Video 26 min

2020 NGS Testing Reimbursement Overview

September 28th, 2022


The below text is a transcript from the webinar. Because it is a transcript, there may be oddities that arise from the process of translating speech into text. We recommend accessing the recording, above, to gain full context. 

Good morning. This is Michael Sanderson, CEO of PierianDx and welcome to a series of webinars that PierianDx puts on. The title of today is our 2020 The NGS Testing Reimbursement Overview, which I know is near and dear to all of our hearts as we are working to spread the use of NGS around the globe.

I've been at PierianDx now nearly two years. I've had over 25 years of experience in healthcare and specifically in data analytics. I've worked with leading providers and healthcare IT companies on several cutting edge tools. As I came into this world of genomics just a few years ago, I looked and could not find an expert in reimbursement and coding that would really support our clients, and we have a lot of them, and our partners, that could really support our clients in our shared goal of spreading the use of NGS.

Fortunately, a good friend at Pfizer who understood our struggle introduced me to Joe of Boston Healthcare, our speaker today, and I quickly learned that there truly is no one else with Joe's depth of experience and grasp of this challenging and critical topic truly around the world. In fact, Joe has over 20 years of experience in life sciences consulting, working with biopharmaceutical, medical device, diagnostics, and healthcare IT clients and market and business development strategies.

Joe's firm supports leading companies in NGS evidence development strategies and value communication. Joe himself leads the global consulting team with practice areas in reimbursement and pricing, health economics, market analysis, and business development strategies. Joe writes and speaks extensively on the value of medical technology innovation with particular focus on precision medicine, advanced diagnostics, and oncology informatics. Joe completed his undergraduate studies at the University of Cincinnati and received his masters from Harvard.

We're blessed to have a partnership with Joe and Boston Healthcare and where we can work to bring his expertise to our shared clients and partners like Illumina, Archer, Pillar, and others. We're looking forward to this webinar as well as other resources as we work to empower the rampant spread of NGS testing. Please join me in welcoming Joe Ferrara as our primary speaker today. Thanks, Joe.
Thank you, Michael, and thanks for the kind introduction. I'd like to thank PierianDx for putting together today's webinar. So, let's walk through some initial content here. I think first, Michael, I don't know if you want to cover some of the overview of PierianDx.

Yeah, you bet. Thanks, Joe. As we get started here, those of you, we won't make this about PierianDx, but many of you know that we were spun out of tech transfer out of Washington University. Our founder, Dr. Rakesh Nagarajan, was there way back as they were wrapping up a lot of the human genome project. So, WashU was the first to validate and clinically report on the somatic cancer NGS panels and numerous clients came and visited Rakesh during that timeframe.

The book that you see on the screen, Rakesh literally wrote a chapter in the book. So, when we talk about writing the book, he did. So, we're really excited. It's not about Pierian today. It's about how do we help our mutual clients spread this, the power of NGS? But thanks for giving me a chance on that, Joe.

Our network's extensive. We are adding to it. Many of you perhaps are on the call, not only now in the US, we've recently added Intermountain, but we're now working globally and I think we'll be in 20 to 30 new countries this next year as we're working around the globe. So, very exciting times for Pierian as we have what we believe is the leading workflow solution in CGW and also the knowledge base that powers that. The network powers that knowledge base. Again, I would say looking at the names on the board as well as looking at our partnerships is the better evidence than listening to me talk about it. That was it on us. Think that was it on us. [crosstalk 00:04:40]-

Yep. Go ahead, Joe. It's all you.
I was going to say, I was going to jump in and say as you're submitting questions, you'll see in the control panel, feel free to go ahead and type those questions in. The way this presentation is structured, there's about a 45 minutes of content, so we should have about 10 or 15 minutes of Q&A at the end. So, we'll go forward into the presentation now.

So, today, I'm going to cover the reimbursement landscape for next generation sequencing and really, a focus on not just the dynamics of the commercial environment, but also really try to get into a bit of how providers and players need to think about being successful in this arena. What do we need to do to push this forward? Reimbursement is a key part of it. It's not the only part, but what I'll cover is a quick overview of the market outlook for NGS, get into coverage dynamics.

