Nature Reviews publishes a flurry of articles on tumor evolution and drug resistance. Some appear in Nature Reviews Cancer, focusing on biology; others in Nature Reviews Clinical Oncology, focusing more on therapy.
An open access article by Maley et al reviews "evolutionary and ecological features" of cancers. This is an open access article that includes proposals for new terminology and standards. Here.
Dagogo-Jack and Shaw review the general topic of tumor resistance and heterogeneity, here. Rotow & Bivona review development of resistance specifically in NSCLC, here.
Along this line, see also a new paper by Blakely et al. in Nature Genetics on the complexity of EGFR and passenger mutation profiles in NSCLC; here and Genomeweb here.
Her2 Patients Should Be Subdivided
Also in the field of precision and biomarkers, Gingras et al. argue we have to get into subdivisions and precision within the class of Her2-positive cancers, here, describing the status quo as "lost in translation" and creating a plateau in patient benefit that we shouldn't accept. Nishino et al. update readers on the current state of checkpoint biomarkers (and confusion) in immuno-oncology, here.
Wednesday, November 8, 2017
$205M for Women's Molecular Diagnostics: $125M Progenity, $80M Counsyl
Within hours of each other, two molecular labs focusing on women's health raised collectively $205M.
Counsyl raised $80M (here). Progenity raised $125M (here).
In other news, on November 7, a publicly held company in germline genetics, Invitae, had a stock pop of 13% based on growing revenues (here.) Invitae announced a $73M private placement offering a couple months ago (here). Germline genetics company Ambry recently sold to Konica Minolta in a deal valued up to $1B (here).
Counsyl raised $80M (here). Progenity raised $125M (here).
In other news, on November 7, a publicly held company in germline genetics, Invitae, had a stock pop of 13% based on growing revenues (here.) Invitae announced a $73M private placement offering a couple months ago (here). Germline genetics company Ambry recently sold to Konica Minolta in a deal valued up to $1B (here).
Tuesday, November 7, 2017
FDA Announces "Pre-Certification Route" to Genetic Test Approvals for Germline Risk Tests
On November 6, 2017, FDA announced a new rout to review of "genetic health risk" germline tests.
Detailed article at MedCityNews, here. Genomeweb here. AND: The FDA's press release, here. Coverage at Sidley, including links to the FDA final orders and a concurrent comment request, here.
See recessive carrier screening downclassification order, 82 FR 51567, here. See also 82FR51560, here, and a Request for Comment on downclassification processes, 84FR51633, here. (Comment due by 1/8/2017). I've put these in one cloud zip file, here.
Update 6/5/2018: See also final downclassification order, June 5, 2018, here. This specifically closes out 84FR51633, as cited above.
Flagged Online at FDA on September 26
Gottlieb actually flagged this Pre-Cert approach clearly in late September, but few picked up on it. See my blog entry on September 26, here. In a speech at Advamed, which was reported by MedCityNews and others at the time, Gottlieb said that "we need some legislation" on LDTs.
However, if you dug around on the FDA website at the time, you could see the "official prepared remarks" -- which were a little different from the actual speech. Here's what we found at the time.
In the "official prepared remarks," online at FDA.gov, Gottlieb had a script for talking about the newly released "pre cert" process for digital health software, and was to have remarked verbally that this would be a "basis for a modern legislative approach" to LDTs. However, this sentence didn't appear to occur in his verbal remarks from the Advamed podium.
For an FDA press release on the Digital Health Software Pre Certification Program, see here. The FDA will hold a January 30-31, 2018 conference on Precertification (here).
FDA's Key Text Released November 6
Returning to the new genetic health risk (GHR) framework, here's a quote from the new FDA press release:
These Important Wheels Starting Turning in February 2015
Note that this process builds on groundbreaking approaches to genetic test policy created for 23andMe a couple years ago. We described this as a sea-change in the FDA's approach to molecular approvals in a deep dive essay back in February 2015.
Detailed article at MedCityNews, here. Genomeweb here. AND: The FDA's press release, here. Coverage at Sidley, including links to the FDA final orders and a concurrent comment request, here.
See recessive carrier screening downclassification order, 82 FR 51567, here. See also 82FR51560, here, and a Request for Comment on downclassification processes, 84FR51633, here. (Comment due by 1/8/2017). I've put these in one cloud zip file, here.
Update 6/5/2018: See also final downclassification order, June 5, 2018, here. This specifically closes out 84FR51633, as cited above.
Flagged Online at FDA on September 26
Gottlieb actually flagged this Pre-Cert approach clearly in late September, but few picked up on it. See my blog entry on September 26, here. In a speech at Advamed, which was reported by MedCityNews and others at the time, Gottlieb said that "we need some legislation" on LDTs.
However, if you dug around on the FDA website at the time, you could see the "official prepared remarks" -- which were a little different from the actual speech. Here's what we found at the time.
In the "official prepared remarks," online at FDA.gov, Gottlieb had a script for talking about the newly released "pre cert" process for digital health software, and was to have remarked verbally that this would be a "basis for a modern legislative approach" to LDTs. However, this sentence didn't appear to occur in his verbal remarks from the Advamed podium.
For an FDA press release on the Digital Health Software Pre Certification Program, see here. The FDA will hold a January 30-31, 2018 conference on Precertification (here).
