We toss the term "precision medicine" around with ease today, and yet payers continue to refuse to pay for diagnostic tests.
These are tests that might indicate which treatment will work for a specific patient, thereby saving perhaps hundreds of thousands of dollars, not to mention protecting the patient from unnecessary harm. These are tests which prevent invasive procedures such as unnecessary biopsies.
A few weeks ago, we featured the CEO of a leading diagnostics company who has been desperately fighting a recent proposal by CMS to reduce reimbursement of his company’s leading test by a whopping 70 percent. If the cut goes through, the company would probably go belly up.
How does this happen in 2015? Why, in the golden age of molecular testing, do diagnostics continue to be so devalued? As a society, why are we undercutting our own investment in biomedical research by not paying for the resulting tests?
These questions led us to today’s guest, Bruce Quinn, a diagnostics reimbursement consultant. Bruce worked five years on the payers’ side and now spends his time helping labs and diagnostics companies get their tests paid for.
Starting with the story mentioned above, Bruce says that the latest CMS proposal to cut rates reflects an old way of calculating reimbursement that goes back to the ‘70s. These old methods such as “crosswalk" and "gap fill” do not work with the sophisticated and costly diagnostics tests coming on the market today. Bruce is hopeful that a new market-based pricing method—similar to that used for drug pricing—which will be implemented as part of the recent PAMA (Protecting Access to Medicare Act) legislation will improve reimbursement rates for the more complex tests. He also warns that it could reduce rates for more simple tests, such as the PSA (prostate specific antigen) test.
Attempting explanation as to why diagnostics are so undervalued, Bruce says that payers have been burned over the years. Many companies and labs say that they are not understood by the payers, but the payers DO understand them, he says. The payers just don’t believe them. So what can these companies do? And who will pay for the expensive studies and trials needed to convince the payers?
“The book still remains to be written on how to develop these diagnostics tests with the optimal efficiency and the optimal chance of success,” Bruce says. “I think people need to recognize we’re still learning how to do it, and we don’t have the answers in hand. It’s still kind of a white space."