Joint San Diego Chapters CLMA AACC / May 16 2010 Mtg Robert Parson

The Application of Evidence-based Assessment Approaches for the Coverage and Reimbursement of Laboratory–based Diagnostic and Genetic Tests

Robert E. Parson MS, MAS, CQE, CRE, CHEExecutive Vice PresidentOsmovian Limited

May 16, 2012

AACC San Diego and Greater San Diego CLMA Joint Meeting

Abstract• With the closer scrutiny by public and private payers

of laboratory tests and their importance to medicine, evidence for their appropriate use is often limited and their cost effectiveness too often misunderstood.

• This presentation will review the expanding use of evaluation processes and methodologies by which laboratory tests are evaluated and reimbursed.

AACC San Diego and Greater San Diego CLMA Joint Meeting May 2012

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With closer scrutiny by public and private payers of laboratory tests and their importance to medicine, evidence for their appropriate use often is limited and their cost effectiveness too often misunderstood:• The presentation will review the expanding use of evaluation

processes and methodologies by which laboratory tests areevaluated and reimbursed.

• Learn the strategies manufacturers, laboratory service providers,and payers employ to collect outcome and cost data to bettersupport the effective use of new laboratory tests which in turnincreases appropriate use and reimbursement.

• What common language, nomenclature and information shouldbe used to present that facilitates an open, straightforwarddialogue from the development, review, and delivery of evidence-based findings by manufacturers, clinical laboratories, andhealthcare providers to those entities that make coverage andreimbursement decisions.

AACC San Diego and Greater San Diego CLMA Joint Meeting May 2012 3

IVD's and LDT's - What's the difference?

• One difference is the regulatory path to market and the regulatory bodyauthorized to regulate them. Under the current U.S. regulatory frameworkmolecular diagnostic tests (including genetic tests) have two compliantpaths to market: the IVD path or the LDT path.

– In vitro diagnostic devices (IVD’s) are developed and manufactured by devicemanufacturers under the Quality System Regulation (QSR) and unless exemptrequire premarket approval or 510(k) notification prior to sale and distribution. FDAhas the authority to regulate devices that are distributed as IVD's as well as thosethat are distributed for "Investigational Use Only" (IUO) and for "Research Use Only"(RUO).

– Laboratory Developed Tests (LDT's), also referred to as Homebrews, are diagnostictests that are developed and manufactured by CLIA certified laboratories under theirQuality Management System. These tests are developed by the lab for use only inthat laboratory. CLIA laboratories develop the performance characteristics, performthe analytical validation for their LDT's and obtain licenses to offer them asdiagnostic services.


What is the Regulatory Cost to Regulate LDT’s

• Registration and Listing• FDA Marketing Authorization – 510k’s• Premarket Authorization – PMA’s• Post Market Controls

– Compliance with the QSR– Submitting Medical Device Reports – MDR’s– Advertising and Promotion– Notification of Recalls under 21 CRF Part 806– FDA Inspections.


Medical products and diagnostics development models


a | FDA medical product development modelb | FDA model adapted for diagnostics9

Coverage and Reimbursement of Laboratory Tests

“There can be no doubt but that the statutes andprovisions in question, involving the financing ofMedicare and Medicaid, are among the mostcompletely impenetrable texts within humanexperience. Indeed, one approaches them at the levelof specificity herein demanded with dread, for not onlyare they dense reading of the most tortuous kind, butCongress also revisits the area frequently, generouslycutting and pruning in the process and making anysolid grasp of the matters addressed merely a passingphase.”—Rehab. Ass’n. v. Kozlowski, 42 F.3d 1444, 1450 (4th Cir.

1994)


DECISION-MAKERS AND INFLUENCERS


Hierarchy of Diagnostic Evaluation When Determining Test Benefits

Level Characteristic Description

1 Technical feasibility & optimization

Ability to produce consistent results

2 Diagnostic accuracy Sens., Spec. , PPV, NPV

3 Impact on diagnostic thinking

% of time that physicians’ estimated probability of a diagnosis changes after test result

4 Impact on Therapeutic choice

% of time that planned therapeutic strategy changes after the test results

5 Impact on patient outcome

% of patients who improve with the test versus the % who improve without the test

6 Impact on society Cost-effectiveness


Prototype of possible approach to developing and regulating combined test–drug products


Span of Evaluations Review the expanding use of evaluation processes and methodologies bywhich laboratory tests are evaluated and reimbursed.

