How To Develop Coverage Policies For Molecular Diagnostics

These tests can be expensive. Worse, they can pave the way for enormous costs, some unwarranted. And there are more of them every year.

Douglas Moeller, MD

Molecular diagnostics is a new class of diagnostic tests that identify molecular and genetic markers, enabling a physician and patient to tailor treatments or predict the risk of diseases for their individual circumstances. They are one of the fastest growing and most costly medical expenditures facing health plans today.

Over 40 million molecular and genetic tests were performed in 2008 — with costs that typically ranged from $300 to $3,000 per test. Over the past year, the industry has grown over 35 percent, from $4 billion to $5.5 billion, and is projected to exceed $8 billion by 2010. Growing at this staggering rate, molecular and genetic diagnostic tests are opening the lid on a Pandora’s box of complexity, cost, and quality problems for health plans. How do health plans begin to develop coverage policies in this new frontier of molecular diagnostics where demand is skyrocketing and the clinical evidence is often confusing or lacking entirely?

What is medically necessary?

Health plans typically consider medical necessity in making coverage and benefit decisions, but in molecular diagnostics, there has been a debate about what constitutes medical necessity. How do we establish medical necessity when evidence is fast-emerging, incomplete, or inconclusive?

Thousands of tests are now available, and new ones come to market so rapidly that there is often little or no clinical evidence to back them up. Even when clinical evidence does become available, it often takes years before it is implemented by a majority of practitioners.

Complicating matters are the enormous moral and ethical issues surrounding molecular diagnostics. For example, consider a physician who is contemplating working up risk factors for a patient with a family history of Huntington’s disease. If the gene test comes back positive, which is extremely rare, then there is a high probability of developing this fatal disease. This could make a tremendous difference in lifestyle choices the patient might make, such as deciding to never have children and/or changing an entire career track to focus more on personal goals.

It would also make a tremendous difference in early diagnosis and treatment. Should this test be considered routinely with other prenatal screening tests for fetal abnormalities? What policy decisions should be made about a test in which the likelihood of a positive result is extremely low but such a result is also extremely significant? Should plans pay for these tests? Some would argue that if there is nothing to be done clinically to prevent or cure the condition, then to test for it is not necessary. Others would say that knowing about the disease could affect a patient’s life decisions.

Perhaps the most ethically and politically contentious issues center on family planning. Consider patients who will decide whether to have children based on the results of testing that show they carry specific predictive genes. Should this be covered in situations where a patient has no known family history of the condition? What about a situation where a patient undergoing in-vitro fertilization has four fertilized eggs and requests pre-implantation genetic diagnosis (PGD) to determine which, if any, of the eggs should be eliminated if she tests positive for common chromosome abnormalities (aneuploidy screening)?

Pre-implantation genetic screening (PGS) — which is used to identify embryos that have no symptoms of disease, but that may have a genetic marker that could lead to a disease — are hotly debated within the payer community. And a payer organization may even cover this testing for certain kinds of conditions, but not for others.

Finally, how is a plan to respond to the worried well — patients who may use an online tool to diagnose themselves and believe that they have Parkinson’s disease or multiple myeloma and want to be tested? Are plans to pay for these tests as well? If so, under what circumstances?

These are just a few of the many moral and ethical dilemmas plans are now facing. In the era of molecular diagnostics where the clinical possibilities seem so limitless, the associated medical necessity issues appear to be limitless as well.

Clinical complexities

Another great challenge in developing coverage policies is dealing with the complexities inherent in some of these innovative diagnostics. Merely understanding when tests should be ordered or followed up on can be very confusing, let alone taking a position on payment or nonpayment. It is exceedingly difficult for a medical director and for practicing physicians to keep abreast of the clinical sophistication and characteristics of tests.

Chip tests provide a good example of how the complexity of these new, innovative tests are confounding policy makers. These diagnostic panels can provide upwards of 1,000 tests from one blood sample on a single chip. Though only a handful of tests may be needed, physicians may end up ordering the entire set of tests. This could be because they believe the information would be helpful to know, or possibly based on a request from the patient. In an area where plans are challenged to determine whether one molecular diagnostic test is medically appropriate, how does a plan develop coverage policies to determine which of the 1,000 chip tests are medically necessary?

Taking it one step further, some companies are now packaging their results from panel tests in terms of what they call risk factor assessments. These companies carry out an interpretive comparison to people that have the same profile as the tested individual, and they actually give the patient a risk number for coronary artery disease, prostate cancer, or a slew of other conditions. But how accurate are these risk assessments? As more patients ask for these and then want to act on the results, who should pay?

Organizational structure

Who in the health plan should “own” the process of developing and managing coverage policies? Perhaps the policy team or medical managers? Often they are already overburdened with day-to-day policy decisions, so how can they be expected to manage molecular diagnostics as well?