FDA's Key Text Released November 6
Returning to the new genetic health risk (GHR) framework, here's a quote from the new FDA press release:
Today, the FDA is taking steps to implement a novel regulatory approach for the regulation of GHR tests that applies proper oversight in a flexible, new way. It builds on the important lessons we learned from the FDA’s authorization of the first GHR and carrier screening tests sold directly to consumers. Specifically, today the agency issued a notice of its intent to allow GHR tests to be exempted from premarket review under certain conditions. If and when finalized, manufacturers of these types of tests would have to come to FDA for a one-time review to ensure that they meet the FDA’s requirements, after which they may enter the market with new GHR tests without further review. The agency also established special controls for these tests in a separate de novo classification order, which outline requirements for assuring the tests’ accuracy, reliability and clinical relevance and describe the type of studies and data required to demonstrate performance of certain types of genetic tests. This approach is similar to the proposed firm-based, pre-certification model that we developed for digital health technologies.
These Important Wheels Starting Turning in February 2015
Note that this process builds on groundbreaking approaches to genetic test policy created for 23andMe a couple years ago. We described this as a sea-change in the FDA's approach to molecular approvals in a deep dive essay back in February 2015.
Labs Could Get More Money Under PAMA Law Than They Lose !!
This is a sexier title for the prior article. In famous scene from the movie and musical "The Producers," the accountant says, "Under the right circumstances, you can make more from a flop than a hit."
Labs lose several hundred million dollars under PAMA price cuts. But ACLA has argued that PAMA overrides a panel pricing policy for clinical chemistry tests. These panels are a big deal, logging $710M in payments in CY2016. The arcane panel price rules cost industry about $45M in CY2016 relative to a la carte analyte prices, and they would recover this money immediately under PAMA if panel prices rules stop in 2018.
But wait, there's more. If there was any rise in the delivery and billing of the newly and colossally profitable N-1 panels paid at a la carte prices, CMS could pay out "billions" more, depending on the frequency of ordering N-1 Panels. For example, Panel 80053 pays $13 under PAMA 2018, with 15 analytes; but any 14 analytes pay about $75. 32M tests at $13 are around $500M but 32M tests at $75 are about $2.5 billion.
See the prior article for charts and details, here.
Labs lose several hundred million dollars under PAMA price cuts. But ACLA has argued that PAMA overrides a panel pricing policy for clinical chemistry tests. These panels are a big deal, logging $710M in payments in CY2016. The arcane panel price rules cost industry about $45M in CY2016 relative to a la carte analyte prices, and they would recover this money immediately under PAMA if panel prices rules stop in 2018.
But wait, there's more. If there was any rise in the delivery and billing of the newly and colossally profitable N-1 panels paid at a la carte prices, CMS could pay out "billions" more, depending on the frequency of ordering N-1 Panels. For example, Panel 80053 pays $13 under PAMA 2018, with 15 analytes; but any 14 analytes pay about $75. 32M tests at $13 are around $500M but 32M tests at $75 are about $2.5 billion.
See the prior article for charts and details, here.
2016 CMS Savings Under Chemistry Panel Pricing Rule; Strategic Impact in 2018
In 2016 and 2017, at the summer Clinical Laboratory Fee Schedule meetings, CMS discussed the impact of pending PAMA pricing law on its use of special "panel pricing policy" in clinical chemistry. CMS has manualized policy (not statute or regulation) that caps the prices of analytes at no more than the price of a corresponding panel. For example, if a 10-analyte panel is $20, and each analyte is individually $8, and you order 9 analytes, you might hope to be paid 9x$8 or $72, but CMS has special calculations that will cap your price at less the $20. The CMS rules are complex, but that's enough to understand this article.
In August 2016, NILA and ACLA argued that CMS must discontinue panel pricing rules if and when PAMA sets the laboratory fee schedule in January 2018. Rather, CMS must pay each code at the PAMA price. While it may take courts and lawyers to decide, I think ACLA has a pretty good argument.
How much would this cost CMS? I think there are two answers, one is calculable and one could only be guessed at. We used 2016 utilization data, released recently by CMS.
In 2016, CMS spent $709,291,438 on clinical chemistry panels. The vast majority of this was for codes 80053 (comprehensive metabolic panel) and 80061 (lipid panel), which totaled 85% of all panel spending at $604,854,656.
Exactly Calculable Savings from Panel Rule
CMS spent $43,026,852 on payments for the 24 analytes in 2016. However, if they had been paid at their fee schedule rates, payments would have been $87,262,430, about twice as much. Cash savings appear to be $44,235,578 per year for the panel policy. [FN *]
But Don't Miss The Impossible to Exactly Predict Impact
The above savings are in the existing panel pricing system, where labs have no incentive at all to submit claims for, say, 9 analytes on a panel of 10. However, if the panel pricing rule vanished like a Penn & Teller trick (the PAMA Panel Vanishing Act), then labs would have a lot of incentive to submit analytes that don't match a panel definition and price. For example, now, if you drop one code from a $20 panel, you get (say) $18. Without the panel pricing rule, if you drop one code from a $20 panel, you might get $50 or more at the a la carte rate (e.g. 9*$6).
This new perverse incentive could affect anywhere from 0% to 100% of the sixty million panels tested in 2016. While it represents an absolute extreme, if 80053 with 32M uses per year now pays $13 in 2018, but any 14 analytes pay $75, the difference is huge. 32M uses x $13 is about $500M, but 32M uses of a 14 analyte panel x $75 is about $2.5B. .[FN **]
Of course, despite the new incentive to submit "N-1" panels, labs in the US wouldn't submit all the panel tests at "N-1" a la carte prices. So let's say this second effect is 10% of panels, or 10% of $700M, or about $70M. The two effects together would tally about $110M. Or more? [FN***] All this offsets a substantial part of the several hundred million dollar savings caused by the rest of PAMA.
