Navigating Challenges With Determining Value, Reimbursement of Genetic Testing

October 11, 2019

During a session at the National Association of Managed Care Physicians 2019 Fall Managed Care Forum being held October 10-11 in Las Vegas, Nevada, Kathryn Phillips, PhD, founding director of the University of California, San Francisco Center for Translational and Policy Research on Personalized Medicine (TRANSPERS), discussed the emergence and rise of genetic testing, the challenges of determining value and reimbursement, and what’s ahead for these tests.

During a session at the National Association of Managed Care Physicians 2019 Fall Managed Care Forum being held October 10-11 in Las Vegas, Nevada, Kathryn Phillips, PhD, founding director of the University of California, San Francisco Center for Translational and Policy Research on Personalized Medicine (TRANSPERS), discussed the emergence and rise of genetic testing, the challenges of determining value and reimbursement, and what’s ahead for these tests.

“Precision medicine is here to stay,” said Phillips, who began by painting a picture of the current genetic testing market:

  • There are genetic tests available for 11,000 conditions, 132 drugs note genetic markers in their labels to guide treatments, and 42% of drugs in the pipeline include genetic markers.
  • Testing is evolving: There’s been a move from single-gene testing to gene panels to whole-exome sequencing to whole-genome sequencing. There are also disease-specific testing and inherited/genome sequencing versus acquired/somatic sequencing.
  • There are currently 75,000 genetic tests on the market, 14% of which are multigene tests, and their prevalence is increasing rapidly.
  • The highest percentage of spending on genetic testing is spent on multigene panel tests and on prenatal and hereditary cancer risk testing.

Looking ahead, Phillips predicts that precision medicine and genetic testing will continue to grow in importance, use, and spending. But, the current challenges will continue, including limitations in the data and evidence, the high cost of some tests relative to benefits, and variable access to appropriate testing. Perhaps the most dauting challenge that will continue to face genetic testing is reimbursement, said Phillips.

Historically, payers have focused on medically necessary, non-experimental testing as criteria for coverage, which means that they assume a patient is being tested for one marker and for one reason, and that information will be used to act on something for that patient. Therefore, said Phillips, payers have wanted to see all measured genes having clinical utility.

However, this view has come in contact with several challenges, as there is a blurring of research use versus clinical use of these tests, a slippery slope of population-wide screening versus targeted testing, personal utility versus payer mandate, and concerns among payers that patients and providers don’t sufficiently understand benefits relative to limitations.

Phillips did note that we are seeing a paradigm shift in payer coverage for genetic testing. For example, in March last year, CMS finalized its National Coverage Determination (NCD) for next-generation sequencing tests for patients with advanced cancer.

Following pushback from most labs and patient advocates, who pointed out flaws in the NCD, including the fact that it would exclude coverage for early-stage patients with cancer, the NCD was subsequently reopened by CMS. A proposed memo is due later this month, and the new NCD is expected to be finalized by early next year.

Despite the setback, the move from CMS represents a coverage approach that would likely have “ripple effects with other payers and tests,” said Phillips. The NCD included coverage for companion diagnostics, with FDA approval and clearance of such tests being enough for automatic coverage. The NCD also said that if one gene met the requirement, the entire panel would be covered.

Will private payers follow CMS’ lead? According to Phillips, they often do not, and the NCD is inconsistent with many current policies and approaches to coverage. She added that there are several other questions that remain unanswered, including the downstream and long-term impact, as well as the impact on family members. And while panels might reduce costs by replacing sequential single-gene testing and offering more information, it’s important to be aware of the budget impact on an organization with the rise in utilization and costs of the large panels.

Phillips then shifted gears, moving the focus from the unknown future of reimbursement for genetic testing to the evolving consumer and business landscape of these panels.

Rise of direct-to-consumer and hybrid labs

Historically, lab testing has been clinician-centric, but recently, there has been a rise in direct-to-consumer (DTC) testing for certain health risks, such as 23andMe’s test for 3 BRCA mutations that are most common in those of Ashkenazi Jewish descent, which have opened the door to other challenges, including limited variants and the unknown role of the primary care provider and health plan.

Concurrently, there has been a rise in the prevalence of hybrid labs, which are a mix between traditional lab and DTC labs. According to Phillips, these labs come with lower costs; for example, a test for hereditary cancer risk will cost about $200 in the hybrid lab, compared with $2000-$6000 in a traditional lab.

There are benefits, such as increased access and convenience. But there are also some potential risks, including that people may not understand what they’re getting, as well as challenges, such as how to link these results to further care.

In a viewpoint appearing in JAMA in May1, Phillips wrote: “The evolving landscape requires evidence so that relevant parties can make informed decisions. The hybrid model cannot be examined as if it was a DTC model, and within the hybrid model, specific laboratories may have varying characteristics. Consumers need clear explanations of their choices, clinicians need an understanding of the advantages and limitations of various models, and policy makers need information on the trade-offs between costs, benefits, and risks to create informed regulations and policies.”

Rise of lab benefit managers

While many are aware of the growing controversy that surrounds pharmacy benefit managers (PBMs), Phillips pointed out that little attention had been paid to lab benefit managers (LBMs), which could also facilitate the same issues and harms seen with PBMs.

LBMs, according to Phillips, are currently used by 3 of the 4 largest plans to manage genetic testing because the plans feel unfit to handle the tests due to their complexity and the lack of in-house expertise. As a result, they outsource their genetic testing to LBMs, which offer provider education, delegate preferred labs and privileging of providers, create prior authorization requirements, and develop test formularies and coverage policies.

To date, there is almost no evidence on the impact of LBMs, and while they may provide benefits, stakeholders should look out for the potential harms, as seen with PBMs.

Future trends

The cell-free DNA (cfDNA) testing market is booming and will likely continue to increase in prevalence and impact, said Phillips. cfDNA has been utilized in 2 ways: circulating tumor DNA testing, otherwise known as liquid biopsy, for therapy selection and monitoring in cancer patients and early detection of cancer in those who don’t know they have cancer, as well as cell-free fetal DNA testing, which uses fetal DNA circulating in maternal blood and is used in non-invasive prenatal testing.

To date, there have been no published analyses of payer coverage, but a TRANSPERS study in progress has found that the proportion of private payers covering these tests increased from 0% in 2016 to 38% in 2019. Interestingly, noted Phillips, there are Medicare Local Coverage Decisions emerging.

There are also few, if any, published studies on the economic impact of these tests, although it’s hypothesized that they could save costs by earlier detection or more targeted treatment.

Reference

Phillips K, Trosman J, Douglas M. Emergence of hybrid models of genetic testing beyond direct-to-consumer of traditional labs [published online May 30, 2019]. JAMA. doi: 10.1001/jama.2019.5670.