and PFS imaging.
  3. All Other Tests (e.g. LDT NGS)
    1. Covered only in NCI trials.
How would the NCD play out for solid tumor patients and Keytruda?

In May 2017, FDA approved immuno-oncology therapy Keytruda for all patients with solid cancers.  While there are several test methods (NGS, PCR, immunohistochemistry), none to my knowledge are FDA cleared.  Nonetheless, use of the cancer drug is on label if used with CLIA MSI testing.  In short, currently, FDA approves a major cancer drug for several hundred thousand US patients without an FDA PMA approved diagnostic.  

Patients can get (1) non-FDA approved immunohistochemistry testing, (2) non-FDA approved PCR, CPT 81301) or (3) non-FDA approved NGS MSI (MSI is found on the Foundation One test but not with CDx status).   For example, the MolDX article for test coverage is here.

Under the NCD, patients with breast, lung, colon, or melanoma have access to MSI testing under the Foundation Medicine test, since the test has one approved gene in each cancer, even though MSI is a supplemental report, not a CDx test.   

Using deaths from cancer as a proxy for advanced cancer, I assumed for sketch purposes that half of cancer deaths were in the Medicare population.  This yields the numbers shown below, assuming the Foundation CDx test is paid at $2900 (81455) and the MSI PCR test (CLIA) at $356.    

64,215 patients with advanced lung, breast, colorectal cancer or melanoma could get the FMI test for MSI, at $186M.   (Had they got the PCR test 81301 for MSI, which CMS also covers, $22.8M).   

More interesting is the other cancers - endometrial, renal, liver, etc.   Here, about 71,470 Medicare patients could get either the FMI or IMPACT tests, at $2900 each, for $207M.   Each patient would cost perhaps $10,000 in CED, for an additional $714.7M, totalling $921.9M.   (Had these 71,470 patients had PCR MSI testing and no CED, costs would be $25.4M.)   

click to enlarge
Before the NCD, total cost of testing of all patients would be $48M under CPT 81301 PCR.   With the NCD, total cost of testing (and CED) is $1.1B, with about $400M being cost of testing for MSI.  

How Much Does CED Cost?  Who pays?

The CED required in the NCD is pretty elaborate, such as RECIST imaging for objective response (OR) and progression free survival (PFS), the latter of which could go on for a year or more.   In addition, I'm assuming that it's not rigorous PFS without monthly imaging.  The imaging would not be required for clinical care, so it would not be covered by the Clinical Trials NCD.   So let's say it is $10,000 per year. 
No regular lab could afford that (based on $2900 test payments). 
Wealthy Centers??
Maybe wealthy medical centers could fund the CED, for a limited number of select patients. 
Since much of the cost is imaging, it could be coded as imaging and billed to patients under an ABN as "medically unnecessary services," but few patients could pay the cost. 
I am not an attorney, but it seems like CMS might be able to cover the imaging costs under CED - the whole point of CED under SSA 1862(1)(e) is to cover non medically necessary costs incurred as expenses in health research.  However, so far CED has only been used when the service under CED is "the" medical therapy, and RECIST imaging is not "the" medical therapy under CED research.  However, it is an expense incurred in health research.  But if the imaging was coded with a modifier and paid by CMS, it would probably still trigger copayments.

Medicare Advantage
Rarely, NCDs trigger an exceptions clause in Medicare Advantage plans, which result in the service being billed to Part B even for Medicare Advantage patients.  It's hard to estimate utilization under the NCD (maximal cases are shown in the Excel above), but this NCD might trigger the exceptional expenses clause. 

Monday, December 11, 2017

Very Brief Blog: LInk to December 11, 2017 ACLA lawsuit against CMS over PAMA (33p)

ACLA sued CMS over PAMA rules and changes in the lab fee schedule.   A link to the PDF lawsuit is here.

The corresponding press article at Reuters is here.   The ACLA press release is here.  (Concurrently, AMA released an article that PAMA will be very adverse to physician office lab testing, here.)

The case has been written by Mark Polston of King & Spalding LLP in Washington.

