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Legislation Needed Despite Demo Project on Tricare Coverage of LDTs, Lab Group Says

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NEW YORK (GenomeWeb) – The US Defense Health Agency last week announced in the Federal Register the launch of a demonstration project to evaluate whether under its existing legal framework the Tricare program can cover laboratory-developed tests without US Food and Drug Administration approval or clearance.

The project is a positive turn of events following the blanket non-coverage policy that Tricare has been exercising for non-FDA approved/cleared LDTs. However, under this new program, DHA hasn't detailed the type of evidence it will consider in determining which tests to cover. Moreover, the agency won't allow labs the right to appeal its coverage decisions once made.

Lab industry stakeholders, while supportive of DHA's demonstration project, maintain that legislative changes are ultimately necessary to ensure Tricare beneficiaries have access to critical lab tests. The American Clinical Laboratory Association "believes that DHA’s new demonstration project is an important step forward in renewing coverage for molecular pathology tests, such as cystic fibrosis testing, and ensuring that Tricare beneficiaries have access to the highest quality clinical laboratory diagnostics and healthcare services," association President Alan Mertz told PGx Reporter. "However, the notice is vague on a number of points that we hope DHA will clarify soon."

Tricare is the healthcare program of the DHA and provides benefits to military personnel, their families, and retirees. In January 2013, Tricare stopped reimbursing for more than 100 lab-developed tests. Many of these tests diagnose genetic diseases such as Fragile X syndrome, cystic fibrosis, and spinal muscular atrophy. While certain LDTs were still covered for those who use Military Treatment Facilities, LDTs mostly were not covered for those using a civilian healthcare provider.

The aim of the latest effort, entitled "DHA Evaluation of Non-FDA Approved LDTs Demonstration Project," is to assess how the US Department of Defense can review non-FDA approved/cleared LDTs and determine if they meet Tricare's evidence bar for safe and effective tests or fit its criteria for diagnostics for rare diseases. "The demonstration project will evaluate feasible alternatives to support modifications to 32 CFR 199.4(g)(15)(i)(A) to allow coverage for non-FDA approved LDTs that otherwise meet the Tricare requirements for safety and effectiveness," the DHA notes in the Federal Register.

Tests that DHA determines to "lack sufficient reliable evidence of safety and efficacy" will not be covered and listed in the Tricare Operations Manual. "Decisions regarding which LDTs are reviewed under the new demonstration, including the priority of review, are not appealable," the DHA stated in the notice. Labs will not be able to appeal DHA's coverage denials for specific tests.

The DHA said this was necessary "in order to dedicate maximum resources to the review of LDTs under the new demonstration." If the demonstration project becomes part of DHA's permanent regulatory authority, only then will labs have appeal rights, according to the notice.

The DHA demonstration project will begin July 18 and continue for three years. "LDTs approved by the Director, DHA, or designee, during the new demonstration period will become available for cost-sharing for qualified Tricare beneficiaries during the demonstration period when performed by CLIA-certified laboratories," the DHA notes in the Federal Register notice.

Tricare stopped covering many LDTs last year after the American Medical Association instated new CPT codes for molecular tests that enabled private and government payors to better identify which tests they were paying for. Under Tricare's policies it cannot reimburse tests or medicines that aren't approved by the FDA.

However, the FDA has long had a policy of "enforcement discretion" over LDTs, and has left regulatory oversight of the majority of lab tests in the hands of the Centers for Medicare & Medicaid Services. The FDA has said it intends to issue guidelines regulating LDTs based on the risks they pose to patients' health. Absent such guidelines, a two-path regulatory framework continues to exist for LDTs. Yet, more and more payors are considering FDA clearance or approval as among their coverage criteria for determining whether a test has sufficient evidence backing its analytical and clinical validity.

With this project, the DHA is evaluating "the feasibility of establishing a cost-effective and efficient way to review an expanded pool of non-FDA approved LDTs prioritized based on their potential high utilization and clinical utility within the Tricare population," the agency said in the notice. Under this effort, DoD will also evaluate if Tricare beneficiaries should receive coverage for prenatal and preconception cystic fibrosis carrier screening conducted in line with the American College of Obstetricians and Gynecologists guidelines. Tricare already covers cystic fibrosis testing for newborns or to confirm a diagnosis.

However, the latest notice doesn't mention any other LDTs it will cover upon the program's launch in mid-July. "Rather, [the notice] says the laboratory joint working group will be prioritizing tests based on highest volume and highest potential clinical benefit," Mertz pointed out. "ACLA is hopeful that DHA will allow laboratories to submit supporting clinical information on how and when to cover LDTs, as our labs supply this information routinely to other payers, including Medicare."

ACLA has issued a statement on the DHA demonstration project noting that current regulations already allow Tricare to cover LDTs, and DHA has a long history of doing so in line with other payors. In the year since Tricare first stopped reimbursing for non-FDA approved LDTs, patient and lab groups, such as ACLA and Genetic Alliance, have urged DHA to restore coverage of LDTs.

In ACLA's view, the demonstration project alone may not resolve the ambiguities that continue to exist regarding Tricare's coverage of LDTs. In its statement, the lab industry group urged Congress to pass the Senate defense authorization bill for fiscal year 2015, which contains a provision (Sec. 705) for clarifying DHA’s authority to cover LDTs.

"The legislation would expand upon which clinical benchmarks DHA can use to determine if a healthcare product or service warrants coverage under Tricare, very similar to what DHA is doing under the current demo," Mertz explained. "For instance, both [the legislative provision] and the demo would allow DHA to use clinical trial studies published in refereed medical literature."

The legislative language is still necessary, Mertz said, because it would ensure the demonstration project on LDT coverage is continued in the future and would help "avoid the unnecessary 18-month gap in coverage we've seen with molecular pathology tests." In the current notice, DHA states that beneficiaries can seek reimbursement for LDTs that Tricare hasn't paid for since January 2013 but are deemed covered through the demonstration project.

In the time that Tricare hasn't been paying for non-FDA approved/cleared LDTs, ACLA estimates that diagnostics providers have performed up to $10 million worth of free testing for beneficiaries.

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