Clinical laboratories and anatomic pathology groups should consider this another example of how CMS is taking forward steps to encourage value-based payment arrangements throughout the health system
With the sky-high cost of many prescription drugs and gene therapies, it was only a matter of time before the Centers for Medicare and Medicaid Services (CMS) would seek to link reimbursement for them to patient outcomes.
A recent CMS proposed rule (CMS-2842-P) concerning value-based purchasing (VBP) for prescription drugs covered by Medicaid encourages payers to engage in Medicaid state value-based purchasing (aka, pay-for-performance) arrangements for expensive prescription drugs. This rule may have implications for medical laboratories and anatomic pathology groups if it were extended to cover companion diagnostics linked to expensive therapeutic drugs and gene therapies.
CMS also intents the proposed rule to help drug manufacturers ease roadblocks to contracting with payers—including Medicaid—a CMS fact sheet explained.
Federal officials are looking to reimburse healthcare providers for prescribing drugs that are shown to work best on patients that truly need them, while also incentivizing pharmaceutical manufacturers to created drugs “of high patient value,” stated Laffer Healthcare Intelligence, a Nashville, Tenn. healthcare investment firm, in an email to its intelligence service subscribers.
In a press release announcing the proposed rule, Seema Verma, CMS Administrator, said “We are creating opportunities for drug manufacturers to have skin in the game through payment arrangements that challenge them to put their money where their mouth is.”
Old Regulations Don’t Address Value, Expensive Gene Therapies
According to CMS, for 30 years federal regulations have favored the “volume of drugs” sold over the “quality of drugs.” Simultaneously, during the past three years the US Food and Drug Administration (FDA) has approved four gene therapies with many more “in the development pipeline,” Verma wrote in the journal Health Affairs. “While the lifesaving impact of these often-curative therapies are profound, their costs are unprecedented,” she stated.
CMS’ new rule proposes to define value-based purchasing as “an arrangement or agreement intended to align pricing and/or payments to evidence-based measures and outcomes-based measures,” Verma added.
Companion Diagnostic: Molecular and Genetic Testing
For clinical laboratories, the case CMS makes for therapeutic drugs could be applied to expensive molecular diagnostics and genetic testing. CMS may base reimbursement on how accurately and how fast a lab test can enable a diagnosis. Also, payment could be linked to a lab’s report and guidance to the ordering provider in selecting a therapy that makes a difference in the patient’s outcome.
“This is exactly the concept of the companion diagnostic,” said Robert Michel, editor-in-chief of Dark Daily and its sister publication, The Dark Report. “Take, for example, a $5,000 genetic cancer test that that stages a $500,000 cancer prescription drug. Patients who will not benefit from the drug will not get it. And the $5,000 lab test may keep, say, 10 people from getting a drug that wouldn’t work for them. Thus, the $50,000 in lab tests could save $5 million in prescription drug costs,” he explained.
For its part, Novartis, the Basel, Switzerland-based creator of Zolgensma, said the proposed CMS changes are “an important first step,” and helpful to the company’s “access strategy” in the US, BioPharma Dive reported.
Healthcare experts envision that deals struck under the new proposed CMS rule will focus on gene therapies and expensive drugs, MedPage Today reported.
“Measuring outcomes is costly; it takes time, and everyone has to come up with a way to do it. So, if a drug costs $50, it’s not worth going to every single patient (in research). If the drug costs $500,000, maybe it’s worth it … figuring out if the drug worked. That’s why people talk about it in the context of gene therapies,” Alexander Dworkowitz (above), Partner, Manatt Health, New York, told MedPage Today. (Photo copyright: Manatt, Phelps and Phillips, LLP.)
According to the Laffer Healthcare Intelligence analysis email, CMS’ 137-page proposed rule is “very broad,” but focuses on three themes:
“First, CMS wants to establish an official definition for VBP models to accelerate development of drug pay-per-value programs.
“Second, CMS want to restrict the amount of opioids doctors can prescribe.
“Third, very subtle changes are proposed that negatively affect the PBM (pharmacy benefit management) industry.”