Congress required CMS to collect private payment payer rates from laboratories which receive "the majority of its revenues under the Medicare program from the CLFS or the PFS."  CMS also interpreted that it had authority to set rational size limits for reporting laboratories (e.g. excluding a physician office lab that reporting 25 urinalysis to CMS a year).

Reverse Engineering CMS's Position, Unpleasant Though It Seems

To my eye as a layman, much of ACLA's argument is convincing.   I do not entirely understand, however, how CMS would have or could have calculated "majority of revenues of a laboratory" for labs that are fully embedded inside a hospital and thus have balance sheets and revenues merged with the hospital, especially for Part A.  For example, Congress could easily have said, any entity billing CMS for more than $12,500 of CLFS services must report its private payer lab payments.   By inserting the rule about "majority of revenues" Congress left a zone of accounting quicksand for anyone trying to determine the percentage of revenues of an embedded, hospital lab under the hospital NPI and hospital TIN.  And almost all hospital labs are embedded this way; they were fiscally embedded and merged under the hospital NPI and TIN before CMS faced the problem in the PAMA rules.

CMS bundles the payments for all DRG inpatients and the vast majority of the lab test payments or allocated budget for hospital outpatients as well.   So none of those CMS payments are from "CLFS or PFS."   CMS probably felt that figuring out the "majority of payments rule" for a lab administratively embedded within a hospital would be very difficult (some mix of CMS payments - completely unspecified and unpriced - for inpatients and outpatients, and then also, CLFS or PFS revenue for reference lab activities.)   Perhaps throwing out the baby with the bathwater, CMS ruled that applicable reporting labs had to be those that were, already, receiving or reporting all CMS payments under their own NPI.   This left a set of ... almost nobody.    However, it's easy for CMS to say exactly what proportion of payments such labs get from CLFS if it's based on an NPI: CMS can just look up its own computer NPI records.  (Actually, it might not be that easy, because the lab might have its own NPI, bill CMS for reference lab tests, yet the "same lab" also get some revenue from a hospital cost center through internal financial transfers for running some tests on inpatients, AKA Medicare origin revenue). 

ACLA Discovers Hidden Tab

A treat for close readers of the lawsuit will be a couple references to a "HIDDEN TAB" in the public CMS spreadsheet.  (!).   At least in early versions of the public spreadsheet, of final PAMA values, you can click on Cells, Visibility, Unhide Sheets, and a sheet or tab pops up called "Hidden Data."  I don't understand the data, but it has to do with full data versus data with "No Labcorp/Quest."

Secret Tab!   Click Cells, Visiblity, Unhide Sheet

Very Brief Blog: Trade Journals on 2017 Changes in 14 Day Rule

Two trade journals have discussed the CMS 14 Day Rule scheduled to become effective on 1/1/2018.

There was a story in the recently created web news agency AXIOS, here.  It actually appeared in mid July 2017.   Note this Axios article links to a 16p cloud deck used in May to successfully explain the problem to CMS.

The news website DARK DAILY follow up with an extension of the storyline, on December 11, here.

image as seen in DARK DAILY article (see link in text)
I believe there is at least one major error in the TEXT of the rulemaking, which I discussed in a prior blog.   The new regulation and the basic concept of the rulemaking is to have Medicare "molecular pathology tests" - which they have been defining in practice for several years as human DNA RNA tests - be billable by the "performing lab," whether that be the hospital or an outside lab.   However, the body of the rulemaking discussion says that this change in billing excludes "genomic sequencing procedures" which makes no sense, and excludes PLA codes, which of course may be genomic sequencing procedures, tests of human DNA, and so on.   I  try to tell the story in a 4 slide online deck PDF, here, and the summary or finale slide is this:


For nerds, I discuss the communications methods used in the CMS deck obtained via AXIOS, here.

Sunday, December 10, 2017

CMS Code Edits for CY2018 Block Use of BRCA Code 81211 At Same Time as BRCA Code 81213

See my earlier October 2017 article here

Each quarter, CMS updates its "Correct Coding Initiative" edits, typically with a larger update for each new calendar year.

