CCLA
2015 Annual Conference
Challenges for new technologies: physician
and payer education and a view from the
PAMA advisory panel
CARL MORRISON, MD, DVM
President, CSO, Founder OmniSeq
Executive Director Center for Personalized Medicine
Director Molecular Pathology
Roswell Park Cancer Institute
Buffalo, NY
DISCLOSURE: Funding member with minority equity interest in OmniSeq, LLC.
BACKGROUND:
• Solo equine practitioner, Lexington, KY, 1982-94
• Molecular pathology director 2002-present
•
Assistant Professor, Ohio State University, Columbus, OH, 2002-2007
•
Professor, Roswell Park Cancer Institute, Buffalo, NY, 2007-present
• Surgical pathology 2002-2104
• Other pertinent
• CAP Molecular Oncology Committee 2006-2102
• CMS Advisory Panel on Clinical Diagnostic Laboratory Tests, 2015
COMMENTS:
Expertise limited to oncological based molecular pathology.
My comments are my own and not those of RPCI or OmniSeq.
Dr. Morrison will discuss some of the challenges that gapfill creates for
new technologies such as next generation sequencing. A lookback at
failures for gapfill for Tier 1 and 2 codes will provide a landscape of
pitfalls to avoid in gapfilling new technologies such as GSP codes.
How the gapfill process intersects with the PAMA regulations for
market based pricing of new technologies will also be discussed.
State three key points (education objectives) that your presentation
will cover.
1.
Why gapfill has failed in the past
2.
Challenges to improving the gapfill process
3.
How gapfill and value based pricing intersect
CMS Advisory Panel on Clinical
Diagnostic Laboratory Tests
Description of Duties
In carrying out the activities outlined above, the Panel may consider and advise on the following
issues:
 Calculation of weighted medians of private payor rates for laboratory tests.
 Phase-in of reductions in Medicare payment rates based on private payor rates, as required.
 Application of market rates to establishment of Medicare payment rates.
 Evaluation and designation of tests as advanced diagnostic laboratory tests are defined in
section 1834A of the Act.
 Whether to use crosswalking or gapfilling to determine payment for a specific new test.
 The factors used in determining coverage or payment processes for new clinical diagnostic
laboratory tests.
The subject matter before the Panel shall be limited to these and related topics. Unrelated topics
are not subjects for discussion. Unrelated topics may include, but are not limited to, the following
topics referenced in section 1834A of the Act: definition of an applicable laboratory, definition of
a data collection period, treatment of discounts, reporting of more than one payment rate for the
same payor, certification of data, definition of private payor, use civil money penalties, and
generally, Medicare conditions of payments for clinical diagnostic laboratory tests.
.
CMS Advisory Panel on Clinical Diagnostic
Laboratory Tests
Description of Duties
In carrying out the activities outlined above, the Panel may consider and advise on the
following issues:
 Calculation of weighted medians of private payor rates for laboratory tests.
 Phase-in of reductions in Medicare payment rates based on private payor rates, as required.
 Application of market rates to establishment of Medicare payment rates.
 Evaluation and designation of tests as advanced diagnostic laboratory tests are defined in
section 1834A of the Act.


Whether to use crosswalking or gapfilling to determine payment for a specific
new test.
The factors used in determining coverage or payment processes for new clinical diagnostic
laboratory tests.
The subject matter before the Panel shall be limited to these and related topics. Unrelated topics
are not subjects for discussion. Unrelated topics may include, but are not limited to, the
following topics referenced in section 1834A of the Act: definition of an applicable laboratory,
definition of a data collection period, treatment of discounts, reporting of more than one
payment rate for the same payor, certification of data, definition of private payor, use civil
money penalties, and generally, Medicare conditions of payments for clinical diagnostic
laboratory tests.
CMS Advisory Panel on Clinical Diagnostic
Laboratory Tests
Description of Duties
In carrying out the activities outlined above, the Panel may consider and advise on the
following issues:
 Calculation of weighted medians of private payor rates for laboratory tests.
 Phase-in of reductions in Medicare payment rates based on private payor rates, as required.
 Application of market rates to establishment of Medicare payment rates.
