The Invisible Hand Pushes Back

Monday, October 17, 2011

There's a sense among many that life would be much easier if FDA would just leave LDTs alone. A recent draft coverage policy from Palmetto GBA may cast that assumption in a harsh new light.

I'm not a reimbursement expert, so please take this with a grain of salt... but it appears pretty plain from this document that Palmetto proposes to:

  1. Presume denial of Medicare coverage for tests not approved by FDA and/or those performed in a single hospital or lab

  2. Seek "overpayment collection" for previously paid claims on such tests

It appears that tests could also qualify by obtaining a "coverage determination" from Palmetto. I'd wager that Palmetto's recent coverage announcement for Oncotype DX was meant to serve as an example of that.

I pinged a couple reimbursement specialists and am told that a significant amount of process is expected before this policy goes into effect. The comment period is open through December 5 and several meetings are already scheduled.

It's quite possible that this hard-line stance is an opening position for purposes of bargaining, not a final outcome. Either way, it appears possible that payers may begin to play a larger role in asserting how lab tests should be validated. That's wouldn't be a surprising outcome, exactly, but it would present a new wrinkle to an old argument.

I don't want to get anyone too worked up about this, as it's unclear exactly how this will play out. If going to FDA wasn't in your plans already, there's probably not enough here to warrant changing your plans.

By the same token, this is a pretty clear signal that clinical validation and utility matter. If you're avoiding FDA to opt out of having to do those studies, this announcement may represent an early warning that your strategy might a short-term one at best.

Sooner or later some critical entity is going to want to take a very serious look at how you prove clinical value. If you're not planning how that value will be demonstrated, perhaps it's time to start planning.

Tags: CLIA, CMS, IVD, LDTs, reimbursement

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