Point of Care Too
Another example is that today, if a point of care test company makes a kit that matches an existing ten test panel, a physician office lab will get about $20 from Medicare for it. But if ACLA is correct that CMS must pay each analyte at its list price in 2018, if the device company makes an N-1 or nine-test panel, the physician might get, say, 9*$6 or $54 for that.
Excel for the above in the cloud, here.
Comparison to BRCA Panels
CMS performs roughly 25,000 BRCA tests per year. If they are all coded at the 2018 rate for BRCA1-BRCA-2 as 81162, this would be 25,000 * $2253 or $56,325,000 payments. If they were all paid at the BRCA Panel Rate (10 genes including the 2 BRCA genes), this would be 25,000 * ($838+$542) or just $34,500,000 payments, giving CMS a CY2018 savings of $21,825,000.
(If BRCA were stack-coded as 81211+81213 that cost would be 25,000 * ($2396+$553) or $73,725,000 payments, so the savings under the panel code policy would rise to $39,225,000. Recall from above that savings from the whole national panel chemistry pricing policy in 2016 were $44,235,578. (If the new Secretary of Health would use either type of savings, he could pay for an extra $400,000 of charter jet flights every 3.6 days and it would be revenue-neutral.)
PAMA and MAC data for 2016 show that BRCA testing was: variably billed as 81211, or as 81211+81213, or as 81162, or sometimes 81432+81433, but other times 81432, the latter probably only under a MolDx policy that "prohibits payment for dup del analysis unless only it is dup del payment for 81213 on top of 81211"). CMS 2016 billing patterns used the full spectrum of somewhat ambiguous current CPT coding choices:
Policy Note
If ACLA is correct that lab tests must be paid at literal fee schedule prices under PAMA law in 2018, it could affect several MolDX local policies that variably act to upgrade and downgrade payments from fee schedule rates (here).
___
[FN *] Actual direct cash savings might be a bit less because some states pay a bit less than the fee schedule normal price. However, I believe this is a small effect on a few codes in a few states, whereas the total affect is 50% over all codes and all states.
[FN **] Relative to 2016 fee schedule prices, in 2018, both panel and a la carte prices will typically drop 10%, but again, this is not a main driver of the large effect I'm discussing. Note that 2018 utilization could probably be 10% higher than 2016 utilization. I've used 2016 prices throughout the clinical chemistry section of this blog.
[FN ***] Hundred million dollar values aren't without precedent at all. Recall that in 2014, CYP genetic testing shot up to $270M before being fought back down to only $25M in 2016. CMS doesn't detect unprotected vulnerabilities quickly. It has no current defenses against N-1 testing, because until December 31, they've paid 10% less, not 300% more.
In August 2016, NILA and ACLA argued that CMS must discontinue panel pricing rules if and when PAMA sets the laboratory fee schedule in January 2018. Rather, CMS must pay each code at the PAMA price. While it may take courts and lawyers to decide, I think ACLA has a pretty good argument.
How much would this cost CMS? I think there are two answers, one is calculable and one could only be guessed at. We used 2016 utilization data, released recently by CMS.
In 2016, CMS spent $709,291,438 on clinical chemistry panels. The vast majority of this was for codes 80053 (comprehensive metabolic panel) and 80061 (lipid panel), which totaled 85% of all panel spending at $604,854,656.
Exactly Calculable Savings from Panel Rule
CMS spent $43,026,852 on payments for the 24 analytes in 2016. However, if they had been paid at their fee schedule rates, payments would have been $87,262,430, about twice as much. Cash savings appear to be $44,235,578 per year for the panel policy. [FN *]
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| click to enlarge |
But Don't Miss The Impossible to Exactly Predict Impact
The above savings are in the existing panel pricing system, where labs have no incentive at all to submit claims for, say, 9 analytes on a panel of 10. However, if the panel pricing rule vanished like a Penn & Teller trick (the PAMA Panel Vanishing Act), then labs would have a lot of incentive to submit analytes that don't match a panel definition and price. For example, now, if you drop one code from a $20 panel, you get (say) $18. Without the panel pricing rule, if you drop one code from a $20 panel, you might get $50 or more at the a la carte rate (e.g. 9*$6).
This new perverse incentive could affect anywhere from 0% to 100% of the sixty million panels tested in 2016. While it represents an absolute extreme, if 80053 with 32M uses per year now pays $13 in 2018, but any 14 analytes pay $75, the difference is huge. 32M uses x $13 is about $500M, but 32M uses of a 14 analyte panel x $75 is about $2.5B. .[FN **]
Of course, despite the new incentive to submit "N-1" panels, labs in the US wouldn't submit all the panel tests at "N-1" a la carte prices. So let's say this second effect is 10% of panels, or 10% of $700M, or about $70M. The two effects together would tally about $110M. Or more? [FN***] All this offsets a substantial part of the several hundred million dollar savings caused by the rest of PAMA.
Point of Care Too
Another example is that today, if a point of care test company makes a kit that matches an existing ten test panel, a physician office lab will get about $20 from Medicare for it. But if ACLA is correct that CMS must pay each analyte at its list price in 2018, if the device company makes an N-1 or nine-test panel, the physician might get, say, 9*$6 or $54 for that.
Excel for the above in the cloud, here.
