CMS decision on NGS coverage is a big step forward for patients and laboratories

By Jeff Schreier, Senior Director, Marketing and Robert Feeney, Marketing Director, Global Lab Relations, Diaceutics. 

A hurdle has just been cleared for patients and the laboratories who serve them.

On March 16, 2018, the Centers for Medicare and Medicaid Services (CMS) finalized a National Coverage Determination (NCD) that covers diagnostic laboratory tests using Next Generation Sequencing (NGS) for patients with advanced cancer.

This decision was made following a parallel review by the FDA and CMS, which resulted in the approval of Foundation Medicine’s companion diagnostic (F1CDx™) test on November 30, 2017. At the same time as the FDA approval, CMS issued a proposed national coverage decision for NGS cancer diagnostics, specifically covering the F1CDx™ test. This is the first breakthrough-designated, NGS-based in vitro diagnostic (IVD) test that is a companion diagnostic for 15 targeted therapies. It can detect genetic mutations in 324 genes and two genomic signatures in any solid tumor.

In addition to covering the FDA-approved F1CDx™, CMS is now covering other FDA-approved or cleared companion in vitro diagnostics when the test has an FDA-approved or cleared indication for use in that patient’s cancer and results are provided to the treating physician for management of the patient using a report template to specify treatment options. Tests that gain FDA approval or clearance as an in vitro companion diagnostic will automatically receive full coverage under this final NCD, provided other coverage criteria are also met.

For Medicare patients, coverage determinations for other diagnostic laboratory tests using NGS with advanced cancer will continue to be made by local Medicare Administrative Contractors (MACs). In addition, after considering all public comments, this final decision expanded coverage to patients with relapsed, refractory or stage III cancers. The final decision also extends coverage to repeat testing when the patient has a new primary diagnosis of cancer.

CMS has removed coverage with evidence development in this final NCD.

The agency left two pathways open for reimbursement coverage of NGS – either the route through the FDA, which guarantees coverage upon approval or clearance, or the Local Coverage Determination (LCD) route through the MACs. The final rule permits that LCDs, while still restrictive, can still provide coverage for NGS tests run as laboratory developed tests (LDTs) for advanced disease.

This leaves laboratories with a clear choice on how to pursue coverage for NGS testing. They can either take the FDA route (or an approved ancillary route through third parties such as the New York State Department of Health), or they can petition their local MACs. The question now is, how much will the MACs reimburse the labs that are running the NGS panels as LDTs? The payment amount could be a fraction of the rate that CMS pays for an FDA-approved or cleared test. This is a way for CMS to reconcile both LDT and IVD pathways, but push commercialization through the FDA path, with the carrot of assured and likely higher reimbursement, given the expense of FDA review.

Diaceutics’ data shows that CMS payment to date has been denied for 39 per cent of all oncology NGS testing, with the reason given that it is investigational or a non-covered service. For panels containing more than 50 genes, 55 per cent of cases with available reimbursement data have been denied. It will be interesting to monitor this denial rate going forward and observe how commercial payers respond to the new NCD.

Patients and physicians will now have greater assurance that payment will not be denied if they order a FDA-approved or cleared test. We expect to see a pronounced increase in utilization of F1CDx™ and other NGS tests that gain FDA approval or clearance. The alternative path for NGS tests as LDTs will remain in place for laboratories that regard FDA approval or clearance as too inflexible or costly.

In summary, this final NCD is a marked improvement on the proposed NCD. It is a win for cancer patients. The 315 laboratories and advocacy organizations who sent their comments to CMS were instrumental in achieving this outcome.

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