Home 5 Lab Industry Advisor 5 Essential 5 LCDs Demonstrate Evolving Coverage of Molecular Diagnostics

LCDs Demonstrate Evolving Coverage of Molecular Diagnostics

by | Jan 23, 2017 | Essential, National Lab Reporter, Reimbursement-nir

Advanced diagnostic tests are emerging faster than the clinicians can document their clinical utility. All of this creates an interesting dilemma for payors as far as coverage is concerned. Normally the most cautious of payors, Medicare has demonstrated an increasing willingness to cover newfangled tests—at least in certain circumstances—with the expectation that they do work and that the studies will eventually catch up. The recent local coverage determinations (LCDs) issued by Palmetto, GBA, one of Medicare’s most important contractors, is an excellent illustration of where things seem to be evolving with regard to Medicare coverage of new molecular diagnostic tests. What’s At Stake First, a quick refresher on LCDs. Medicare covers only services that are "reasonable and necessary." Each Medicare contractor has discretion to decide which services meet those criteria. LCDs set out the particular contractor’s coverage rules. So-called draft LCDs typically contain proposed revisions and updates to coverage rules and are open to comment for at least 45 days. Once the comment period ends, the contractor issues a final LCD. The lab test LCDs discussed in this article are draft LCDs that Palmetto issued on Dec. 23. The comment period runs between Feb. 6 and March 23. Let’s go […]

Advanced diagnostic tests are emerging faster than the clinicians can document their clinical utility. All of this creates an interesting dilemma for payors as far as coverage is concerned. Normally the most cautious of payors, Medicare has demonstrated an increasing willingness to cover newfangled tests—at least in certain circumstances—with the expectation that they do work and that the studies will eventually catch up.

The recent local coverage determinations (LCDs) issued by Palmetto, GBA, one of Medicare's most important contractors, is an excellent illustration of where things seem to be evolving with regard to Medicare coverage of new molecular diagnostic tests.

What's At Stake
First, a quick refresher on LCDs. Medicare covers only services that are "reasonable and necessary." Each Medicare contractor has discretion to decide which services meet those criteria. LCDs set out the particular contractor's coverage rules. So-called draft LCDs typically contain proposed revisions and updates to coverage rules and are open to comment for at least 45 days. Once the comment period ends, the contractor issues a final LCD.

The lab test LCDs discussed in this article are draft LCDs that Palmetto issued on Dec. 23. The comment period runs between Feb. 6 and March 23.

Let's go through the 8 key coverage changes.

1. Eliminate Coverage of Vectra DA for Rheumatoid Arthritis (DL37024)
Test: Vectra DA generates a test score based on 12 biomarkers associated with rheumatoid arthritis inflammation that is used to track disease activity and a patient's response to treatment.

Proposed Change: The draft LCD proposes to end Medicare coverage of Vectra DA.

Explanation: Palmetto says there is conflicting evidence on Vectra DA's effectiveness, citing, among other things, a recent study suggesting that test scores yielded are unreliable and should not be used to guide treatment. Palmetto also notes that 2015 American College of Rheumatology treatment guidelines recommend "functional status assessment using a standardized, validated measure" and do not even mention biomarker testing.

Financial Impact: Vectra DA is manufactured by Myriad Genetics' subsidiary Crescendo Biosciences. Myriad "strongly disagrees" with the proposal and claims the cited study is flawed. There is a lot on the line. Ending Medicare coverage of Vectra DA could cut Myriad's revenues by $35 million to $40 million, according to one report by a Piper Jaffray analyst cited in GenomeWeb.

2. Coverage of Prolaris for Intermediate-Risk Prostate Cancer Patients (DL37043)
Test: Prolaris measures the aggressiveness of prostate cancer by analyzing 31 cell cycle progression genes.

Proposed Change: The LCD proposes to cover the test for men who have favorable intermediate risk of prostate cancer under National Comprehensive Cancer Network (NCCN) guidelines.

Explanation: Palmetto acknowledges the current lack of evidence supporting Prolaris's clinical utility among men at intermediate risk of prostate cancer but says that prospective studies supporting the test's effectiveness for identifying low-risk patients who can then avoid unnecessary invasive procedures is enough to justify coverage. Last year, Palmetto and another Medicare contractor Noridian issued a final LCD covering Prolaris for patients meeting NCCN criteria for low- and verylow- risk prostate cancer.