I want to spend some time on evidence, particularly evidence of clinical utility for comprehensive and targeted panels, a brief on coding, think it's important to update that, and then payment assignment for NGS, and then wrap up with what we see are some key factors, success factors for players in the space. So, let's get into the market outlook a bit. I think one of the key things that really underpins the adoption of next generation sequencing is really the move to a biomarker driven approach to therapy selection.

You can see there's been a progressive increase in use of biomarker testing oncology and certainly a proliferation of targeted therapies and immune therapies really driving the adoption of this testing modality. We're also seeing more and more of the emergence of standardized testing algorithms to drive selection of these biomarkers for common tumors. I think what NGS does obviously is change this to a much broader approach, and I'll get into that on the next few slides.

But we know that more labs are performing next generation sequencing for common tumor types with approved therapies. We also know this enables a testing for tumor agnostic markers, such as MSI, TMB, and entrec fusions and really, these pan-cancer tumor agnostic markers are also a key driver for the adoption of next generation sequencing. Then we have seen, and we'll get into the details on this, improving payer coverage with really Medicare coverage for FDA approved or cleared tests beginning next year and further modified this year.

You can see some of the verbatim we have here, which is probably quite familiar to all of you. Even pathologists in the community setting of course are seeing explosion of biomarker testing, particularly in lung expanding into breast and colon, as you can see from the verbatim on the side, and again, that positioning of an NGS panel. There is a lack of clarity on primary diagnosis or consideration of a targeted therapy. Likewise, the comment at the bottom around the growth of NGS testing for TMB, again, driven by the need for therapy selection and burgeoning available immunotherapies.
So, this is clearly, it's underpinned by substantial clinical need and clinical demand. You can go on to the next one. So, I think what this is really a symptom of is a broader evolution in oncology testing where we've moved or are moving from a single marker and hotspot panel approach, which has really been the historical approach when there were just a few specific biomarkers, and really driven primarily by PCR and EGFR. The challenge, of course, is limits on tissue availability make an iterative testing paradigm with single markers or smaller panels not sustainable.

We also see the emergence of a multi-modality approach, which would include reflex patterns, some tests being prioritized perhaps because their ease of use or affordability. Then some FDA approved tests, Of course, and the availability of laboratory developed tests. I think over the longer term, and we've already seen this develop, is a broader application of NGS testing where larger panels are being performed. Comprehensive genomic profiling increasingly dominates standard methods.

This is really the enabling the use of a single test to obtain a comprehensive profile of the patient. I think underpinning all of this is the need, and I think increasing need, for the informatics behind this to be deployed to create a full genotypic and phenotypic profile of the patient. Over the longterm, I think this is where it's going. So, it's this type of change. We're certainly not all the way up to the right yet, but it's something that we clearly see a clinical level demand for.

I think what we've seen in parallel is a broadening of access to next generation sequencing, and that's whether it's in house or sent out. Profiles and providers here vary. Based on our work, we see, of course, and as you would expect, a lot more academic medical centers performing in house NGS vs. the community setting. Not surprising there. We know physicians in the community setting represent a substantial proportion of demand and send out to reference labs.

Some labs have implemented reflex testing for certain tumor types to NGS, and then despite improved coverage costs, reimbursement, all these are still challenges. So, we have seen improvements, but these are still challenges that need to be addressed, and we'll get into this and then actually some of the barriers that we've identified. You can see on the bottom right here, certainly concerned about cost. Reimbursement, of course, nobody wants the patient to receive a bill for the test.

Adequate tissue sample is considered a barrier. So, even there, for tissue, NGS, that could be a challenge, of course. Pathologists do anticipate an increase in NGS based testing moving forward as the coverage outlook continues to improve, and certainly more targeted therapies get approved. I think what we'll get into is will this cumulative CDX approvals basically deliver a turning point for payers or a tipping point for payers? Let's go to the next slide.

