Friday, March 12, 2021

Very Brief Blog; MOLDX Publishes Article Defining "Algorithm" Valuation in Lab Tests

CMS releases new local contractor policies and articles on Thursday, and yesterday, MolDx released an article with the concise title, "Algorithm Definition."  It's logged as CMS article A58650.

Find the link here:

I've cut-pasted the article in full within this blog.  It has effective date, 3/11/2021.

Other Definitions of Algorithm

CMS also defines algorithm for a lab test by law at 42 CFR 414.502, but it's beyond my scope to assess if there's a meaningful difference between 414.502 and A58650.  I've clipped the 414.502 definition at bottom.

AMA defines algorithm in the CPT code booking regarding MAAA tests - I've also clipped this at bottom.

International Group - Polygenic Risk Scores

In related news, The Clinical Genomics Resource Complex Disease Working Group has published a paper in Nature on defining polygenic risk scores.  Nature here, Genomeweb here.

Palmetto MolDx Article Text:

This contractor defines an algorithm, as a distinct component of clinical laboratory processes, as follows:

An algorithm may be considered a clinically valuable and independent component of a laboratory process when ALL the following conditions are met:

  • It is an unambiguous problem-solving operation that includes deploying a set of rules or calculations requiring computer processing;
  • The test result (or a component of the result) is the calculated output of this process, and not an intermediary process;
  • The same or similar test result could not be obtained without the use of this process;
  • The input for the computation is derived from biological samples using analytical processes, and must include data from the sample submitted for the test;
  • The process must:

Either be required for the analytical result, OR

If adjunct to the analytical result as a post-analytical process, the calculation itself must be independently found to be reasonable and necessary apart from the other components of the test.

Examples. [Note that examples 2,3,4 are of "non-algorithms".]

  1. A gene expression profile test wherein sequencing data must be compared in a calculation to an existing and validated set of profiles to bin it in one of several possible risk stratification groups would require the use of an algorithm as defined above.
  2. A next generation sequencing (NGS) test that uses computation to identify variants in a sample is not considered as using an algorithm in this context. The calculation in this scenario is seen as an intermediary process.
  3. Calculations using only clinical information not derived from analytical services on biological samples are not considered algorithms in this context. Examples would include using the clinical information from the patient in a calculation to assess their risk stratification or using a similar process to identify relevant clinical annotations derived from literature as associations with sequencing variants.
  4. A test that inputs resultant analytical processes that are reasonable and necessary (such as gene variants or protein markers) that are post processed by computation, but wherein that subsequent computation is not independently established as reasonable and necessary above and beyond the other lab components, shall not be considered an algorithm as a valid component of a laboratory test.


Other sources with definitions of algorithims include (A) Medicare statute, (B) Medicare regulations, and (C) AMA CPT.

(A) Statute Definition

SSA 1834A

  • The statute states only that an algorithm is used and yields a single and patient-specific result.

"The test is an analysis of multiple biomarkers of DNA, RNA, or proteins combined with a unique algorithm to yield a single patient-specific result."

(B) Regulation Definition

42 CFR 414.502 (ADLT law)

  • The regulation adds a few terms such as "predicts the probability" and "will develop" and "will respond to."

Advanced diagnostic laboratory test (ADLT) means a clinical diagnostic laboratory test (CDLT) covered under Medicare Part B that is offered and furnished only by a single laboratory and not sold for use by a laboratory other than the single laboratory that designed the test or a successor owner of that laboratory, and meets one of the following criteria:
(1) The test -
   (i) Is an analysis of multiple biomarkers of deoxyribonucleic acid (DNA), ribonucleic acid (RNA), or proteins;
   (ii) When combined with an empirically derived algorithm, yields a result that predicts the probability a specific individual patient will develop a certain condition(s) or respond to a particular therapy(ies);
   (iii) Provides new clinical diagnostic information that cannot be obtained from any other test or combination of tests; and
   (iv) May include other assays.
(2) The test is cleared or approved by the Food and Drug Administration.

CMS further discusses the meaning of algorithm at 81 FR 41057ff (June 23, 2016).

That the analysis of the biomarkers 
must be ‘‘combined with a unique 
algorithm to yield a single patient- 
specific result’’ indicated to us that the 
algorithm must be empirically derived, 
and that the ultimate test result must be 
diagnostic of a certain condition, a 
prediction of the probability of an 
individual developing a certain 
condition, or the probability of an 
individual’s response to a particular 
therapy. Furthermore, the statute 
requires the result to be a single patient- 
specific one, so we proposed that the 
test must diagnose a certain condition 
for an individual, or predict the 
probability that a specific individual 
patient will develop a certain 
condition(s) or respond to a particular 

...Laboratories would have to 
submit to CMS evidence of their 
empirically derived algorithms and 
show how their test provides new 
clinical diagnostic information that 
cannot be obtained from any other test 
or combination of tests. 

...We considered the 
commenters’ suggestion to use only the 
exact statutory language and not define 
unique algorithm as we proposed to do. 
However, we do not agree with this 
approach for the following reasons. 
First, using only the exact language of 
the statute would leave the public 
without any specific guidance on how 
to interpret ‘‘unique algorithm to yield 
a single, patient-specific result,’’ and 
would leave us with no criteria by 
which to evaluate whether a test meets 
that requirement. Second, without such 
criteria, the requirement that a test have 
a ‘‘unique algorithm to yield a single, 
patient-specific result’’ would be, to 
some extent, self-determined by each 
laboratory requesting ADLT status. 
Without specific guidance, the 
laboratory seeking ADLT status would 
interpret the requirements under 
criterion A in whatever manner it chose, 
which could potentially vary depending 
on the test, and which could also vary 
from other laboratory interpretations. 
Third, if not further defined, the 
criterion could apply very broadly to 
nearly any test on the CLFS that is only 
done by one laboratory, which would be 
inconsistent with our view that ADLTs 
are innovative tests that are new and 
different from any test already on the 
market. Therefore, we believe it is 
necessary for us to interpret what it 
means for a unique algorithm to yield a 
single, patient-specific result, and to use 
that interpretation in establishing the 
requirements a test must meet to qualify 
as an ADLT. Additionally, as noted 
previously in this section, we are 
revising criterion A of the definition of 
an ADLT to include protein-only tests. 
However, we continue to have concerns 
about granting ADLT status for protein- 
only tests that are not advanced tests. To 
that end, we believe our proposed 
application of the unique algorithm 
requirement ensures that simple protein 
analyses would not be considered 
advanced tests as they are not likely to 
produce a patient-specific result that 
cannot be provided by any other test. 
For the reasons discussed previously 
in this section, we are finalizing our 
proposal for the unique algorithm, and 
will reflect it in the definition of ADLT 
under criterion A as proposed. 

PAMA final rule fact sheet

Medicare also has an ADLT application form that involves reporting and describing the algorithm, but doesn't add anything to the definition of algorithm, it just repeats the language seen above.

(C) AMA CPT Definition of Algorithm (MAAA)

"In contrast to genomic sequencing procedures and other multi-analyte assays, the assays in the [AMA CPT MAAA section] represent algorithmically combined results of analyses of multiple analytes to obtain a risk score or other value which in itself represents a new and distinct medical property of independent medical significance relative to the individual component test results in the clinical context in which the assay is performed.  ...Typically reported as a numeric score as or as probability.   MAAAs are typically unique to a single laboratory or manufacturer.