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Multiple Major CMS Decisions Impact Dx Industry in 2023

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NEW YORK – Amid the coverage decisions issued by the US Center for Medicare and Medicaid Services in 2023 were several that have the potential to broadly impact diagnostic testing industrywide. 

Every year, CMS issues hundreds of decisions that not only determine how diagnostic test makers are reimbursed by the federal government but also set the bar for how much private insurers pay for tests. During the past year, several determinations made by the center could have far-reaching implications for test developers, and by extension, providers and patients who may rely on them for proper care.

One of the more important coverage decisions was a billing article released by Palmetto GBA, a Medicare administrative contractor and leader of CMS's MolDx program, early in 2023 to update reimbursement guidance for molecular tests that assess rejection risk in solid organs. The article limited reimbursement to one test per patient encounter, provided new coding to define surveillance and for-cause testing, and redefined acceptable surveillance testing as compliant only for patients enrolled in centers that utilize surveillance protocols and would otherwise receive such testing. The article also said Palmetto would no longer reimburse for-cause tests unless they were used in place of a biopsy or to confirm biopsy results. 

The change in reimbursement guidance affected multiple firms, including CareDx and Natera, and sparked concerns for transplant surgeons and patients and their advocates who worried the new guidelines would have a chilling effect on transplant tests. In light of the news, CareDx withdrew its 2023 financial guidance amid uncertainty about whether its AlloSure and AlloMap tests would be covered when used in conjunction. Despite the change in coverage, CareDx received favorable coverage decisions from Medicare for its HeartCare service and AlloSure Lung transplant rejection test.

In August, Palmetto published a draft local coverage determination covering revisions to the existing LCD and opened a public comment period on the changes in light of the concerns voiced by stakeholders. The proposed LCD did not require a physician to hold affiliation with a transplant center and covered molecular testing instead of surveillance tissue biopsy only as often as a surveillance tissue biopsy would've been covered. The draft LCD also said that "for a given patient encounter, only one molecular test for assessing allograft status may be performed." 

The draft text noted that the proposed revisions were made for clarity only and that there was no change in coverage.

Cancer testing also faced coverage changes from Medicare contractors last year. In June, the MAC Novitas Solutions released a wide-ranging final local coverage determination that would rescind coverage for multiple cancer genetic tests, including assays from Castle Biosciences, Interpace Biosciences, and Pacific Edge Diagnostics. The decision rescinded coverage for Castle Bio's DecisionDx-Melanoma and DecisionDx-SCC tests; Pacific Edge Diagnostics' Cxbladder Detect, Enhanced Detect, Monitor, Enhanced Triage, and Resolve assays; Interpace's PancraGen; Clinical Genomics' Colvera; Abbott's UroVysion fluorescence in situ hybridization test; and the University of Pittsburgh Medical Center's ThyroSeq Cancer Risk Classifier and PancreaSeq Genomic Classifier. 

Novitas noted in its decision that tests are not considered medically reasonable and necessary if there are unestablished analytical or clinical validity or clinical utility levels of evidence, if the interventions are not identified by third-party databases ClinGen, National Comprehensive Cancer Network, or OncoKB as demonstrating actionability in clinical decision-making, or if patents don't have an established diagnosis of cancer or substantiated suspicion of cancer. 

These new requirements faced significant pushback from industry stakeholders, including laboratory organizations, patient advocates, and diagnostic companies offering cancer testing. After the outcry, Novitas rescinded the noncoverage decision and released a new draft LCD outlining the changes in coverage, along with fellow MAC First Coast Service Options. The draft LCD, nonetheless, faced similar criticisms from stakeholders who said they believed the changes would harm cancer-stricken Medicare beneficiaries by impeding their access to necessary genetic testing.

The LCDs, which have not been finalized, would apply to DNA and RNA, germline and somatic genetic tests used to diagnose cancer, gauge a patient's prognosis, predict the likelihood a patient would benefit from a treatment, or identify therapeutic targets. The draft LCDs also named multiple tests that wouldn't be covered — the same ones it rescinded coverage for previously. A key concern for many stakeholders was the need for a test to be supported by one of the three third-party databases, as some stakeholders said they felt the databases shouldn't be used alone to determine coverage. 

Although not related to coverage of specific tests, another preliminary decision from CMS raised diagnostic industry stakeholder concerns later in the year. The agency released preliminary pricing for a set of six new CPT codes encompassing genomic sequencing procedures that had laboratorians and diagnostic companies worried about being financially able to perform such tests. The agency priced the assorted new codes at $597 each, going against recommendations from an advisory panel that priced the tests between $1,759.60 and $4,375, depending on the code's complexity and resource requirements.

Stakeholders such as the American Clinical Laboratory Association, the Association for Molecular Pathology, and the College of American Pathologists supported the recommended prices but balked at the preliminary price released by CMS. Diagnostic companies and laboratories also expressed their fears that if the $597 price was finalized, it would not be financially feasible for laboratories to offer genomic sequencing tests to Medicare beneficiaries.

The agency postponed its final decision by choosing to gapfill the codes, meaning it would reach out to each CMS jurisdiction and gather data on what the price should be before reaching a final decision in 2024. 

In other reimbursement news from CMS last year, the agency changed its COVID-19 testing reimbursement policies after the public health emergency ended in May. The agency said it would no longer provide blanket coverage for the cost of over-the-counter COVID-19 tests, although beneficiaries enrolled in Medicare Part B would have coverage for laboratory-based PCR and antigen tests when ordered by a healthcare provider.

CMS also last year released a proposal for its Transitional Coverage for Emerging Technologies initiative, which aims to streamline coverage for certain medical devices. Diagnostic industry stakeholders, despite finding some useful changes within the proposal, expressed disappointment that the proposal seemed to deprioritize diagnostics compared to other medical devices. TCET will apply to breakthrough devices designated by the US Food and Drug Administration and will use CMS's existing Coverage with Evidence Development program, covering medical devices while vendors are still collecting data on their performance.

The CED program has been used only a few times in the nearly 20 years since it was introduced and has been criticized for its opacity and unclear timelines. The TCET proposal includes a program timeline, saying that CMS intends to finalize national coverage decisions for devices in TCET within six months of FDA market authorization. 

However, the TCET proposal also said that the majority of coverage determinations for diagnostic tests that have received FDA breakthrough device designation should be determined by Medicare contractors through existing pathways, limiting its use as a tool for diagnostic assays.