CMS’ proposal also includes standards aimed at fighting opioid prescription fraud and misuse in Medicaid drug programs, noted Fierce Healthcare.
Transparent Drug Prices
Medical laboratory leaders may want to monitor the progress of this proposed rule. In addition to value-based payment, the rule advances price transparency by clearing the way to sharing prices of therapeutic drugs and how they improve patient care, while also lowering costs.
Meanwhile, a refresh of lab information technology to enable authorization of genetic and molecular tests by payer also may prove worthwhile.
Goal of his foundation is to provide access to COVID-19 medical laboratory tests for first responders, as well as low-cost tests to the general public
Early in April, when many of the nation’s clinical laboratories were facing numerous challenges in their attempts to obtain adequate supplies for collecting, transporting, and testing for COVID-19, a Hollywood actor was funding his foundation and obtaining enough supplies for his foundation to offer access to COVID-19 testing to residents in his community of Malibu—as well as in other areas.
In many ways, local medical laboratories that offer COVID-19 tests are competing with actor/philanthropist Sean Penn’s Community Organized Relief Effort (CORE) foundation for the supplies they need to provide COVID-19 testing to the patients in their own communities. The non-profit organization says it is working with various healthcare providers to provide free coronavirus testing to first responders, and low-cost testing to the general public, in eleven cities and counties in California, Georgia, North Carolina, and Illinois.
In fact, the volume of COVID-19 testing CORE currently provides is large enough that The Hollywood Report published a story on June 3, titled, “How Sean Penn Made the Biggest COVID-19 Testing Site in U.S.” The article stated that, “In late May, Mayor Eric Garcetti announced the opening of a new COVID-19 testing site at Dodger Stadium in partnership with CORE, the Los Angeles Dodgers, Live Nation Entertainment, Red Rock Entertainment, and the Los Angeles Fire Department. Operated by CORE and LAFD, this site has capacity to test 6,000 residents a day free of charge––making it three times the size of any other location in L.A. County and said to be the largest testing site in the U.S.”
The Reporter did not make the distinction that the Dodger Stadium site is only collecting specimens. And, no news accounts of the CORE COVID-19 testing program names the clinical laboratories that CORE currently uses to perform the coronavirus tests for the specimens it collects.
CORE Partnered with Private Healthcare Provider Elevated Health
CORE first got underway in 2010 providing disaster relief following the catastrophic magnitude 7.0 earthquake in Haiti. It was known then as the Jenkins-Penn Haitian Relief Organization (J/P HRO). The foundation initiated its support of COVID-19 testing efforts in California in April, reported the Orange County Register (OCR). At that time, testing was much more limited than it is today and drive-thru testing in most areas in America was not available.
Elevated Health’s COVID Clinic website enables consumers to complete pre-test enrollment and payment before arriving at the drive-up testing site at the Westminster Mall.
“Right now, hospitals have very strict guidelines on who can be tested. Public health departments are overwhelmed and possibly underfunded. That’s where I’m trying to bridge the gap,” Matthew Abinante, DO, a doctor of osteopathy and Elevated Health’s founder and CEO, told the OCR.
The coronavirus test kits Elevated Health uses are made in China and were purchased from Georgia-based HealthTrackRx. According to Abinante, they are “FDA authorized, but not FDA approved,” reported the OCR.
Clinical laboratory leaders may be intrigued to see consumers waiting their turn at drive-through testing lines as they take COVID-19 diagnosis into their own hands. Sites like the one above run by Elevated Health at the Westminster Mall demonstrate that people are willing to patronize providers that serve their needs directly. (Photo copyright: Orange County Register.)
CORE Aims to Be a Model for Partnering in Testing
Though CORE’s COVID-19 testing relief efforts are no longer limited to Los Angeles County, that is where it all began. Specimen collection at drive-through sites for COVID-19 tests initially prioritized first responders and essential workers. CORE funds provided for a staff of 70 people at four of the 35 drive-thru specimen collection sites in LA, reported CBS Los Angeles(CBSLA).
CORE-funded services also made it possible for Los Angeles city employees—who were running the drive-thru specimen collection sites—to return to their primary jobs as emergency first responders, reported the Associated Press (AP).
