Updated December 14, 2012
A new House bill seeks to improve and update the system for reimbursing IVD manufacturers. The bill, HR 6446 , known as the Improving Diagnostic Innovations Act of 2012, was introduced by Representatives Peter J. Roskam (R-IL) and Leonard Lance (R-NJ) and cosponsored by Rep. Richard E. Neal (D-MA). UPDATE: As of December 14, 2012, there are five additional cosponsors of this bill. They are:
The text of the bill states that its purpose is “to create incentive for innovative diagnostics by improving the process for determining Medicare payment rates for new tests.” In other words, the goal is to better and more fairly reimburse IVD manufacturers, thereby providing them incentive for directing more of their resources toward innovation.
The bill calls for improvements to the process for determining fee-schedule amounts for new tests by taking into account each test’s impact on patient care, its technical characteristics, claims data, laboratory charges, private insurance rates, advisory-panel recommendations, and “such other factors as the Secretary [of Health and Human Services] may specify.”
Seeking input from patients, clinicians, and technical experts is also cited in the legislation as a means for improving the process for setting fees for new tests. This input will come from an “independent advisory panel” comprising individuals with clinical IVD expertise, patient representatives, practicing clinicians, “individuals with expertise in the requirements to develop, validate, and perform the new test,” laboratorians, experts in pharmacoeconomics or health-technology assessment, and “individuals with expertise on the impact of new tests on quality of patient care, including genetic counselors.”
The writers of the bill also request a process for assigning temporary codes for new IVDs that can’t be assigned an existing code.
“The text of HR 6446 replicates the diagnostic-reform language from the previously introduced MODDERN Cures Act (HR 3497), which would reform diagnostics payment for new tests by establishing new payment-setting criteria that incorporates elements of market value and takes into account the contribution of diagnostics to healthcare outcomes,” wrote Ashley McMaster, Director, Communications for AdvaMed, in an e-mail. (AdvaMedDx
provided input during the writing up of the bill.)
Impact on Industry
Andrew Fish, Executive Director, AdvaMedDx, said, “Diagnostics manufacturers need to know that this bill, if passed, would fundamentally change the way the Centers for Medicare and Medicaid Services [CMS] sets rates for new IVD tests reimbursed under the Clinical Lab Fee Schedule.” He pointed out that the current fee schedule was established 28 years ago, in 1984. Rates were set based on the time and materials required for a test----and little else.
“This legislation, if passed, would require CMS to set reimbursement rates for new tests by taking into account additional criteria,” Fish said, “including the resources it took to develop and validate a test, the impact of a test on patient care, and private and out-of-pocket payments being made for the test.” In short, he said, the bill would require diagnostic reimbursement rates to “more closely reflect the real value of a test.”
Glen Freiberg, RAC, of RCQ Consulting (San Diego), commented that the proposed legislation “appears to help streamline and organize the process” of setting reimbursement rates. “This is a good thing,” he said, “but one never knows how it will be enacted until we see the activity.” He pointed to the line in the wording of the bill within the “Clarifying Factors for Rate-Setting” subsection that explicitly states that “such other factors as the Secretary may specify” may be taken into account when setting reimbursement rates. Freiberg expressed concern that such wording “leaves open the possibility for the resulting regulations to express political considerations rather than the balanced and multifunctional input provided by the advisory committee.” He applauded the bill but advised “close monitoring in its execution.”
HR 6446 has been referred to the House Energy and Commerce Committee and the Ways and Means Committee.
Check back for updates.