Financial Impact: Like Vectra DA, Prolaris is manufactured by Myriad Genetics. If approved, the draft LCD proposal would expand coverage for about 15 percent of men or roughly 30,000 per year, according to an official company statement. Prolaris coverage in intermediate-risk patients is a $65 million market, according to the aforementioned Piper Jaffray analyst.

3. Limited Coverage of Xpresys for Lung Cancer Screening (DL37031)
Test: Xpresys is a molecular blood test in which expression levels of two proteins are assessed against five clinical risk factors to identify which lung nodules are likely benign and which patients are eligible for surveillance via noninvasive CT scans rather than invasive surgical procedures.

Proposed Change: Palmetto would cover Xpresys Lung version 2 (XL2) but only in limited circumstances. Under the LCD, XL2 would be covered only:

  • To assess lung nodules of between 8 and 30 mm in diameter;
  • For patients over age 40 who have a pre-test cancer risk of 50 percent or less.

Explanation: In February 2015, CMS announced that Medicare would cover lung cancer screening. But while it can save lives and minimize the need for costly treatment, low-dose computed tomography screens also detect intermediate lesions that cannot be defined as benign or malignant without costly and sometimes dangerous additional testing.

Financial Impact: So the capacity to detect benign tumors noninvasively makes biomarker tests like Xpresys, which is manufactured by Seattle-based Integrated Diagnostics and has been on the market only since 2014, potentially valuable. By the same token, only a few of these tests are commercially available; and they have yet to be adopted for routine clinical use. Accordingly, Medicare has been wary about covering them, as reflected in the LCD.

4. Limited Coverage of DecisionDx-UM for Metastatic Cancer Risk (DL37033)
Test: DecisionDx-UM is a gene expression profile test assessing the expression levels of 15 messenger RNA transcripts to evaluate whether patients newly diagnosed with uveal melanoma (UM) are at risk for metastatic disease.

Proposed Change: Palmetto proposes limited coverage of DecisionDx-UM for patients diagnosed with UM when there is no evidence of distant metastatic disease at the time of diagnosis for purposes of determining whether the patient should be referred to a specialist for further surveillance. Physicians should not order the test unless they intend to act upon the results.

Explanation: Although there is enough clinical evidence to support clinical utility for now, the LCD stipulates that continued coverage will depend on publication and/or presentation of clinical utility evidence. This is in line with LCDs of other contractors, such as Noridian which began covering DecisionDx- UM last year.

Financial Impact: DecisionDx-UM was developed by an ocular oncologist and exclusively licensed to Castle Biosciences in 2009. The test is "now used as a standard of care by over 95 percent of ocular oncologists in the U.S.," according to the company website.

5. Coverage of Comprehensive Genomic Profiling (CGP) for Specific Cancers
Test: CGP cancer analysis is a single test that uses tissue from a tumor to detect genomic alterations and information that can guide diagnosis and individualized treatment.

Proposed Change: Palmetto issued LCDs covering CGP for patients with three different types of cancers: i. metastatic melanoma (DL37041); ii. metastatic colorectal cancer (DL37039); and iii. advanced primary peritoneal, fallopian tube and ovarian cancer (DL37045). All three of the LCDs include the same basic coverage conditions, including the requirement that:

  • The patient be newly diagnosed with the cancer involved;
  • The patient has not received CGP or, in the case of metastatic melanoma, CGP or polymerase chain reaction (PCR) testing for genomic alterations;
  • The test is capable of detecting all four types of DNA alterations associated with cancer; and
  • The test meets Palmetto's Analytical Performance Specifications for CGP (APS).

Explanation: The new CGP LCDs are significant for what they do not include, namely, the requirement that labs submit testing and patient data through registries, a burdensome obligation that has appeared in previous Palmetto CGP coverage policies.

Financial Impact: As in the brand-specific LCDs, Palmetto acknowledges the current lack of evidence supporting the clinical utility of CGP for metastatic melanoma but states its belief that the test works and will be validated by forthcoming studies.

Takeaway: Palmetto is only one Medicare contractor. But far from being a blip on the radar screen, the new Palmetto LCDs are a reflection of how CMS and its other contractors are coming around on newly developed molecular diagnostic testing—despite the current lack of evidence supporting their clinical effectiveness. In other words, the Medicare payor community is moving ahead with coverage in the expectation that the justifying scientific studies will eventually catch up and not the other way around.

Subscribe to view Essential

Start a Free Trial for immediate access to this article