 Evaluation and designation of tests as advanced diagnostic laboratory tests are defined in
section 1834A of the Act.
 Whether to use crosswalking or gapfilling to determine payment for a specific new test.

The factors used in determining coverage or payment processes for new clinical
diagnostic laboratory tests.
The subject matter before the Panel shall be limited to these and related topics. Unrelated topics
are not subjects for discussion. Unrelated topics may include, but are not limited to, the
following topics referenced in section 1834A of the Act: definition of an applicable laboratory,
definition of a data collection period, treatment of discounts, reporting of more than one
payment rate for the same payor, certification of data, definition of private payor, use civil
money penalties, and generally, Medicare conditions of payments for clinical diagnostic
laboratory tests.
.
CMS Advisory Panel on Clinical
Diagnostic Laboratory Tests
What have we learned?
Gapfill is the future.
Extraordinary focus on ADLT(s) given the relative
number of tests.
What have we not learned?
Gapfill and how it should work.
How to manage historical problems, eg, Tier 2 codes
and why the CLFS price is $0.00.
Pricing and transparency, eg, GSP codes (81445).
Pricing
1980s
2012
2013
2014
2015
2016
Stacked codes
42 CFR 414.508 - Payment for a new
clinical diagnostic laboratory test.
• Technology
assessment
• Crosswalking
• Gapfilling
2017
future
PAMA
• Market based
• report private
payer rate and
volume data
Pricing
1980s
2012
2013
2014
2015
2016
Stacked codes
42 CFR 414.508 - Payment for a new
clinical diagnostic laboratory test.
• Technology
assessment
• Crosswalking
• Gapfilling
2012
Stacked codes
• Technology
assessment
2013
MoPath
CPT
• Tier 1
• Tier 2
2014
2015
MoPath CPT
•
•
•
•
future
PAMA
• Market based
• report private
payer rate and
volume data
Coding
1980s
2017
Tier 1
Tier 2
GSP
MAA
2016
2017
future
MoPath CPT
• Tier 1 – analyte specific, ~100 codes, typically 1 code per 1 gene, but exceptions
of several codes for 1 gene or multiple genes for 1 code
• Tier 2 – not analyte specific, 9 codes each with 50-100 genes
• GSP
• MAAA
MoPath CPT
• Tier 1 – analyte specific, ~100 codes, typically 1 code per 1 gene, but exceptions
of several codes for 1 gene or multiple genes for 1 code
• Tier 2 – not analyte specific, 9 codes each with 50-100 genes
• GSP
• MAAA
Xifin pdUnits 6
mo 2015
=1,351,447
Xifin pdUnits 6
mo 2015
=67,111
MoPath CPT
• Tier 1 – analyte specific, ~100 codes, typically 1 code per 1 gene, but exceptions
of several codes for 1 gene or multiple genes for 1 code
• Tier 2 – not analyte specific, 9 codes each with 50-100 genes
• GSP – 21 codes, each multiple genes
• MAAA – 12 codes = 12 unique tests
81445 Targeted genomic sequence analysis panel, solid organ neoplasm, DNA analysis,
5-50 genes (eg, ALK, BRAF, CDKN2A, EGFR, ERBB2, KIT, KRAS, NRAS, MET, PDGFRA,
PDGFRB, PGR, PIK3CA, PTEN, RET), interrogation for sequence variants and copy
number variants or rearrangements, if performed
81455 Targeted genomic sequence analysis panel, solid organ or hematolymphoid
neoplasm, DNA and RNA analysis when performed, 51 or greater genes (eg, ALK, BRAF,
CDKN2A, CEBPA, DNMT3A, EGFR, ERBB2, EZH2, RLT3, IDH1, IDH2, JAK2, KIT, KRAS,
MLL, NPM1, NRAS, MET, NOTCH1, PDGRA, PDGFRB, PGR, PIK3CA, PTEN, RET),
interrogation for sequence variants and copy number variants or rearrangements, if
performed.
