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Proving Utility, Demonstrating Value: How to Align Moving Parts in Personalized Medicine Reimbursement

Of the many business, operational, legal, regulatory and clinical obstacles standing in the way of widespread delivery of personalized medicine, the single greatest challenge may lie in solving the reimbursement puzzle. Advocates of personalized medicine contend that it results in better care for the patient, as therapy is targeted specific to an individual, and that it should result in cost savings as treatment that is unlikely to work for that patient is avoided.

The lack of standardized reimbursement codes and definitions covering precision medicine treatments and services, particularly molecular genetic laboratory tests — when the industry hasn’t even settled on a standard definition of “personalized medicine” — make it difficult for providers to get reimbursed, especially for new or innovative offerings. In order to secure payment from insurers, personalized medicine providers must prove not only the clinical efficacy of their treatments or genetic testing, but also the value they offer to payers. Doing so requires a deep understanding of health care economics.

That formidable landscape provided the backdrop for panel discussion at the Business of Personalized Medicine Summit on March 28 in San Francisco. The discussion carried the title “Moving Targets,” an apt description of a market in the midst of dramatic structural and philosophical change. Even in light of the recent failure of a sweeping health care bill in Congress, the market remains mired in uncertainty. The Affordable Care Act, and other government and payer initiatives, pushed the industry toward value-based reimbursement, and the Obama administration provided vocal support for personalized medicine. Thus far the Trump administration has yet to signal whether it will support continued movement in those directions.

In that environment, the imperative for personalized medicine providers is to recognize and fully understand, at the earliest possible stage, how they’ll make money.

They’ll also need to have a plan for demonstrating clinical utility in order to meet payers’ evidentiary requirements for coverage, said Mark McCoy, Senior Director, Reimbursement at Guardant Health. In most cases that means building a body of clinical literature, since most payers want to see published data proving either cost savings or cost effectiveness of outcomes.

That has ramifications for sales and marketing, McCoy said. It’s vital to work with providers to set up clinical tests with appropriate utilization and other elements that payers will expect to see – and to keep in mind that providers [physicians who order and rely upon the test that is reimbursed by payers] have little if any financial incentive to use your test. That means, as the business and product evolve, changes must be carefully communicated to providers – who can’t be expected to take pains. “We’ve found you can get good early adoption, but if you change your ordering process a year or two in providers will get frustrated and just drop you,” he said.

Providers also require a lot of education on not only personalized medicine treatments or tests, but on how to apply new evidence to specific patients and how to articulate the results. Amber Trivedi, Senior Vice President, Market Development and Innovation at InformedDNA, said payers want to see that providers are involved, and that puts the impetus on companies to ensure that providers understand how payers define clinical utility and that they document that utility in encounter notes.

Trivedi advised taking a very hands-on approach in dealing with physicians. “You might even have to teach them how to write letters of medical necessity to secure coverage,” she said. “There’s a lot of variation out there in understanding of even the most basic terms.”

Evidence-based review through one of the four established programs also proves extremely helpful when seeking reimbursement, said Anita Chawla, Managing Principal at Analysis Group. The MoIDX program, developed and administered by Palmetto GBA, helps determine Medicare reimbursement – making its determination of clinical utility among the most influential in the industry.

Given that influence, it makes sense for personalized medicine providers to factor in MoIDX criteria and processes when designing clinical studies. “It can save a lot of time downstream,” Chawla said. She pointed to the MoIDX hierarchy – which sets randomized, prospectively controlled trials as the gold standard – as an important road map for companies in the testing-design stage.

© 2017 Foley & Lardner LLP

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Our attorneys at Foley pride themselves on having a first-hand understanding of health care’s business and legal challenges. Health Care Group is your go-to resource for information and perspectives on the latest news and developments in health care law and how it relates to and impacts the industry and those with related business interests.

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