So, I'm going to get into NGS payer coverage. I think before we get into details on coverage coding and payment, I just wanted to highlight these key reimbursement components because they are indeed distinct components. I think all three need to be working to ensure routine reimbursement. What we're after here is essentially routine optimal payment. We want to make sure that payment is adequate for the laboratory, the test is covered and routinely accessible for patients, and then of course, there's coding available to basically make the link between coverage and payment.

So, I think coverage, just by way of background, this is essentially the policy that's behind any kind of access for these tests or any healthcare service or medical technology. I think the coverage piece is going to define the range and extent of services that the insurer will pay for. Coding, this is the mechanics of reimbursement, universal alphanumeric codes that characterize services, procedures, and products, and could potentially have different codes across different settings of care. In the case of NGS, it could actually be by laboratory type.

Then payment, the process by which payments are made by an insurer for a covered product. Obviously, if any of these elements are missing, this will not permit routine market access for a medical technology or service. So, for, broadly speaking, for medical technologies, and we'll see some of this reflected in coverage for next generation sequencing, we think of it in four basic buckets. The left two columns are really Medicare. So, Medicare coverage can take form of a local coverage determination, which is really driven by a Medicare administrative contractor or MAC.
In that case, it's really the MAC that's responsible for reviewing the technology, and any Medicare coverage could have a significant impact on private payers. Then of course, the national coverage determination, which underpins next generation sequencing coverage in the US for Medicare. National coverage determination, as the name suggests, developed at the national level by Medicare, provides access to testing for all Medicare patients. So, the difference is that a local coverage determination could result in variability across geographies within the US depending on which Medicare administrative contractor, which policy they adopt.

On the right hand side of this slide, we have private payers or commercial payers. Each payer here generates its own coverage policy. There's significant variability in coverage for the same tests, or could be. Increasingly, private payers are considering outsourcing coverage to third parties or intermediaries. So, in the laboratory world, it's genetic benefit managers and laboratory benefit managers, and we'll get into some of those dynamics. Then finally, finally Medicaid on the right. It's the insurer for indigent patients and here, oncology and biomarker testing is covered on a state by state basis, typically lagging Medicare and other private payers in terms of policy formation. We can go to the next one.

Wanted to talk a bit about how the Medicare administrative carriers or the local coverage determinations work because the bulk of coverage for biomarker testing and oncology is actually handled at this level, not through national coverage determinations. So, here, the map is really highlighting that even though there are many jurisdictions for Medicare administrative carriers, for the purposes of laboratory tests, there are really four key geographies and four maps that are essential.

There's the MolDX program, which covers several jurisdictions, and that is highlighted here in yellow. Then there is a territory administered by Novitas, another one by NGS, or national government services, and then First Coast, or administers Florida. I think Palmetto the map that administers the MolDX program. The MolDX program is important because this is essentially a health technology assessment program that covers the largest swath of the United States and becomes vitally important in securing coverage in the US, depending, of course, on where the laboratory resides. So, it's really the location of the laboratory that determines the administrative carrier of importance. You can go on to the next one.

So, just some details on the MolDX program in particular because it is so important, just to highlight the MolDX technology assessment requirements is a very high level and the submissions that are required, but certainly, what it boils down to is evidence to show analytical validity, clinical validity, and clinical utility, and really, the requirement that that insight be published and prepared in a concrete submission to the program and have a formalized submission process for that.

Once that submission is made, then a final coverage determination can be made. The results can be coverage. It could be limited coverage. So, may not get coverage, for example, for all tumor types. In fact, limited coverages tends to be the more typical result. Then coverage with data development is rare, but it does occur, and then no coverage. So, a negative, essentially a negative decision. Think what we're going to stress here going forward is the importance of these evidence components in the submission and really some key considerations for success in this space going forward we think are going to be the development of strong supporting evidence of clinical utility for clinical application of next generation sequencing.

On private payer side, we have seen a lack of continuity, so we'll get into the national coverage decision. But this is just true in general for diagnostic tests. That is Medicare and private payers have different standards for coverage. So, the coverage for Medicare, the coverage standard is reasonable and necessary by statute. For private payers, it typically is medical necessity. These are different bars that technologies have to clear in order to secure coverage.

