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Harvard Pilgrim, Trustmark Join Other Payors Considering Outsourcing MDx Claims to Specialty Vendors

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By Molika Ashford

Specialty vendors may be some insurance companies' best option for navigating the rapidly changing field of genetic testing, according to two healthcare providers considering contracts with such firms to help manage personalized medicine claims.

Representatives from several healthcare providers spoke about their growing concerns about genomic testing reimbursement at the fourth annual Forum for Payers on Personalized Medicine in Washington, DC, last month. Michael Sherman, chief medical officer of Harvard Pilgrim Healthcare, and Thomas Johnston, vice president of pharmacy strategies for the Trustmark Companies, both discussed plans to work with one or more outside vendors to help handle personalized medicine tests.

Sherman said Harvard Pilgrim is considering working with one of three firms: McKesson, DNA Direct, and Care Core National, to fill gaps in its ability to identify PGx diagnostics claims and build a strategy for how to reimburse them. Though the plan is not set in stone, HPH currently intends to choose one of the three companies by the end of this year, he told PGx Reporter.

Johnston, meantime, said at the conference that Trustmark is also close to choosing an outside vendor to address similar issues. He suggested the health plan has been in conversation with several companies, but did not specify any by name.

As both adoption and costs of molecular testing grow, payors are eager to implement systems to better identify, track, and make reimbursement decisions for personalized medicine services. Insurer UnitedHealthCare made a number of recommendations in a working paper released last month by its Center for Health Reform & Modernization on how to ensure that health plans are paying for tests that are robustly validated, improve patient outcomes, and ultimately reduce healthcare costs (PGx Reporter 3/14/2012).

In the paper, the company suggested health plans could benefit from improvements in the medical claims coding system, such as Medicare contractor Palmetto's MolDx program developed with McKesson, which requires that each molecular diagnostic it reviews for reimbursement be submitted with a unique "Z-Code" or "Palmetto Test Indicator."

Officials associated with the MolDx program have hinted that the efforts underway through Palmetto could potentially be applied to other Medicare contractors as well as private payors. The American Medical Association, meanwhile, has demanded that the Centers for Medicare and Medicaid Services stop implementation of the program, concerned that the pilot may weaken the dominance of its current procedural terminology codes in the reimbursement process, especially if CMS expands the MolDx Program to other jurisdictions and private payors begin adopting Z-Codes for molecular diagnostics (PGx Reporter 1/4/2012).

Palmetto is the first to implement Z-Codes for Medicare coverage determinations, but McKesson has said it is working with many private payors, providing a number of different services. MVP Health Care and Blue Cross of Idaho both announced in 2009 that they would use the firm's automated decision support system to track which patients under their plans are getting genetically tested, and to gain more clarity on which tests they are reimbursing (PGx Reporter 11/18/2009). McKesson has stated more recently that as many as 44 managed care organizations have utilized at least one of its MDx services.

DNA Direct provides its own slate of programs for evaluating molecular and genetic tests to both hospitals and health plans. Care Core National offers a variety of medical claims and laboratory management services, according to its website.

Neither Harvard Pilgrim nor Trustmark has decided which of several vendors they will end up choosing this year. It's unclear whether either health plan will choose to work with McKesson over other companies, and if so, whether Z-codes would see greater utilization via the services the payors are hoping to contract out. Nevertheless, both Sherman and Johnston cited the lack of standardization of current MDx coding systems as one impetus for their search for an outside partner.

Seeking a Dialogue

As specialty vendors are getting more involved with insurers helping them gain greater insight into the molecular diagnostics they are reimbursing, laboratory groups have become increasingly concerned. At least one lab interest group has charged that the test utilization tracking schemes, mainly those proposed by McKesson, will result in restricting payments for the majority of tests.

Sherman stressed in his presentation at the March conference that Harvard Pilgrim does not intend to use a vendor MDx system as a filter for "hard denials" of personalized medicine claims — rejecting certain tests outright and approving others. Rather, the company hopes, at least right now, for an MDx service that serves as more of a junction whereby genomic test claims can be properly identified, pulled out, and subject to additional discussion.

He further explained that the company doesn’t intend to say "no" to tests through an eventual vendor-supported evaluation system. "We just want to have a dialogue on why they're ordering and what they're going to do with the results. And hopefully if it's not indicated, have them realize that themselves," he said.

Sherman told PGx Reporter that the plan's main concern is making sure the genomic tests it pays for are used correctly and efficiently.

"Given that we know that even for routine care there is data showing that …there is a lot of poor care coordination in the system, particularly when you look at the personalized medicine area, I think everyone is concerned as to how you make sure that doctors are absorbing this information and incorporating it appropriately into their practice," he said

"It may be less that you have to call and get approval and more that we'd like you to call and just explain what you're doing and talk about it, and have this as a resource."

