With CMS coverage policy, NGS cancer testing goes large

Anne Paxton

July 2018—The March 16 announcement of a new Centers for Medicare and Medicaid Services coverage policy for next-​generation-sequencing–based diagnostic lab tests for patients with advanced cancer did not appear out of the blue, since a draft policy was issued last fall. But the revised final national coverage determination broke away from the original draft significantly.

The new, more liberal national coverage policy of the NCD proactively lays out the reimbursement welcome mat for NGS testing, industry analysts say. “Now there is a defined FDA pathway to get an NGS test to the market and get reimbursement for Medicare patients,” says Jeff Schreier, MBA, senior director of the marketing team at Diaceutics, a company that works with pharmaceutical firms on diagnostic testing and data analytics. “Before this NCD, there was none.”

The NCD makes all NGS testing (including leukemia/lymphoma, germline, liquid biopsy tests, and more) for patients with advanced-stage cancer eligible for pathways to FDA approval and CMS coverage. It drops a requirement that the tests be backed by evidence development, and it expands the eligible patient population to patients with stage III and stage IV advanced cancer, as well as those having recurrent, relapsed, refractory, or metastatic cancer.

Foundation Medicine and Thermo Fisher’s comprehensive tumor panels (FoundationOne CDx and Oncomine Dx Target Test) will be covered immediately. So will other FDA-approved or FDA-cleared companion in vitro diagnostics when the test has an FDA-approved or FDA-cleared indication for use in a patient’s cancer. Other tests using NGS with advanced cancer will continue to have local coverage determinations made by the local Medicare administrative contractors. But the full implications of the new policy for laboratory-developed tests, medical research, payer policies, and patient care continue to be subjects for debate.

It will definitely be easier to gain approval for NGS tests. “It has provided more predictability, but some questions remain about the overall impact on the use of NGS tumor panels moving forward,” says Charles Mathews, a principal with ClearView Healthcare Partners, a worldwide health care strategy consulting firm. Still, some old assumptions will be jettisoned. His job has often involved helping people identify clinical utility evidence they can develop to secure reimbursement, “and the NCD has flipped the script a bit,” he says. “Now it says, if you get FDA approval, you don’t have to develop all of that evidence.”

“It’s very much a conscious decision on the part of CMS to say: ‘We think this is advanced care. We want people to have access to it and we’re going to proactively support it.’” Even though there is not a lot of evidence about NGS across the board right now, Mathews sees the CMS saying, “Let’s give it a shot”—in contrast with typically cautious CMS approaches in the past. Political pressures also figure in the equation, he says, given the United Kingdom’s 100,000 Genomes Project and Germany’s recent NGS coding and payment reforms.

One result of the NCD is fairly certain, in Mathews’ view: Foundation Medicine and Thermo Fisher stand to immediately gain market share because of their approved comprehensive tumor panels. The NCD, in fact, originated in a request by Foundation Medicine for parallel review (by CMS and FDA) of its FoundationOne CDx, which last November was the first NGS panel to win FDA approval, Mathews says. “These two companies are in a unique position where they were actually at the forefront of getting parallel approval. So now if you run a Thermo Fisher Oncomine in your lab, it has approval; the Illumina TruSight Cancer Sequencing Panel doesn’t have the same.”

“But long term, now that the pathway has been established and we know how to get approval, it’s just a matter of time for other panels to get approved,” Mathews adds. As a result, he expects that academic medical centers and community hospitals will further insource tumor panel testing, eventually eroding Foundation’s market share.

From laboratories’ perspective, tumor panel profiling makes sense, Mathews says. “The world as it was organized historically had individual tests associated with individual therapeutics; you take a piece of tissue, cut it into 15 pieces and say, ‘Let’s do the EGFR analysis, and now the ALK analysis,’ etc. And to be on label for all of these things, you have to use the FDA-approved companion diagnostic for each of them.”

