Sunday, October 29, 2017
NEHI 10/2017 Presentation on Value Based Oncology Drug Pricing
For more about the October 2017 webinar, here.
Thursday, October 26, 2017
Public Data about Direct Costs of Genomic Testing
A colleague asked me about direct costs of genomic testing, e.g. costs of good sold. There are a number of public sources that contribute to what we know about this.
One over-arching consideration is scale. Economies of scale are very important in the laboratory, especially with next generation sequencing. Running equipment to capacity is the most efficient approach to both capital equipment and reagents.
AMP MICROCOSTING
One approach, dating to Spring 2016, is the Association for Molecular Pathology's microcosting paper, Sabatini et al. A Genomeweb article on the publication is here. The ten page publication is open access at Journal of Molecular Diagnostics (18:319-28), here. The authors surveyed several labs on several typical genomic procedures. For many of the tests, costs per sample clustered in the $700-$1000 range, but several large assays had outlying cost estimates up to $2000-3400. It's interesting that for some tests sample prep and library costs are about the same as "sequencing" costs.
One critical flaw in the paper is a lack of allocation for most overhead. In some ways, it's like estimating the cost of an airline ticket by the cost of fuel, crew salary, and perhaps the food, without the capital equipment, airports, actual airline, etc. Many members of AMP work embedded inside hospital-based labs where huge amounts of overhead are outside the actual lab bench chemistry budget - the building, staff, H.R., utilities, cleaning and security, upper management, everything.
PUBLIC FINANCIALS OF PUBLICLY HELD LABS
Much data is available from the public financials of labs with quarterly investor calls and SEC reports. There's one caveat, and that publicly held labs are incented to make their "cost of goods sold" as low as possible, within the limits of generally accepted accounting procedures. They're proud to say their cost of goods sold is falling from 19% to 18% to 17%, but it also means that just as little as possible will be loaded onto the COGS number and all possible expenses will be accrued somewhere else. To repeat the analogy I mentioned above, it's a little like looking at airline costs based on gas and crew salaries in the cabin.
That said, let's touch on the COGS of big labs like Labcorp and Quest. In 2016, Labcorp had $9.6B revenue and $6.4B cost of revenue, so cost of revenue was 66% of revenue. [*] In 2016, Quest had $7.5B revenue and $4.6 cost of revenue, so cost of revenue was 61% of revenue. So, all things average out, the average $10 test had average $6.10 direct cost.
If we switch to research oriented companies, Myriad Genetics had $771M revenue and $171M cost of revenue, so cost of revenue was 22% of revenue. So, all things averaged out, the average $3000 test had $660 cost. [**] Invitae doesn't work for the simple calculation, since they are nowhere near profitable. They had $25M revenue and $28M costs in 2016. But they also had a $100M loss. If they had broken even, they would have had by definition $125M revenue but they would have been selling considerably more than the $28M of tests they sold, so it's hard to directly extrapolate.
WHEN PUBLIC LABS SAY: "HERE, WRITE THIS DOWN, THIS IS MY DIRECT COST PER TEST"
There's another window, in that at least two publicly held genetics company feature their COGS in investor calls, so you get the number first-hand per test and you don't have to back it out from volume. In their August 2017 investor call, gene panel test company FULGENT said it had cost per test of $485. It refers to this as "the lowest cost in the industry." The August 2017 investor call at gene panel test company INVITAE gives their cost per sample as $345, which has "improved approximately 30%" from the prior year.
_________________
[*] One source says COGS and Cost of Revenue are interchangeable: here.
[**] In a different field, MAAA tests, Genomic Health had $328M revenue and $57M costs, or 17%. In the pharma field, Gilead had $30B revenue and $4.2B costs, or 14%. For recent articles on Gilead's revenue structure, WSJ here, LATimes here.
One over-arching consideration is scale. Economies of scale are very important in the laboratory, especially with next generation sequencing. Running equipment to capacity is the most efficient approach to both capital equipment and reagents.
AMP MICROCOSTING
One approach, dating to Spring 2016, is the Association for Molecular Pathology's microcosting paper, Sabatini et al. A Genomeweb article on the publication is here. The ten page publication is open access at Journal of Molecular Diagnostics (18:319-28), here. The authors surveyed several labs on several typical genomic procedures. For many of the tests, costs per sample clustered in the $700-$1000 range, but several large assays had outlying cost estimates up to $2000-3400. It's interesting that for some tests sample prep and library costs are about the same as "sequencing" costs.
One critical flaw in the paper is a lack of allocation for most overhead. In some ways, it's like estimating the cost of an airline ticket by the cost of fuel, crew salary, and perhaps the food, without the capital equipment, airports, actual airline, etc. Many members of AMP work embedded inside hospital-based labs where huge amounts of overhead are outside the actual lab bench chemistry budget - the building, staff, H.R., utilities, cleaning and security, upper management, everything.
PUBLIC FINANCIALS OF PUBLICLY HELD LABS
Much data is available from the public financials of labs with quarterly investor calls and SEC reports. There's one caveat, and that publicly held labs are incented to make their "cost of goods sold" as low as possible, within the limits of generally accepted accounting procedures. They're proud to say their cost of goods sold is falling from 19% to 18% to 17%, but it also means that just as little as possible will be loaded onto the COGS number and all possible expenses will be accrued somewhere else. To repeat the analogy I mentioned above, it's a little like looking at airline costs based on gas and crew salaries in the cabin.