So, we found in analysis across diagnostic tests, coverage policies that, in fact, Medicare tends to cover earlier than private payers and may, in fact, have more favorable coverage for diagnostic tests. By favorable, I mean potentially broader populations. So, it could mean, for example, the difference between Medicare coverage for pan-cancer application of NGS vs. a much more specific lung cancer only coverage for NGS that a private payer could put in place in the form of policy.

Insurers can create explicit positive coverage policies. They can create explicit negative policies or non-coverage, or they may be silent on the matter and forgo developing a policy for a diagnostic assay. It's not a typical. It doesn't mean they're not paying for it on a case by case basis, but they haven't come out with a formal coverage policy. Then in diagnostic tests, generally a coverage policy could be very specific or it could be directed at an entire category of diagnostic tests. So, for example, all NGS based tests, independent of the tumor specific application, or it could be one specific application or one specific test.

Commercial insurers, not dissimilar from the MolDX program in Medicare, use a variety of tools to evaluate clinical utility. But it is important to note that their ultimate coverage decisions may not reflect those made by MolDX. So, it's not unusual for the determinations by private payers to be different than Medicare. Obviously, they're insuring a different population and may be much more narrow in what they're willing to cover, again, to meet that criterion of medical necessity.

Some of the tools that private payers are using, the published studies, again, you see that. They're very similar to submission requirements under MolDX. There may be independent health technology assessment organizations that that they would refer to, such as ECRI or Hayes. These are independent health tech assessment groups outside of the payer guidelines, of course, or specialty society recommendations. Then of course, they will refer to Medicare coverage decisions. But as I said, there are going to be some key differences.

I mentioned at the top that private payers are increasingly turning to third parties or intermediaries, not unlike PBMs in the pharma world. There over the last several years, benefit management companies have developed around laboratory testing, as you're known as genetic benefit managers or laboratory benefit managers. You can see some of the players here on the left. These are entities that payers use to essentially help them control costs. You can see some of the arrangements that United Healthcare and Anthem have through AIM Specialty Health, implementing things like prior authorization programs.

Not surprisingly, given the economics of advanced diagnostics, payers are increasingly relying on these benefit managers to control costs for NGS and genetic testing and molecular testing. So, these are important entities. Anytime we want to understand what kinds of restrictions might be placed on access to a test, what some of the hurdles might be, or even some of the logistics in submitting a claim, we really want to understand that from the relevant LBMs. In fact, LBMs are instrumental in assessing the evidence context for coverage for payers in this space.

So, it's a combination of the mechanics of reimbursement, such as prior authorization, plus an increasing role for these third parties or these intermediaries to play in evidence assessment. So, the number of constituents demanding evidence in this space is growing and it's important that we address them. Just a review of what we've seen is what that evidence demand looks like. Not surprisingly, according to payers, the highest impact on a plan's coverage and reimbursement decision is clinical evidence. It's a pretty broad bucket.

Actually, we've done this assessment now over the past few years and it hasn't changed much. The actionability of genes, still very critical. Looking for guidelines inclusion, so again, as a proxy for clinical utility or an indication of clinical utility. FDA approval also hits the list. But it's really, if you look at the top three, those are really around what evidence do we have to support the utility of testing? That's reflected in actionability and, of course, reflected in guidelines inclusion.

Health economic evidence was actually noted as least influential. So, I think the default position, at least in some of our work, clients always want to understand what role health economics plays. In this space, it's not jumping to the top of the list and typically doesn't because I think payers recognize that getting the test right can have a substantial impact on getting the therapy right. When therapies are in the hundreds of thousands of dollars per year, certainly identifying patients most likely to respond is critical and a worthwhile investment for payers.