CMS has released its Procedure to Procedure Edits for lab codes for CY2018, available at the CMS CCI website, here.

  • CMS has changed the edits to block joint use of BRCA Sequencing (81211) and the add-on or stacked code 81213 (BRCA dup del analysis).   CMS has altered the rationale to "HCPCS/CPT procedure code definition."   
  • I believe the underlying rationale has to be that if you do BOTH, BRCA sequencing and BRCA full dup-del analysis, they are replaced by the comprehensive AMA CPT code 81162, which is for full BRCA sequencing with full Dup Del analysis as one code.   

This has important fiscal implications for CMS, because under PAMA, the price for the code stack (81211+81213) rises (to about $2900 total) but the price for 81162 as a comprehensive code falls steadily.

81162 will pay $2253 in 2018, and $2018 in 2019, and $1825 in 2020.

Fiscal Impact for CMS

For example, at 20,000 BRCA cases per year, for CY2020 CMS would have paid $58M at the code stack rate; but only $36M at the comprehensive code rate, an instant savings of $21M.  Private insurers may follow CMS edits like this, but are not required to.

Screen shot from the 2018 CMS edit instruction:

click to enlarge
Manual for 2018 Available

The CMS CCI staff also released a manual of instructions (in PDF text form) in December, available online here.  See the link at bottom of the CMS webpage for NCCI Policy Manual (zip file of PDF chanters).

The "1" modifier in the table means that the edit can, or could, be overridden, but CMS manual instructions state only to allow that in uncommon circumstances where a special circumstance is justified by review of the medical record.

Note that CPT code 81432 (BRCA panel sequencing) is NOT blocked against 81433 (BRCA panel Dup Del) because there is no single code that represents the services 81432+81433.  

Friday, December 8, 2017

The Foundation Medicine NGS NCD: Did CMS Accidentally Roll Over Leukemia and Liquid Biopsy?

On November 30, 2017, CMS released a detailed and complex NCD that originated in a Parallel Review assessment of the newly FDA approved Foundation Medicine CDX test based on paraffin block analysis in solid tumors (here).

The NCD, which is under comment until December 29, provides coverage for PMA-approved NGS tests as long as they are used in a patient with an on-label cancer for that test.  It covers the Foundation One PMA CDx test, as well as other PMA-approved NGS tests like the Thermo Fisher OncoMine Target Dx tests.  Tests are defined as covered now and on a rolling basis in the future.

However, the NCD states that it governs use of testing in all advanced cancers when NGS testing is used.   The NCD doesn't mention differences between solid tumors paraffin based tests and liquid biopsy based tests, and it doesn't call out any differences for tests in hematopoeitic cancers (leukemia/lymphoma.)  The NCD would have unexpected results for patients needing a liquid biopsy test under NCCN guidelines, for all patients who have leukemias or lymphomas, and for all Medicare patients with have cancers outside the top 4 or 5 like lung and colon.  (Medicare Advantage patients could get medically necessary tests in these categories, but no available coverage would be possible for patients in Traditional Medicare.)  The NCD works differently for each group, as presented below.


Here is an overview of the landscape.  (FIGURE 1).   Working from the bottom of the chart upwards, there are solid cancers, and hematopoeitic cancers.   Solid tumors can be assessed with paraffin block tissue; or NCCN recommends oncologist consider liquid biopsy when solid tissue isn't available.   Testing has progressed from single gene tests (e.g. BCR ABL alone) to multiple gene separate tests to gene panel tests.   NCCN guidelines cover all of this, and there are pretty tightly written LCDs.   Overall usage of gene panel codes is not high, about 1000-3000 uses for codes 81445, 81450, 81455 in Medicare data for 2016.  This indicates that LCD controls are tight.  As FIGURE 1 shows, in the upper left, the chart culminates in 2017 with the FDA approval for several paraffin block based, solid tumor NGS tests.

