How Will Reimbursement be Managed in the Era of Precision Medicine and Value-Based Care?

  • Patricia Goede

If one were to ask the question: How will reimbursement be managed in the era of precision medicine and value-based care? The answer would require careful consideration. The precision medicine (PM) landscape continues to evolve due to the exponential growth, complexity and use of data in clinical decision making. With thousands of new diagnostic tests introduced every year, data sharing is, and will continue to be, a critical component to ensuring successful PM programs. Data sharing has many stakeholders including regulatory agencies such as the Food and Drug Administration (FDA), Centers for Medicare & Medicaid Services (CMS), clinicians, diagnostic providers, private payors and patients. The building of a successful data sharing program that meets the needs of all the stakeholders is not so straightforward. Each stakeholder has a role, a voice and influence in the precision medicine landscape when it comes to healthcare data management.

Patricia Goede, Vice President Clinical Informatics, XIFIN

In January of this year, XIFIN moderated a panel at the PMWC that focused on the intersection of regulatory compliance, data sharing and reimbursement in precision medicine. While each of the topics, regulatory compliance, reimbursement and data sharing could have easily filled a full day’s discussion, the panelists discussed the most pressing issues related to how each of the topics are uniquely interdependent upon each other. Let’s take a closer look.

Arguably, the most pressing issue impacting the diagnostics landscape and precision medicine is reimbursement. 

-Patricia Goede

Arguably, the most pressing issue impacting the diagnostics landscape and precision medicine is reimbursement. Policies that determine how diagnostic providers and physicians get paid, sets the stage for how PM programs remain viable and succeed. Reimbursement policy is complicated by many factors but ultimately decisions are made from data and/or access to data by regulators and payors.

For example, the Protecting Access to Medicare Act (PAMA) on high complexity testing set the Clinical Lab Fee Schedule (CLFS) was largely based on data provided by two large commercial laboratories where the volume of high complexity testing is very low. The impact of this non-representative data set resulted in a significant reduction in current reimbursement and additional reporting requirements, adding additional overhead for diagnostic providers.1 For more on the impact of PAMA, visit XIFIN subject matter expert reviews .2,3,4

The reimbursement landscape gets further complicated when, in March 2018, the CMS National Coverage Determination (NCD) outlined and narrowly defined coverage of Next Generation Sequencing (NGS) for patients with advanced cancer. The NCD guaranteed coverage for certain FDA companion diagnostic tests (CDx) as well as an avenue for Medicare Administrative Contractors (MACs) Local Coverage Determinations (LCDs) for laboratory developed tests (LDTs). Fast forward to November 2018 when CMS issued additional language on the restriction of BRCA germline testing in stage I and II breast cancer patients. Germline testing at these early stages is extremely useful for clinical management. About 60% of breast cancer patients in the U.S. are diagnosed at Stage I-II.5 The complexities and outright absurdities of the NCD are elegantly summarized by Bruce Quinn in his white paper titled: “How the CMS NCD for Oncology Genomics Went Sideways: 2017-2019.” 6

The regulatory story would not be complete without mentioning the parallel review program, a joint process that allowed CMS and the FDA to simultaneously review curated genomic and clinical data to help decrease the time between the FDA’s approval of a premarket application and development of CMS’s coverage NCD for high complexity testing.7  The parallel review program grants clearance and coverage of Next Generation Sequencing (NGS) based on the development and use of real-world evidence (RWE). The collection and use of RWE are wholly dependent on establishing data sharing methodologies for collecting real-world data (RWD). The discussion of RWE is an underlying theme and involves many stakeholders in the precision medicine landscape, including patients, to cooperate in a multi-beneficial data sharing landscape. Development of RWE from RWD establishes a framework to communicate clinical value for beneficiaries through an expedited review process that is dependent on quality data sharing methodologies. All stakeholders in the precision medicine landscape benefit from the use of data curation and sharing that drive FDA approval and payor coverage. For more on real-world evidence and the use of data-driven insights XIFIN subject matter experts dive into the value of RWD and uses for evidence development.8

A regulatory and compliance discussion would not be complete without including commercial payors and the complicated relationship with value-based healthcare. While CMS is leading the charge in value-based care by implementing quality incentives and penalties, commercial payors are establishing value through bundled payments. In 2019, Cigna exceeded its value-based care goal of having 50 percent of payments in 2015 that link health care provider payments to both quality and affordability and is targeting specialty practices in the fields of obstetrics/gynecology, orthopedics, gastroenterology, general surgery, and cancer care.9 Other payors are following suit. However, in precision medicine, not all payors are following the guidance set forth by CMS. The panelists identified commercial payor’s reluctance to cover tumor profiling as defined in the NCD and provide coverage on an exceptions-only basis citing clinical utility and medical necessity. Commercial payors will likely follow the direction of the MACs to support coverage for a specific test. The very same commercial payors may cite evidence and medical necessity to cover a test. Data is fundamental to developing evidence will be a compelling reason to revise payor policies that cover high complexity testing.

The panel discussion regarding the regulatory impact on precision medicine would not have been complete without mentioning the most important stakeholder, the patient. In the world of data sharing and patients’ rights surrounding how their data can be used, informed consent is a critical element. Regulatory compliance with an exponentially growing understanding of diseases present with unprecedented opportunities to answer important clinical questions through data sharing from ‘big data’ derived from a growing number of data sources including patient registries, electronic medical records, and biospecimen repositories. The evolution of precision medicine that describes the genetic makeup of a patient and the patient’s family is powerful for understanding disease, but requires the utmost stewardship in the protection of the patients’ data. Regulatory agencies mandate data privacy protection and transparency for patients. Informed consent addresses the patients right to control who has access to their health data and how that data will be used.

In summary, sharing of patient data is central to clinical, regulatory and health policy decision making, but there are privacy, transparency and ethical issues with data sharing that will undoubtedly have unforeseen and far-reaching implications, with potentially unintended consequences for all healthcare stakeholders including patients, providers, payors and regulatory agencies.



  1. CMS Medicare Physician Fee Schedule (MPFS)
  2. Lale White and Craig Young
  3. Diana Brooks: What does the CMS Medicare Physician Fee Schedule Mean for Pathology Labs?
  4. Lale White, Kyle Fetter, Diana Brooks, et al. Webinar: Proposed Changes to the Medicare Physician Fee Schedule and Quality Payment Program Just Released: What You Need to Know and Action Steps to Take Now to Protect Your Lab’s Revenue.
  5. Breast Cancer Statistics: Cancer.Net Editorial Board 01/2019
  6. Bruce Quinn: How the CMS NCD for Oncology Genomics Went Sideways: 2017-2019
  7. Centers for Medicare and Medicaid Services (CMS) and U.S. Food and Drug Administration (FDA) Parallel Review
  8. Lori Anderson: Improve Reimbursement for Genomic Tests by Leveraging Real World Data.
  9. Cigna Transition to Value-based Health Care Results in $600 Million in Medical Cost Savings. (2019)


Published by XIFIN
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