AMP Publishes Economic Analysis of Genomic Sequencing Procedures to Support Lab, Payor Discussions | GenomeWeb

AMP Publishes Economic Analysis of Genomic Sequencing Procedures to Support Lab, Payor Discussions

NEW YORK (GenomeWeb) – The Association of Molecular Pathology has estimated how much it costs laboratories to perform certain genomic sequencing procedures and has modeled the value this testing adds to the overall care of patients.

The analysis, published in the Journal of Molecular Diagnostics, provides a snapshot of the resources labs require to perform complex genomic testing and found that these tests could reduce healthcare costs or identify the right treatment strategy for many patients.

AMP's cost analysis comes during a time of rapid growth in the NGS clinical testing market, which payors have countered with significant reimbursement pressure. "A main objective of developing AMP’s microcost and health economic analysis was to assist laboratories in communicating the cost of their genomic sequencing procedure services to Medicare administrative contractors," lead author Linda Sabatini from NorthShore University HealthSystem told GenomeWeb.

The American Medical Association's Current Procedural Terminology (CPT) Editorial Panel last year added several new CPT codes describing multi-marker DNA or RNA tests to the clinical lab fee schedule. Utilizing the gapfill process, Medicare Administrative Contractors were supposed to price these codes — factoring in charges and routine discounts for tests, resources needed to perform the tests, payments from other payors, and the charges and resources required for comparable tests. Based on the median of the prices from MACs, CMS issued national payment rates, which went into effect Jan. 1.

"Unfortunately, very few of the [genomic sequencing procedure] codes were priced during that process," Sabatini said (see story here). "The ones that were priced were either at or lower than the microcost analysis developed by AMP."

In addition to the published analysis, AMP had previously released microcost analysis template tools to help molecular diagnostic labs calculate how much it costs them to perform next-generation sequencing procedures. AMP made these tools available to labs a year ago, and they have been downloaded over 500 times since then by entities providing or developing genomic sequencing procedures.

"The feedback from users has been very positive," said Sabatini, who is the director of molecular diagnostics at NorthShore's pathology and laboratory medicine department. "We have been told that they are the most effective and accurate tools available for estimating and communicating the cost and value of performing genomic sequencing services."

Need for gapfill transparency

Researchers led by Sabatini gathered information on the standard operating procedures — from DNA extraction to clinical reporting of results — involved in 13 test protocols. They received information from nine out of 65 contacted labs, including large reference labs, as well as small and large academic medical centers. Using a Centers for Medicare & Medicaid Services' cost database, the researchers then estimated the resources needed for the components in each step of performing procedures described by several CPT codes, including costs of reagents and consumables, time for equipment use, and personnel time.

For CPT code 81445, describing targeted genomic sequence analysis of five to 50 genes for solid tumor samples, five laboratories reported costs ranging from $578 to $908. For CPT code 81430, describing hearing loss sequencing analysis, two labs reported costs of between $1,048 and $1,949. For CPT code 81455, describing a tumor panel with greater than 50 genes, data from one lab estimated costs at $1,948. For CPT code 81415, describing exome sequencing, three labs submitted costs ranging from $1,499 to $3,388.

Several CPT codes describing genomic sequencing services that were priced through the gapfill process are below some of these microcosting estimates. For example, the final Medicare value for CPT code 81445 (five to 50 genes for solid tumors) was $597.31, while in AMP's microcost analysis, researcher estimated lab costs between $578 and $908 for performing this type of analysis.

"It is important to note that these data reflect the cost of these procedures and not the charges," Sabatini explained. "Therefore, labs receiving payment for GSP services, which fall under CPT codes 81445, would more than likely receive a payment that is lower than what it costs to perform that procedure."

MACs are required to factor in different sources of information when pricing CPT codes through gapfill, including the resources it requires to perform the testing procedures. Although AMP believes that the gapfill process can be effective in pricing new molecular diagnostics if employed as originally intended, Sabatini said there is "a profound lack of transparency" in how MACs priced genomic sequencing procedures.

"It is still unclear how each contractor determined prices and what data was utilized," she said. "If gapfill is to work as intended, the MACs must independently determine and recommend pricing." AMP, she said, would like to see more transparency in the gapfill process and more accountability for MACs.

Making a case for value

Sabatini and her colleagues also conducted an economic analysis to model how genomic sequencing procedures impact patient care and costs in three clinical scenarios — using a targeted gene panel to guide care decisions for advanced non-small cell lung cancer patients, a targeted gene panel to diagnose and manage patients with sensorineural hearing loss, and exome sequencing to diagnose and manage children with neurodevelopmental disorders with unknown genetic causes.

In the first theoretical scenario, the researchers reported that using panel sequencing in advanced NSCLC would increase targeted therapy use from 6 percent to 13 percent, but deeply cut the use of non-targeted therapy from 83 percent to 20 percent. Such reductions in the use of non-targeted treatments in turn would reduce the total number of adverse events from 207 to 138 within a million-member plan.

Additionally, the use of panel sequencing would increase the number of advanced NSCLC patients enrolled in clinical trials from 4 percent to 54 percent, and help doctors make decisions about hospice care for more patients without targetable alterations. At an average cost of $700 for a tumor panel of 5 to 50 genes, the total cost of genetic testing would increase by $130,000, but would reduce total treatment costs by $2.7 million.

In the second scenario, the researchers considered the impact of using panel sequencing to diagnose sensorineural hearing loss of unknown causes in children. Within a million-member plan, when such testing costs on average $1,499, it would result in a savings of $240,000 and increase diagnoses from 25 percent to 36 percent.  

Lastly, the researchers modeled the value of exome sequencing to diagnose children with neurodevelopmental disorders with unknown causes. In one scenario, they compared the traditional care pathway without exome sequencing against a pathway where all patients first received chromosomal microarray and fragile X testing, followed by exome sequencing. In the second scenario, the researchers contrasted the traditional care pathway against one where all patients first received exome sequencing and then chromosomal microarray and fragile X testing.

Using an average $2,439 cost of exome sequencing, when CMA and fragile X testing were done first, it resulted in savings of $1.33 million and increased diagnosis from 30 percent to 40 percent. When the minimum exome sequencing cost was considered ($1,499), the savings increased to $10.1 million.

When exome sequencing was performed first (factoring in the same average $2,439 cost), it increased costs by $890,000, in order to improve diagnostic yield from 30 percent to 40 percent. At the minimum cost of $1,499, however, exome sequencing resulted in savings of $10.8 million. "This analysis suggests that the selective use of exome sequencing can demonstrate possible cost savings," Sabatini and colleagues wrote.

AMP is hopeful that labs will use these models and its resource evaluation tools to articulate the cost and value of genomic sequencing services to government and commercial payors. Successful interaction between labs and payors is critical to maintaining patient access to much needed tests, Sabatini suggested.

"Ultimately, the inconsistencies in carrier pricing methodology are disruptive to providers, patients, and healthcare institutions," she said. "Because test pricing is so critical to the economic viability of laboratories, difficulties created by the inefficient gapfill process and lack of payment for medically necessary molecular tests have the potential to result in laboratories shutting down and patients losing access to their services."

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