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AFTER the FDA had issued PMAs for several paraffin block test, and in coordination with the FDA, CMS created the NCD, as shown in FIGURE 2.

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So far so good.

The tricky part is, CMS waited until there were several paraffin NGS panel tests on the market before releasing the NCD.   But the NCD provides coverage ONLY for PMA approved tests, and the FDA' library of PMA-approved tests is currently very incomplete compared to the wide range of major human cancers.   Over half of cancers have no PMA approved CDx, immediately shunting hundreds of thousands of patients into complex and very costly "CED" immediately, on the day the NCD is finalized.


Yikes.  There aren't yet any PMA approved NGS panel tests for hematopoietic tumors, or for liquid biopsy in refractory scenarios in solid tumors, or for over half of the incident U.S. cancers (pancreatic, leukemia, lymphoma, kidney, etc).  So we get FIGURE 3:

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The text of the NCD provides de facto coverage only for paraffin tumor block NGS tests used in a small number of solid tumors (far left column of Figure 3), because these are the only type of PMA tests approved by FDA so far

Wait, what about the CED coverage in the NCD?   

CMS provides back-up coverage by allowing Coverage with Evidence Development (CED) clinical trials for gene panel tests, if they have NYS and FDA 510(k) clearance.  But there are still two big problems, big enough to make this channel essentially impossible.

Problem 1:  Many gene panel tests are NYS approved, but FDA hasn't even created a 510(k) pathway for leukemia, or lymphoma, or liquid biopsy tests.  Nor has FDA approved any tests in these several broad categories.  That's a pretty big problem.  These are the entry points for the CED channel, and they're not even opened yet. 

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In the preceding pie chart, I estimated incidence of advance cancers based on NCI death rates; mapped the cancers with at least one PMA NGS CDx gene (green); categorized other solid tumors as CED (red); allow about 5% for solid tumor liquid biopsy per guidelines (pink); and separately show the population for leukemia/lymphoma (maroon).   The total pie chart in the US represents 450,000 advanced cancers (deaths); as a rule of thumb you could estimate 1/2 of that is the Medicare, >65 population.  So far circa 100,000 Medicare patients, the NCD covers the $3000 NGS test; for the rest of the circa 100,000 patients, it would cover the $3000 FMI NGS test off label but require ?$10,000 or $20,000 of CED as well.  If it was all paid for, it would be 100,000 PMA NGS patients for $300M (green slice), and circa 100,000 off label CED patients at a similar $300M for testing and perhaps 100,000 x $10,000 or $1B for CED.

Problem 2:  In addition, in all practical terms, CED trials for 510(k) gene panels tests and off label PMA tests will be impossible as proposed.

The most severe issue is that the CED requires RECIST testing (special whole body imaging tests, typically conducted monthly) in order to have accurate ORR and PFS data.  This could mean monthly, $1000 scans surveillance imaging (MRI or CT) - $12,000 in the first year.  Obviously, a lab can't spend $10,000-20,000 on CED research in return for the patient's Medicare payment of $600-$2900 test.  It's a non starter.[*]   This concern - that CED is impossibly costly - also applies directly to all the Medicare cancer patients who are unlucky enough to have each and all of the many solid tumors that aren't approved at the PMA level on Foundation's test.
Cost of Proposed CED?  I peg the cost of the CED section of the NCD at two billion dollars. NCI lists about 450,000 patients dying each year of the 13 major cancers.  Of these, about 250,000 have NGS CDx tests (lung, colon, etc).  About 200,000 do not.   If half of these advanced cancer patients are Medicare patients, it's 100,000.  If the CED with monthly RECIST studies costs $20,000 per year, the cost of the CED research would be  $2B annually.   See my table based on NCI data, here.  
An additional problem, for Medicare patients with leukemia, is that the CED is written to require mandatory RECIST testing, which is impossible for these patients.  Dr. Gottlieb of the FDA strongly supported the NCD in testimony on the Hill on December 7; but today if he was a Medicare patient and had a relapse of his lymphoma or a recurrence as leukemia, he couldn't get any genomic testing.  So either CMS envisions no genetic testing in leukemias, or, would have to admit to substantially mis-writing the basic scope of the NCD and/or major high level requirements of the CED, despite the NCD being the result of a 2-year process.

