Groundbreaking Decision on Genomic Profiling Coverage Comes With No Fanfare

Published on: 
Evidence-Based Oncology, Patient-Centered Oncology Care, Volume 21, Issue SP4

A key CMS contractor has issued an apparent precedent-setting decision outlining how it will make coverage determinations for laboratory developed tests (LDTs) that use sequence-based genetic profiling to guide treatment for persons with non-small cell lung cancer (NSCLC). However, the decision, known as a local coverage determination (LCD), came with no warning, press release, or announcement, so it remains to be seen if the policy will become standard across Medicare.

As reported in The Cancer Letter January 23, 2015, Palmetto GBA posted on its website on January 22, 2015, “well after the close of business,” an LCD titled “Comprehensive Genomic Profiling for Non-Small Cell Lung Cancer.”1 The move came in the aftermath of President Obama’s State of the Union address, which mentioned a precision medicine initiative later outlined at the White House. While the Obama administration did not draw a link between the 2 items, The New York Times mentioned the Palmetto policy change in its coverage of the larger effort to develop treatments tailored to patients’ individual genetic characteristics.

Bruce Quinn, MD, PhD, MBA, a former Medicare official and consultant for Foley Hoag, told the Times that the LCD was a “watershed event.”2 What does the Palmetto change mean? Strictly speaking, it applies only to treatment decisions in the Carolinas, Virginia, and West Virginia. In a broader sense, as The Cancer Letter notes, Palmetto’s decision to develop the MolDx program and gain expertise in developing standards for making payment decisions in molecular diagnostics could elevate its status due to a 2014 law that would allow CMS to use its LCDs to establish policies for all such tests.

According to The Cancer Letter, the decision focuses on coverage of somatic comprehensive genomic profiling for patients with metastatic NSCLC. Tests are limited to those who are lifetime nonsmokers or former light smokers and who have tested negative for EGFR mutations and EML4-ALK rearrangements. This will allow patients to be treated with a targeted therapy for which they would have been ineligible.1 As experts told The Cancer Letter,1 and as Quinn and Rina Wolf, MHA, vice president of XIFIN, told stakeholders gathered in Baltimore at Patient-Centered Oncology

Care in November 2014, sponsored by The American Journal of Managed Care,3 the issue of reimbursement in next-generation sequencing is increasingly important.3


Both Wolf, in addressing the Baltimore meeting, and sources who spoke to The Cancer Letter, said the comprehensive sequencing technologies could render moot challenges that arise when tissue samples are depleted before all tests are run.1,3 Vincent Miller, chief medical officer of Foundation Medicine Inc, a company that stands to be a winner under the Palmetto decision, called it “potentially transformative,” and specifically cited the distinction between a comprehensive genetic profile and panels of multiple genes.1 In mid-January, Roche spent just over $1 billion

for a 56% share in Foundation Medicine, Forbes reported.4

If Palmetto’s move is a harbinger of what CMS will do more broadly, it could signal less uncertainty in both the reimbursement and regulation of diagnostic testing, which may not make everyone happy. In early January, the FDA held a 2-day workshop to outline a framework for regulating up to 11,000 LDTs that fall under a relatively small number of Medicare codes. Most reach the market with oversight from agencies, although the FDA has granted clearance for some companion diagnostics.5

Pharmaceutical firms have sought to bring order to this situation, and reports indicate they were represented at the White House announcement of the precision medicine initiative.6 Some funding in the $215-million plan will aid FDA efforts to regulate to the industry.7


1. Goldberg P. CMS opens door to coverage of comprehensive genomic sequencing. The Cancer Letter. 2015;41(3):1-6.

2. Pear R. Obama to request research funding for treatments tailored to patients’ DNA. The New York Times website. Published January 24, 2015. Accessed February 2, 2015.

3. The American Journal of Managed Care website.The Road to Personalized Medicine: Clinical Utility and Reimbursement in Molecular Diagnostics. Patient Centered Oncology Care 2014. Produced November 14, 2014. Accessed February 3, 2015.

4. Herper M. Roche spends $1.03 billion for majority stake in cancer genomics firm. Forbes website. Published January 12, 2015. Accessed February 2, 2015.

5. Caffrey MK. Arguments taking shape for and against FDA regulation of diagnostic tests. Am J Manag Care. 2015. In press.

6. Tirrell M. Drugmakers receive mysterious invitations to the White House. CNBC website. Published January 28, 2015. Accessed February 2, 2015.

7. Office of the press secretary. FACT SHEET: President Obama’s precision medicine initiative. Whitehouse website. Published January 30, 2015. Accessed February 2, 2015.