Pharmacogenetic Testing Reimbursement

Pharmacogenetic testing reimbursement for Medicare patients has recently become a sore subject in the clinical laboratory industry, with the decision of the nation’s Medicare Administrative Contractors (MACs) to discontinue payment for such testing as of June 22, 2015. A lack of definitive results from such testing is generally stated as the reason for this decision.

Noridian, the last MAC to end pharmacogenetic testing reimbursement, said in its June 22, 2015 Local Coverage Determination (LCD) that it would end genetic testing to assess patients taking some medications and that for other medications, it would await definitive utility for such testing. In the LCD, Noridian said it ended payment for all genetic testing associated with all medications related to CYP2C9 (CPT 81227) and VKORC1 (CPT 81355). For genetic testing for medications related to CYP2C19 (CPT 81225) and CYP2D6 (CPT 81226), Noridian ended payment until definitive clinical utility is established. Testing for response to medications related to CYP2C19 and CYP2D6 would be limited for patients with certain indications, Noridian said.

These tests, in addition to being strong revenue enhancers for labs, are also considered by the many in the medical community to be critical to healthcare. Pharmacogenetics is the study of inherited genetic differences in drug metabolic pathways that can affect individual responses to drugs, both in terms of therapeutic effect as well as adverse effects. The use of pharmacogenetic testing is viewed by many as an outstanding opportunity to improve prescribing safety and efficacy.

Driving this trend are the 2.2 million people who suffer severe adverse drug reactions per year. ADRs are the third leading cause of death in the U.S., and prescribed drugs causing severe reactions or death are the cost leader for malpractice payouts.

These events are responsible for 5-7% of hospital admissions in the US and Europe, lead to the withdrawal of 4% of new medicines, and cost society an amount equal to the costs of drug treatment, according to a report published in 2005 by Magnus Ingelman-Sundberg and Cristina Rodriguez-Antona.

Kristine Ashcraft, Chief Operating Officer of Genelex, a pharmacogenomic testing company in Seattle, WA, notes, “As many as 19 million Americans could be affected by this decision. That’s because about 75% of Americans have genetic variations affecting their response to medications. These medications are commonly prescribed drugs for patients with cardiovascular disease, pain, depression, anxiety, and cancer. When you consider that 4% of Medicare spending is for hospitalizations caused by adverse drug reactions, taking away coverage for tools that can help combat this problem is short-sighted.”

“This [pharmacogenetic testing reimbursement] decision is designed to save money at the expense of patient care,” said John Logan Black, III, M.D., Co-Director, Personalized Genomics Laboratory and Vice Chair for Business Development in the Department of Laboratory Medicine and Pathology at Mayo Clinic in Rochester, MN. “It comes down to dollars and cents and not really what patients need,” he explained. “Medicare officials are trying to control costs by saying they haven’t seen enough benefit from these tests.

There are exceptions to the MACs’ reimbursement decision, however. Assurex Health produces three tests, for behavioral health conditions, ADHD and chronic pain medications, which are eligible for reimbursement under certain conditions sfrom Medicare and, in some states, from Medicaid.

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