So, it may seem counterintuitive, but actually, health economic evidence falls routinely to the bottom of the list. So, I wanted to cover the national coverage decision and some of the timelines here for Medicare. I think that, as probably this audiences is familiar, beginning in last year, Medicare released its coverage decision for next generation sequencing for FDA approved companion diagnostic tests for patients with advanced cancer with an FDA approved therapy. Then MACs had the authority to decide if other NGS tests were covered in their jurisdictions.

This was modified slightly in November of 2018 to clarify to the MACs that only NGS testing allowed by the NGS NCD has covered. So, this created some confusion in the marketplace. Then in January of this year, MACs revised BRCA testing local coverage determinations to take a non-coverage stance of patients with early stage cancers undergo an NGS BRCA germline tests. Really, intentions behind this were unclear. Then in April of this year, CMS opened a comment period. Then CMS received a total of 82 comments.

Finally, just this October, there was a proposed decision memorandum, which distinguishes between national and local coverage of NGS testing, somatic and/or germline. You can go to the next one. So, I do want to cover what these look like. So, in the original NCD, the patient criteria were recurrent relapsed, refractory, metastatic, or advanced stage three cancer, stage three or four cancers not previously tested.

This local coverage was the same as the national coverage. Then test criteria was FDA approved or cleared as a CDX in the patient's cancer. Results are provided to the treating physician for management of the patients, and so on. Local coverage determinations were still reserved for other NGS tests that do not fall under the NCD, such as laboratory developed tests. Under the proposed addition, the patient criteria were expanded to include ovarian or breast cancer, clinical indications for germline, risk factors for germline, and not previously tested using NGS.

Then local coverage is reserved for cancer diagnosis other than breast or ovarian, clinical indications for germline testing, and not previously tested using NGS. The test criteria, FDA approved or cleared under the national decision and, of course, under the LDT, again, reserved for other NGS tests under the local determination, such as laboratory developed tests. You can go on.

So, where do we stand in terms of impact on the commercial side? As I mentioned, essentially we've seen an expansion of coverage under Medicare. What we see are, I'd say, emerging private payer coverage, it's definitely made progress and actually, but it's not reflecting precisely the language of the NCD by any means. In fact, you can see from the quotes on the right, the coverage criteria may be specific to lung, for example, and not pan-cancer.

Some of the tools that payers are using to manage access here include prior authorization, limited to oncologists ordering tests, limiting to specific tumor types. This is really a key component of these private payer coverage policies or specific stage or severity, waiting for the first line treatment failure in advanced cancers, or even providing conditional coverage based on further evidence development. So, I think we've seen all forms of these types of restrictions placed by private payers.

I think what we're watching for, of course, is what is that tipping point on the private payer side so that coverage is more similar to Medicare's NCD? I think one of the key dynamics there will be, of course, evidence of clinical utility and the cumulative approval of companion diagnostics. These are two distinct issues because obviously, the utility of NGS can go beyond approved CDX in issues such as reducing the iterative testing paradigm or avoiding that, providing much more comprehensive information with a single tissue sample.

So, there are clear clinical utilities, independent of approved CDX. The key question will be which of these utilities will private payers be looking to expand coverage? So, I want to get into that a little bit. I think the forms of evidence are important to understand here. So, clearly, when we talk about evidence development for diagnostic testing, we think primarily of three buckets. This is analytical validity, clinical validity, and then clinical utility. Certainly, all three are important.

I think where we see some of the biggest gaps in NGS today are really on the clinical utility side. Where a lot of the investment and evidence to date has been by the players in next generation sequencing has really been on the validity side. I think we're seeing more and more evidence in clinical utility or investment in clinical utility evidence. So, we are confident that will play an increasing role in expanding coverage for next generation sequencing going forward. But it's still an emerging story. You can go to the next one.

So, I think what are we thinking in terms of what stakeholders need to prove here and what they're looking for, certainly we've been talking about the payer. But the payer is not the only recipient of evidence and evidence is critical in clinician adoption. It's critical in a lab's confidence in performing a test or sending out a test. At the health system level even, understanding the impact of the test on quality and care or patient satisfaction where the health system may be at risk or even budget impact, and of course, the FDA.

