TRENDS & PERSPECTIVES

In December, U.S. Senator Charles E. Schumer (D–NY) introduced the Medicare Advanced Laboratory Diagnostics Act of 2007 (S 2404). This act is the Senate companion bill to the legislation of the same name (HR 1321) that Rep. Bobby Rush (D–IL) introduced earlier last year in the House of Representatives (see IVD Technology Industry News, May 2007).

The Schumer bill incorporates the same four main provisions from the Rush legislation: creating a new private-public process for evaluating the accuracy of payment rates for individual tests, defining more explicitly the current process by the Centers for Medicare and Medicaid Services (CMS; Baltimore) for gathering public input on payment rates for new laboratory tests, requiring CMS to develop a new gap-fill process, and establishing a demonstration project to evaluate a new Medicare payment system for molecular diagnostic tests.

“Medicare’s antiquated payment system stymies research and development that could generate cutting-edge screening and diagnostic tests,” says Schumer in a written statement. “This bill will ensure that reimbursements for these tests are appropriate so that Medicare patients are not deprived of the health benefits that come with access to the newest lab technology.”

Industry analysts and advocacy groups have voiced their strong support for this legislation, especially how it accounts for the growing emergence of molecular diagnostics.

“The bill should provide much needed incentives to the IVD industry toward the development of new molecular diagnostics,” says Tom Tsakeris, president, Devices & Diagnostics Consulting Group Inc. (Rockville, MD). “I hope the bill will be expanded to cover other new cutting-edge nonmolecular diagnostic IVDs, such as new serum tumor and cardiac markers.”

AdvaMed (Washington, DC) is urging members of Congress to cosponsor this legislation. According to Wanda Moebius, AdvaMed’s vice president of policy communications, the legislation would reform many of the outdated Medicare policies that discourage the development and adoption of new molecular diagnostic laboratory tests.

“Specifically, the demonstration program would test a new Medicare payment system for certain molecular diagnostics,” says Moebius. “The demonstration will reflect the value of diagnostics in patient care management, associated resource requirements, and potential to reduce long-term costs. Ultimately, the provision will demonstrate that reforming the old system in this way will result in increased access to personalized medicine for patients.”

Jeff Bush, director of corporate reimbursement at BD (Franklin Lakes, NJ) agrees that the intent of the bill is to test a novel approach to setting appropriate payment of new molecular diagnostic technology via a stakeholder-driven, value-focused payment system, and to establish a reconsideration process for updating existing test payments to correct long-standing payment errors.

“There are many benefits that could be achieved by passing this bill,” says Bush. “First, the bill would enhance provider performance, and enabling healthcare providers and facilities to adopt improved technologies will improve quality and performance. Second, the bill would improve patient care in which earlier actionable information can yield better clinical decisions and interventions that will lead to better patient outcomes. Third, the bill would encourage continued innovation in medical technology in which rewarding value provides a positive incentive for continued developments and advancements in medicine and patient care.”

Bush adds that the legislation would allow patients to be treated more effectively and efficiently within a tight fiscal environment, and appropriate use of molecular diagnostics will help Medicare transition from being a passive payer to an active and prudent purchaser of healthcare. Bush also believes the legislation would foster the development of personalized medicine that relies on molecular diagnostic data to deliver the right treatment tailored to each individual patient at the right time.

However, some analysts are skeptical about the demonstration project’s ability to evaluate new approaches to coding and payment for IVDs.

“It is not clear to me how the government will assess and assign a reimbursement for the value of a test to patient care management,” says Glen P. Freiberg, president of RCQ Consulting (San Diego). “The government has refused to have a general administrative approach to pay reasonable amounts for diagnostic tests that could save money later via prevention.

“So I am having difficulty determining how the demonstration project could have a reproducible and understood assessment method in the time frame required for enactment. Additionally, it appears that the bill makes this assessment process something that must be public and readily available to the public to review and understand.”

Freiberg adds that the one risk area for IVD manufacturers of molecular products subject to this bill would be the case in which current reimbursement is based on the series of procedural codes and a new test code results in a lower reimbursement.