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What Steps Can Dx Shops Take to Ensure Their Tools are Reimbursable?

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Vickie Beselski
Professor, Department
of Pathology
University of Tennessee Health Science Center

At A Glance

Name: Vickie Beselski

Position: Professor, Department of Pathology, University of Tennessee Health Science Center

Technical director of microbiology at the Regional Medical Center at Memphis, Memphis Pathology Laboratory, and at the Memphis and Shelby County Health Department

Education: Postdoctoral Fellowship, Centers for Disease Control and Prevention in Atlanta — 1978-1980

PhD, Microbiology, University of Texas at Austin — 1978


The talk you're giving at the Biomedical Marketing Association's annual meeting in Baltimore on April 6-7 is called "Paying the Troops: Reimbursement Strategies for a New Dx." Can you talk a little about what you think are the important parts?

I think anyone who's in the lab industry and is not getting paid is able to speak passionately on the subject. So it's going to be kind of new for me to speak to this audience — I'm usually speaking to laboratorians on this.

But the gist of what I have to say is, 'All right, guys, we need your help in this. If we can't code for these new, emerging, exciting technologies, and we can't bill for them, and we can't be reimbursed for them, then we can't do them.'

Along the way I have some recommendations on things that industry can do while they're preparing to introduce a new diagnostic.

How did you get involved in discussing reimbursement?

My background is primarily in infectious disease diagnostics; I'm a card-carrying clinical microbiologist. But I've had the good fortune of becoming involved in some of the aspects of reimbursement, starting with my representing [the American Society of Microbiology] on the negotiated-rule-making committee in 1998-1999.

What are you going to recommend that the diagnostic industry do?

I'm going to recommend that they not ignore the [CPT] coding aspect, first of all. If they have an entirely novel technology, they need to start right at the beginning with laying the groundwork to get a new CPT code. Whether they go the way of a category three code, which is an emerging technology code, or they feel confident enough that this is going to enter the mainstream very quickly, and they start laying the groundwork for a category one code — either way, they've got to have a way to designate this new technology. If we try to squeeze it into an existing code, we may not be able to do it, or if we do it, we may end up being reimbursed at a level for an old technology, and it's just not going to work.

I've made that recommendation to a number of people in industry, and some of them have listened, and it's been very effective.

The other thing that we don't want to see is the use of not-otherwise-specified codes. And that's happened with some new technologies in recent years. Those would be codes that describe a method, but the analyte is not described, and payors don't look very well on those codes — they get kicked out from manual review, and so on — if you get paid, you get big delays in those payments.

I strongly recommend that people jump into the coding game early on. They can do that now with the Pathology Coding Caucus, which was set up by [the Centers for Medicare and Medicaid Services] about two years ago. PCC welcomes written recommendations from individuals who are introducing new technologies, so that the PCC can evaluate that data and determine whether to make recommendations to the CPT editorial committee as to whether to establish a new code or not.

What sort of technologies do you see coming down the pike?

Molecular, molecular, and more molecular. I think we're mostly seeing genomics now, but I don't think proteomics will be far behind, and microarray testing in particular.

How many of those types of assays seem to be genomics- or array-based?

We've seen an explosion in microbiology — of those assays. But the same problems I've already mentioned apply there as well. We've got assays for which there are not specific CPT four codes, and that's a problem.

Is that just a problem with arrays in general?

That is a problem with arrays in general, although there is discussion of coming up with some ways to address that from a coding perspective in the future. And I think if you look at what's happening with genetic and genomic coding in general, which is looking at each probe, each marker, each concept, I think that's where we can look for microarray testing to go with coding.

But for 'each probe,' aren't we talking about tens of thousands?

We are. So there will probably be some bundling, as was done with flow — if you look how interpretations were coded with flow. I don't remember the exact numbers, but after a certain number of markers, you got paid a lump sum. They wouldn't go any higher on reimbursement.

So who is in the PCC?

The PCC is set up by the [American Medical Association] through the College of American Pathologists. It's a voluntary group that was set up as part of the CPT coding development procedure. And it was specifically set up to allow some broader input and discussion of these new codes or new technologies that were coming down the pike. But again, it is simply an advisory group.

Once the CPT code has been established for a diagnostic product, how should industry proceed in securing reimbursement?