CMS should defer imposing either [non coverage or $20,000 CED registries] on cancer patients before there are at least several PMA approved test for that patient's category of cancer.  

Issues of quality are over-rated in the NCD.   Recall that FDA now equates NYS approval with FDA clearance and clinical use of tests (e.g. the MSKCC IMPACT test was cleared in this new pathway).  And tests like Foundation One are essentially the same before and after the FDA approval.  And all cancer patients in Europe, Canada, Japan, Australia are getting NGS testing without FDA PMA approval.   And the FDA has regularly approved major on-label drugs on a rolling basis (based on KRAS, ROS1, MSI testing) ahead of the existence of any PMA approved test, suggesting the FDA isn't as concerned as CMS is.  Concern about test quality has a place, but doesn't need to be directed against presently NYS and CAP approved tests that are in NCCN guidelines and are in pipelines for FDA approval.  (CMS also seems to conflate the medical necessity of gene-drug pairs that have been FDA endorsed, like ALK-Xalkori, with the function of analytically accurate tests for the same gene).  For broad categories of patients that have no PMA-approved gene panel test, in the short term, over the couple of years, LCD coverage has already proved to be stringent and frugal and it will be enough to control overuse.

Note on Process.  NCD clearly directly only to solid tumors in its body.  CMS didn't justify "non coverage" in these additional cancer areas (shown in red).  CMS studied the NGS literature in paraffin tissue from solid tumors, using Pubmed search keywords like "lung cancer" or "melanoma" (not leukemia or lymphoma) and assisted by Foundation Medicine publications on its paraffin based test use in solid cancers.

Also, as mentioned above, CMS demands that all patients in CED must have RECIST studies, which makes no sense in leukemia patients, and suggests the NCD authors were not actually thinking of applying the NCD to leukemia/lymphoma.  This implies that CMS may have miswritten the legal scope of the NCD (all cancers) relative to the available body of facts and research inside it (some cancers).

Another Note on Process.  NCD predicated on today's 510(k) & PMA terminology, while FDA is racing ahead to other concepts.  The NCD is based on the current 510(k) and PMA processes.  These have been changing substantially; for years, FDA refused to give 510(k) approval based on accuracy of genetic testing in CDx tests, and then it opened the 510(k) pathway in cancer for analytically accurate tests with NYS approval in November.   The FDA is also opening up important non-PMA, non-510(k) pathways for germline human genetic tests, such as for hereditary recessive genes, an enormous change in policy based  fundamentally on the accuracy of modern NGS testing and sequencing (82 Fed Reg 51560, 51563, 51567, links here).  The NCD doesn't contemplate these recent FDA publications.  In addition, if Congress passed a new diagnostics law, it would create terminology and approval categories other than PMA and 510(k) for diagnostics, which the NCD doesn't contemplate.

A final note on Access and Process.   CED Channel is Burdensome, but FDA itself approves drugs ahead of their CDx tests. Sometimes by a couple years.   The NCD has only a VERY burdensome CED channel, and it's available only to 510(k) or PMA approved tests, but is triggered whenever a cancer is off label (e.g. outside the top 4 cancers).  However, on a regular basis, FDA has released drug approvals ahead of any PMA test.  For example, there was approval for use of KRAS testing a full couple years before a PMA KRAS drug.  There was approval for ROS1 drugs long before  a PMA ROS1 test (the Oncomine test in June 2017).   There is currently approval, right now, for MSI based drug use for Keytruda, but no PMA test.  (MSI is in the FMI test, but it's not PMA CDx).  All of these categories of gene-drug get shunted into burdensome or impossible CED if and when the FDA drug approval precedes the PMA test approval by a year or two.   Another example of problems in this category would be the discovery of important genes that act on the effectiveness of generic drugs, or limit the optimal population for an existing drug.  These aren't going to be funded and researched by wealthy biopharmas and will never reach on-label PMA gene tests, no matter how strong the evidence and how wide the use.   No one is going to spend $50M out of their pocket getting FDA PMA approval for a generic gene on a generic drug.

