Skip to main content
Premium Trial:

Request an Annual Quote

CMS Official Says Revamped CED Program Could Benefit Molecular Dx Reimbursement

Premium

By Turna Ray

WASHINGTON ─ The Centers for Medicare & Medicaid Services is seeking public input on its coverage with evidence development program, a process through which the agency reimburses new medical interventions with the condition that sponsors will collect data showing their products and services are improving outcomes for the Medicare population.

According to a CMS official, a revamped CED program that enables the agency to more readily provide conditional coverage for medical interventions and could provide a path for more molecular diagnostics to gather the necessary clinical utility evidence needed for reimbursement.

"Two weeks ago we pulled down the current CED guidance document [and] we opened a 60-day public comment," Louis Jacques, director of CMS's coverage and analysis group, said this week at a conference here hosted by the Institute of Medicine. CMS issued guidance on CED in 2006.

"What we would like to explore is the ability to not only have greater breadth of CED, but greater agility to do CED. Because there are a heck of a lot more molecular diagnostic tests than we can possibly ever review if we have to do them one [by] one," Jacques said.

CMS is currently using CED to figure out whether genetic testing to dose the anticoagulant warfarin improves outcomes in the Medicare population. Two years ago, after CMS found insufficient evidence demonstrating that pharmacogenetically guided warfarin dosing improves health outcomes for Medicare beneficiaries, the government payor decided not to cover such testing for Medicare recipients, except when it is performed as part of a prospective, randomized controlled trial (PGx Reporter 5/6/2009).

Under this scheme, CMS is paying for warfarin genetic testing performed as part of PGx studies being conducted by Iverson Genetics and by Brian Gage, an internist and health service researcher at Washington University School of Medicine, St. Louis (PGx Reporter 7/28/2010).

Jacques said at the IoM meeting that CMS is interested in figuring out how the CED program can be applied more broadly to molecular diagnostics.

According to CMS, changes to the CED program are needed because the current reimbursement and payment process doesn't incentivize drug developers and test makers to continue to gather clinical utility data once they have been granted or denied coverage.

"For Medicare purposes one of the challenges we have is that payment is binary," Jacques said. "Payment is actually more important that coverage, because at some point, no matter what coverage determination I make, if it's a 'yes,' you suddenly get everything. Is that in fact a disincentive for further evidence development? Would it make more sense to have earlier payment at a lower level?"

To illustrate his point, Jacques painted a hypothetical scenario in which payment amounts for products undergoing CED would change based on the level of evidence submitted and how long they've been on the market.

"Initially you'd get [a] percent of what you thought you deserved and as your evidence base matures and you actually start to show clinical benefit, you then get a payment premium," he explained. "Then, after some plateau, there would be some gradual decrement [in payment] if for no other reason than to bring money back into the system for new innovation."

Specifically with regard to molecular diagnostics, CMS is instituting system changes with an eye toward bringing more transparency and standardization to its coverage policies. The agency is requiring that molecular assays submitted for a coverage determination meet certain coding and regulatory requirements. Additionally, molecular tests performed in certain US states and territories will need to apply for a unique McKesson Z-Code that will enable Medicare contractor Palmetto to track test utilization and gather data that will inform payment levels (see related story, this issue.)

While some labs fear that these changes are a sign that CMS will deny coverage for most molecular diagnostics on the market, Jacques countered that a more flexible CED program would actually improve test makers' chances of getting paid while they establish the clinical utility of their assays.

Coverage determinations for laboratory-developed tests are made by the Medicare contractor with jurisdiction over the state where the lab is located. This can be cumbersome, and having "CED as part of [the contractors'] armamentarium" may provide an evidence-based path to help payors determine whether tests are "reasonable and necessary" for the Medicare population.

"In concept, CED has the potential to accelerate Medicare beneficiaries’ access to innovative items and services and use evidence to identify the setting(s) in which a patient population is more likely to see the greatest benefit from an item or service," CMS said in a statement announcing the open comment period for the CED program. "While CED has produced some gains in innovation, our experience over the last few years indicates we still have room to improve the CED process."

According to Jacques, CMS's decision to revisit CED has industry support, though this may be a counter-reaction to its distaste for comparative effectiveness research. Drug and diagnostics firms lobbied heavily against provisions in the healthcare reform bill to establish an independent research body that will conduct clinical utility and cost-effectiveness studies of new interventions compared to standard procedures.

"I don't know whether people are just so afraid of comparative effectiveness [research] that they've decided to embrace the other three-letter CE acronym, which is CED, as a lesser evil," Jacques said. "But I'm seeing big players in industry, and I'm talking enormous players in industry, make public comments that CED is good for innovation, [and] that we ought to do more CED."

CMS is seeking input specifically on how CMS could use national coverage determination or other mechanisms to improve its implementation of the CED program; the potential impact of CED on the Medicare program and its beneficiaries; and specific approaches to CED that might best benefit the Medicare population.

"We will weigh public input on CED with our internal lessons learned to develop a guidance document that better aligns CED with the rapidly evolving changes in our healthcare system," the agency said. "Our intended outcome is to mature CED so that it fulfills its potential as a mechanism that simultaneously reduces barriers for innovation and enables CMS to make better informed decisions that improve health outcomes for Medicare beneficiaries."

Stakeholders can submit comments through Jan. 6.


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