But, really the payer is where a lot of the focus of this discussion is and here, what payers really want to understand is does this test inform clinical management in the real world setting and will that management be informed by the test results, and will it result in improved clinical outcomes? Ideally results in downstream cost savings. That burden is not completely borne by the test. So, are we able to identify more appropriate therapy and avoid the expense of therapy that that may not be effective?
So, I think these are the critical components that payers are looking for. If we go to a deeper dive on this, what are the kinds of decision, what's a decision tree look like here? In fact, about validity, both analytical and clinical, these are really stepping stones to get to the clinical utility piece for payers. So they want to make sure, of course, that the test can deliver accurate results and that, in fact, the markers that are being tested are clinically meaningful or well characterized. But are they actionable?
This is the key question. Does the test result mean a patient management change, does it guide intervention, or is it merely something that's nice to know, but doesn't result in any action? I think the key there is making sure we've identified what all of these potential actions are, and a lot of effort is going into communicating to payers what actionability is in this context, and what is utility? There is not a very codified definition here of utility for NGS that's been exhaustive.

I think payers are really trying to understand what actionability is in this context and I think innovators in this space, really the burden is on innovators to deliver this information to payers. Go to the next one. So, I think as evidence of utility and familiarity with the technology increases, payers are becoming more receptive. We have seen some increases in private payer coverage for comprehensive genomic profiling, for example, and some movement just over the past 12 months by private payers to expand coverage.

It may be tumor specific coverage, but it's still moving from a place large panels were non-covered. Certainly, the demand for evidence, however, continues, and we do want to see inclusion guidelines as a key driver. That's important to payers. For many payers, FDA approval's still an important condition. I think it's important to note those that are payers that are more familiar with the dynamics of laboratory medicine were actually placing less emphasis on FDA approval. So, it's cited as a key condition by many payers. But I think once educated, there certainly is an opportunity for coverage of laboratory developed tests.

Some primary challenge, again, this goes back to this actionability issue. Are we testing for biomarkers that really don't have utility or are not plenty clinically meaningful? So, the coverage determination process, we highlighted a little bit about this. But I think just to stress it again, it'll be incumbent upon innovators here, laboratories, and so on to develop and deploy robust evidence strategies. That would mean having the right tools to communicate to these key stakeholders.

This obviously would be to support guidelines inclusion for communication with specialty societies, certainly Medicare, the third party tech assessment players, such as ECRI and Hayes, private payers, of course. Then really, all supported by these key value tools via communication tools, such as a value dossier, perhaps a payer value deck, all the data to back that up, published literature, and if needed, budget impact models. As I said, health economics are downplayed, but it may be rather simple budget impact model just to show that, in fact, identifying patients or candidates for appropriate therapy may even be a budget neutral result, given the cost of NGS testing.

What are some key value messages that need to be delivered? I talked about the top three already, so I really want to focus more on the bottom three, which we also think are quite important. These are some geared to the lab, some geared to the payer, some geared to the clinician. So, I think taking a very holistic approach to value demonstration and evidence development is important. The evidence will support both clinical adoption and payer acceptance.

So, that means addressing things like practice workflow. Are we delivering results faster? Are we reducing the diagnostic odyssey or avoiding unnecessary tests or repeat testing? On the payer and provider economics side, are we having a positive budget impact? Are we reducing costs associated with unnecessary tests and so on? Then the patient experience itself. Is the test more accessible than alternatives, can somehow reduce burden by giving more comprehensive information to reduce the burden on the patient or the caregiver, and so on?

So, I think these bottom three perhaps are emerging factors in coverage for payers, but they're certainly important to other stakeholders, and so should be a key part of an evidence development strategy. We know that clinicians need compelling evidence. They really want to understand and want to see studies to back these up. This is very schematic, but again, just to show that these are the typical kinds of queries we get on evidence in this space from clinicians.

