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Medicare Contractor Issues Local Coverage Decision on Genomic Sequencing Panels

NEW YORK (GenomeWeb) – Medicare contractor National Government Services has issued a final local coverage determination (LCD) for genomic sequencing panels in advanced non-small cell lung cancer.

The contractor has deemed such panels gauging between five and 50 genes (CPT code 81445) "reasonable and necessary" for advanced NSCLC patients who are newly diagnosed but can't have surgery or radiation, or have been previously diagnosed but aren't responding to systemic therapy or are resistant to targeted therapy. Patients must be able to receive targeted treatment at the time of genomic testing.

The LCD lists six genes in which gene alterations are targetable by available drugs and "the use of which meets Medicare coverage requirements (outside of a clinical trial.)" Overall, the contractor estimated there are more than 40 single nucleotide or small insertion/deletion variants in loci across 10 genes that might be relevant for the treatment of NSCLC.

"These variants represent potential therapeutic targets and, as therapeutic agents aimed at these targets are proven safe and effective and meet Medicare coverage guidelines, additional genes may be added to the above table," the contractor said. National Government Services also noted that "gene fusions can involve five different genes, and amplification is the significant recognized alteration in at least one gene."

When it comes to coverage of genomic sequencing panels in NSCLC, a number of Medicare contractors and private payors have issued policies, but each enumerates different criteria making it challenging to decipher the impact on labs performing testing. For example, analyst Dan Leonard from investment firm Leerink Partners pointed out a few differences between LCDs issued by National Government Services and another Medicare contractor Palmetto in a note yesterday.

National Government Services' LCD doesn't distinguish between hotspot genomic tests and broader tests that pick up base pair substitutions, insertions/deletions, copy number variations, and translocations. "The latter category has been dubbed comprehensive genomic profiling in the Palmetto policy, and would be inclusive of Foundation Medicine's FoundationOne test," Leonard wrote.

Additionally, National Government Services will only cover tests described by CPT code 81445, which Medicare has priced below $600. This, he noted, "compares unfavorably to the $3,200 average reimbursement Foundation receives from commercial payors for payments that meet its revenue recognition criteria."

The LCD from National Government Services, unlike Palmetto's policy, also doesn't require a lab to meet any published analytical validation criteria and seems to include a broader swath of the NSCLC patient population, Leonard added.

He foresees Foundation as having two options — open a lab in a locale that has a more favorable coverage policy from a Medicare contractor or accept the around $600 payment attached to the 81445 CPT code. National Government Services covers labs in 10 states, including Massachusetts, where Foundation is headquartered.

Medicare customers comprise around 27 percent of Foundation's current clinical test volume, Leonard estimated. Meanwhile, the anticipated changes due to the Protecting Access to Medicare Act, which seeks to implement a market-based payment system for clinical lab tests using private payor rates, "could obsolesce the [around] $600 pricing for 81445 beginning Jan. 1, 2017," Leonard noted.