• Process Based Evaluations• Quality – Validation – Standardization• Performance – Clinical (Efficacy & Effectiveness)• Pharmaco-economics – Budget Impact – Cost Effectiveness• Regulatory – Compliance – CLIA


Quality Indicators


Post-analytic performance Revised reports*Total Critical Results Notification reports*

Operational performance Incoming call resolutionIncoming call abandon rateCall completion rateCall in-queue monitoringCustomer complaintsCustomer satisfaction surveys

Pre-analytic performance Incoming defects*Lost specimensCompliance TrackingOn-time delivery*Specimen identification*

Analytic performance Proficiency testingTest reliabilityTurnaround (analytic) timesQuantity-not-sufficient (QNS) specimens*

Measured using Six Sigma defects per million (dpm) method.

Components of Validation for LDT’s

• Integrated, standardized process to guide diagnostic industry, providers, and payers through development, validation, regulatory submission, reimbursement, and commercialization

• Standardized intended use determination and risk assessment evaluation of diagnostics to support regulatory requirements

• Standardized quality and performance evaluation of diagnostics

• Certification of Tests and Processes• Certification of test performance to support marketing,

approval, adoption, and reimbursement• Expert panels – leading clinicians and pathologists design

studies, define sample sets, and evaluate results in communication with FDA

• Gold-standard clinical samples – clinical sample sets designed by world class pathologists.


Standardization & Validation

• Validate quality, speed development, assure alignment with regulatory requirements, guide regulatory pathway strategy, and inform reimbursement decisions.

• The performance, intended use, and risk assessment of diagnostic tests are certified through standards and methods based on the consensus of regulatory, industry, and academic experts.

• Analysis is conducted “gold-standard” referencesets of highly qualified clinical samples.

–


Key stakeholders in the IVD market in the US


Technology Review Process


Reimbursement and Coverage/Payment Flow Map and Procurement Process


International Classification of Diseases (ICD)

Key facts• The ICD is the global health information standard for mortality

and morbidity statistics.• ICD is increasingly used in clinical care and research to define

diseases and study disease patterns, as well as manage health care, monitor outcomes and allocate resources.

• More than 100 countries use the system to report mortality data, a primary indicator of health status.

• This system helps to monitor death and disease rates worldwide and measure progress towards the Millennium Development Goals.

• About 70% of the world’s health expenditures (USD $ 3.5 billion) are allocated using ICD for reimbursement and resource allocation

• ICD has been translated into 43 languages.• The 11tth revision process is underway and the final ICD-11

will be released in 2015.


International Classification of Diseases • The ICD is the foundation for the identification of health trends and

statistics globally. It is the international standard for defining and reporting diseases and health conditions.

• The ICD defines the universe of diseases, disorders, injuries and other related health conditions. These entities are listed in a comprehensive way so that everything is covered. It organizes information into standard groupings of diseases, which allows for:– easy storage, retrieval and analysis of health information for

evidenced-based decision-making;– sharing and comparing health information between hospitals, regions,

settings and countries; • And data comparisons in the same location across different time

periods.


International Classification of Diseases

• It is the diagnostic classification standard for all clinical and research purposes. These include – monitoring of the incidence and prevalence of diseases,

observing reimbursements and resource – allocation trends, and keeping track of safety and quality

guidelines.• ICD allows the counting of deaths as well as diseases, injuries,

symptoms, reasons for encounter, factors that influence health status, and external causes of disease.


Payer Employer Payment Model


Coverage Reimbursement Process


Example Evaluation Process


Markov Model Example


Comparative Effectiveness

• Comparative effectiveness research is the conduct and synthesis of systematic research comparing different interventions and strategies to prevent, diagnose, treat and monitor health conditions.

• The purpose of this research is to inform patients, providers, and decision-makers, responding to their expressed needs, about which interventions are most effective for which patients under specific circumstances.

• To provide this information, comparative effectiveness research must assess a comprehensive array of health-related outcomes for diverse patient populations…

].


Comparative Effectiveness Reviews

• The questions that are most important to patients and healthcare decision makers are carefully chosen.

• The types of research studies that provide useful evidence for aparticular treatment are defined, collected and assessed.

• An assessment is made as to whether efficacy studies areapplicable to the patients, clinicians and settings for whom thereview is intended.

• The benefits and harms for different treatments and tests arepresented in a consistent way so that decision makers can fairlyassess the important tradeoffs involved for different treatmentsor diagnostic strategies

Source: AHRQ Effective Healthcare Program


Practical Benefits from Comparative Effectiveness

• Panel deserves the best and most objective informationabout treating your sickness or condition. With thisresearch in hand, patients and clinicians need to make thebest possible treatment choices.