With so many policy needs and an avalanche of new information continually pouring in on technology assessments, health plans need to know where to focus their very scarce medical policy development resources to address today’s needs while also planning for what is to come. This is why, as plans begin to create coverage strategies, they should start at the organizational level with the creation of a molecular diagnostics “champion” — a person who learns how all of this should work.

Coverage strategies

Given the lack of clinical evidence, the charged moral and ethical issues, the clinical and technology complexities, and the escalating volume of tests, how should health plans get started on developing coverage strategies for molecular diagnostics? The following six-step approach can help health plans create coverage strategies.

  1. Start with state-mandated benefits. These are the benefits that a plan must pay, such as newborn screening panels. Groups such as the American College of Medical Genetics work with the government to decide which tests fall under the state-mandated umbrella. In addition, information on required screening tests can be found on the Web site of each state’s department of health.
  2. Select a molecular diagnostics champion. Plans should choose a senior executive as their molecular diagnostics champion to lead the charge in developing and managing coverage policies. With the barrage of clinical literature to review and the plethora of technological assessments to monitor, these molecular diagnostics champions will need a strong support staff as they decide which tests to focus on, and in what order.
  3. Establish guidelines and thresholds. One way to do this is to perform month-to-month analytics on testing volume. If a spike in testing follows a newspaper article or a scientific announcement, it is likely that a certain test has become hot, and the plan should focus on creating a coverage guideline sooner rather than later. Another way to proceed may be to determine the cost-threshold for review. If a test costs less than $100, the plan may decide not to review it until volumes skyrocket. On the other hand, you may want to establish a guideline that all tests over $3,000 must be reviewed.
  4. Develop a clear definition of what is experimental. Plans must decide for themselves, based on established evidence, how much they trust a test’s predictive value, and what their coverage policies will be.
  5. Remain objective. With so much at stake, test manufacturers and physicians may be pressuring health plans to cover certain tests. “Show me the evidence” is a good starting point to determine if the assessment is solid, incomplete, or lacking.
  6. Consider using a content aggregator. Seeking out a group of people who have laboriously reviewed and discussed the clinical evidence and performed the technology assessments together, outside of a single plan, can create real value. Plans should look to emerging services that provide rigorous, evidence-based criteria.

The government took on a leadership role by enacting the Genetic Information Nondiscrimination Act and proposing the Genomics and Personalized Medicine Act of 2007. However, it is vital that the government or another national organization take the lead when it comes to technology assessments and coding. The CDC is putting together an initiative called Evaluation of Genomic Applications in Practice and Prevention (EGAPP), which is beginning to look at evaluation criteria and clinical indicators, but it has been a rather slow process. There is an immediate need for the creation of a national entity to validate these tests to determine their relevance to particular diseases and when they should be administered. Each test must be judged in terms of its analytical and clinical validity as well as appropriateness.

Concurrently with test assessment, the government should take the lead in creating a standardized national coding system that enhances the government’s Healthcare Common Procedure Coding System (HCPCS), of which the American Medical Association’s Current Procedural Terminology (CPT) is a part. You can’t manage what you can’t measure: The current transaction schemes for determining what tests are coming in by way of claims are inadequate. With a handful of codes being used to handle thousands of individual tests, plans are unable to truly understand what tests are actually being submitted for claims and, therefore, to even know what policies should be invoked. The current coding systems need to be expanded significantly to address this emerging technology.

Time for health plans to act

Until there is the necessary level of leadership at the national level in regard to technology assessment and coding, health plans must act quickly to fill the gap. As they begin to develop policies, they should keep a few key questions in mind:

  • Where should we focus our scarce policy resources?
  • How do we decide which tests have enough substance to focus on first?
  • What is the relevance of each test to a particular disease?
  • How much should we trust these tests?

Medical directors are being bombarded with molecular diagnostic questions right now, and these issues need immediate attention in the form of cogent coverage strategies and policies to manage the $5 billion molecular diagnostics onslaught. Health plans must do what they can to extend the value of their already-stretched resources. They must begin to take bold actions, such as appointing a senior molecular diagnostics champion to provide the necessary leadership to tackle these complex issues. They need to look to content aggregators to ensure that the critical evidence-based decision support tools are put in place. And they need to know if these tests make a difference. Only then can they truly focus on their mission of advancing the overall quality of health care.

Douglas Moeller, MD, is a medical director in the claim performance group at McKesson Health Solutions and an expert in helping health plans develop and execute coverage strategies. He leads McKesson’s clinical outreach initiative — an effort to involve specialty organizations in the development and maintenance of the company’s knowledge bases — and he has a strong interest in the correct coding of medical services and devices, especially related to emerging technology. McKesson has work under way in the area that he writes about in this article.

A six-step approach can help health plans create the sort of coverage strategies needed to manage molecular diagnostics, says Douglas Moeller, MD.


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