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CMS Contractor Proposes Noncoverage of Castle Biosciences Skin Cancer Test

NEW YORK – Medicare Administrative Contractor Wisconsin Physicians Service Insurance Corporation has released a proposed local coverage determination that would not cover Castle Biosciences' DecisionDx-SCC test for risk stratification of patients with cutaneous squamous cell carcinoma. 

The LCD released on Thursday denies coverage for all current molecular biomarker tests that risk stratify people with cutaneous squamous cell carcinoma, including the DecisionDx-SCC assay, due to lack of clarity on how results from these tests change patient management. The company has been receiving reimbursement from another Medicare Administrative Contractor, Novitas, since Q2 2022.

Friendswood, Texas-based Castle Biosciences' gene expression profile test measures 34 metastasis-associated genes and six control genes to identify patients with a high risk of metastasis and is intended to be used in patients with localized, invasive cancer and the presence of at least one risk factor to guide treatment plans, the LCD stated. Risk factors include tumors larger than two centimeters located anywhere on the body; tumors located on the head, neck, hands, feet, pretibial, or genitalia; tumors with poorly defined borders; rapidly growing tumors; neurological symptoms in the tumor region; a tumor at the site of prior radiation therapy or chronic inflammation; and immunosuppression, among others.

The test stratifies patients with at least one risk factor into low metastatic risk, moderate metastatic risk, or high metastatic risk groups. Its potential clinical utility "lies in its incorporation into existing risk-assessment frameworks in order to improve prognostic value and facilitate individualized risk assessment, treatment, and follow-up," according to the LCD. 

Currently, the most used staging systems and guidelines for squamous cell carcinoma include the National Comprehensive Cancer Network Guidelines, the American Joint Committee on Cancer 8th Edition staging system for Head and Neck Tumors, and the Brigham and Women's Hospital staging system, the MAC said.

Although it noted that the company has presented clinical vignettes and clinician surveys at conferences showing that physicians would alter their treatment decisions due to the test's results, the MAC said that outcomes data from prospective studies with documented specific changes in management is lacking. In WPSIC's view, it's unclear how the results "can be consistently or accurately interpreted in the context of baseline clinicopathologic risk as part of a comprehensive risk assessment to change patient management."

In addition, the literature presented thus far doesn't adopt a consistent and recommended patient management strategy regarding follow-up frequency, nodal assessment, and adjuvant therapy for the different risk groups, the MAC said. While management strategies have been proposed, it's necessary to clearly define the changes in patient management after the test's results and to measure clinical outcomes based on those changes. "Ideally, there should be evidence of improved risk stratification without detriment to patient outcomes," it added.

The company should also address potential patient misclassification and undertreatment due to a false-negative result, it said.

The MAC recommended that the test's performance with disease-specific death as an endpoint aside from metastasis-free survival should be examined to determine the overall impact on patient outcomes. It also noted that the clinical utility and performance of the test has been measured in a largely male and white population and recommended both utility and performance be measured in patients of color, who have a higher metastatic rate compared to white patients.

Overall, WPSIC said that there is apparent need and clinical utility for molecular markers to improve risk stratification of patients with cutaneous squamous cell carcinoma, but that the current evaluated tests haven't "demonstrated definitive value above the combination of available clinical, pathological, and staging criteria in accurate risk stratification." However, it noted that it will continue to monitor the evidence and may modify coverage based on new information and society recommendations.

The comment period for the proposed LCD is open until July 15, 2023. 

In afternoon trading on the Nasdaq, Castle Biosciences' stock was down 13 percent at $21.33. Mark Massaro, an analyst at investment bank BTIG, wrote in a note to investors that the share weakness is overblown because Castle doesn't operate a laboratory in WPSIC's jurisdiction, the contractor may amend the policy upon further review, and the test has existing coverage from Novitas, which has jurisdiction over the company's Pittsburgh-based lab.

Massaro added that although the WPSIC decision could increase the possibility of Palmetto GBA and the MolDx program denying coverage, it would likely not matter as long as Castle continues to get payment from Novitas. He also noted that the company's management team indicated to him that WPSIC misunderstood the firm's evidence, and that the firm was confident in its full-year 2023 revenue guidance even if the test's reimbursement were to materially change. The company previously announced it expects 2023 revenues to total between $170 million and $180 million.