Presentation at the San Diego Q1 Diagnostics Conference in Feb 2016 on Influencing Payer Coverage for Advanced Genomic Testing

1. John W. Hanna, MBA
VP, Endocrinology
Veracyte, Inc.
john@veracyte.com
650.243.6362
Influencing Payer Coverage

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• Engage FDA on LDT Regulation
• Work to establish a pathway for coding, coverage and reimbursement
• Promote legislation supporting precision medicine
Coalition for 21st Century Medicine
www.twentyfirstcenturymedicine.org

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PAMA Act of 2014
Section 216 Authorizes CMS To Establish:
I. Market Based Rate Setting
II. Coding for Existing ADLTs & New ADLTs
III. Advisory Panel for Rate Setting
IV. Consolidate to four or less MAC contractors for labs
V. Report to Congress

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1Q 3Q2Q
Start of
Initial Period
1st quarter
following LCD
effective date
Initial Data
Reporting
Period
Medicare
Final LCD
Effective
Date
Initial Commercial
Offering of New Test
May take several years for
labs to generate clinical
utility data sufficient for
LCD coverage
Draft LCD
Published
Activity
Medicare
Rate
No Medicare
Payment
No
Medicare
Payment
Contractor
Priced
Initial Data
Collection
Period
Labs may report
most recent 12
months of data
Actual List Charge (ALC)
Payment for New ADLT
Medicare Rate Set
at Weighted Median
Code & rate added to
CLFS and set until next
ADLT reporting cycle
Lab Can Apply For ADLT Status and Be Assigned a
Code Anytime Prior to Start of Initial Period
Hanna JW, Coalition for 21st Century Medicine Letter to CMS. January 18, 2016
New ADLT Designation, Coding & Payment

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About Veracyte, Inc.
• Founded in 2008 to address diagnostic ambiguity
• HQ and CLIA Molecular Lab in South San Francisco, CA
• Nearly 200 employees in South San Francisco & Austin, TX
• Two commercial products:
/ 3 / © 2015 Veracyte, Inc. All rights reserved.
Diagnostic Ambiguity: A Significant Healthcare Issue
$ BILLIONS
of Healthcare
Dollars Wasted
HUNDREDS
of THOUSANDS
of Unnecessary,
Invasive Procedures
AMBIGUOUS
DIAGNOSIS

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Veracyte Is Recognized in the Bay Area

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Evidence Driven Coverage for Afirma
Published Evidence Guidelines ~175 Million Lives Covered
Analytic Validation
• Walsh PS, et al. JCEM 2012
Clinical Validation
• Chudova D, et al. JCEM 2010
• Alexander E, et al. NEJM 2012
Clinical Utility
• Duick D, et al. Thyroid, 2012
• Harrell M, et al. Endo Prac 2013
• Alexander E, et al. JCEM 2014
• Lastra E, et al. Cancer Cyto 2014
• McIver B, et al. JCEM 2014
• Sullivan, et al. Cancer Ctyo 2014
• Marti J, et al. Surg Onc 2015
• Angell TE, et al. JCEM 2015
• Witt RL, et al. Laryngoscope 2015
• Brauner E, et a.l Thyroid 2015
• Zhu Q, et al. A J Radiol 2015
• Yang S, et al. Cancer Cyto 2015
• Celik B, et al. Diagnos Cyto 2015
• Wu J, et al. Surgery 2015
• Sipos J, et al. Endo Prac 2016
NCCN
Thyroid Carcinoma Guideline
2013–present
UpToDate
Thyroid Nodule Management
2013-present
American Thyroid Association
Thyroid Nodule
Management Guideline
2015-present
• Medicare ‘12
• UnitedHealthcare ‘13
• Aetna ‘13
• Cigna ‘13
• Humana ’13
• SelectHealth ‘13
• Emblem ‘14
• HealthNet ’14
• BS California ‘14
• Premera BCBS ‘14
• Horizon BCBS ‘14
• Highmark BCBS ‘14
• BCBS Louisiana ‘14
• WellMark BCBS ’14
• Hawaii MSA ’15
• Independence BC ‘15
• CareFirst ’15
• BCBS MASS ’15
• North Dakota ’15
• Excellus ’15
• HCSC ‘16
• Regence ’16
• BCBS South Carolina ‘16

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Constellation of Factors Impact Coverage
Decision Making
Factor Effect Payer Comments
Patient and Provider
Adoption
Patients and Providers ask for or
use test and file claims, prompts
closer test review
“There was demand and that
did influence us”
Coverage by local
Medicare contractor
Creates a status quo for others,
may tip decision to cover
“We reviewed the studies of
clinical utility and said, “there
is clinical utility data, and
Medicare covers”
Endorsement by
medical societies
Inclusion in guidelines suggests a
standard of care
“It wasn’t the new
information that came out
but rather a broadening
sense of consensus”
Regulation Not FDA approved “FDA looks at safety and
efficacy and not utility”
Trossman JR, et al. J Oncol Practice 2010:(6)5;238-42.

