How Labs Can Improve Their Relationships with Payers for Genomic Test Reimbursement

Useful Approaches for Prior Authorization and Reimbursement

This is an excerpt of a 2,215-word article in the October 10, 2022 issue of  THE DARK REPORT. The full article is available to subscribers.

CEO SUMMARY: For payers and health plans, it may be a matter of trust that initially ensures new and novel genomic test reimbursement. A panel of experts at the Executive War College offered insights on effective ways that genetic testing laboratories can establish that trust early on with payers. From there, clinical labs must then navigate obstacles while effectively demonstrating the value to patients of genomic tests and ensuring that these genetic tests are properly coded.

GETTING PAID FOR GENETIC TEST CLAIMS IS A MAJOR CHALLENGE for many clinical laboratories and anatomic pathology groups. Yet there are ways labs can work with health plans to increase genomic test reimbursement.

Payers may challenge a new genetic test’s clinical utility, ask whether an effective alternative already exists, or even wonder if the laboratory is a legitimate business—the latter factor a side effect of the Theranos fraud saga. 

To evaluate the genomic test reimbursement landscape, a panel of experts gathered at April’s Executive War College Conference on Laboratory and Pathology Management in New Orleans last spring. The panel included: 

  • James Almas, MD, Vice President and National Medical Director for Clinical Effectiveness at Labcorp based in Burlington, N.C. 
  • Trish Brown, Genomics and Precision Medicine Program Director at Aetna in Hartford, Conn. 
  • Brent Gibbs, Senior Vice President of Market Access at Scipher Medicine, a precision medicine company in Waltham, Mass. 
  • Karen McFadden, former Senior Vice President of Managed Care at Labcorp and now a consultant for the company, who served as moderator for the panel.

Reimbursement Roadblocks

During the session, titled, “Genomic Testing: How Labs and Payers Can Work Together to Achieve Better Outcomes and Health Equity,” the panelists cited the following litany of roadblocks to genomic test reimbursement:

  • Prior authorization (PA) requirements imposed by some payers.
  • Challenges in demonstrating the value of new and novel tests.
  • Inconsistent test coding practices among genetic testing lab companies, in addition to inconsistencies among payers regarding which codes they recognize. 

“Nothing is ever clear when dealing with a payer and the different health plans in the market,” McFadden said. “When I’m asked if a certain genetic test is a covered benefit, my typical answer is, ‘It depends.’” 

Establishing Trust Early On 

The four panelists agreed that one overriding issue for genomic testing companies is a lack of trust from payers. When approaching insurance carriers and health plans, genetic testing laboratories “have to realize first what payers are thinking,” Almas observed. “There are bad actors in the lab community. Labs have to tell payers, ‘We’re not Theranos.’” 

The conviction of Theranos founder Elizabeth Holmes in 2022 looms in the lab industry as payers fear a test or technology that may not work as touted. (See TDR, “Jury Finds Elizabeth Holmes Guilty in Four of 11 Criminal Counts,” Jan. 10, 2022.) 

‘Bad Coding is Out There’ 

Beyond fraud, payers worry about coding troubles from clinical laboratories and pathology groups. “Labs have to admit up front that bad coding is out there,” added Almas. “Thus, they should be prepared to explain to payers that they don’t play coding games, such as improperly billing CPT code 81408.” (See TDR, “One Genetic Test CPT Code Earns ‘Fraudomatic’ Title,” Dec. 7, 2020.) 

Demonstrating the value of a genomic test can go a long way with payers. Almas gave the example of a specific molecular genomic test. The policy at one health plan was that the test was medically unnecessary because an ob/gyn could use microscopy instead. Furthermore, “Labs were billing the test in crazy ways, with ‘zillions’ of CPT codes,” he said. 

In this case, Labcorp’s response was that the payer’s policy harmed marginalized patients. Half of the counties in the U.S., he noted, don’t have board-certified ob/gyns.

“These patients are going to urgent care centers and to primary care doctors for obstetrics,” Almas explained. “And only 10% of U.S. ob/gyns have a CLIA certificate to do microscopy. So, now, in coversations with that payer, we can rule out that the ob/gyn using a microscope is the appropriate way to assess these patients.”

Labcorp presented the molecular test as an effective alternative. “We’ve made some headway,” he said. “That’s been a payer-lab provider collaboration to try to do the best thing and it includes equity because these are marginalized patients.”