Comparison to BRCA Panels
CMS performs roughly 25,000 BRCA tests per year. If they are all coded at the 2018 rate for BRCA1-BRCA-2 as 81162, this would be 25,000 * $2253 or $56,325,000 payments. If they were all paid at the BRCA Panel Rate (10 genes including the 2 BRCA genes), this would be 25,000 * ($838+$542) or just $34,500,000 payments, giving CMS a CY2018 savings of $21,825,000.
(If BRCA were stack-coded as 81211+81213 that cost would be 25,000 * ($2396+$553) or $73,725,000 payments, so the savings under the panel code policy would rise to $39,225,000. Recall from above that savings from the whole national panel chemistry pricing policy in 2016 were $44,235,578. (If the new Secretary of Health would use either type of savings, he could pay for an extra $400,000 of charter jet flights every 3.6 days and it would be revenue-neutral.)
PAMA and MAC data for 2016 show that BRCA testing was: variably billed as 81211, or as 81211+81213, or as 81162, or sometimes 81432+81433, but other times 81432, the latter probably only under a MolDx policy that "prohibits payment for dup del analysis unless only it is dup del payment for 81213 on top of 81211"). CMS 2016 billing patterns used the full spectrum of somewhat ambiguous current CPT coding choices:
Policy Note
If ACLA is correct that lab tests must be paid at literal fee schedule prices under PAMA law in 2018, it could affect several MolDX local policies that variably act to upgrade and downgrade payments from fee schedule rates (here).
___
[FN *] Actual direct cash savings might be a bit less because some states pay a bit less than the fee schedule normal price. However, I believe this is a small effect on a few codes in a few states, whereas the total affect is 50% over all codes and all states.
[FN **] Relative to 2016 fee schedule prices, in 2018, both panel and a la carte prices will typically drop 10%, but again, this is not a main driver of the large effect I'm discussing. Note that 2018 utilization could probably be 10% higher than 2016 utilization. I've used 2016 prices throughout the clinical chemistry section of this blog.
[FN ***] Hundred million dollar values aren't without precedent at all. Recall that in 2014, CYP genetic testing shot up to $270M before being fought back down to only $25M in 2016. CMS doesn't detect unprotected vulnerabilities quickly. It has no current defenses against N-1 testing, because until December 31, they've paid 10% less, not 300% more.
Monday, November 6, 2017
Counsyl Raises $80M For Genetics
In an announcement November 6, 2017, COUNSYL announced it has raised new $80M in funding.
Press release here. Funding is from NYC-based Perceptive Advisors.
Counsyl Celebrates 10 Year Anniversary
With New Financing and New Board Member
Sunday, November 5, 2017
Very Very Very Brief Blog: PAMA and Weighted Median
The briefest note. I've seen some sources I would think know better, criticize CMS for calculating PAMA prices at Weighted Median rather than other calculations like Average.
It's a dead issue. The 2014 PAMA statute clearly required calculations solely for: Weighted Median. It wasn't a CMS option to do otherwise.
Medians can be above or below the average. If the data is 1,5,10, the median and average are nearly the same. If the data is 1,3,10, the median is well below the average. If the data is 1,8,10, the median is way above the average.
It's a dead issue. The 2014 PAMA statute clearly required calculations solely for: Weighted Median. It wasn't a CMS option to do otherwise.
Could the MolDx Program Be Even Better with Increased Transparency?
On a cross country flight this week, I was reading CMS's two 1200 page November policy documents on PFS and Outpatient 2018 policies (here, here). I was struck by a section in the PFS policy about new approaches to coding and pricing biosimilars, aimed squarely at improving the marketplace for biosimilar development and encouraging market entry once the statutory exclusivity of the original product has expired. The particular policy will provide more specific coding, and product-specific ASP price setting, and the text about Medicare's desire to support innovation and avoid underpayment is inspiring. (See CMS text here). The upshot, which you can read for yourself, is that CMS strongly takes a position both toward encouraging the first innovators (e.g. the first Avastin), but equally, to thereafter encouraging market entry by new companies in the same area.
The MolDx program, which will soon operate in 28 states, handles nearly 90% of CMS molecular test payments as of 2015.* The program has strongly supported innovators and its coverage policies are all available on the CMS website as LCDs. MolDx has published extensive documentation about its coverage process. By 2016, the lion's share of CMS national molecular test payments are MAAA tests covered by MolDX, making it a very important program:
If so much of Medicare's mopath payments flow through special MolDx rules (see rest of article), it is hard for the CMS Actuary, MedPAC, OIG, or other policymakers to predict what payments will be based on the CMS rules and CMS fee schedules held at Baltimore and on the cms.gov website. Even if you study and click around the MolDx website for a long time, you may not know what local payment rules you haven't found or how large their impact might be.
While I am a strong MolDx supporter, some stakeholders such as College of American Pathologists have had concerns about MolDx (see their most recent 2017 infographic here). The MOLDX statement of work is online at a government RFP website (here).
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If so much of Medicare's mopath payments flow through special MolDx rules (see rest of article), it is hard for the CMS Actuary, MedPAC, OIG, or other policymakers to predict what payments will be based on the CMS rules and CMS fee schedules held at Baltimore and on the cms.gov website. Even if you study and click around the MolDx website for a long time, you may not know what local payment rules you haven't found or how large their impact might be.
While I am a strong MolDx supporter, some stakeholders such as College of American Pathologists have had concerns about MolDx (see their most recent 2017 infographic here). The MOLDX statement of work is online at a government RFP website (here).
