CEO SUMMARY: At a time when most molecular and genetic testing companies are struggling to gain coverage for their tests, this Silicon Valley-based lab company has become an in-network lab provider for a number of health insurers—including three of the nation’s largest payers. It did this by establishing a patient-friendly price of $249 for its 30-gene test panel and building a physician-friendly portal that makes it quick and easy for doctors to meet pre-authorization requirements when ordering the test.
DO SILICON VALLEY EXECUTIVES schooled in the intensely competitive web marketplace understand the market forces driving genetic testing better than pathologists and clinical laboratory directors and the private equity firms that fund their lab companies?
The answer to that question may be yes, based on the impressive managed care contracts that Color (formerly Color Genomics) announced last month. The two-year-old company snared multiple managed care contracts to provide testing for more than 100 million lives for its 30-gene cancer test. Color operates a CAP-accredited, CLIA-certified laboratory in Burlingame, Calif.,
Priced at just $249 for cash-paying consumers, the test is convincing evidence that some of the nation’s largest health insurers appreciate Color’s strategy of setting a patient-friendly price for its genetic test.
On June 15, Color will become an in-network lab provider for three of the nation’s large health insurers: United-Healthcare, Blue Shield of California, and one other unidentified insurer. These payers will reimburse Color when in-network physicians order its 30-gene test for hereditary cancer risk for patients who meet the insurers’ medical criteria, Color said.
Color’s in-network status gives it immediate access to more than 100 million Americans. For any insurers not under contract, Color will accept out-of-network payment.
In 2015, Color launched a 19-gene test for $249 for women who wanted to know their risk for breast and ovarian cancer. Then, in April 2016, Color expanded the test to 30 genes and marketed the new panel to men and women seeking to assess their risk for developing eight common hereditary cancers. Although it had expanded the genetic markers in the test panel, Color retained the $249 price.
A Simple, Direct-Pay Model
Last year, Color’s co-founder and CEO Othman Laraki told THE DARK REPORT, “From day one, we have adopted a simple, direct-pay model. We did not put a lot of effort into pursuing insurance payment because our focus has always been on improving patient access to these genetic tests.” (See TDR, July 5, 2016.)
Low prices helped to improve patients’ access to those tests and generated a lot of buzz, with publications such as Forbes, Fortune, The New York Times, TechCrunch, and BuzzFeed writing stories about Color’s low price.
Being savvy shoppers, health insurers noticed and soon came calling. “This is the only time in my career that insurance companies actually started to reach out to us,” stated Darrin Crisitello, Color’s VP of Global Sales, Marketing, and Operations. Because of the complexity of billing inherent in any insurance contract, health insurers will pay more than $249 for the test, but Crisitello would not reveal contracted rates.
“Our $249 price point resonated with insurers, and so we were able to contract with them at rates that are much less than they currently pay to other labs,” he said. “Not only did we get a lot of traction with UHC and Blue Shield, but we’ll have more payers within the next quarter.
“Many lab companies are trying to determine what’s the most amount they can charge for a genetic test or service,” commented Crisitello. “But we have the opposite view about price.
“We want to know what’s the least amount we can charge to promote more widespread access to our genetic test panel and truly be a disrupter,” he explained. “Our foray into managed care contracting shows that same thinking.”
Color is particularly gratified about its contract with Blue Shield of California, Crisitello said. “The interesting thing about Blue Shield is we became one of their preferred laboratory vendors for BRCA testing,” he noted. “That’s exciting for us because our cost is dramatically lower than what our competitors charge. That helps us negotiate favorable terms with payers.
“We don’t share our list price or our contracted rates with the payers, but you can assume that there are some additional fees because there are added steps involved in billing insurers compared with billing a cash-paying or self-pay individual,” he said. “Those rates are higher than our cash rates.” Like most labs taking insurance payment, Color needed to hire a billing team, for example.
Physicians Prefer One Lab
The reason to pursue insurance contracts is simple: Physicians who order tests from Color wanted to offer the same lab test to their insured patients. “Physicians want a way to offer genetic tests to their patients that will be covered by the patients’ health insurance plan,” explained Crisitello. “Physicians use other commercial laboratories that take insurance but would rather use one lab for all their needs—if possible.”
Crisitello then added the twist that appears to be making his company’s pricing strategy a double-winner. “It’s easier for physicians to use a single laboratory for two types of their patients,” he said. “One type are folks who meet insurance criteria. The second type are patients who may have high-deductible health coverage or are self-pay for the full cost of the genetic test.”
Recognizing the value of being physician-friendly, Color built a physician portal to ease the prior-authorization process to make it easier for doctors to order its test. Often, obtaining preapproval for a genetic test can be troublesome for physicians and their office staff.
“Our goal was to give physicians the same type of user experience that we provide to consumers,” noted Crisitello. “Each specific payer has requirements that individuals must meet, including personal and family history, for instance.
“That’s why we designed our physician portal to make it simple for doctors to identify which patients meet insurance criteria and which do not,” he said. “It also helps physicians understand what their patients’ out-of-pocket costs may be.
“With the online tool, the physician can make the best choice for the patient on what the lowest cost would be, whether through insurance that includes an out- of-pocket portion or whether the patient is to use the self-pay option of $249,” he explained.
Given the low price and simplified ordering, does Color expect volume to increase overnight beginning June 15?
“Simply getting insurance contracts doesn’t mean that our lab automatically gets that volume,” observed Crisitello. “But the lab has been scaled for significant volume from day one in part because we are participating with the University of California’s WISDOM trial. Under an exclusive contract, we’re assessing 100,000 women for their hereditary cancer risk.
“So, from a scale and a volume stand-point, we’re comfortable we’ll be able to handle whatever volume comes from payers and providers,” he said.
Contact Darrin Crisitello at 844-352-6567.
Genomics Lab Company Focuses on Patient Experience to Attract Patients, Physicians
COMPANIES IN THE SILICON VALLEY are known for focusing on the users’ experience. Some of today’s biggest tech companies in the San Francisco area grew by meeting and exceeding users’ expectations.
In 2015, tech entrepreneurs founded Color to offer affordable genetic testing. Two of the founders had worked at Google and Twitter. Their work in consumer platforms is visible in Color’s user-friendly approach toward patients and toward physicians.
For patients, the attraction was low price. For physicians, it was ease of use, noted Darrin Crisitello, Color’s VP of Global Sales, Marketing, and Operations.
“We want to make it easier for physicians to order tests so they can spend their time with their patients,” he explained. “Our design, product, and engineering teams aim to offer providers a simple user-friendly experience.
“On our platform, a physician enters patient information,” continued Crisitello. “The system then identifies the insurer’s criteria and the patient’s potential out-of-pocket costs, including the deductible and co-pay.
“This tool streamlines the ordering and approval process for our genetic test because it gives the physician the information he or she needs to decide whether to choose the self-pay or insurance-submission process,” he explained. “Therefore, physicians can be more efficient when ordering a genetic test from Color.
“In this industry, the payer system for adjudicating claims is challenging,” added Crisitello. “It shouldn’t take 12 people to review and process a lab test claim. It seems to have reached this point because a significant number of labs are billing exorbitant amounts and payers have installed various restrictions and denials to ensure that they’re properly managing costs.
“We hope that the best way turns out to be the simplest way,” he added. “We’d like to see payers tell our lab what the criteria is for their patients. Then our lab will submit only those patients who meet that test criteria. When we submit the claim, the health plans will pay us. In that way, we make the process as simple and efficient as possible.”