“But then these NGS panels come along and say we can look at all of it at once. One sample, one workflow.” For EGFR and ALK, he adds, “we know there are certain therapies that respond well. But now you also have newer concepts such as tumor mutational burden and microsatellite instability. It appears that with the new NGS policy CMS is paying for the whole test, and that includes both the FDA-approved components of very clear value and also others that are along for the ride.”

Kyle Fetter, executive vice president and general manager of diagnostic services for Xifin, a health care IT company that provides lab information systems and revenue cycle management systems and services for diagnostic companies, views the NCD as a step in the right direction. “It’s a validation of technology that’s very important in diagnosing cancer patients.”

Fetter believes many laboratories will now take the route of developing their own tests and then apply for coverage through an individual MAC or Palmetto GBA’s MolDX program, which decides genetic testing coverage for most of the Medicare contractors.

Most recently, MolDX approved NGS coverage for gene testing for familial adenomatous polyposis, BRCA1 and BRCA2, myeloproliferative disease, and Lynch syndrome, and more tests are on deck. “Right now there are three specific NGS tests being considered by the MolDX program for coverage,” Diaceutics’ Schreier says. The tests are comprehensive genomic profiles to guide treatment in patients with advanced primary fallopian tube and ovarian cancer, metastatic colorectal cancer, and metastatic melanoma. MolDX revisited these panels two weeks after the NCD was issued, Schreier notes.

Fetter says more FDA approvals of NGS sequencing technologies are likely over time. “But we actually feel that if CMS is covering laboratory-​developed tests, many labs will continue to do LDTs in sequencing and simply go through the Medicare contractors” to win approval for reimbursement. Fetter hopes that labs will continue to push to get coverage for their specific NGS-based LDTs to supplement the FDA-approved tests, as well as push for expanded indications for coverage beyond those in the current NCD.

But a big problem for laboratories, Fetter says, is that the price point for testing with some of the genetic panels is way too low—$500 to $700. “When these prices were first released, it was well understood within the industry that they were too low, and people over time have become sort of passively accepting of it, but there are very few labs, if any, that can perform that testing at such a low cost. The specimens are very expensive, the logistical support and testing are very expensive, and the development is very expensive.”

People seeking approval of LDTs, he notes, appear to be seeking a new CPT code to get reimbursed at an appropriate rate, rather than be tied to the very low price for the established CPT codes. Xifin is encouraging more laboratories to work to get their LDTs approved through their MACs and to provide comments to the CMS on pricing and expanding their coverage indications for the NCD.

It was recently announced, Mathews says, that Foundation Medicine received a novel advanced diagnostic laboratory test, or ADLT, designation. “For a nine-month period starting July 1, CMS will reimburse FoundationOne CDx at a rate of $3,500 per test, which interestingly is less than their $5,800 list price,” Mathews says. The other assays do not have this designation, he adds, and will go through a process in which each individual carrier will set its own price before a final national price is established (gap-filling).

The coverage of evidence requirement, mandating that LDT developers demonstrate clinical utility of their NGS test, was a concern for many when it was part of the original draft of the NCD, though there was surprise when the CMS removed it in the final draft, Fetter says. “I do think it would be prohibitive for many laboratories trying to get into performing NGS for particular patients. So when CMS removed that requirement, most laboratories would have agreed that that removes a barrier to their performing that type of testing.” The laboratory community in general, he notes, believes approval should be based on just making sure there is clinical validation for the NGS tests they are running.

The laboratories in contact with Schreier have been positive about the NCD, and so are Diaceutics’ pharmaceutical clients. “The pharmaceutical companies are very keen to the need to understand what patient access there will be for NGS,” Schreier says, “because their drug pipelines are so dependent on the testing. And that access will depend on reimbursement, and the NCD is a step forward in getting NGS testing covered and reimbursed.” Since the NCD was announced, he has seen an uptick in drug companies’ announcements of collaborations with Foundation Medicine to develop companion diagnostic tests for their therapeutic assets.