MolDx also has at least three programs that raise or lower the price of tests on the CLFS national fee schedule. These policies are not on the CMS website and are much harder to find and understand than LCDs. However, as CMS shows in its new innovation-oriented biosimilar rulemaking, payment rules are important important. I describe the three unique MolDx payment policies here, and offer three practical ways that each policy might be - not so much changed, but made more transparent.
MolDx Payment Policy One: Raising CPT Code Payments
** NOTE ***
BY DECEMBER 2017, MOLDX HAD DROPPED ITS
SPECIAL PRICING RULES
FOR FDA CDX TESTS LIKE EGFR. UPDATE HERE.
MolDX has several articles describing use of CMS modifier 22 - for extended services - to flag genetic tests performed with FDA approved kits. See the "Approved Genetic Tests" webpage at MolDx. (MolDx here, archive here.) As of November 5, I count 6 genetic tests flagged with the -22 modifier: Roche Cobas tests BRAF, EGFR, KRAS (81210, 81235, 81275), Qiagen tests EGFR and KRAS (81235, 81275) and bioMerieux test BRAF (81210).
MolDX describes its authority for repricing FDA approved genetic tests here. A discussion of the MolDX negotiated up-pricing of a Qiagen EGFR assay in Genomeweb, May 2014, here.
While no payment amounts are specified, CMS Open Data for 2015 and 2016 suggests that bonus payments ran as high as 2X ($600 for EGFR; 81275; Genoptix 2015; see my deep dive article on an OpenData view of the MolDX Mod-22 program, here.)
More after the break.
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Saturday, November 4, 2017
Variable Prices Per Test for EGFR Testing (Medicare, 2015)
In CY2015, CMS had a flat and fixed fee schedule price for EGFR testing of $329.18 (for AMA CPT code 81235, common variants.) This gene is commonly tested in lung cancer and some other cancers.
Using the CMS 2015 provider database, a couple labs received up to double the fee schedule price, per EGFR test. This is one entry point into an unusual policy quirk at Medicare.
Using the CMS 2015 provider database, a couple labs received up to double the fee schedule price, per EGFR test. This is one entry point into an unusual policy quirk at Medicare.
- For several years. the MolDX Program has had an online article requesting that labs using Roche Cobas kits for EGFR testing add modifier -22 to claims.
- Then: No public data on actual prices paid were available.
- Now: The various CMS Open Data projects now provide a window into upgraded payments for some labs for CPT code 81235 in 2015 and 2016.
- Extra payments via -22 modifier could help labs beat PAMA fee cuts.
- But: Extra payments (as much as 200%) for some CPT codes on the CLFS, to certain labs, may raise concerns by labs elsewhere that it is difficult to compete on a level playing field (e.g. Mayo in Minnesota; GeneDx in Maryland).
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More details after the break.
Friday, November 3, 2017
Very Brief Blog: CDC Deck on Trends in National BRCA Testing (August 2017)
In August 2017, CDC released an 18 slide deck on US utilization of BRCA testing (through 2014). Online here. Around 2007, rates per 100,000 were twice as high in the Northeast as elsewhere although the difference has since narrowed. The information also appears as a September publication in Genetics in Medicine, here.
US PAMA data published by CMS on September 22 gives a less sophisticated but interesting snapshot of BRCA testing. Labs reported to CMS they had about 100,000 payments for BRCA full sequencing in 1H2016, suggesting an annualized rate of about 200,00 per year. The CMS PAMA data misses some labs (including hospital based labs and physician office labs) but might be a fairly good sample of large, independent BRCA-testing labs. CMS itself pays for circa 20,000 BRCA full sequencing cases per year.
Thursday, November 2, 2017
CMS Publishes Physician Fee Schedule Policies for CY2018 (DPP, Biosimilar, AUC)
On November 2, 2017, CMS published annual rulemaking for PFS policies for CY2017. The homepage is here. The final typeset version appeared November 15, 2017, 82 FR 52976, here, 396 pages.
The CMS homepage with lots of tables and addenda is here. CMS press release here, fact sheet here. See also a fairly detailed discussion at Lexology, November 17, here.
Diabetes Prevention Program begins on page 53254 and runs through page 53357, about 100pp or 25% of the annual rule. This is the first major program that began as an Innovation Center demo and is being expanded by rulemaking into a nationwide benefit. It's for brick and mortar DPP only. Questions on future offerings of "virtual DPP" or how MA plans will handle DPP/VDPP are to be clarified in "future guidance." (p. 53235, bottom right.)
Biosimilar guidance has been under discussion again, as CMS proposed to categorize biosimilars in one "bucket" HCPCS code which the biosimilars industry opposed. CMS will begin categorizing each biosimilar under its own HCPCS code (page 53348ff).
CMS discussed comments about the PAMA data collection program for labs at 53581ff. 40 comments were received. CMS notes drily that "most comments received were out of scope."
The complex but interesting area of Appropriate Use Criteria requirements, applied to advanced imaging test orders, begins at 53187ff. This is an invention of PAMA that is still being implemented. I have always wondered if the same idea could show up some year in context of molecular tests. Except for PET scans, which are around $1000, most advanced imaging (PET, CT) is $300-600 at CMS prices. This is easily in the range of many genetic tests and below the range of many proprietary MAAA tests.
Tidbits
For an article on some revisions to Telemedicine services, here. Also remote monitoring cardiology testing, 53063. Flow cytometry RVUs, discussed at 53059; pathology consultation 53060; tumor immunohistochemistry, 53061. Discussion of using PAMA Section 220 authority to collect data on real world pricing, using independent contractors, 52998 (bottom right).