• For example, patient with high blood pressure might havemore than a dozen medicines to choose from. Someonewith heart disease might need to choose between havingheart surgery or taking medicine to open a clogged artery.Reports on these topics and others include the pros andcons of all the options so that the best possible treatment .

• Every patient is different — different circumstances,different medical history, different values. These reportsdon’t tell you and your doctor which treatment to choose.Instead, they offer an important tool to help you and yourdoctor understand the facts about different treatments.

Federal Coordinating Council for Comparative Effectiveness Research, 28 July 2010].


Comparative Effectiveness Approach

• A number of factors may limit how applicable the results fromefficacy studies are to certain patient populations. Patients areoften carefully selected, excluding patients who are sicker orolder and those who have trouble adhering to treatment plans.

• Racial and ethnic minorities may also be underrepresented.Efficacy studies also often use regimens and follow-up protocolsthat maximize the benefits and limit the harms of certaintreatments.

• As a result, the findings of such studies do not accurately reflectthe real world outcomes.

• Effectiveness studies are intended to provide results that aremore applicable to “average” patients. However, they remainmuch less common than efficacy studies.


•



• A comparative effectiveness review examines theefficacy data thoroughly to ensure that decisionmakers can assess the scope, quality, and relevance ofthe available data and point out areas of clinicaluncertainty.

• Clinicians can judge the relevance of the study resultsto their practice and should note where there are gapsin the available scientific information.

• Identified gaps in the available scientific evidence canprovide important insight.




• These reviews also highlight areas in which evidenceindicates that benefits, harms, and tradeoffs aredifferent for distinct patient groups.

• With or without a comparative effectiveness review,these are decisions that must be left to a clinician’sbest judgment.



Overview of categories of evidence

• Most US payers do not explicitly require cost-effectiveness data.While they will look review published economic studies andconsider budget impact, few include a cost/QALY threshold intheir decision-making process currently.

• Payers look at clinical data first, economic data is particularlyvaluable especially for higher cost or large volume technologiesthat need to justify their cost-impact to the organization.


Category Evidence Requirements

Safe & Effective Technology has final FDA approvalRisk-benefit analysis Benefits outweigh risks

Clinical Outcomes Technology provides clinical benefits to the patientEconomic Outcomes Technology is cost effective

Two Methods for Risk-Benefit Analysis

Two methods have been used to systematically demonstrate the willingness of stakeholders to trade off risks for benefits. • incremental net health benefits (INHB) and • maximum acceptable risk (MAR) analyses.


Incremental Net Health Benefits (INHB) Approach

• Benefits and adverse events associated with a treatment arequantified using available clinical trial or post-marketingsurveillance data.

• Importance weights, usually health-state utilities, areassigned to each outcome in order to express all benefitsand all risks in a common metric.

• The difference between the sum of the weighted benefitsand the sum of the weighted risks of a treatment thus rep-resent the net health benefits (NHB) of the treatment. INHBis then calculated as the difference between the NHB of thetreatment of interest less the NHB of an alternativetreatment or standard of care.

• A positive INHB indicates that the net benefits of treatmentare positive relative to an appropriate comparator.Source: ISPOR


Maximum Acceptable Risk (MAR) Approach

• The objective of this approach is to estimate the maximumrisk patients are willing to accept in order to achieve thetherapeutic benefits of a pharmacotherapy thatincorporates patient preferences over both risk and benefitoutcomes as well as over different risk levels.

• This maximum acceptable risk (MAR) then can becompared against the actual or expected risk associatedwith a treatment to determine whether the treatment isacceptable to patients.

• MAR is estimated using choice-experiment or conjoint-analysis methods - an increasingly common method ofpatient preference analysis in health economicsSource: ISPOR


In Summary

• The presentation covered the expanding use of evaluationprocesses and methodologies by which laboratory tests areevaluated and reimbursed.

• Reviewed the strategies manufacturers, laboratory serviceproviders, and payers employ to collect outcome and costdata to better support the effective use of new laboratorytests which in turn increases appropriate use andreimbursement.

• Used the language, nomenclature and information thatshould be used to present that facilitates an open,straightforward dialogue from the development, review,and delivery of evidence-based findings by manufacturers,clinical laboratories, and healthcare providers to thoseentities that make coverage and reimbursement decisions.


Thank You

Robert ParsonMS, MAS, CQE, CRE, CHE

[email protected](858) 357-6491

Skype: Bob_ParsonTwitter: robert_parson

http://www.osmovian.comhttp://www.linkedin.com/in/roberteparson


Joint San Diego Chapters CLMA AACC / May 16 2010 Mtg Robert Parson

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