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Evidence Relied Upon to Assess Reimbursement
of MDx – 2008 Survey
Faulkner E, et al. J Managed Care Med. 2009;12(4)42-55.

10. / 10 /Chambers JD, et al. Health Affairs 2015

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Would Uniform Coverage Decisions be Ethical?
Chambers JD, et al. Health Affairs 2015

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Agreement by Clinical Categories
Chambers JD, et al. Health Affairs 2015

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National Association of Managed Care
Physicians – 2013 Survey
• 56 Medical Directors
• 73% Surveys Completed
• 70% Commercial
• 30% Health Systems
• Aetna, Cigna, Anthem
and UnitedHealthcare
• >100 Million Lives
Faulkner E, et al. J Managed Care Med. 2015;18(1)5-13.

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77% of Medical Directors Accurately Defined
Clinical Utility of MDx
Faulkner E, et al. J Managed Care Med. 2015;18(1)5-13.

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Evidence Most Likely to Inform Coverage
Decisions for MDx
Top 3 answers selected, proportion of all respondents
Faulkner E, et al. J Managed Care Med. 2015;18(1)5-13.

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2009 EGAAP
1997 NIH Task Force
1998 SCGT
2002 Burke et al.
2006 AACE
Direct or indirect improvement in health outcomes
Definition of Utility for Molecular Testing
“Data must be collected to demonstrate the
benefits and risks that accrue from both positive
and negative tests”
“The benefits and risks to be considered include
psychological, social and economic consequences of
testing as well as the implications for health outcomes”
“Clinical utility refers to the likelihood that the
test will lead to an improved health outcome”
Firmly associated clinical utility with health
benefits, defined in terms of clinical endpoints,
and distinguished from ELSI
Grosse SD, et al. Genetics In Medicine. 2006
Teutsch SM, et al. Genetics In Medicine. 2009

17. / 17 /Jeter EK, South Carolina Association of Health Plans Meeting. Dec 4, 2015

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Freuh & Quinn – Contextual HTA Evaluation
Frueh FW, Quinn B. Expert Rev Mol Diagn 2014:14(7)777-86
Trusheim et al. Pharmacogenomics 2013;14:325-334

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Freuh & Quinn – Accepted Outcomes Measures
Frueh FW, Quinn B. Expert Rev Mol Diagn 2014:14(7)777-86

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Why Is The Claim Being Denied?
• WPC + Policy Reporter + FindACode
• Denial reason or med policy specific appeals
• Identify administrative errors

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Appeals Are Like Ice Cream Cones

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Commercial Appeals Process
Patients reach a claim resolution quicker, and have
greater appeals rights.
Customer service claim
review for processing errors
Were all plan benefits provided
to the patient?
External Review
Legal Action
Was the claim adjudicated
correctly based on Med Policy?
Was the procedure
medically necessary?
Specialty matched review
board
External Review
Provider ProcessPatient Process
Level 1
Level 2
Level 3
Level 4

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Appeals Communication

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ACA Appeal and Review Mandate
• Sec. 1001 of the Affordable Care Act (ACA) requires
an internal and an external review process
• External reviews follow a state process or a federal process
• State external review process:
1. Default process with minimum standards
2. If process fails to meet standards, may bring legal action
• Federal external review process:
1. Accredited Independent Review Organization (IRO); or
2. The HHS-Administered External Review Process administered by
MAXIMUS
• ERISA Plans
• Follows similar Federal requirements for IRO review

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Who Conducts External Reviews?
Segment External Review Organization
Commercial MCI International, Maximus, MCMC,
iMedecs
Blue Cross iMedecs, MCMC, AMR, AllMed, ProPEER,
Permedion, IMX, Ipro, MPRO, Maximus,
MCS, MES, NMR, MMRO, HHC

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Closing Thoughts
• Coverage decisions are multi-factorial
• Comprehension of MDx clinical utility is growing
• Communicate test evidence with every claim
• Know state laws and administrative processes
• Maintain a consistent and clear message

27. Questions?
John W. Hanna, MBA
VP, Endocrinology
Veracyte, Inc.
john@veracyte.com
650.243.6362