“It’s something that we can adapt to very quickly with the training of the Los Angeles Fire Department initially. And we’re able to take all those firemen and put them back in to serve the people in the way that we need them to,” said Penn in the AP article.
At that time, city officials planned to perform 10,000 tests a day, Deputy Mayor Jeff Gorell, JD, told the LA Times. The City of Los Angeles purchased the tests and CORE covered the cost of staff, volunteers, and personal protective equipment (PPE), reported the LA Times.
“We have servers and people from the Peace Corps, actresses—a lot of people from the communities where the test site is. We’re trying to hire as much locally as possible,” Ann Lee, CORE’s Chief Executive Officer, told Business Insider.
CORE also partnered with the City of Malibu in western Los Angeles County to provide mobile COVID-19 testing services for the city’s 3,000 residents, first responders, and essential workers from April 6 to 17 at a testing site at Malibu City Hall.
“This is what I hope will be a model in terms of the government and community foundation partnerships that can be replicated not only in the city of Los Angeles and throughout California, but throughout the country,” Sean Penn (above at the COVID-19 drive-thru testing site in Malibu, Calif.), founder of CORE, told CBSLA. Since making that statement, CORE has gone on to partner with healthcare providers in three other states to provide coronavirus drive-thru specimen collection. (Photo copyright: Associated Press/ABC News.)
Should Drive-Through Testing Continue Post-Pandemic?
An April Dark Daily e-briefing reported on drive-thru COVID-19 specimen collection operations across 30 states. The e-briefing also noted that drive-thru collections protects medical laboratory professionals and emergency department staff from possible exposure to infectious agents.
It’s likely many industries—from education and retail to travel and restaurants—will be revamped as a result of the pandemic. Clinical laboratory leaders and pathologists will want to study the different approaches used to develop drive-through COVID-19 specimen collection; how some providers that ran them partnered with charitable organizations such as CORE; why drive-thru specimen collection appeals to consumers; and how it may improve phlebotomists’ safety and increase clinical laboratory business.
UnitedHealthcare to cover Foundation Medicine’s comprehensive genomic profiling assay for solid tumors, but Medicare still reluctant to reimburse for genetic tests
Studies showing success of targeted therapies in cancer care may be having an influence on the decisions by certain health insurers to reimburse clinical laboratories to reimburse for certain genetic tests.
One example that press reports cite is how last December UnitedHealthcare began reimbursing for a certain genetic test for patients with a particular lung cancer, according to a statement from Foundation Medicine (NASDAQ:FMI). Based in Cambridge, Massachusetts, Foundation Medicine describes itself as “a molecular information company dedicated to a transformation in cancer care in which treatment is informed by a deep understanding of the genomic changes that contribute to each patient’s unique cancer.” (more…)
Clinical laboratories and pathology groups serving Cigna beneficiaries can expect to see new requirements for genetic tests used to diagnose breast cancer, colon cancer and long QT syndrome
Effective this week, Cigna (NYSE: CI) in Bloomfield, Connecticut, is implementing a new program that requires genetic counseling and pre-authorization for certain genetic tests. This is an important development and clinical laboratory executives can expect to see other health insurers take similar steps.
Cigna wants to control costs and improve the appropriateness of ordering expensive genetic tests. It will start with tests for three conditions and may require counseling for other types of genetic tests if this program is successful. Industry observers expect other health insurers will follow Cigna’s example and also require genetic counseling for a compelling reason: all insurers recognize that more than 50% of all genetic tests may be ordered inappropriately, experts say.
Columnist Steve Gottlieb, M.D., wrote that “This sort of bungling may be without precedent, even for the Medicare agency”
Since the beginning of the year, most Medicare contractors and private health insurers have not paid clinical laboratories and anatomic pathology practices for molecular diagnostic test claims coded to the 114 new molecular test CPT codes.
This unprecedented situation of labs going unpaid for more than three months has created financial turmoil and uncertainty across the medical laboratory profession. In fact, the question must be asked: Did Forbes columnist Scott Gottlieb, M.D., wake up the nation’s Medicare contractors with his column published on March 27? (more…)
