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, CHE
Executive Vice President
Osmovian 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
2

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 are
evaluated and reimbursed.
Learn the strategies manufacturers, laboratory service providers,
and payers employ to collect outcome and cost data to better
support the effective use of new laboratory tests which in turn
increases appropriate use and reimbursement.
What common language, nomenclature and information should
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 those entities that make coverage and
reimbursement 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 body
authorized to regulate them. Under the current U.S. regulatory framework
molecular diagnostic tests (including genetic tests) have two compliant
paths to market: the IVD path or the LDT path.

In vitro diagnostic devices (IVD s) are developed and manufactured by device
manufacturers under the Quality System Regulation (QSR) and unless exempt
require premarket approval or 510(k) notification prior to sale and distribution. FDA
has the authority to regulate devices that are distributed as IVD's as well as those
that are distributed for "Investigational Use Only" (IUO) and for "Research Use Only"
(RUO).

Laboratory Developed Tests (LDT's), also referred to as Homebrews, are diagnostic
tests that are developed and manufactured by CLIA certified laboratories under their
Quality Management System. These tests are developed by the lab for use only in
that laboratory. CLIA laboratories develop the performance characteristics, perform
the analytical validation for their LDT's and obtain licenses to offer them as
diagnostic 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 model
b | FDA model adapted for diagnostics9


Coverage and Reimbursement of
Laboratory Tests
There can be no doubt but that the statutes and
provisions in question, involving the financing of
Medicare and Medicaid, are among the most
completely impenetrable texts within human
experience. Indeed, one approaches them at the level
of specificity herein demanded with dread, for not only
are they dense reading of the most tortuous kind, but
Congress also revisits the area frequently, generously
cutting and pruning in the process and making any
solid grasp of the matters addressed merely a passing
phase.
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 & Ability to produce consistent results
optimization
2 Diagnostic accuracy Sens., Spec. , PPV, NPV
3 Impact on diagnostic % of time that physicians estimated
thinking probability of a diagnosis changes after test
result
4 Impact on % of time that planned therapeutic strategy
Therapeutic choice changes after the test results

5 Impact on patient % of patients who improve with the test
outcome 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 by
which 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
Pre-analytic performance Post-analytic performance
Incoming defects* Revised reports*
Lost specimens Total Critical Results Notification
Compliance Tracking reports*
On-time delivery*
Specimen identification*

Analytic performance Operational performance
Proficiency testing Incoming call resolution
Test reliability Incoming call abandon rate
Turnaround (analytic) Call completion rate
times Call in-queue monitoring
Quantity-not-sufficient Customer complaints
(QNS) specimens* Customer satisfaction surveys

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 reference
sets 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)
The ICD is the global health information standard for mortality
and morbidity statistics.
Key facts
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.


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.


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

AACC San Diego and Greater San Diego
24
CLMA Joint Meeting May 2012

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 health
care decision makers are carefully chosen.
The types of research studies that provide useful evidence for a
particular treatment are defined, collected and assessed.
An assessment is made as to whether efficacy studies are
applicable to the patients, clinicians and settings for whom the
review is intended.
The benefits and harms for different treatments and tests are
presented in a consistent way so that decision makers can fairly
assess the important tradeoffs involved for different treatments
or diagnostic strategies
Source: AHRQ Effective Healthcare Program


Practical Benefits from Comparative Effectiveness

Panel deserves the best and most objective information
about treating your sickness or condition. With this
research in hand, patients and clinicians need to make the
best possible treatment choices.
For example, patient with high blood pressure might have
more than a dozen medicines to choose from. Someone
with heart disease might need to choose between having
heart surgery or taking medicine to open a clogged artery.
Reports on these topics and others include the pros and
cons of all the options so that the best possible treatment .
Every patient is different different circumstances,
different medical history, different values. These reports
don t tell you and your doctor which treatment to choose.
Instead, they offer an important tool to help you and your
doctor 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 from
efficacy studies are to certain patient populations. Patients are
often carefully selected, excluding patients who are sicker or
older 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 protocols
that maximize the benefits and limit the harms of certain
treatments.
As a result, the findings of such studies do not accurately reflect
the real world outcomes.
Effectiveness studies are intended to provide results that are
more applicable to average patients. However, they remain
much less common than efficacy studies.



A comparative effectiveness review examines the
efficacy data thoroughly to ensure that decision
makers can assess the scope, quality, and relevance of
the available data and point out areas of clinical
uncertainty.
Clinicians can judge the relevance of the study results
to their practice and should note where there are gaps
in the available scientific information.
Identified gaps in the available scientific evidence can
provide important insight.



These reviews also highlight areas in which evidence
indicates that benefits, harms, and tradeoffs are
different for distinct patient groups.
With or without a comparative effectiveness review,
these are decisions that must be left to a clinician s
best judgment.


Overview of categories of evidence
Most US payers do not explicitly require cost-effectiveness data.
While they will look review published economic studies and
consider budget impact, few include a cost/QALY threshold in
their decision-making process currently.
Payers look at clinical data first, economic data is particularly
valuable especially for higher cost or large volume technologies
that need to justify their cost-impact to the organization.
Category Evidence Requirements
Safe & Effective Technology has final FDA approval
Risk-benefit analysis Benefits outweigh risks
Clinical Outcomes Technology provides clinical benefits to the patient
Economic 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 are
quantified using available clinical trial or post-marketing
surveillance data.
Importance weights, usually health-state utilities, are
assigned to each outcome in order to express all benefits
and all risks in a common metric.
The difference between the sum of the weighted benefits
and the sum of the weighted risks of a treatment thus rep-
resent the net health benefits (NHB) of the treatment. INHB
is then calculated as the difference between the NHB of the
treatment of interest less the NHB of an alternative
treatment or standard of care.
A positive INHB indicates that the net benefits of treatment
are positive relative to an appropriate comparator.
Source: ISPOR


Maximum Acceptable Risk (MAR) Approach
The objective of this approach is to estimate the maximum
risk patients are willing to accept in order to achieve the
therapeutic benefits of a pharmacotherapy that
incorporates patient preferences over both risk and benefit
outcomes as well as over different risk levels.
This maximum acceptable risk (MAR) then can be
compared against the actual or expected risk associated
with a treatment to determine whether the treatment is
acceptable to patients.
MAR is estimated using choice-experiment or conjoint-
analysis methods - an increasingly common method of
patient preference analysis in health economics
Source: ISPOR


In Summary
The presentation covered the expanding use of evaluation
processes and methodologies by which laboratory tests are
evaluated and reimbursed.
Reviewed the strategies manufacturers, laboratory service
providers, and payers employ to collect outcome and cost
data to better support the effective use of new laboratory
tests which in turn increases appropriate use and
reimbursement.
Used the language, nomenclature and information that
should 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 those
entities that make coverage and reimbursement decisions.


Thank You
Robert Parson
MS, MAS, CQE, CRE, CHE
robert.parson@osmovian.com
(858) 357-6491
Skype: Bob_Parson
Twitter: robert_parson
http://www.osmovian.com
http://www.linkedin.com/in/roberteparson


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

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