42 CFR 414.508 - Payment for a new clinical diagnostic laboratory test.
• Crosswalking
(b) New codes released by CMS
Year 1
Jan
Feb
(a)
Codes from AMA
CPT Editorial Panel
March
April
May
June
July
(c)
Public
comments
Aug
Sept
(d)(1)
Proposed
Final Rule
($rate)
Oct
Nov
Dec
(d)(2)
Preliminary
Final Rule
($rate)
(a) CMS makes available to the public (through CMS's Internet Web site) a list that includes codes for which
establishment of a payment amount is being considered for the next calendar year.
(b) CMS publishes a FEDERAL REGISTER notice of a meeting to receive public comments and
recommendations (and data on which recommendations are based) on the appropriate basis, as specified in
§414.508, for establishing payment amounts for the list of codes made available to the public.
(c) Not fewer than 30 days after publication of the notice in the FEDERAL REGISTER, CMS convenes a
meeting that includes representatives of CMS officials involved in determining payment amounts, to receive
public comments and recommendations (and data on which the recommendations are based).
(d) Considering the comments and recommendations (and accompanying data) received at the public meeting,
CMS develops and makes available to the public (through an Internet Web site and other appropriate
mechanisms) a list of—
(1) Proposed determinations with respect to the appropriate basis for establishing a payment amount for each
code, with an explanation of the reasons for each determination, the data on which the determinations are
based, and a request for public written comments within a specified time period on the proposed
determination; and
(2) Final determinations of the payment amounts for tests, with the rationale for each determination, the data
on which the determinations are based, and responses to comments and suggestions from the public.
42 CFR 414.508 - Payment for a new clinical diagnostic laboratory test.
• Gapfill
(b)
Year 1
Jan
Feb
March
April
May
June
Jan
Feb
Aug
(c)
(a)
Year 2
July
March
April
May
(d)(2)
Prelim $rate
June
July
Sept
Oct
Nov
Dec
Oct
Nov
Dec
(d)(1)
$0.00
Aug
Sept
(d)(2)
Final $rate
(a) CMS makes available to the public (through CMS's Internet Web site) a list that includes codes for which
establishment of a payment amount is being considered for the next calendar year.
(b) CMS publishes a FEDERAL REGISTER notice of a meeting to receive public comments and
recommendations (and data on which recommendations are based) on the appropriate basis, as specified in
§414.508, for establishing payment amounts for the list of codes made available to the public.
(c) Not fewer than 30 days after publication of the notice in the FEDERAL REGISTER, CMS convenes a
meeting that includes representatives of CMS officials involved in determining payment amounts, to receive
public comments and recommendations (and data on which the recommendations are based).
(d) Considering the comments and recommendations (and accompanying data) received at the public meeting,
CMS develops and makes available to the public (through an Internet Web site and other appropriate
mechanisms) a list of—
(1) Proposed determinations with respect to the appropriate basis for establishing a payment amount for each
code, with an explanation of the reasons for each determination, the data on which the determinations are
based, and a request for public written comments within a specified time period on the proposed
determination; and
(2) Final determinations of the payment amounts for tests, with the rationale for each determination, the data
on which the determinations are based, and responses to comments and suggestions from the public.
42 CFR 414.508 - Payment for a new clinical diagnostic laboratory test.
• Gapfill - ADLT
Year 1
Jan
Feb
March
(a)
Code from AMA
April
May
(b)
New code
released
June
July
(c)
Public
comments
Aug
Sept
(d)(1)
List $rate
Oct
Nov
Dec
(d)(2)
List $rate
Proposed Rule
‘(5) ADVANCED DIAGNOSTIC LABORATORY TEST DEFINED.— Advanced diagnostic laboratory test (ADLT) means a CDLT
covered under Medicare Part B that is marketed and
In this subsection, the term ‘advanced diagnostic laboratory
performed only by a single laboratory and not sold for use by
test’ means a clinical diagnostic laboratory test covered under
a laboratory other than the laboratory that designed the test
this part that is offered and furnished only by a single laboratory
and not sold for use by a laboratory other than the original
or a successor owner of that laboratory, and meets one of the
developing laboratory (or a successor owner) and meets one
following criteria:
of the following criteria:
(1) The test—
‘‘(A) The test is an analysis of multiple biomarkers
(i) Must be a molecular pathology analysis of multiple
of DNA, RNA, or proteins combined with a unique algorithm
biomarkers of deoxyribonucleic acid (DNA), or ribonucleic
to yield a single patient-specific result.