The second major area that I'm going to discuss [at the meeting] is coverage policy. Once you have a code, there's no guarantee that you're going to get it covered, and I make strong recommendations to the companies that they know the landscape out there for coverage policy. That's knowing both things like: whether there are national coverage decisions and/or local coverage decisions on the part of federal payors — like Medicare and Medicaid — that would govern coverage; and also knowing what is out there for other third-party payors.

It used to be very difficult to have access to that information, but it's all on the Internet now — a lot of that as a result of the negotiated-rulemaking committee. But it's very simple to go online and look up local coverage decisions now, as well as national coverage decisions, and see if there's anything there that might give you an idea of what's going on there in terms of reimbursement for either the analyte that you're developing the technology for, or the technology that is comparable or closest to what you're doing.

I can give you an example: the Vysis product that uses in situ hybridization for monitoring of bladder cancer — within Tennessee, that was a product that was designed for monitoring, which means that you use it repetitively — you use it once, you treat, and you look again to see how the patient is responding to therapy. A coverage decision was written in Tennessee that allowed for a single use of that product once in a patient's lifetime. So obviously that coverage decision was totally incompatible with the intent of that product. The company intervened on the part of clinical laboratories and went directly to the contractor for Medicare within the state of Tennessee, and was able to negotiate a much more reasonable coverage policy.

Why it's so important to tackle Medicare first is the old truism, 'As goes Medicare, so go other payors.' Many payors simply pick up those [national coverage determinations] and [local coverage determinations] that Medicare has developed and use those pretty much in total for their own coverage decisions.

Other third-party payors have their own technology assessment groups, and for large payors, I think it would behoove the diagnostic manufacturers to initiate discussions with them as well, because in some cases of very novel technologies they may be [convinced to reimburse] much more quickly than the Medicare process can be attacked.

The key point is that the individuals that are producing these technologies cannot divorce themselves from the coverage decisions that will be made to pay for these.

What's the next step?

The next step is payment for the code. In terms of ensuring that you have adequate payment for a new code, a few things have happened recently that diagnostic manufacturers have been getting involved in.

For [about] the last three years, public comment has been actively sought from individuals, professional societies, and diagnostic manufacturers — anyone, in essence, can render an opinion on the fee-setting strategy for the clinical laboratory fee-schedule for new CPT codes. This year, for example, the announcement is going to be coming out shortly in the Federal Register of the meeting — which will be on July 18 this year.

So if a new CPT code comes out, and those new codes are announced earlier than they used to be so that this meeting can be held — if a new code is coming out, and it is a code that's of relevance to your company, you need to be at that meeting so that you can make recommendations to CMS as to mechanisms of pricing that code. You're kind of limited as to what you can recommend, but you can recommend that it be cross-walked — and that would be to an existing code — and it doesn't have to be a straight 1X cross-walk, it can be cross-walked at a replicate of a code, you just have to justify it. Or if it is a new technology, you can recommend a gap-fill.

At the same time you're doing that, you've got those other third-party payors, and you've got this new code now, so I think you need to be aggressively communicating with them as well, because CMS pays at a lower rate than third-party payors, although that's rapidly changing.

Is there something else diagnostic companies should be doing?

Once you've got a code, coverage policies that let you use the code, and once we have a payment that's adequate for the code (it at least covers the cost and gives a reasonable profit margin), we've got to convince people that it is a useful technology. That's probably going to be the hardest aspect of reimbursement. A lot of these are going to be expensive tests, and we've got to be more global in our assessment of the utility of these tests.

And now we're getting into the world of outcome studies and utilization-type studies — you may actually pay more to do the assay, but you're ultimately going to save more for the care of that patient. This is classical economic value for a new assay.

These are not easy studies to do … but the companies that are developing these assays are going to have to fund long-term outcome studies for diagnostics, just as they have funded long-term outcome studies for therapeutics historically, or we're not going to be able to justify the large dollars that we have to spend in the laboratory for these kinds of studies. The profit margin is just going to be too small with these assays otherwise. Once they fund these studies, they're going to have to be liberal in providing data, and they're going to have to help devise templates that laboratories can use and that clinicians can use to plug their own data in to show that their outcome is desirable.

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