The CMS homepage with lots of tables and addenda is here. CMS press release here, fact sheet here. See also a fairly detailed discussion at Lexology, November 17, here.
Diabetes Prevention Program begins on page 53254 and runs through page 53357, about 100pp or 25% of the annual rule. This is the first major program that began as an Innovation Center demo and is being expanded by rulemaking into a nationwide benefit. It's for brick and mortar DPP only. Questions on future offerings of "virtual DPP" or how MA plans will handle DPP/VDPP are to be clarified in "future guidance." (p. 53235, bottom right.)
Biosimilar guidance has been under discussion again, as CMS proposed to categorize biosimilars in one "bucket" HCPCS code which the biosimilars industry opposed. CMS will begin categorizing each biosimilar under its own HCPCS code (page 53348ff).
- Under "bucket" coding for biosimilars, CMS would likely have had lower prices, due to drug-on-drug competition to create a profit margin for physicians, by one-upping each other to give the physician more margin under the CMS payment price for the quarter.
- However, a sufficiently adverse marketplace would mean biosimilars would stand down and not enter the US marketplace at all, a genuine concern. See RAPS, October 30, here.
- CMS acknowledges that its change to biosimilar-specific coding will "address concerns about a stronger marketplace...encourage innovation to bring more products in the market."
- Note that while CMS sets payment policies only for itself, it also controls all HCPCS codes. So long as CMS staff had refused to even create unique HCPCS codes, any efforts to get a better market in other payer venues was a non-starter.
- Two other notes:
- It's unusual that a change this large could be accomplished without a regulatory change. The requisite regulation, 42 CFR 414.904(j), said that all biosimilars coded together would get an average price. It did not say whether CMS must, or must not, issue codes that group more than 1 biosimilar together.
- It's unusual in that the proposed policy change was quite short and the final policy change and discussion was very long. CMS revealed intentions and rationales in the final policy that couldn't be guessed from the July proposal.
- See July proposal, November final, and Regulation in one PDF here.
- For a fascinating article on the early impact of the existing "bucket" pricing rules for biosimilars, see Adam Fein at Drug Channels, 9/2017, here. See also various links from within that article. (Like here and here and here.)
Added 1/2018: Novartis says "US desperately needs biosimilars [at lower prices] to create fiscal space for new drug products," here.
CMS discussed comments about the PAMA data collection program for labs at 53581ff. 40 comments were received. CMS notes drily that "most comments received were out of scope."
The complex but interesting area of Appropriate Use Criteria requirements, applied to advanced imaging test orders, begins at 53187ff. This is an invention of PAMA that is still being implemented. I have always wondered if the same idea could show up some year in context of molecular tests. Except for PET scans, which are around $1000, most advanced imaging (PET, CT) is $300-600 at CMS prices. This is easily in the range of many genetic tests and below the range of many proprietary MAAA tests.
Tidbits
For an article on some revisions to Telemedicine services, here. Also remote monitoring cardiology testing, 53063. Flow cytometry RVUs, discussed at 53059; pathology consultation 53060; tumor immunohistochemistry, 53061. Discussion of using PAMA Section 220 authority to collect data on real world pricing, using independent contractors, 52998 (bottom right).
Very Brief Blog: How Will MolDx Handle the Transition to Single Price Tier Two Codes?
UPDATE: BY DECEMBER 2017, MOLDX HAD TAKEN DOWN
ITS SPECIAL TIER 2 GENE BY GENE PRICES.
IT WILL PROBABLY USE
FLAT PAMA PRICES FOR TIER TWO IN 2018.
Update here.
When the new genetic test coding system was created in CPT Year 2012, and first used by CMS in CY2013 for gapfilling finalized at the end of 2013, a new coding concept called Tier 2 codes were introduced. These are CPT codes for nine "levels" of analysis complexity. Each CPT code in the series 81400,81401, 81402...81408 has a long list of gene names associated with it. Work levels progress from one exon, to two exons, to three or four exons, and so on.
MolDx provides a table of meticulously determined individual prices for each single one of the covered genes under Tier 2. (Most genes listed in the AMA Tier 2 set are not covered by MolDx). See the June, 2017 version of this fee schedule here or in the cloud here. Like snowflakes, almost all are different (there are 7 pairs of matching prices among 49 genes, or 42 prices for 49 genes.)
Through PAMA, CMS has set rates for each Tier 2 code to be effective on January 1, 2018. The second-to-right column, "Pmt", is the new 2018 PAMA rate. The "Ave Pmt" column is the observed average payment rate at CMS during 2016.
Here's a brain teaser for MolDx watchers. What will MolDx do when these fixed fee rates become effective?
- MolDx trashes its elaborate special Tier 2 fee schedule series and just uses the new Tier 2 codes.
- This is the obvious choice; it's what non-MolDx MACs will do.
- This seems best aligned with the MolDX statement of work, which is only to price codes which "do not have CLFS prices," and the Tier 2 codes will have CLFS prices. SOW here.
- MolDx could require the Tier 2 codes to be used with "reduced services" or "enhanced services" modifiers tagged to Z codes and continue to offer special pricing lower or higher than the official Tier 2 code price.
- MolDX could ...not recognize the Tier 2 codes and throw all the services onto unlisted codes matched with Z codes.
- This is the "make crazy" option but they have been very liberal with local usage of Unlisted Code in the past.