acid (RNA);
‘‘(B) The test is cleared or approved by the Food and
(ii) When combined with an empirically derived algorithm,
Drug Administration.
yields a result that predicts the probability a specific
‘‘(C) The test meets other similar criteria established
individual patient will develop a certain condition(s) or
by the Secretary.
respond to a particular therapy(ies);
(iii) Provides new clinical diagnostic information that cannot
be obtained from any other test or combination of
tests;
…the Act recognize special reporting and payment
requirements for ADLTs…
Section 1834A(d)(1)(A) of the Act requires the payment
amount for new ADLTs to be based on actual list charge
for an ‘‘initial period’’ of 3 quarters,
H. R. 4302—18‘
Evidence of the impact of CMS gapfill on
commercial payers since 2013.
CPT
81235
81275
81210
Interpretation
EGFR Tier 1
KRAS Tier 1
BRAF Tier 1
Limitation of Commercial Commercial G2
coverage
2015
Intelligence 2013
NSCLC
$239
$609
Colorectal
$148
$474
Melanoma
$110
336
Difference $ Difference %
$
(370) ↓ 61%
$
(326) ↓ 68%
$
(226) ↓ 68%
What is gapfill?
The elements that can and should be considered in the gapfill process
according to section 42 CFR 414.508 include:
(i) Charges for the test and routine discounts to charges;
(ii) Resources required to perform the test;
(iii) Payment amounts determined by other payers; and
(iv) Charges, payment amounts, and resources required for other tests
that may be comparable or otherwise relevant.
Is there any additional guidance on gapfill?
Is there any additional guidance on gapfill?
Is there any additional guidance on gapfill?
Is there any additional guidance on gapfill?
“…the local Medicare Administrative
Contractors (MACs) are responsible for
determining the appropriate fee
schedule amounts in the first year.”
42 CFR 414.508 - Payment for a new clinical diagnostic laboratory test.
• Gapfill
Year 1
Jan
Feb
March
April
(b)
New code
released
(a)
Code from AMA
Year 1
Jan
Feb
May
March
April
May
(d)(2)
Prelim $rate
Laboratory Directors
June
July
Aug
(c)
Public
comments
June
July
Sept
Oct
Nov
Dec
Oct
Nov
Dec
(d)(1)
$0.00
Aug
Sept
(d)(2)
Final $rate
What is gapfill?
Why has gapfill failed for Tier 2 codes when there
is evidence to support that are several million
units paid by commercial payers on an annual
basis?
Why did CMS provide an unrealistic gapfill price for
the next generation sequencing code for 81445
when essentially there is no evidence to support
that laboratories are using this code?
Why has gapfill failed for Tier 2 codes when there
is evidence to support that are several million
units paid by commercial payers on an annual
basis?
No good current explanation other than a lack of
knowledge among laboratory directors as to how
the gapfill process should work, given that there
are millions of data points from which to
extrapolate data prices.
Why did CMS provide an unrealistic gapfill price for
the next generation sequencing code for 81445
when essentially there is no evidence to support
that laboratories are using this code, ie, in this
instance there is essentially little to no data but yet
a NLA was established?
42 CFR 414.508 - Payment for a new clinical diagnostic laboratory test.
81445 Targeted genomic sequence analysis panel, solid organ neoplasm, DNA analysis, 5-50
genes (eg, ALK, BRAF, CDKN2A, EGFR, ERBB2, KIT, KRAS, NRAS, MET, PDGFRA, PDGFRB, PGR,
PIK3CA, PTEN, RET), interrogation for sequence variants and copy number variants or
rearrangements, if performed
(b)
2014
Jan
Feb
March
April
May
June
Jan
Feb
Aug
(c)
(a)
2015
July
March
April
(d)(2)
NLA $597
May
June
July
Sept
Oct
Nov
Dec
Oct
Nov
Dec
(d)(1)
$0.00
Aug
Sept
(d)(2)
NLA $597
In 2014, the Palmetto GBA MOLDX contractor issued a local coverage determination, L36143
for 81445 that was applicable to 4 mid-Atlantic states (Palmetto: SC NC VA WV), two central
states (CGS: OH KY), and the west coast and mountain states (western Noridian "JE" CA NV HI,
and northwestern/mountain Noridian "JF" AK WA OR ID MT ND SD UT AZ).
