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Clinical Laboratories and Pathology Groups

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Clinical Laboratories and Pathology Groups

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Health insurers not eager to establish coverage for new molecular diagnostic assays

Navigating the pathway to successful commercialization of new genetic tests and molecular diagnostic assays has proven tricky. While scientists work quickly to bring new and better clinical laboratory testing tools to the market, health insurers work at a much slower pace to issue coverage guidelines and establish reimbursement for these new diagnostics tests.

“Successfully moving a genetic test from the research bench to the clinical laboratory takes much more than an understanding of the science,” stated Rina Wolf, Vice President of Commercialization Strategies for Consulting and Industry Affairs, XIFIN Inc., of San Diego, California. “Competition for coverage and reimbursement by health insurers is fierce. Often, the molecular diagnostic tests that win the best coverage decisions by payers are those proprietary tests backed by companies and laboratories with the most effective business plans.”

White Paper New Genetic Laboratory Tests Face Complicated Hurdles to Win Reimbursement

In recent years, Wolf helped several pathology laboratory companies launch proprietary new molecular assays, including the OncotypeDx developed at Genomic Health, Inc. and the PathFinderTG at RedPath Integrated Pathology. “The reality of today’s healthcare system is that success for any new genetic test depends greatly on how quickly health insurance plans will develop appropriate coverage guidelines in tandem with a fair reimbursement policy,” observed Wolf.

This creates a catch 22 for those laboratory companies introducing new molecular diagnostic assays. As physicians learn about the new laboratory test and want to order it, payers do not have policies in place to reimburse for this new genetic test—even when it delivers substantial clinical benefit to the patient. It is the chicken-and-egg conundrum: what comes first? Is it physician demand for the test (which convinces payers that it is clinically useful) or is it payer coverage and reimbursement policies (which assure physicians that, when they order the test, the patient’s insurance will reimburse for it)?

“The lessons of the marketplace over the past decade are compelling,” noted Wolf. “Every successful launch of a new molecular test has come because of a dual market introduction strategy. One side of the strategy is to provide physicians and patients with the knowledge and education they need to understand how to order the test and respond appropriately to the lab test results. The other side of the strategy is proper preparation to address all the issues raised by health insurers.”

Understanding the business pathway is critical in this process, as is persistence in the appeals process. Wolf described an interesting approach which she called “creating a reimbursement sandwich.” “The top slice of the reimbursement sandwich is the steady growth in demand by physicians who order the test appropriately—and pressure payers,” explained Wolf. “The bottom slice of the reimbursement sandwich is the persistence of your laboratory company in the appeals process. This provides an alternative pressure which is often an effective way of convincing payers to cover the new molecular test.”

Wolf further noted that the path to this final goal often requires the use of interim reimbursement strategies specifically designed to assist physicians in getting reimbursement in the early phases of adoption. “Using stacked codes and miscellaneous codes are viable options, but they have inherent weaknesses,” warned Wolf. “At the same time, one pathway to a national coverage decision is to work through the process for unlisted codes with a local Medicare Administrative Contractor.

“Once payer acceptance is gained for the new molecular tests, the laboratory company faces a major decision on whether to contract with payers,” she explained. “Initially, signing network contracts may look like a good bet. However, there are often situations where the laboratory company can benefit from the greater flexibility of being a non-contracted provider. This is particularly true when an insurance plan offers a very low contract rate.”

For test developers who want to further understand the nuances of reimbursement, Dark Daily has published a white paper, “A CEO’s Guide to Molecular Diagnostic Reimbursement: Navigating the Many Challenges of Reimbursement and Commercialization”.  It is a free download and provides a comprehensive overview of the complicated process of gaining health insurer coverage and reimbursement for the new genetic test.

This white paper is designed to be a useful guide for any company, clinical laboratory, or pathology business that is ready to introduce a new genetic test or molecular diagnostic assay. It provides practical solutions for the problems inherent in the process of taking a test from good science to everyday use.

Related Information:

White Paper: “A CEO’s Guide to Molecular Diagnostic Reimbursement: Navigating the Many Challenges of Reimbursement and Commercialization”

National Human Genome Research Institute: Coverage and Reimbursement of Genetic Tests

Human Genome Project: Primer on Genetic Testing and Insurance Coverage

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