So, I'm going to spend just a few minutes on coding. It's probably quite familiar to many of you, the CPT codes that are available for use. So, the key buckets to look at here for NGS will be the top row, which are the genomic sequencing procedure codes. That's broken down into two codes, one for panels of five to 50 genes and the other for more than 50 genes. The other area to focus would be the PLA codes. This is a new code set that was introduced in 2017. It's a code that's specific to a test provided by a sole source laboratory, or could be licensed or marketed to multiple providing laboratories.

Some examples we put on the right are Foundation One CDX and Oncomine target tests. So, there are some options here for coding. Many of the laboratory developed tests are using the top row, the GSP codes, which have become more widely accepted over the past few years. Then many innovator labs are also using PLA codes. The PLA code obviously allows for unique payment and could allow for the potential for incremental payment over the panel codes, the GSP codes, provided provider can supply evidence of incremental value. Let's go on.

So, you can see this is reflected in funding reliability. So, proprietary laboratory analysis codes and PLA codes. Jump to the top in terms of Medicare reimbursement, GSP codes fall in slightly below this. Really, the key difference here could be things like FDA clearance or approval, and behind that really is evidence. But even without FDA clearance or approval, we see a lot of laboratories seeking these PLA codes and able to secure a higher payment based on evidence.

Briefly on payment assignments, we're seeing a wide array of payment approaches here. Not going to spend an enormous amount of time, but most of the payment here is going to be fee schedule based or some sort of negotiated payment amount for NGS. Then I think as you're all probably familiar, two key methods for establishing payment for laboratory tests, crosswalk or gap fill. I think in this case, for NGS, the payment environment is largely set here, or at least the ranges are. So, I think everything is really clustered into two key payment levels, depending on panel size.

So, I think for the most part, these payment predicates will be reflected for in the payment rates that are offered for any new service in this space. So, as I said, I want to wrap up with some keys to success. I think first, balancing payer and physician needs. Again, we think this is really evidence driven. We need to show that we're delivering a high quality test or delivering something that's actionable and that the reporting is clear. I didn't talk a lot about this, but it's one of the key components that we hear from clinicians, which is a key advantage to them for the test that they adopt will be is the report clear and digestible?

I talked about these evidence types that we need to see, and going beyond evidence development and having a work stream or supporting guidelines inclusion and KOL support are critical. So, I think having a comprehensive evidence development strategy is really foundational here. Some of the communication tools that we recommend that service providers have will be a payer coverage presentation. This is a succinct presentation that's used to communicate to pay our medical directors really explaining essentially the validity and utility evidence behind it with support from physicians, ideally key opinion leaders that are in that payer's network.

Certainly a payer monograph or a dossier describing in detail the value story for the test and the supporting evidence. Then behind that, the data binder, which would have all the published literature that's relevant to support that value story. The cost and budget impact, as I said, comes out lower in the list for payers, but it's still in a way table stakes to have something like this just to show the economics of what we're doing. As I said, they're, I don't think looking for enormous cost savings within the test itself, but it would really be the broader budget impact on their plan in terms of adopting a test that could help more effectively guide therapy.

Then payer profiling. So, understanding your payers, understanding where you're going to need to deliver these messages, who you need to engage, timing, and so on. Two ways to engage payers, there's the top down approach, which we have just described a lot of the tools that would be used in a top down approach. This would include direct engagement with key decision makers, such as the medical director or policy personnel, and then leveraging KOL support, as I said.

Let's not forget that there's also a bottoms up approach. This is really working at the claims level to ensure that each test request is essentially pulled through and making sure we're jumping through all those hoops and things like prior authorization and also making sure we're creating enough volume so that engaging in the top down process is even interesting to the payer. So, I think these are all critical approaches and having an approach at both the top down and bottom up level is important.
Then finally, strong relationships. Who is actually facilitating the communication between pathologists and oncologists? I think one of the key dynamics we've noticed in this space and where there is more of a connection between oncology and pathology and that there's a dialogue going on, there tends to be higher adoption of more comprehensive panels. So, we've found, for example, where there're active tumor boards in a case, then we see, let's say, a more expansive approach to testing.
So, trying to essentially replicate that, those kinds of dialogues and connections and making them more pervasive is critical to the adoption of more advanced diagnostics. So, just to sum it up, four keys to success, strong value and quality story, developing these compelling communication tools, engaging clinicians and payers with compelling evidence, and then focusing on these key administrative elements, this bottom up approach. These are the four keys for driving success in this space. So, I'll end there. Thank you for your time today and I'm happy to take questions in the time remaining.

