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AMP puts a cost—and value—to sequencing procedures

July 2015—Amid excitement about the groundbreaking work of unlocking the human genome’s secrets to speed diagnosis and target oncologic treatment comes the unpleasant reality that much of this labor now goes unpaid. Getting the American Medical Association’s editorial panel to publish nearly two dozen new genomics-related CPT codes for molecular pathology was a vital step, as was having those codes accepted in the Medicare clinical laboratory fee schedule.

But when the Centers for Medicare and Medicaid Services determined that the payment basis for those codes would be gap-filled, that meant that pricing would not be determined until later this year and not take effect until 2016. With Medicaid and private payers following Medicare’s lead—or lack thereof—laboratories find themselves with a raft of CPT codes to use when billing their genomic sequencing procedures but no price tag associated with them.

Genomic testing “is expanding in CLIA laboratories, and it’s important that these codes get prices,” Aaron D. Bossler, MD, PhD, said in a talk at this year’s Executive War College. Dr. Bossler is director of the molecular pathology laboratory at the University of Iowa Carver College of Medicine. He also chairs the Association for Molecular Pathology’s Economic Affairs Committee.

Setting the right price depends on understanding how much laboratories spend to develop, perform, and maintain a genomic test, as well as the value that assay delivers for patients and for payers, Dr. Bossler said. AMP has come up with a method to do just that, formulating a model to help laboratories calculate their genomic testing costs to the penny while demonstrating—in the sometimes obscure specifications of health economics—the financial merit of these innovative assays.

The association’s Genomic Sequencing Procedures Pricing Project Oversight Committee gathered detailed protocols on 13 representative genomic tests from nine laboratories using the Illumina or Ion Torrent platforms. The committee examined the costs associated with each step of the process, such as consumables and supplies, equipment, bioinformatics and reporting, personnel time, and test validation and maintenance.

Dr. Bossler

Some assays, such as test code 81430—a genomic sequence analysis for hearing loss—showed relatively little variation, with the cost per test ranging between $1,899 and $1,949, Dr. Bossler said. Others showed a much broader array of costs. For example, code 81415—for exome sequence analysis—found laboratory expenses ranging from $1,639 to $3,142.

AMP also examined the value proposition of three genomic sequencing procedures, contrasting current pathways that leave genomic testing for last with new paradigms in which sequencing is done earlier in the patient’s evaluation. In some areas, the proposed pathway would save payers money, Dr. Bossler said. If a targeted multiple gene sequencing test were done immediately after hearing loss was confirmed, the cost per diagnosis would add up to $4,106. That is less than a third of the current tally of $15,498 per diagnosis, says the AMP analysis.

“This really helps on this problem of the diagnostic odyssey, where it’s not entirely clear what the diagnosis is for the patient, and you end up spending a lot of money on single-gene tests, procedures, imaging studies, all those sorts of things that add to the cost of doing this,” Dr. Bossler said.

In the case of an exome sequencing-first approach to undiagnosed neurodevelopmental disorders, AMP estimates the cost per diagnosis would be $9,484, less than half of what it costs under the current care pathway.

“Again, we are showing that using this very powerful technology is extremely helpful for these patients. And, hopefully, we’ll be able to convince payers that that is the case,” Dr. Bossler said.

The economic case for expanding genomic testing for patients with non-small cell lung cancer was not as strong. Compared with the current standard of doing EGFR and ALK mutational analysis, a new pathway expanded to look for a number of other markers that the National Comprehensive Cancer Network has tabbed as potentially useful in targeting NSCLC treatment would actually cost about $2,500 more. That is likely due in part to the fact that this alternative approach would boost—from six percent to 30 percent—the proportion of patients receiving targeted therapy. However, the new pathway would be expected to improve patient outcomes and dramatically reduce adverse events.

More information about AMP’s genomics pricing model, including a step-by-step video tutorial for laboratories interested in using it, is available at http://j.mp/amp_pricing. At press time, the CMS was set to hold a July 16 meeting in Baltimore to accept public comments on payment for new test codes for 2016. The agency will post preliminary pricing determinations in September, to be followed by a 60-day comment period. The final pay rates for the new codes will be unveiled in November, along with the final fee schedule.

It may be an uphill battle for next-generation sequencing to get its due from payers, Dr. Bossler said.

“It will have to be a lot of folks speaking up, including the patients who will benefit from these things, before we’re going to get a whole lot of traction.”—KBO’R

Liquid biopsy seen as one disruptive technology

Forces potentially disruptive to mainstream clinical laboratory practice lie ahead, Gregory J. Tsongalis, PhD, director of molecular pathology and clinical genomics at Dartmouth’s Geisel School of Medicine, said in a War College presentation in May.