On September 25, 2015, CMS released final MAC gap-fill prices on the Medicare fee schedule for
81445 based upon the Palmetto MOLDX LCD L36143. The proposed pricing for this code was
$90.00 in the three Cahaba states (AL GA TN) and $597.31 in the four Palmetto states
(NC SC VA WV) with a National Limit of $597 based upon the median of the seven states.
42 CFR 414.508 - Payment for a new clinical diagnostic laboratory test.
81445 Targeted genomic sequence analysis panel, solid organ neoplasm, DNA analysis, 5-50
genes (eg, ALK, BRAF, CDKN2A, EGFR, ERBB2, KIT, KRAS, NRAS, MET, PDGFRA, PDGFRB, PGR,
PIK3CA, PTEN, RET), interrogation for sequence variants and copy number variants or
rearrangements, if performed
2015
Jan
Feb
March
April
(d)(2)
NLA $597
May
June
July
Aug
Sept
Oct
(d)(2)
NLA $597
Nov
Dec
Comments
NLA proposed for two codes, 81445 and 81450, which appear to have been determined by data
from only two Medicare contractors, which suggests that the gapfill process was not properly
or effectively applied, and at the very least, is not in the spirit of what the gapfill process intends,
i.e. to determine a fair price based on consideration of an aggregate of data obtained from multiple
available sources.
CMS should have recognized that a
price of $90 for 81445 is unrealistic and
should have questioned the accuracy of code usage by the laboratory and the validity of
the price submitted by that contractor. If those unrealistic prices were dismissed from
consideration, the national limitation would be based on the submission
of a single
carrier. Accepting the median of a single value, or even two values, as a legitimate national
limitation amount is erroneous in two respects, and highlights several shortcomings in the
application of the gapfill process.
42 CFR 414.508 - Payment for a new clinical diagnostic laboratory test.
81445 Targeted genomic sequence analysis panel, solid organ neoplasm, DNA analysis, 5-50
genes (eg, ALK, BRAF, CDKN2A, EGFR, ERBB2, KIT, KRAS, NRAS, MET, PDGFRA, PDGFRB, PGR,
PIK3CA, PTEN, RET), interrogation for sequence variants and copy number variants or
rearrangements, if performed
2015
Jan
Feb
March
April
May
June
July
Aug
(d)(2)
NLA $597
Sept
Oct
(d)(2)
NLA $597
What is gapfill?
The elements that can and should be considered in the gapfill process
according to section 42 CFR 414.508 include:
(i) Charges for the test and routine discounts to charges;
(ii) Resources required
to perform the test;
(iii) Payment amounts determined by other payers; and
(iv) Charges, payment amounts, and resources required for other tests
that may be comparable or otherwise relevant.
Nov
Dec
Comments
(ii) Resources required to perform the test
2014 Annual CLFS Meeting, Baltimore, MD
(ii) Resources required to perform the test
Arron Bossler, MD, PhD, University of Iowa, representing the
Economic Affairs Committee, Association MP
• 2014 Annual CLFS Meeting, Baltimore, MD
• 2015 Annual CLFS Meeting, Baltimore, MD
Presented micro-costing model for multiple GSP codes; 81415,
81430, 81470, 81445, and 81455.
Data collected and organized by Tynan Consulting & Boston
Healthcare Associates from 9 different laboratories.