I think the answer will be #1, and the snowflake-like pricing of Tier 2 codes will be tossed overboard, but if it is #2 or #3 you heard it here first.
CMS Posts State Level Payment Data for Part B for CY2016: MoPath
CMS annually posts both national payment data by CPT code (here) and by state (here).
Specific to genomics, I've done an initial analysis of 2016 national payment data here.
It's difficult to analyze the state payment data since there are over 50 files. However, I've pulled the MoPath code series for Northern California, Southern California, and Utah into one spreadsheet, because these three areas total the lion's share of US MoPath payments. In the cloud, here.
2016 Data by State: BRCA as a Case Study
Update: I've published expanded data and charts in March 2018, as a survey that reviews 2014 2015 2016 together, here.
While it would take a long time to assess all the MoPath codes by all the states, I've pulled just the BRCA related codes, here, as a case study:
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| Click to enlarge |
Turning to Utah, claims came in variably under code 81162 and 81211 at about a 2:1 ratio. It's not possible to know how many patients are represented by the code pairs 81211+81213; for this table, I assume there were 3,613 unique patients. With that assumption, there were about 12,000 patients getting BRCA sequencing in Utah with payments of $31M and the average price just a little higher than in Southern California.
In round numbers -- with some assumptions -- if all the patients getting BRCA1-2 sequencing (with or without a larger panel) had been paid at the average Northern California rate, total CMS payments would be around $23M. If all the patients had been paid at the Southern California or Utah rates, total payments would have been closer to $58M.
Medicare has published provider specific payment data for up to CY2015 (here). As of CY2015, there was only one 81211 provider in Utah, although that may not be the case in 2016. As for SoCal, that's a puzzle. There were only a few dozen payments for 81211 in SoCal in CY2015, but over 7,000 payments for 81211 in SoCal in CY2016. At the same time, payments for unlisted code 81479 in SoCal dropped from $62M in CY2015 (of which $31M to Ambry Genetics) to $51M in CY2016.
Can CMS Do Anything?
CMS has long applied a panel pricing rule in lab medicine, so that components of a panel can never get paid more than the total panel. CMS could apply that to BRCA testing. If it was a leg fix, it looks like it would score $35M savings per year or (as a first guess) $350M savings over 10 years.
Bonus: Pie Chart
As best as I can reconstruct, this is a pie chart of the five different ways to code BRCA testing at five different net prices, using CMS 2016 data. 2016 was the first year that comprehensive code 81162 was available, as well as gene panel codes 81432, 81433. I've shown earlier, in PAMA data for commercial payers in 1H2016, the use of 81162 was around 1%. The "blue slice," 81162, paid about $2500; the "orange slice," 81213+81211, paid about $2700 but required not employing a published CMS CCI edit against code stacking 81213+81211. The yellow slice (81432+81433) pays about $1500 but not in California, where a MolDX edit classifes 81433 as an "excluded" code (here) and payment is for 81432 alone at $932 (blue slice).
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| click to enlarge |
Quorum Consulting Acquired by Navigant (NYSE)
San Francisco's leading boutique pharma and healthcare consultancy, Quorum Consulting, will be acquired by Navigant for an undisclosed amount. Navigant is traded on the New York Stock Exchange with a market cap of about $800M. 2016 revenue was about $1B. Press release here.
In August 2015, Avalere, another life sciences/pharmacoeconomics consultancy was acquired by Inovalon for $140M.
Truven health data analytics was acquired by IBM in February 2016 for $2.6B.
In November 2017, Optum completed its acquisition of Advisory Board. The deal was valued at $1.3B.
In other news, longstanding Silicon Valley pharmacoeconomics consultancy Cedar Associates has apparently taken down its website. John Hornberger MD is now listed as Senior Fellow at Genomic Health on LinkedIn as of October 2017.
In August 2015, Avalere, another life sciences/pharmacoeconomics consultancy was acquired by Inovalon for $140M.
Truven health data analytics was acquired by IBM in February 2016 for $2.6B.
In November 2017, Optum completed its acquisition of Advisory Board. The deal was valued at $1.3B.
In other news, longstanding Silicon Valley pharmacoeconomics consultancy Cedar Associates has apparently taken down its website. John Hornberger MD is now listed as Senior Fellow at Genomic Health on LinkedIn as of October 2017.
Wednesday, November 1, 2017
CMS Publishes CY2018 OPPS Rule; Loosens Bundling on Hospital-Outpatient ADLT Tests
HOW TO COMMENT ON 14 DAY RULE ERRORS: SEE NOVEMBER 21 BLOG HERE.
_________
On November 1, 2018, CMS released the "public inspection" version of the CY2018 Hospital Outpatient rulemaking. The rule is 282 pages long. See final publication here, 82 Fed Reg 52356, November 13, 2017. See discussion at Lexology, here.
For for addenda documentation, here. CMS press release here, fact sheet here.
For the complementary rulemaking, the 2018 Physician Fee Schedule, see here.
This blog focuses on changes to the 14 Day Rule in diagnostics. For a general article on the 2018 rule, see HealthcareDive, here. Changes to 340B and more.
Note: An early version of this post said the rule applies only to ADLTs. Nope. It applies to Type A, not Type B ADLTs, and it applies to "molecular pathology tests currently excluded from bundling" but not (confusingly) to genetic tests in the GSP series.
All this is: if I read the rule correctly, or if the CMS rule really says what CMS intended. There may be errors in the CMS text.