We have several questions. I believe that you have answered actually the question number one that came across. Are you able to see questions two through five in that order, Joe?
[inaudible 00:54:28] with payer. Yes. I can see these questions.

Okay. Let's tackle question two and there's a ton of them, but we tried to prioritize them for you. So, if you'd like, you can hit question two and we'll see what else we can get to.

Yeah. I think contracting, there is resistance for newer laboratories. Are there intermediaries that can help new laboratories get reimbursed? There are certainly players out there that help on both the bottom up and the top down approaches, and I would consider contracting kind of in between. So, contracting is basically going to help connect the top down coverage results with really a bottom up implementation path. There are vendors out there, I won't name them today, but I'm happy to follow up if somebody sends me an email with some of them and I can provide some references.
I think the key is going to be are you an out of network provider, in network provider on the payer side, and what are the hurdles that you'd have to jump through to become in network? Is it worth it if you have to accept a certain payment rate? So, I think those are all considerations.

It seems, Joe, that having come from the world of pharma and healthcare and the provider world and other markets, it seems like the advent of the PBM, specific pharmacy benefit managers, that we're seeing that with laboratory benefit managers and we're seeing some of those LBMs get into NGS. Perhaps there's some of those, and I believe you were working on a white paper at some point. Would that be relevant here?

Mm-hmm (affirmative). Yeah, it would. Certainly, I would think of these benefit managers as key parties to engage. What I want to make sure of is that the payers that I'm focused on are actually working with those benefit managers. If they're not, then you don't need to engage them. But if, in fact, they are essentially developing or key influencers in policy development for your payer constituents, then those are parties that will need to be engaged.

Question three, coverage and reimbursement. This is really the question of targeted panel vs. comprehensive panel. If I look at the coverage landscape in the US today, the coverage landscape for targeted panels does look slightly more favorable, and I think this is not surprising, right? Because you're going to have a panel where, as a percentage of biomarkers, you have many more, a higher percentage of approved companion diagnostics in that panel or those panels.

It goes back to that issue of actionability. It tells me that payers are not fully convinced of the value of comprehensive genomic profiling across the board or a 500 gene panel. There are certainly positive trends in acceptance of the larger panels, but it's not surprising to us that the targeted panels would achieve a more favorable coverage out of the gate, and that's exactly what's happened.

Right.Question four.

So, yeah. Well, actually, Joe, we got just a couple minutes left and just to close this out here, just everyone that's participating, thank you for your time. Joe, of course, thank you for your time, and for Mark and Sam and the Boston Healthcare gang as always being so supportive. A link will be sent out to this webinar. It's been recorded. We'll send that out with the materials for people to peruse.
I thought as far as question four goes, wondered if you might address it and then we'll at this one. But it's really what do you think of the role with payers and that rely on this NGS testing to find the patients for the therapies and thinking about how the clinical utility message should come from these test developers or drug developers? Or what's your sense of that question?

Yeah. Yeah, I think that it should come from both. We do feel strongly about this that I think it is in pharma's best interest for testing to be accessible and a routine part of cancer care to help identify targeted immune therapies. So, I think a lot of the burden has been carried by test developers. But increasingly, we're seeing interest from pharma in supporting the clinical utility story of NGS, and that's because if you look at drug pipelines, pharma companies will really want to have a widely available next generation sequencing as a key part of cancer care to support access to pharmaceuticals. So, I hope that gets at the question. We do think it's both.

Joe, it does. Thank you so much again for your time. We appreciate everyone's participation. Stay tuned for the next webinar from Pierian. We'll continue to try to bring the resources not just on coding compliance and reimbursement, but on clinical utility and validation and all the wonderful things that help us spread the power of NGS around the globe. So, thank you all for your time. Take care.

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