In his presentation at the conference, Sherman used Genomic Health's Oncotype DX as an example of how difficult it is for a payor to assess the quality and cost considerations of genetic tests. He cited data from other payors showing that chemotherapy can be avoided for a significant number of patients who fall within Oncotype's low recurrence risk group. "That's obviously good from a cost and quality impact [perspective,]" he said.

On the other hand, he noted, different data has suggested that a significant number of patients in higher risk groups may also not be receiving chemotherapy, which is a "very serious problem."

Simply identifying which genomic tests are already being used and paid for by the plan is also a large, but in Sherman's eyes somewhat more straightforward, part of what HPH and Trustmark are hoping to outsource to a third-party vendor.

"I think because there hasn’t been uniform coding, by and large it's hard for us to really segment [molecular claims] … We can look at our global spending, but it's hard once you go a level down to look at what the drivers are," Sherman said.

Sherman expressed worry that a lack of granularity in coding has left HPH unable to even identify whether genetic tests that could be informative over a lifetime or at least for several different drug assessments might be repeated unnecessarily.

"We would like to say where we find a thing being done more than once that there is an opportunity to [share] the information rather than rerun the test," Sherman said.

This is a problem the company is trying to tackle across genomic and non-genomic areas, he explained. "But when you're talking about some very expensive [molecular] tests it is even more impactful in terms of helping us practice more efficiently," he said.

Though he didn't go into detail about any specific plans to allow for more granular tracking of molecular diagnostic claims, Sherman said Harvard Pilgrim is "studying" alternative coding possibilities like Palmetto's Z-codes. This is another area where the company hopes an outside vendor may be able to provide guidance, he said.

Both Sherman and Johnston said that health plans could theoretically handle some of these issues themselves, but noted that the acceleration of the genomic medicine field has been so staggering that there appears to be a strong benefit to partnering with a company like McKesson or DNA Direct with demonstrated expertise.

"We could staff up and hire the right people, but it probably makes more sense to use those that have greater domain knowledge," Sherman said.

Johnston reflected this view. "We feel pretty good about how we manage, for example, diabetes [at Trustmark]," he said at the meeting. "But this is changing by the month. I don't trust our ability to keep up."

"That means there is a benefit to an organization that says, 'We've figured out some of the coding issues. We keep up with all the information, and it's our core business.'"

Johnston added that in building its own partnership plans, Trustmark is also considering vendors' experience working with other payors. "If there's something in place for a different payor … [that] creates less confusion," he said.

'Too Many Claims'

Describing Trustmark's journey from having no system for treating molecular diagnostics claims as of early 2011, Johnston echoed many of the same challenges and blind spots Sherman cited.

Overall, he said the company came to the conclusion that it needed outside help in several areas, including identifying genetic tests from the larger field of laboratory services, educating clinical and claims staff on a rapidly changing field, and better assessing the cost and quality benefits of molecular diagnostics and associated targeted treatments.

"We learned early on that we needed vendor input to discovering genetic tests," Johnston said at the conference, describing the company's initial effort to find tests using a "recommended program" for finding tests using stacked codes. He said the company only pulled claims above $5,000, but still got 17,000 of them. "Which ones were genetic tests, I have no idea. It just generated way too many claims," he said.

The company also decided a vendor partner would have to provide decision support and education for claims and clinical staff, especially to speed up the approvals process for company medical directors.

"Right now we're talking about someone getting hundreds of claims a month [and] general questions from case management," Johnston said. "But they have the same problems with this that anyone does … You pull up a bunch of articles [on a test] — which one do you believe? Which is current? … Which one was written by a competitor?" he asked.

"Up to this point we've had no basis of decision other than the medical director's opinion."

Johnston said the company is in discussions with multiple vendors and is close to completing its selection process.

A final decision will be based on the chosen company's ability to provide decision support, education, and "proprietary review" of current claims to determine testing activity. "We basically decided on one vendor that not only rates tests and does studies themselves, but backs up what the medical director is deciding [and] can cut down that research," he said in his presentation.

Harvard Pilgrim, meanwhile, expects to choose a vendor towards its own purpose by the end of this year, Sherman said.

"We're going to go through an evaluation process that we're in the early stages of," he told PGx Reporter. "I expect it will be complete in the third quarter [and] we'd like to do something to go live in the fourth [quarter], but that's subject to change."


Have topics you'd like to see covered in Pharmacogenomics Reporter? Contact the editor at mashford [at] genomeweb [.] com.