[*] Technically, CMS can cover $20,000 in RECIST research costs or other costs implied by the rigorous CED.  Congress gives CMS carte blanche to cover costs related to research that furthers any purposes of AHRQ (which is to study and improve the health of the US population).  If it's $20,000 per CED cancer patient x 100,000 patients, that's $2 billion.  I don't believe CMS has ever attempted to cover research costs in CED rather than only medical costs, but CMS can pay for costs that are not medically necessary but are necessary for AHRQ research.

AMA Has Pre-Posted Lab Codes for Feb CPT Meeting; Will Post All Codes Posted December 8 for Comment

AMA  posts a universal calendar of key dates for upcoming CPT meetings (here).  For the February 8-10, 2018, meeting, all code titles will be posted on December 8 for a brief public comment period.

Look for "next-meeting-specific" PDFs and links, posted and updated by AMA on a rolling basis, here.

In addition, the Pathology application titles are posted even earlier, December 1.  These have an early comment period til December 8, I believe to facilitate December subcommittee meetings for lab codes.   Here.   However, I believe that despite this early December 1-8 cycle, the Path Codes are also included in the universal comment cycle that begins when all codes are posted together for comment on December 8.

The lab specific early posting (which may get updated)  calendars tabs 13-21 for lab codes.   These include (13) BRCA coding, (14) NUDT15 tier 1 gene, (15) SMN1-SMN2 set of 3 codes, (16) TERT Tier 1 gene for glioblastoma, (17) Tier 1 status for over a dozen triple repeat disorders being moved from Tier 2 to Tier 1, (18) a MAAA for bladder cancer recurrence, (19) a MAAA for bladder cancer risk, (20) a MAAA for thyroid cancer risk, (21) finally a dyhydrotestorerone chemistry test described as "reinstate code 82651."

The purpose of posting agendas and code titles is to allow public stakeholders to request copies of the CPT applications and submit comments.  However, the comment periods are short.

Thursday, December 7, 2017

Very Brief Blog: Speaking at MEDCITY / INVEST2018 (May 1, Chicago)

Agenda just posted for the MEDCITY - INVEST2018 conference in Chicago, May 1-2.

Overview of the conference in a MedCityNews article here.  Agenda for the conference here.   Clip of my session title and agenda, below.

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Show me the Money: How Investors Are Seeking Robust Reimbursement

A well-thought out regulatory pathway alone cannot win venture capital dollars. More and more, VCs are requiring entrepreneurs articulate the business model and reimbursement plan for their novel idea. Hear from experts about how startups need to develop their health economics chops.

Bruce Quinn, M.D., Ph.D., 
Principal, Bruce Quinn Associates LLC, 
Senior Strategic Advisor, Faegre Baker Daniels

FDA issues Major New Digital Guidances, Like Clinical Decision Support

On December 7, 2017, FDA issued three new guidances on digital health topics.

The guidances include two in draft, one final, and follow naturally from recent initiatives such as the "Digital Health Innovation Action Plan" *8pp) of the FDA.   Guidances today include:
  • Clinical and Patient Decision Support Software (draft)
  • Policy Changes per 21st Century Cures Act (draft)
  • Software as a Medical Device (final)
For full information and links, see the FDA's heavily hotlinked press announcement, here.  I've also put the 3 guidances and the Innovation Action Plan in one open acess cloud zip file, here.

Coverage at Fierce Healthcare, here. RAPS here.

The FDA has also announced a two day workshop (January 30-31, 2018) on its software precertification program.  Note that, Dr. Gottlieb has previously flagged the precertification program may be increasingly applicable to diagnostics at some future point.

Extra credit assignment; See Bradley Merrill Thompson's detailed multi page (web) essay on CDS history at FDA, here.  Although undated, I believe from internal references it may cover until 2012, e.g. "there will be changes in 2012."  It's a reminder that the issues in play in today's guidances have percolated many years.

