Key Trends in Diagnostics and Lifesciences: Promise, Reality Reimbursement

Panel Moderator: Ken Bahk, Three Lake Partners. Panelists- Nathan Ledeboer, Medical College of Wisconsin,Victoria Pratt, Indiana University School of Medicine, Nick Papadopolous, Johns Hopkins School of Medicine.

Here are some takeaways from the session that covers novel tests, clinical diagnostic reimbursement and CPT codes(no slides were presented):

  1. Liquid Biopsy. The technology is “not there yet” for robust diagnostics. “Infrastructure may not be ready” to interpret results and recommend therapy. Need good algorithms to reduce errors in specificity and sensitivity which vary lab to lab, not good for healthy people i.e. screening test. Specificity is more important because of cost to follow-up and interpret.
  2. Reimbursement. Reductions in reimbursement caused by PAMA (a new private payor rate based system)”downer” puts hospital labs under pressure and creates a need to protect sources of test revenue.  Big testing labs (Quest and Labcorp) have lowest prices and drive down reimbursement for all labs from the PAMA directive of market based rate.This could result in consolidation as economics of scale are favored.
  3. CPT and LDTs. A rather complicated issue was discussed as a result of PAMA which encourages labs to develop their own CPT (see AMA guidelines) code for proprietary tests like NGS.This would give them premium pricing that gives a competitive edge but of course the lab or Company still needs to get FDA approval.
  4. The regulatory and reimbursement model for Foundation One, by Foundation Medicine (FMI) and Roche should be reviewed in detail as these tests are approved as companion diagnostic tests for solid tumors and help cancer treatment management. We first reported on Foundation Medicine (FMI) on 7/5/16.

These notes only touch on the complicated and timely issues that affect many diagnostic companies especially if PAMA reduces prices and reimbursement. The regulatory status of LDTs (lab developed tests) and the CPT approach for innovative tests such as NGS (Next Generation Sequencing) is also mentioned.

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