By Allison Proffitt
August 22, 2017 | Last week at the Next Generation Dx Summit*, a bevy of Washington experts weighed in on policy and predictions for diagnostics in a keynote panel. Many of the panel’s concerns were the same; then they mentioned laboratory-developed tests.
Modernization of CLIA—the Clinical Laboratory Improvement Amendments—came up time and again. CLIA regulates laboratory testing and requires clinical laboratories to be certificated by their state as well as the Center for Medicare and Medicaid Services (CMS) before they can accept human samples for diagnostic testing. Mary Steele Williams, executive director for the Association for Molecular Pathology, said that AMP has been arguing for CLIA modernization. Julie Khani, president of the American Clinical Laboratory Association (ACLA), agreed. ACLA strongly opposed FDA’s proposal to regulate laboratory-developed tests (LDTs) as medical devices, Khani said, and is looking for CLIA modernization to move forward instead.
Several panelists spoke out on the importance of LDTs—value that perhaps would be lost under FDA’s regulation. “I have a lab that does nothing but LDTs,” said Michael Bennett, of the Children’s Hospital of Philadelphia (CHOP; also representing the American Association for Clinical Chemistry). His lab at CHOP can’t afford to do FDA submission, he said, though the lab “jumps through hoops” to get CLIA certification. LDTs have been around for a very long time, he emphasized, reminding the audience that baby heel pricks to test for various inherited disorders are LDTs. “The tests are trusted and proven,” he asserts.
FDA’s mission is safe and effective devices, said Lea Carrington, director, Division of Immunology and Hematology Devices, Office of In Vitro Diagnostics and Radiological Health at FDA. She didn’t address comments that FDA does not have the authority to regulate LDTs, but she did point out that while last November, FDA withdrew its proposal to regulate LDTs, the agency hasn’t suggested that it thinks such regulation is inappropriate or that it won’t pursue LDT regulation in the future.
A Consolidated Landscape
There’s been lots of change in the diagnostics industry, observed Julie Khani, and government policies are promoting the change.
Bruce Quinn of Bruce Quinn Associates and Mary Steele Williams discussed consolidation within the diagnostics landscape. There are good business reasons for consolidation, Williams said, but she warned about too much of it. What would happen if we stopped doing a type of testing, she asked. What if a test-maker had only five customers?
Michael Bennett expressed somewhat related concerns when he discussed the types of laboratory developed tests performed at CHOP. These are very low volume tests, he explained. Some are only performed about once a week. He emphasized that the volume makes FDA approval prohibitive for CHOP, but it also makes those tests less attractive to a larger diagnostics company, which would prefer volume in testing.
Quinn noted that while companies have been bought and merged, diagnostics is also seeing spinouts—he mentioned testing entities spun out from Roswell Park Cancer Institute, Intermountain Health, and others. These new groups aren’t just offering lab tests, but genetic counselors, and services including procuring off-label drugs for patients for whom diagnostic tests indicate them, he said.
Andrew Fish, executive director at AdvaMedDx, agreed that there was a huge challenge maintaining proprietary value in tests. Diagnostics companies can no longer simply offer good tests, he said. They need to add suites of services to their products to have value: interpretation, genetic counseling, other physician guidances. They need to aggregate tests data to find additional value. The biggest challenge in diagnostics, Fish said, is now “not to get commoditized.”
PAMA Concerns
The Protecting Access to Medicare Act of 2014 (PAMA) was top of mind for several panelists. Michael Bennett, representing the American Association for Clinical Chemistry, said, “PAMA worries us.” Under the rule, laboratories, including physician office laboratories, are required to report private payor rate and volume data if they have more than $12,500 in Medicare revenues from laboratory services on the CLFS and if they receive more than 50% of their Medicare revenues from laboratory and physician services during a data collection period. The problem, Bennett said, is that big academic medical centers have not shared any cost data yet.
Khani agreed. One of ACLA’s top priorities is delaying the implementation of the PAMA fee schedule until there is better legislation, she said. Originally ACLA supported PAMA; the Association was in favor of labs coming together to develop the right prices for tests. But CMS has prohibited some labs from offering price data, Khani said, so ACLA is now recommending that any fee schedule be delayed.
Andrew Fish is pushing for test-specific code provisions in PAMA. “We felt there was a real need to break up CPT codes and their broad categories. You need to ID specific tests to provide value, rather than grouping a bunch that fall under the same CPT code,” he said.
J. Leonard Lichtenfeld, American Cancer Society, didn’t have much encouragement for him on that task. “I spent 25 years determining values for CPT codes,” he said. “I wish you well. It drove me to retirement.”
*Next Generation Dx Summit; August 15-18, 2017; Washington D.C. The event was sponsored by Cambridge Healthtech Institute, the parent company of Diagnostics World News.