The key to getting genomic test reimbursement in these situations is to explain why the status quo isn’t effective and provide a tangible approach involving a genetic test that the payer feels good about. “The payer wants to know a genomic test is effective, it’s going to work, and it’s going to improve outcomes,” Almas noted. 

Prior Authorization Hurdle

Prior authorization (PA) requirements for many genetic and molecular tests has long been a major hurdle in genomic test reimbursement. Providers believe the tests they order are in the best interests of patients. But long ago the price of these tests caught the attention of managed care companies, who instituted prior authorization mandates. 

Prior authorizations and their associated administrative burdens are cumbersome, Brown said. “They are complicated. They add to the administrative system.”

In theory, prior authorization is supposed to happen in advance of a test. “But in practice, it’s sought after the doctor has drawn the sample,” Gibbs noted. “The lab has a sample, then the genetic testing lab says, ‘Oh, we need a PA,’ and it’s too late once a draw has happened.”

He pointed to logistical challenges that make prior authorization for some genomic tests impractical. “Yes, the sample was drawn, but there’s a short window in the life of that specimen before labs have to test it,” Gibbs observed. “That specimen probably flies across the country. It has to stay at a certain temperature. Labs cannot hold the specimen until that PA is obtained.”

Real-Time Claim Adjudication

Brown pointed to pharmacy benefit management (PBM) as a possible model that could ease prior authorization for genomic test reimbursement. “While pharmacy benefit manager models have their own issues, one thing with which they don’t have an issue is real-time claim adjudication and transparency,” Brown explained. “Typically, the clinician at the point of care gets a quick answer from the PBM on whether a drug is covered.

“This works because every individual pill and dose on the market has its own unique code,” she noted. But in the medical laboratory space, “We have the AMA CPT codes, we have PLA codes, we have Z codes.” 

In addition, Concert Genetics in Nashville, Tenn.—which maintains a database of 175,000 genetic tests—has “genetic testing units” available to the industry to identify tests more clearly. 

“Further, we have payers that require genetic test registry,” Brown said. “And everybody’s supposed to put that genetic test in the electronic equivalent of Box 19,” a catchall for additional information about a medical claim.

“I know that the genetic testing companies are really frustrated by that requirement because it puts them into a position where they must change how they submit a claim,” she added. “However, that problem would go away if we all came up with a system that had great transparency while allowing real-time claim adjudication.”

One solution to difficult genomic test reimbursement suggested by panelists was “gold carding,” in which payers relax prior authorization requirements for healthcare providers with high prior authorization approval rates. 

Gibbs next discussed some special challenges facing startup genetic testing companies offering new and novel genomic tests. Beyond demonstrating that they’re not the next Theranos, these startups must also show they’re producing a valid test. 

“The problem that new, innovative genetic testing lab companies face is the ability for the technology assessors and the payers to review and keep up with all the new genetic tests,” he said. “Payers can’t keep up with the advancement. This stifles creativity and reimbursement for a laboratory. Many startup labs won’t make it because they can’t get reimbursed for their genetic test claims.”

For genetic testing companies seeking coverage for their proprietary assays, “the first few payer contracts are the hardest ones to obtain,” Gibbs noted. “The biggest opportunity for such labs is to find one or two payers that see the value of the test and partner with them.

“One approach is to do a pilot or demonstration project,” he explained. “Another path forward is to seek coverage with evidence development in which the Centers for Medicare and Medicaid Services agrees to cover a test or procedure while data about its effectiveness is collected.”

Test Effectiveness

The lab can then show data developed during the time Medicare covered the genetic test that demonstrates the assay’s effectiveness to other payers, though Gibbs added that payers will want to see positive results that apply specifically to their patient populations. 

“Every payer thinks their patients are unique, and these payers believe that what works with one payer won’t work in their patient population,” Gibbs observed. “One way to overcome this hurdle is to obtain approval from Medicare for that specific genetic test. We know that once a novel test gets Medicare coverage, it helps validate the test and allow for additional reimbursement.”

Brown added that there are some genomic test reimbursement examples where payers will agree to cover a genomic test if the developer can demonstrate that it works in a certain population. “We are moving into a precision medicine era and a novel genetic test really should be tailored to give better outcomes,” she explained.

Another path for genomic test reimbursement involves use of value-based contracts. “In this scenario, either the genetic test delivers a certain amount of savings and improved member outcomes, or there is no reimbursement because that test did not work for patients as intended,” Brown added.

How is your lab dealing with the problem of getting genetic tests reimbursed by payers? Please share your thoughts with us in the comments below.