A Molecular Diagnostic Perfect Storm: The Convergence of Regulatory & Reimbursement Forces that Threaten Patient Access to Innovations in Genomic Medicine

Executive Summary & Recommendations:

The Human Genome Project was an international, collaborative research program whose goal was the complete mapping and understanding of all the human genes, which are collectively referred to as the "genome." The pioneering effort of the Human Genome Project and other genomic research generated extensive data about human DNA enabling scientists and clinicians to develop more powerful tools to study complex diseases. These diseases, such as cancer, diabetes, and cardiovascular disease constitute the majority of health problems in the United States. In his testimony before the U.S. House Subcommittee on Health, Committee on Energy and Commerce in May 2003, Francis Collins celebrated the successful conclusion of the Human Genome Project as "the true dawning of the genomic era," emphasizing that there is an ongoing vital role for the federal government in enabling the future of genomics, and especially in applying it to benefit human health." 1

More than a decade later, researchers and medical professionals in universities, cancer centers, clinical laboratories, and pharmaceutical/manufacturing companies across the country have honored the public trust in the Human Genome Project by developing hundreds of innovative diagnostic tests and therapies that are advancing modern medicine in ways that would have been impossible without this breakthrough. Cancers treated like chronic illnesses, the causes of mysterious inherited conditions now identified, and rapid detection of emerging infectious diseases like Ebola and pandemic flu are just a few of the advances stemming from this investment. A recent example in the New England Journal of Medicine details the remarkable story of a cancer survivor whose life was prolonged beyond expectation solely based on the result of a laboratory developed procedure (LDP), and its therapeutic implications. The case is a 57-year-old woman who was diagnosed with a highly aggressive and near-universally fatal type of metastatic thyroid cancer. Her doctors ordered an LDP called whole-exome sequencing, a technique similar to that used to complete the Human Genome Project. The DNA fingerprint revealed a mutation that rendered the tumor sensitive to a specific chemotherapy agent. After treatment, the patient was almost fully cancer free for 18 months, which is extraordinary in light of the typical prognosis of this type of tumor - a mere 5 months median survival. By using a procedure developed in a molecular diagnostics laboratory based on the pioneering work of the Human Genome Project, this patient was able to live disease free for more than a year longer than expected.

However, the breakthroughs made possible by mapping the human genome are being endangered by government regulations which are threatening patient access to these truly revolutionary treatments. Unbeknownst to most patients, a storm is brewing in Washington that could significantly threaten development and coverage of these new tests. A long list of efforts by the U.S. Food and Drug Administration (FDA) and the Centers for Medicare and Medicaid Services (CMS), the two federal agencies that claim oversight over laboratory developed procedures (LDPs), are at the heart of this brewing storm. On the one hand, the FDA recently announced that it intends to regulate LDPs requiring that laboratories submit applications for enormously expensive premarket review for thousands of LDPs if they wish to continue offering them to patients. Laboratories and the LDPs that they provide are already regulated by the Clinical Laboratory Improvement Amendments (CLIA) program at CMS, state health agencies, and third party federally recognized organizations. The FDA's new policies will effectively reformulate existing medical device regulations and consider healthcare providers as manufacturers, which will impose substantially new and duplicative requirements on clinical laboratories and hospitals. Of even greater concern, the FDA proposed policy could potentially stifle innovation by not allowing professionals the flexibility to improve and adapt already approved tests, essentially freezing outdated tests in time. Additionally, the FDA has recently issued a final guidance for "companion diagnostics," which are tests that are paired with a drug therapy. This guidance document restricts the development of these tests, in most circumstances, to a one test-one therapy model, and furthermore, requires that they are approved or cleared contemporaneously potentially limiting patient access to testing not developed in concert with a therapy.

Meanwhile, CMS who runs Medicare, the nation's largest insurer and whose actions are frequently mimicked in the private sector, has taken a heavy handed approach in denying coverage or reducing payment for many medically necessary molecular pathology tests. This has created a challenging environment for innovators to translate new genomic discoveries into clinical applications. For example, Medicare refused to pay for many molecular pathology tests during the first half of 2013. For certain commonly-utilized tests, such as cytogenomic arrays and Fragile X testing, which are important diagnostic tests for children with developmental delay, Medicare continues to deny coverage mistakenly believing that these tests are never appropriate for the Medicare beneficiary population. For example, adult males with previously undiagnosed Fragile X syndrome who develop tremor ataxia later in life, may be on Social Security disability, and therefore are Medicare beneficiaries. They are denied access to Fragile X testing to guide appropriate care management. Additionally, at least one of the Medicare Administrative Contractors (MACs), the companies that establish local coverage policies and process claims for Medicare, requires that laboratories that develop these innovative tests meet complex and costly mandates to secure reimbursement even for well-established diagnostics. These policies are jeopardizing the ability of even the largest laboratories to continue to provide innovative testing. Compounding these issues are a number of questions around overlapping requirements between the two agencies. Caught squarely in the middle are health care providers - those developing and delivering innovative treatments - and patients, who are the beneficiaries of this innovation.