See also links about the recently formed "Digital Therapeutic Alliance," here.

Wednesday, December 6, 2017

Very Brief Blog: Old School Lab Fraud: Strip clubs and bags of cash in NJ

A few years ago, I was talking to a senior lab industry colleague about trends in Medicare fraud.  Old school, I said, was giving the physician a brown paper bag full of $50 bills.   New school, was having the physician enrolled as a "consultant" for a "registry" and giving him $200 per head or some other figure.  (See 2014 OIG bulletin here).    My colleague said, "Well, there's still plenty of the Old School approach, in New Jersey."  Total earnings of the lab were >$100M during its run.

For a colorful article on the colorful and seamy side of the clinical chemistry business, see a December 5, 2017 article in New Jersey Dot Com, here.  (Medicare payments to the lab were only $2.1M in 2015, available via here; but that's 2 years after initial arrests made in 2013; BCBS cases against the lab dated to 2009).

Tuesday, December 5, 2017

Brief Blog: MOLDX Statement of Work (Jurisdiction M, 2014)

In the past month two different people have asked me about the MOLDX statement of work.  It's online at a federal RFP website, and I've clipped it here on my documentation blog.

Features of the SOW include:
  • pricing of tests not priced on the CLFS, 
  • maintaining a test code registry (e.g. Z codes), and 
  • providing standard formats for evidence and conducting systematic evidence review.   
  • MolDX is also to advise CMS on new national edits.  
  • There's an interesting section that very clearly authorizes "coverage with evidence development" or "coverage with data development," although LCDs from MOLDX do not currently use that. 
MOLDX has some policies which don't trace as easily to the SOW, which I discussed here.  These included (1) altering prices of codes that do have CLFS prices, (2) not using CMS CPT codes for two or more tests, because they become "panels," and (3) employing local edits (such as blocking payment of 81433 when 81432 is used) that have not been migrated to "national" edits in the public CCI system.  Update:  Around December 1, they stopped using Mod 22 to up-price certain codes already priced on the CLFS.

Monday, December 4, 2017

Very Brief Blog: Silicon Valley Bank "Diagnostics and Tools," November 2017

In mid-November, Silicon Valley Bank issued a 22 page report specific to "Diagnostics and Tools," subtitled, "NGS and AI drive Moonshot Investments." 

The SVB home page for the report is here; the PDF is online here.

A few weeks ago, we highlighted their more general mid-year 2017 report on health investment trends (here).

Friday, December 1, 2017

Very Brief Blog: Harry Glorikian Releases New Book on Data Driven Healthcare with Coauthor Malorye Alyson Branca

Harry Glorikan, a well-known consultant and expert on the diagnostics and biopharma industries, has released a new book titled, "MONEYBALL MEDICINE: Thriving in the New Data-Driven Healthcare Market," coauthored with  Malorye Alison Branca

In 2016, Glorikian published, "Commercializing Novel IVDs: Comprehensive Manual for Success," here.   See also his December 2017 article on risk based regulation of diagnostics, here.

The book already sold out its first printing on Amazon; but ebooks currently are available.  See the Amazon website here.

From the Amazon summary:

MoneyBall Medicine: Thriving in the New Data-Driven Healthcare Market, which includes interviews with dozens of healthcare leaders, describes the business challenges and opportunities arising for those working in one of the most vibrant sectors of the world’s economy. Doctors, hospital administrators, health information technology directors, and entrepreneurs need to adapt to the changes effecting healthcare today in order to succeed in the new, cost-conscious and value-based environment of the future. The authors map out many of the changes taking place, describe how they are impacting everyone from patients to researchers to insurers, and outline some predictions for the healthcare industry in the years to come.

Two other books on related topics in the recent weeks include FOURTH WAVE: DIGITAL HEALTH by Paul Sonnier (here), and REALIZING THE PROMISE OF PRECISION MEDICINE: Patient Data, Mobile Technology, Consumer Engagement, by Paul Cerrato and John Halamka (here).