Ensuring a Personalized Future through Diagnostics Policies

In a time of rapidly rising healthcare costs, personalized medicine offers a more efficient approach to prevention, diagnosis and treatment.

However, special considerations and thoughtful policies that acknowledge the emerging and varied technology (and challenging science) at play are needed in order to ensure access to personalized diagnostics and treatments, while also encouraging further investment and development of technologies. Just as personalized medicine is moving us away from a one-size-fits-all approach to healthcare, we must too move away from one-size-fits-all approaches to reimbursement.

The Personalized Medicine Coalition recently released “The Future of Coverage and Payment for Personalized Medicine Diagnostics.” The white paper takes a critical look at the policies of the Centers for Medicare and Medicaid Services, which in turn inform the decision making process for payers. Three specific challenges to the further implementation of personalized medicine diagnostics are identified:

• Reimbursement levels that ensure access while also encouraging development
• Inconsistent standards for evaluating genomic tests
• A lack of incentives for genomic medicine

As we continue our journey in the post-ACA healthcare landscape, the need for objective, reliable and clearly defined standards for evaluation and reimbursement continue to grow. Uncertainty – especially in the form of payment – does not inspire investment or fuel growth through R&D.

Key SGR Fix Brings Relief to Diagnostics Industry

On April 1, the diagnostics industry let out a collective sigh of relief as President Obama signed into law HR 4302. Officially known as the Protecting Access to Medicare Act of 2014, many refer to the law as “Doc Fix” or “SGR fix”, focusing on the delay, yet again, of the 24 percent physician pay cut as a part of Medicare’s sustainable growth rate (SGR) formula.

However, my attention, along with that of the diagnostics industry, focused on the provisions in the law that protect clinical diagnostics from unpredictable repricing (subscription required) under the Centers for Medicare and Medicaid Services (CMS) Clinical Lab Fee Schedule (CLFS).

The passage of this law showcases the need and value of the industry to unite in highlighting policies that, though unintended, challenge innovators by creating an uncertain reimbursement environment. Predictable reimbursement policies encourage exploration and innovation within the diagnostics community, improving health care through advances in diagnosis and beyond.

This law acknowledges the transformative scientific advancements the industry has achieved in recent years, catching our policies up with our technologies.

Many questions remain as we look at the implementation of this law, and as such we remain committed to convening the personalized medicine community to work in collaboration with CMS.

Collaboration Key to Improved Reimbursement Policies for Personalized Medicine

Significant reimbursement challenges to personalized medicine began in 2012 when the Centers for Medicare and Medicaid Services (CMS) changed payments for diagnostics from a stack of different types of codes describing different parts of lab testing to a unique code for a type of test.

The Personalized Medicine Coalition (PMC) has engaged with CMS on reimbursement issues for personalized therapies and companion diagnostics in a variety of ways, most recently when Patrick Conway, M.D., Deputy Administrator for Innovation and Quality and Chief Medical Officer, CMS, delivered the keynote address at the Tenth Annual State of Personalized Medicine Luncheon.

Dr. Conway outlined his perspective on the state of personalized medicine and where it is headed, noting that we are in an era in which the power of genetics is driving innovation, informing treatments and improving patient outcomes.

As Dr. Conway noted, diagnostics are a challenge as a new market, and CMS is working with FDA to streamline the process further. We want and need diagnostics that enable physicians’ to tailor therapies for individual patients and influence decision making, all resulting in better health outcomes and improved patient care.

Dr. Conway emphasized innovation, noting that we need a system that values innovation and pays for it appropriately. We should cover and pay for technology that may have greater costs in the short-term, but which will result in long-term savings and improved outcomes.

Yet, innovators are facing significant challenges stemming from CMS policies, through the unintended consequences related to coding, in particular. PMC is focused on working with CMS to ease the pressure on innovators, and identifying opportunities to make sure this does not happen again.

A key theme of Dr. Conway’s talk was that of collaboration. PMC will continue to facilitate engagement with CMS, taking up Dr. Conway on his open door policy to ensure that future policies encourage innovation and support continued developments in personalized medicine.

Dr. Conway’s presentation is available at the PMC website.

Examining the Relationship Between Payment Policies and Personalized Medicine

In an era of increased focus on containing rising healthcare costs, personalized medicine represents an important solution in addressing these concerns, while improving the quality of patient care. In order to ensure that these important advances continue, it is essential to ensure payment policy supports personalized medicine.

Much of PMC’s policy work in the coming year will focus on both the challenges and opportunities in Medicare payment policy. For several years, ongoing efforts to reduce reimbursement for advanced diagnostic tests have been at the leading edge of this work. Recent proposals to cut reimbursement for diagnostics and drugs in Medicare Part B underscore the importance of our continued focus in this area.

Building on the success of our reimbursement issues brief from 2010, we will soon publish an updated brief outlining the difficulties facing personalized medicine in coverage and reimbursement decisions. This paper will cover coding changes as well as the challenges that CMS has placed on innovators. It will also outline evidence issues and how the field might consider tackling them.

In addition, PMC will address how emerging, alternative payment models (such as medical homes, accountable care organizations, and pathway- or episode-based payment) also will have a significant impact on development and adoption of personalized medicine. While some of these approaches appear to hold promise, we must pay attention to the details to ensure that they are designed in ways that allow physicians to tailor care based on an individual’s genetics and other factors, and that support adoption of novel targeted therapies.

PMC already has begun engaging on this important set of issues. Based on our policy principles for deficit reduction, we are developing additional messaging and conducting further analysis to engage Centers for Medicare and Medicaid Services (CMS) throughout the year. Our next opportunity will be on April 10 when we will respond to a request for comments on Specialty Practitioner Payment Models. In our response, we will encourage CMS to see targeting drugs with diagnostic tools as a way to increase the quality of patient care and to ensure that policies encourage this direction.

As we engage on a growing range of important policy issues, it is timely that Dr. Patrick Conway, the acting director of the Center for Medicare and Medicaid Innovation (CMMI), will be joining us this week at our Tenth Annual State of Personalized Medicine Luncheon. CMMI has responsibility for testing and implementing alternative payment models at CMS. We look forward to hearing from Dr. Conway as he shares his vision of personalized medicine, CMS’ perspective of innovation and quality health care reform, and answers questions about developing payment policies.

We recognize that personalized medicine depends on our ability to pay for both diagnostic and therapeutic products, and to that end, the PMC is focused on advocating for public policies that support personalized medicine’s development through scientific, regulatory, and reimbursement-related activities. I invite you to join PMC at the Tenth Annual State of Personalized Medicine Luncheon Address at the National Press Club in Washington, D.C., on March 13.