For example, in the 2018 OPPS excel spreadsheet called "Addendum B," which have payment instructions for each code, all regular lab tests are "N" - not separately paid - while genetic/genomic tests are generally A, including "GSPs," but in the MAAA series, tests are erratically code as status N, E1, or A. Net-net, I think CMS misspoke when it writes the rule doesn't apply to GSPs. I would think it will have to go through PLA codes and at least allow payable status to genetic ones, when it comes to its senses.
CMS did not discuss exclusion of PLA or GSP tests in July proposed rulemaking!
For Genomeweb's effort to cover the rulemaking, here (subscription).
The rule loosens Medicare's bundling rules, put in place in 2007, on hospital outpatient specimens. The discussion is lengthy and runs from page 707 to 737. The logic and rules are a little complicated but here goes:
_________
On November 1, 2018, CMS released the "public inspection" version of the CY2018 Hospital Outpatient rulemaking. The rule is 282 pages long. See final publication here, 82 Fed Reg 52356, November 13, 2017. See discussion at Lexology, here.
For for addenda documentation, here. CMS press release here, fact sheet here.
For the complementary rulemaking, the 2018 Physician Fee Schedule, see here.
This blog focuses on changes to the 14 Day Rule in diagnostics. For a general article on the 2018 rule, see HealthcareDive, here. Changes to 340B and more.
Note: An early version of this post said the rule applies only to ADLTs. Nope. It applies to Type A, not Type B ADLTs, and it applies to "molecular pathology tests currently excluded from bundling" but not (confusingly) to genetic tests in the GSP series.
All this is: if I read the rule correctly, or if the CMS rule really says what CMS intended. There may be errors in the CMS text.
For example, in the 2018 OPPS excel spreadsheet called "Addendum B," which have payment instructions for each code, all regular lab tests are "N" - not separately paid - while genetic/genomic tests are generally A, including "GSPs," but in the MAAA series, tests are erratically code as status N, E1, or A. Net-net, I think CMS misspoke when it writes the rule doesn't apply to GSPs. I would think it will have to go through PLA codes and at least allow payable status to genetic ones, when it comes to its senses.
CMS did not discuss exclusion of PLA or GSP tests in July proposed rulemaking!
For Genomeweb's effort to cover the rulemaking, here (subscription).
The rule loosens Medicare's bundling rules, put in place in 2007, on hospital outpatient specimens. The discussion is lengthy and runs from page 707 to 737. The logic and rules are a little complicated but here goes:
- Since 2007, hospital outpatient lab tests can only be billed by the hospital, even if they are sent to an outside reference laboratory. This rule is in place holds for 14 days after the date of tissue or blood procurement in a hospital outpatient center. In essence, any test performed is "a service of the hospital" and must be billed by the hospital.
- For example, a Genomic Health Oncotype DX test could (I'm simplifying a bit) be billed only be the hospital if performed within 14 days of an outpatient lumpectomy, but if performed +14 days on the paraffin block, it could be billed by Genomic Health.
- Since about 2013, CMS has bundled all clinical laboratory tests to the hospital outpatient event (e.g. lumpectomy, office visit, etc) - except human genetic/genomic tests. These latter were still billable by the hospital on a line item basis, or, if later than 14 days, by the performing reference lab.
- THE NEW RULE allows Advanced Diagnostic Laboratory Tests, or ADLTs, to be billed Medicare directly by the laboratory, when run on hospital outpatient specimens in the 0-14 day range, as well as "molecular pathology tests currently excluded from bundling."
- Confusingly, the rule appears to exclude Genomic Sequencing Procedures, which are certainly human molecular pathology tests."
- The rule also appears to exclude PLA tests which in some cases will be genetic tests that are closely equivalent to genetic tests in the genetic code series.
ADLTs are defined under PAMA law, and later CMS policymaking, as sole source tests that are either (A) MAAA type tests or (B) FDA approved or cleared. CMS states, confusingly, that the new rule applies only to "TYPE A" ADLT tests.
CMS Still Hasn't Certified Its First ADLT Test
CMS loaded some extra policy rules such as the test was independently developed by the laboratory and not licensed. (I believe these latter rules will prove to be tortuous to apply or may be applied inconsistently.) And that the test provides "unique information." (Will CMS view several prostate MAAA tests as providing a unique class of information? Will something cease to be an ADLT if someone produces a close copy? Etc.) CMS notes that tests released from the 14 day rule because they are ADLTs must be certified by CMS as ADLTs, a process I believe is not in place yet.
Is This an Extra Incentive to Fill Out ADLT Paperwork on Your ADLT?
CMS Still Hasn't Certified Its First ADLT Test
CMS loaded some extra policy rules such as the test was independently developed by the laboratory and not licensed. (I believe these latter rules will prove to be tortuous to apply or may be applied inconsistently.) And that the test provides "unique information." (Will CMS view several prostate MAAA tests as providing a unique class of information? Will something cease to be an ADLT if someone produces a close copy? Etc.) CMS notes that tests released from the 14 day rule because they are ADLTs must be certified by CMS as ADLTs, a process I believe is not in place yet.
Is This an Extra Incentive to Fill Out ADLT Paperwork on Your ADLT?
There has been some question whether well-accepted popular MAAA tests that would qualify as ADLTs need to be certified as ADLTs, because it would convert them from 3-year to 1-year pricing updates, which might be unhelpful to the lab. This new rule provides one incentive to go through the extra work to be certified as an ADLT, because it gives access to the 14 day rule exemption.
The policymaking applies to hospital outpatient specimens, but not to hospital inpatient specimens.
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