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AdvaMed Bill Seeks to Increase Reimbursement Rate for Mol Dx

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The Advanced Medical Technology Association is backing legislation to change the way Medicare looks at molecular diagnostic tests, hoping to change the reimbursement system so that it takes long-term cost effectiveness into account when establishing rates.

"The regulations and practices that are used to determine reimbursement rates [currently] are much more based on traditional diagnostic tests, not ones like Oncotype Dx that might save $80,000-worth of chemotherapy," Emanuel Petricoin, co-director of the Center for Applied Proteomics and Molecular Medicine at George Mason University, said in an interview with Pharmacogenomics Reporter last week.

"A reimbursement rate for a $3,000 test that only pays back $700 — [the bill's sponsors] think that's out of whack, it's an impediment to doctors checking that box, knowing that a patient is going to have to pay out-of-pocket," Petricoin said. He said he had spoken — at AdvaMed's request — at a press conference announcing the bill on May 11.

The bill, Advanced Laboratory Diagnostics Act of 2006, or HR 5369 (pdf), was introduced in the House of Representatives on May 11, and is sponsored by Rep. Michael Ferguson (R-NJ), Rep. Phil English (R-PA), Rep. Mike Thompson (D-IL), and Rep. Bobby Rush (D-IL).

The legislation is based on a study AdvaMed commissioned from the Lewin Group that examined barriers to patient access to healthcare. "What you see in our legislative package are near-term fixes that address some of the nagging, chronic problems with the clinical ad-fee schedule — things that Lewin and the Secretary's Advisory Committee on Genetics, Health, and Society have commented on that impede Medicare's ability to integrate new tests," said Jeff Ezell, an AdvaMed spokesperson, this week in an interview with Pharmacogenomics Reporter.

The near-term functions of the bill include giving the Centers for Medicare and Medicaid Services statutory authority to address possible underpayment for tests that are currently reimbursed. The bill also attempts to make reimbursement rate scheduling more transparent.

In the long term, the Advanced Laboratory Diagnostics Act would establish a three-year demonstration project through which a panel of stakeholders would advise CMS on the reimbursement rate for a test based on the value of the test to patient care management, the resources required to run the test, and other factors. "For the life of the demonstration project, [diagnostics companies who opt to get involved] get a national rate — they're not subject to the 56 different Medicare carriers while they're in the demo," said Ezell.

The panel would consist of physicians, patient groups, pathologists, diagnostic makers, and "anyone who has a role in the adoption, diffusion, and use of lab tests," including members of the payor community, said Ezell.

The demonstration would ideally provide enough information about specific changes in the reimbursement system that would make sense for the entire fee schedule. Later legislation would make permanent changes in the reimbursement system. The ultimate authority on whether changes should be made to the current system is CMS itself.

It is too early in the process to say whether the bill will survive markup in committee to come up for a vote before the House, and a Senate version of the bill has yet to be introduced. "Being an election year, it's uncertain what will move and when," said Ezell. "There are potentially a few larger Medicare-type bills that could move in mid- to late 2006 that it could become attached to," he said. Congress will probably have to deal with physician payment in some form this year, he added.

— Chris Womack ([email protected])

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