Pathologists should take note that an increasing number of patients who want genetic tests are complaining when they learn their insurance plan will not pay for such tests

Concerned about the increased cost of genetic tests, health insurers are becoming reluctant to pay for many types of molecular diagnostics and gene tests. As they do, however, they face a buzzsaw of angry patients—many of whom see a genetic test as their last resort for a diagnosis and selection of a therapy that might just work for them.

Reuters recently reported that health insurance companies are reluctant to pay providers for gene-sequencing tests until more research becomes available. This is a sign for pathologists and clinical laboratory managers that enough patients have been affected by this to justify news coverage by a major news source.

Health Insurers Demand Proof of Effectiveness of Genetic Tests

In the Reuters story, it was noted,“as use of the new [genetic test] technology has grown, a number of insurers, including Blue Cross Blue Shield, have reacted by putting the brakes on reimbursement. Insurers are demanding proof that the results will lead to meaningful treatments among the estimated two million Americans with a serious, undiagnosed disease.”

Insurance companies’ wariness to pay for medical laboratory  tests that use gene sequencing does not come as a surprise to most pathologists and laboratory managers. After all, it’s consistent with payers’ reluctance to establish coverage guidelines and reimbursement for many new molecular assays and genetic tests.

Therefore, it is increasingly important for genetics experts and pathology laboratory professionals to document the value of genetic testing and publish studies in peer-reviewed medical journals. This gives payers the clinical evidence they need to established appropriate coverage guidelines for each genetic test.

Insurers Release Statements Citing High Costs and Uncertainty With Gene Tests

Gene-sequencing testing appears to be gaining wider exposure among diverse providers and the public. This puts pressure on insurance companies, noted Reuters. “Once strictly the domain of research labs, gene-sequencing tests increasingly are being used to help understand the genetic cause of rare diseases, putting insurance companies in the position of deciding whether to pay the $5,000 to $17,000 for the tests,” Reuters said.

Blue Cross Blue Shield, a company with 37 independent plans, made its decision clear on gene sequencing. It issued a Whole Exome Sequencing  (WES) report last fall that considered WES “experimental, investigational and or unproven for all indications.”

Many of the BCBS state plans apparently concluded WES is not eligible for coverage. The BCBS medical policy reads in part: “At this time, there are many technical limitations to WES that prohibit its use in routine clinical care. The risk/benefit ratio of WES testing is poorly defined. Therefore, the use of WES is considered experimental, investigational and/or unproven for all indications.” Reuters reported that Cigna generally does not cover whole genome or WES unless there is a clear clinical reason.

How Insurers Make Coverage Determinations for Molecular Tests

Insurer payments for diagnostic genetic testing is subject to four criterion, according to a spokesperson for America’s Health Insurance Plans, which was quoted in a story published by Insurance News. There must be:

1) clinical basis to suspect a specific disease,

2) a valid test to detect that disease;

3) treatment if the test comes back positive; and,

4) agreement from the patient to undergo genetic counseling.

Reuters did report that the DNA Diagnostic Lab at Yale School of Medicine receives enough payment from insurance companies to cover its costs, according to Allen Everett Bale, M.D.. He is a Professor of Genetics and the director of Yale’s DNA diagnostic laboratory and was quoted by Reuters.

 

Pictured above is Allen Everett Bale, M.D., Director of the DNA Diagnostic Lab at Yale School of Medicine in Connecticut. His lab has seen a 500% increase in orders for exome sequencing since 2011 and does about 750 exome tests a year, according to a Reuters article.  Medicare does not cover the tests and other insurers pay enough for the lab to break even, Bale told Reuters.  (Photo copyright Yale University.)

Pictured above is Allen Everett Bale, M.D., Director of the DNA Diagnostic Lab at Yale School of Medicine in Connecticut. His lab has seen a 500% increase in orders for exome sequencing since 2011 and does about 750 exome tests a year, according to a Reuters article. Medicare does not cover the tests and other insurers pay enough for the lab to break even, Bale told Reuters. (Photo copyright Yale University.)

“There’s a lot of [gene] testing we’re doing that’s getting denied. We appeal it. A lot of time that works, but it’s case by case,” Bale told Reuters.

Payers Reimbursing Less for Genetic Tests

Insurers pay less than they used to pay for genetic tests, according to Rebecca Nagy, MS, LGC, President of the National Society of Genetic Counselors. “Companies that were covering a test at 90% are now covering it at 80%,” she told NPR News.

A UnitedHealth Group report sheds light on what its insurance service pays for genetic testing, as well as national spending trends. The report, released in March 2012, estimated that U.S. spending on genetic testing may grow to between $15 billion and $25 billion annually by 2021.

The report also showed that UnitedHealth Group spent about $500 million for genetic and molecular diagnostic testing in 2012. National spending may have been $5 billion that year, it said.

Will Reimbursement Pressures Help to Drive Down Sequencing Costs?

Previous Dark Daily editions delved into gene-sequencing services and prices at clinical laboratories and diagnostic companies. Partners HealthCare,  a Boston-based system, is one of the mega healthcare systems to begin an in-house whole human genome sequencing service. It is reportedly charging $9,000 for whole human genome sequencing (See Dark Daily, “Major Healthcare Systems Begin Building In-House Whole Human Genome Sequencing Capabilities, Creating New Opportunities for Pathologists”, February 5, 2014).

Dark Daily also explored the decreasing cost of whole genome sequencing at research labs including Illumina, a San Diego-based technology giant. Illumina promoted “full coverage human genome sequences for less than $1,000, down from $500 million 10 years ago.” (See links to Dark Daily e-briefings below.) As the price of whole genome sequencing falls, so too will insurers’ concerns about costs. That prediction was made by Stéphane Budel, a Vice President at the consulting firm DeciBio. Reuters quoted him as saying, “There is no doubt it is going to become standard of care,” he said of gene sequencing.

Appropriate Payment for Genetic Tests Is a Key Issue

The National Human Genome Research Institute attests on its web site that genomic medicine can only go so far without insurance companies and Medicare willing to pay for genetic testing.

Most scientists, pathologists and laboratory professionals know that one approach to helping health insurers make positive coverage and reimbursement decisions for molecular diagnostic assays and genetic tests is to have credible clinical data. Payers need evidence that individual genetic tests are reliable for diagnostic purposes and help physicians to improve patient outcomes.

—by Donna Marie Pocius

Related Content:

As Sequencing Moves Into Clinical Use, Insurers Balk

Whole Exome Sequencing (WES)

New B. Braun Venture Seeking Acceptance of Genetic Sequencing Method

Don’t Count On Insurance to Pay for Genetic Tests

New Report Finds Greater Use of Genetic Testing

Major Healthcare Systems Begin Building In-House Whole Human Genome Sequencing Capabilities, Creating New Opportunities for Pathologists

Is Illumina’s $1,000 Genome a Reality—Not for Clinical Laboratory Purposes, Attests an In Vitro Diagnostics Expert