By Boonsri Dickinson
May 22, 2013 | With the plummeting cost of next-generation sequencing (NGS) expanding the range of clinical genomics tests being offered by diagnostics companies and medical centers, a looming problem lies in reimbursement.
Mark Boguski, a pathologist at Brigham & Women’s Hospital in Boston and co-founder of the consulting firm Genome Health Solutions, points out that genetic sequencing technology is advancing faster than it can be incorporated into the health care delivery system. In this case, the delay may have real repercussions for the care that is available.
Current Procedural Terminology (CPT) codes identify surgical, medical, and diagnostic services for continuity of care and so that insurance companies can consistently reimburse providers for services rendered. Codes in the 80000 series are reserved for pathology and laboratory services.
CPT codes were first set by the American Medical Association (AMA) in 1966, and physicians have been able to use the codes to report molecular diagnostic tests since 1993. As sequencing technology has progressed, insurance companies have had trouble classifying—and paying—for molecular diagnostic tests because the codes were not specific enough.
To fix this discrepancy, the AMA issued new CPT codes for about 200 genetic and molecular tests in two rounds, the latest of which went into effect January 1, 2013.
Heidi Rehm, assistant professor of pathology at Harvard Medical School and director of the Partners Healthcare Laboratory of Molecular Medicine, says that in some ways it is too soon to know the new codes’ impact on billing and payment, as it usually takes months to see the results of changes. But even in just a few months of implementation, she is concerned. The 200 new codes are already outpaced by the rapid growth of diagnostic technologies.
Rehm opened the Partners Healthcare diagnostics lab ten years ago; her lab began with a single test for hearing loss, but her team now performs some 200 tests. “For most of the tests we run, there is no code for it in the new coding system,” she says.
To organize the new codes, genetic tests are sorted into tiers. Tier 1 codes include single-analyte molecular tests and are billed depending on the analyte tested. Illumina, for example, uses several different codes for cystic fibrosis genetic testing: 81220 for common variants, 81221 for known familial variants, 81222 for duplication/deletion variants, 81223 for full gene sequencing, and 81224 for intron 8 poly-T analysis.
Tier 2 codes correspond to tests for rare diseases that often require interpretive work by a physician or other healthcare professional. Interpretation itself can be billed at $18.70 per test regardless of the complexity of the report or the condition.
If a test is neither Tier 1 nor 2—usually tests for the most rare diseases or specialty tests—it is simply given a CPT 81479 code, a catchall for “unlisted molecular pathology procedure”.
Insiders say the whole restructuring was supposed to create new codes, not a new pricing scheme, but according to one company executive who did not wish to be identified, there is no transparency in how prices are set.
The new coding structure doesn’t take into account the actual business of genetic testing and what it costs to perform tests, the executive says.
For example, the larger the gene, the more resources are required for testing and processing results. Yet there seems to be no correlation between price and gene size. Should a 20-exon gene (HADHA) be priced almost 9 times less than a 3-exon gene (VHL)? In some cases, the costs associated with reagents alone are higher than the proposed reimbursements.
Companies with diverse menus, such as Ambry Genetics, have a range of tests. If a particular test is reimbursed too cheaply, or if there is delay or confusion around payment, the company’s risk is distributed among many tests at many prices. Companies that offer fewer or specialty tests without associated codes carry much more of the financial burden for inaccurate pricing.
Anyone can lobby the AMA for new codes, but that requires a technical assessment, which largely places the burden to prove a test’s clinical utility on the first company marketing that test.
Apples to Apples
The old coding system accounted for the technology that was used. A lab could bill $100 or $1000 for a gene, depending on the technology that was used. In this year’s changes, the CPT coding for molecular diagnostic tests changed from focusing on the sequencing technique—gene amplification, nucleic acid extraction, or nucleic acid probes—to focusing on the variants tested.
This isn’t a fair switch, says Kevin McKernan, chief scientific officer of Courtagen Life Sciences, a molecular diagnostics start-up specializing in mitochondrial disorders. “Next-generation sequencing is different than arrays and PCR… The current coding system, however, does not accurately account for and recognize the assay complexity of NGS, as well as the ancillary components needed to utilize and translate a complex next-gen test into highly actionable diagnostic information.”
McKernan’s company Courtagen offers several NGS tests for mitochondrial disorders. Because the new codes are agnostic toward technology, Courtagen has the option to either combine Tier 1 and Tier 2 with the catchall code 81479, or use code 81479 to represent all of the testing done.
For rare conditions, next-generation technologies are the best—or only—way to pinpoint a diagnosis. But when the payrate does not recognize the higher cost associated with these technologies, small labs can’t afford to offer next-generation technologies while being paid for less complex techniques.
“The failure to develop CPT codes specific to next-generation sequencing has created difficulties in submitting claims and receiving proper and timely reimbursement from payers,” McKernan says.
The Interpretation Question
Even if the tests themselves all had clear reimbursement structures, there’s still the problem of interpretation.
Without interpretation and adoption, sequencing technology runs the risk of being simply, “a curious distraction in the history of medicine,” warns Boguski. “People are talking about the $1,000 genome… but what about the $1 million interpretation? If the interpretation isn’t reimbursed, no one will use the tests!”
Interpretation, though, is a years-long process—a particularly challenging concept for payers.
Whole-exome sequencing looks at all protein-coding genes, rather than a single gene. These resulting data are relevant beyond the original diagnostic intent.
Heidi Rehm is concerned about the ongoing task of reinterpreting the medical significance of DNA variants in patients throughout their lives.
“At the moment, we don’t understand most variants,” says Rehm. “For the rest of their lives, [patients’] variants can be reinterpreted. However, once you pay for it, there isn’t a robust way for getting paid for re-interpreting the results. There’s no incentive for the labs to support data re-interpretation.”
While the industry struggles with these difficulties, Kevin McKernan worries that the dream of personalized medicine is slipping away, and may never reach its full potential for cost savings or health impact.
“If the system is not careful, low cost-to-perform tests will dominate,” he says, “leading to poorer care overall and higher costs in the long run—in our case, missed carriers, more debilitating and costly disease.”
Gene Name Number of Exons CPT Code Price Set
CDKN2A 3 81404 $373.14
VHL 3 81404 $639.96
MUTYH 16 81406 $367.46
HADHA 20 81406 $75.88
BRCA2 26 81216 $1,747.04
CORRECTION: This story has been updated to reflect the correct creation date for CPT codes and the correct first date they were accessible for molecular diagnostics.