Minimum cost = $751
Maximum cost = $2,265
(iv) Charges, payment amounts, and resources required for
other tests that may be comparable or otherwise relevant
Gene
ALK
Alteration Type
translocation
ALK
BRAF
EGFR
ERBB2
KRAS
SNV*
SNV
SNV
SNV, CNV
SNV
Indel at exon 14,
CNV**
translocation
translocation
translocation
translocation
MET
NRTK1
NTRK3
RET
ROS1
Actionable
Variants
Many
8
6
11
1
16
CPT code
88377
81479
(81235)***
81210
81235
88377
81275
CLFS price
$140.15
$329.18***
$178.80
$329.18
$140.15
$196.99
Many
Many
Many
Many
Many
88377
88377
88377
88377
88377
$140.15
$140.15
$140.15
$140.15
$140.15
$1,686.02
*SNV – single nucleotide variant
**CNV – copy number variant
*** no code - comparable procedure noted
42 CFR 414.508 - Payment for a new clinical diagnostic laboratory test.
81445 Targeted genomic sequence analysis panel, solid organ neoplasm, DNA analysis, 5-50
genes (eg, ALK, BRAF, CDKN2A, EGFR, ERBB2, KIT, KRAS, NRAS, MET, PDGFRA, PDGFRB, PGR,
PIK3CA, PTEN, RET), interrogation for sequence variants and copy number variants or
rearrangements, if performed
2015
Jan
Feb
March
April
(d)(2)
NLA $597
May
June
July
Aug
Sept
(d)(2)
NLA $597
Oct
Nov
Dec
Comments
On September 25, 2015, two additional MACs issued a local coverage determination for 81445, open
to comment until December 22, 2015.
The first, DL36376 was released by the NGS (National Government Services MAC) for IL-MN-WI
and for New York/New England. While limited to lung cancer is much broader in scope and policy
than the MOLDX policy
The second LCD DL36446 was released by Cahaba for AL-GA-TN, and is very similar to the
MOLDX policy.
Why did CMS provide an unrealistic gapfill price for
the next generation sequencing code for 81445
when essentially there is no evidence to support
that laboratories are using this code, ie, in this
instance there is essentially little to no data but yet
a NLA was established?
????????????????????????????????????????????
How will PAMA impact the current process?
6/30/15
Q1, Q2,
Q3 2106
• Final rules on parameters for data collection
• “Applicable laboratories” to report “applicable
information” to CMS
01/01/17
• Prices based on weighted median of private market
data to become new payment rates.
01/01/18
• Prices based on weighted median of private market
data to become new payment rates.
How will PAMA impact the future of reimbursement for 81445
or next generation sequencing?
Highly dependent on whether or not laboratories seek
reimbursement for next generation sequencing from commercial
payers.
Reimbursement
Coding practices
Contracting
Coverage
Preauthorization
• Single analyte
• GSP Codes
• Contracted
• Non-contracted
• GSP - lung
• Avoid at all costs
How will PAMA impact the future of reimbursement for 81445
or next generation sequencing?
Highly dependent on whether or not laboratories seek
reimbursement for next generation sequencing from commercial
payers.
Reimbursement
Coding practices
Contracting
Coverage
Preauthorization
• Single analyte
• GSP Codes
• Contracted
• Non-contracted
• GSP - lung
• Avoid at all costs
Personal experience with pricing for next generation sequencing
from commercial payers is an elaborate crosswalk.
How will PAMA impact the future of reimbursement for 81445?
What is the future of reimbursement for next
generation sequencing for the next 2 years?
A few laboratories will gain
reimbursement from commercial
payers for 81445, not 81455, in
2016 and 2017 with a limitation
of coverage restricted to Stage III
or IV NSCLC with a
reimbursement rate of $1,750 to
$3,500.
How will PAMA impact the future of reimbursement for 81445?
What is the future of reimbursement for next
generation sequencing for the next 2 years?
Very few laboratories will pursue
reimbursement from commercial
payers for 81445 in 2016 and 2017
with a limitation of coverage for
colorectal, breast, pancreatic, or
prostate cancer, but will abandon the
cause due to the impact on their
current negotiated rate for lung
cancer, aka, the elaborate crosswalk.
How will PAMA impact the future of reimbursement for 81445?
What is the future of reimbursement for next
generation sequencing for the next 2 years?
Most laboratories will pursue
reimbursement from commercial
payers for 81445 using single
analyte methodology and collect
from $300 to $1,750 depending
on the ICD9/10 neoplasm
classification.
How will PAMA impact the future of reimbursement for 81445?
What is the future of reimbursement for next
generation sequencing for the next 2 years?
CMS will honor reconsideration
requests for the current NLA for
81445, reverting the entire
process back to extended gapfill,
which will coincide very closely
with PAMA for a net effect of
$0.00 for 2016 and likely also for
2017.
Questions?
Thank you for your time and interest today.