While CMS and FDA officials have not publicly announced consolidation of laboratory testing as a goal, it does appear to be an inevitable outcome of the agencies' initiatives through their policy decisions. Significant reductions in the number of clinical laboratories offering molecular tests will have far-reaching negative effects for the healthcare system, including creating barriers to innovation, declining opportunities for specialized training regarding these complex tests, restricting direct interaction between molecular professionals and clinicians, and most importantly limiting patient access to medically necessary testing. Even more concerning, further encumbrances are around the corner as the reforms to payment under the Clinical Laboratory Fee Schedule (CLFS) newly enacted under the Protecting Access to Medicare Act (PAMA) are implemented in the next one to two years.

The Association for Molecular Pathology (AMP) is an international nonprofit medical society that has as its mission to advance the clinical practice, science, and excellence of molecular and genomic laboratory medicine through education, innovation, and advocacy to enable highest quality health care. Its members are board-certified pathologists, doctoral scientists and other laboratory medicine professionals who practice in the majority of clinical molecular diagnostics laboratories in the United States. They both develop and provide a professional interpretation for the novel, high quality molecular tests that are utilized daily in medical decision-making in all medical areas including cancer, infectious diseases, heritable disorders, and histocompatibility testing. Molecular pathology professionals are responsible for the design, validation, performance, and interpretation of the results associated with testing services provided by their laboratories. By closely monitoring every aspect of these important medical services, they have additional opportunities to promote patient safety, and therefore, are unlike any boxed and shipped medical devices including scalpels, artificial joints, or diagnostic kits, which are intended to be used by customers who are independent from the company that manufactured them.

In numerous papers, comment letters, and position statements, AMP has addressed the consequences of this gathering perfect storm of regulatory and reimbursement forces directed against molecular diagnostic testing with numerous recommendations designed to preserve patient access to appropriate testing and mitigate burgeoning negative impact on healthcare.

Recommendations:

1. Oversight for most laboratory developed procedures should remain at CMS under CLIA regulations, which should be modernized.
2. The FDA should eliminate the one test - one drug pair, approved or cleared in concert in the current companion diagnostics paradigm, which is unsustainable over time, and facilitate the utilization of additional diagnostics including multi-gene sequencing assays.
3. The FDA should use notice and comment rulemaking for substantive policy changes regarding LDPs, or at least conduct an economic impact study. In addition, draft guidance documents that fail to be finalized after a defined time limit should be withdrawn.
4. Regulator and payer policies should also reflect the contribution of molecular diagnostic laboratories to medical training and the necessary interaction between laboratory professionals and clinicians to support proper ordering and utilization of tests.
5. CMS should authorize payment for all claims previously filed using Tier 1 and Tier 2 molecular pathology CPT codes, retroactive to January 1, 2013, without requiring submission of an appeal for every claim unless a MAC has issued a Local Coverage Determination (LCD) for non-coverage that complies with existing regulatory requirements, including code-specific notice and comment.
6. When any new molecular pathology CPT codes are implemented, including those for multi-gene sequencing assays, the new CPT codes should share the same disposition of any other new Medicare service and should presumptively be covered. MACs should continue to have the authority and discretion to create exceptions, i.e., non-coverage or limitation on coverage determinations, through the existing LCD process.
7. CMS should not establish a single MAC to make recommendations or administer pricing, coverage, and payment decisions as this will undermine the LCD process and render all such determinations National Coverage Determinations (NCD), thus skirting the NCD process.
8. CMS should abandon the use of unique identifiers that discriminate among tests within a CPT code based on any criteria.
9. CMS should provide state Medicaid departments with information that will assist their coverage and pricing determinations so that our most vulnerable patients do not suffer lack of access to care due to bureaucratic constraints.
10. Congress should pass legislation to significantly reduce or eliminate the reporting penalties included in "Improving Medicare Policies for Clinical Diagnostic Laboratories" provision (Section 216) of PAMA. The reporting requirements and penalties will be burdensome for laboratories of any size, and could be impossible for smaller laboratories, which provide essential care to their local community.

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