IVDT_In Vitro Diagnostics Technology

IVD Technology, Fall 2013

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BUSINESS STRATEGIES IVD Industry Pressure Points: Wrangling with Reimbursement Policies Speakers at the upcoming IVD Business Strategy Conference weigh in on how ill-considered reimbursement measures are hampering innovation and market growth. BY NORBERT SPARROW T he IVD industry has been experiencing sluggish growth in the US market as the utilization and payment of diagnostic testing adjusts to a new normal, where healthcare spending is more sustainable in the long term, according to Winny Tan, PhD, senior industry analyst at Frost & Sullivan. Hospital laboratory suppliers reported only 3 to 4% growth in 2012 with a continued drop of in 2013, says Winny Tan Tan, and one reason why labs aren't spending more is because of immediate reimbursement cuts that took efect in 2013, some of which blindsided industry. "For example, reimbursement for the technical component—the portion the laboratory collects—of surgical pathology CPT code 88305 was cut by 52%," says Tan. When you take into account the total technical and professional reimbursement amount for the tissue slide, it represents a one-third reduction. "Tis is signifcant for a lab that is processing a lot of biopsies, and can put some of them out of business," says Tan. Tis is by design, she adds, as there is intent to discourage the growth of certain physician ofce labs that have used this CPT code as a proft center. Te prospect of continued cuts in reimbursement and their future impact is keeping labs from making capital investments, says Tan. Weak demand this year is an added blow to IVD manufacturers, who are already absorbing the 2.3% excise tax on the sale of medical devices that is part of healthcare legislation, which also began on January 1, 2013, Tan adds. Reimbursement is also a central concern for Bruce Quinn, MD, a senior healthcare policy specialist with Foley Hoag LLP. He takes issue with the way that the Centers for Medicare and Medicaid Services (CMS) are pricing more than 100 new genetic codes recently introduced by the American Medical Association. "In many cases, the new genetic tests are not covered at all or are covered at substantially reduced prices compared with 2012," he says. "Tis discourages the introduction of FDA-approved IVD tests for genetic diseases or molecular tests for cancer drug choices." Quinn also points to CMS reviewing whether it will pay for clinical value and intellectual capital invested in multi-analyte tests with algorithms as a pressure point for industry. "CMS announced initially in 2012 that it would not pay for these tests, and then, that a decision would be postponed Bruce Quinn until 2013." Other proposals that blur the reimbursement landscape for IVD companies include setting new prices for clinical lab fee schedules and aligning physician pathology tests with a diferent pricing system that would amount to a 50% or greater price reduction for some manufacturers. Companion Diagnostics: The Price Isn't Right Te novel characteristics of companion diagnostics (CDx) pose some unique challenges when it comes to reimbursement, notes Rosanne Welcher, PhD, Vice President, Companion Diagnostics R&D, at Dako, an Agilent Technologies Co. "Te price of the tests are based on 18 IVD TEC HNOL O G Y | FA L L 2013 magenta cyan yellow black ES320859_IV1309_018.pgs 09.19.2013 05:05 UBM

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