That said, let's touch on the COGS of big labs like Labcorp and Quest. In 2016, Labcorp had $9.6B revenue and $6.4B cost of revenue, so cost of revenue was 66% of revenue. [*] In 2016, Quest had $7.5B revenue and $4.6 cost of revenue, so cost of revenue was 61% of revenue. So, all things average out, the average $10 test had average $6.10 direct cost.
If we switch to research oriented companies, Myriad Genetics had $771M revenue and $171M cost of revenue, so cost of revenue was 22% of revenue. So, all things averaged out, the average $3000 test had $660 cost. [**] Invitae doesn't work for the simple calculation, since they are nowhere near profitable. They had $25M revenue and $28M costs in 2016. But they also had a $100M loss. If they had broken even, they would have had by definition $125M revenue but they would have been selling considerably more than the $28M of tests they sold, so it's hard to directly extrapolate.
WHEN PUBLIC LABS SAY: "HERE, WRITE THIS DOWN, THIS IS MY DIRECT COST PER TEST"
There's another window, in that at least two publicly held genetics company feature their COGS in investor calls, so you get the number first-hand per test and you don't have to back it out from volume. In their August 2017 investor call, gene panel test company FULGENT said it had cost per test of $485. It refers to this as "the lowest cost in the industry." The August 2017 investor call at gene panel test company INVITAE gives their cost per sample as $345, which has "improved approximately 30%" from the prior year.
_________________
[*] One source says COGS and Cost of Revenue are interchangeable: here.
[**] In a different field, MAAA tests, Genomic Health had $328M revenue and $57M costs, or 17%. In the pharma field, Gilead had $30B revenue and $4.2B costs, or 14%. For recent articles on Gilead's revenue structure, WSJ here, LATimes here.
Thursday, October 19, 2017
Archive Agenda: Rock Health Digital Health Conference, October 2017 SF
Rock Health
Digital Health Conference
October 2017
San Francisco
Digital Health Conference
October 2017
San Francisco
TUESDAY, OCTOBER 17TH
3:00PM–3:10PM: Welcome - Robertson Auditorium
3:10PM–3:40PM: Thinking Smaller May Be The Next Big Thing - Robertson Auditorium
A pioneering and prolific engineer, Mary Lou Jepsen has led teams at Facebook/Oculus, Google[x], and Intel. In her latest endeavor as the Founder and CEO of Openwater, Jepsen is developing a wearable with wide-ranging potential—from detecting disease to reducing the cost of an MRI scan to that of a phone call. Learn from one of the most influential technologists of our time about how harnessing technology to tap into the human brain could launch us into the next generation of healthcare capabilities—and monumental cost savings.
3:40PM–4:15PM: Investing Gets Personal: VCs’ Brush With Healthcare - Robertson Auditorium
A cancer diagnosis changes everyone’s life. As a VC investing in the future of healthcare, it adds a whole other dimension. How has surviving cancer impacted the way these healthcare investors evaluate potential investments? As seasoned patients of the healthcare system they’re aiming to change, what unique insight can they provide around areas that are still in need of innovation?
David Lee, Managing Partner at Refactor Capital
Yumin Choi, Managing Director at Bain Capital Ventures
Stephanie Lee (Moderator), Senior Technology Reporter at BuzzFeed
Yumin Choi, Managing Director at Bain Capital Ventures
Stephanie Lee (Moderator), Senior Technology Reporter at BuzzFeed
4:15PM–4:25PM: Break
4:25PM–5:00PM: How Non-Traditional Players Are Shaping Healthcare Transformation - Robertson Auditorium
As one of the last industries to undergo technological transformation on an exponential scale, healthcare is ripe for change—and attracting the attention of diverse industries like never before. What opportunities do transportation, finance, food, and other companies see in healthcare? What trends are leading non-traditional companies into this balkanized industry? And what lessons should healthcare learn from them?
Chris Waugh, Chief Design & Innovation Officer at Sutter Health
James Sinclair, Managing Director, Consumer Retail and Healthcare Group at Goldman Sachs
Heather Jordan Cartwright, General Manager at Healthcare NExT, Microsoft
Ronan Wisdom, Managing Director, Global Lead - Connected Health, Accenture
James Sinclair, Managing Director, Consumer Retail and Healthcare Group at Goldman Sachs
Heather Jordan Cartwright, General Manager at Healthcare NExT, Microsoft
Ronan Wisdom, Managing Director, Global Lead - Connected Health, Accenture
5:00PM–5:30PM: The Bipartisan Approach To Healthcare Innovation: A Fireside Chat With Andy Slavitt - Robertson Auditorium
We believe technology has the power to make healthcare massively better for every human being—but what does the path to get us there look like? Andy Slavitt helps us to answer this question by sharing what he learned from his time in government as the former Acting Administrator of the CMS and across more than 20 years of experience in the private sector.
Andy Slavitt, Former Administrator of CMS / Senior Advisor at Bipartisan Policy Center
Lucia Savage (Moderator), Chief Privacy & Regulatory Officer at Omada Health
Lucia Savage (Moderator), Chief Privacy & Regulatory Officer at Omada Health
5:30PM–7:00PM: Opening Night Reception: Patient Impact - Fisher Atrium
WEDNESDAY, OCTOBER 18TH
8:30AM–9:30AM: Late Registration & Breakfast
9:30AM–10:10AM: Reshaping Regulation For The Digital Era - Robertson Auditorium
With the ongoing maturation of digital health companies comes greater responsibility—both in terms of validating claims and ensuring patient safety. How can digital health startups and regulators work in tandem to create a more seamless regulation process? The leader at the helm of the FDA's newly-minted digital health unit joins an outcomes-driven CEO to explore a regulation scheme in which healthcare innovation maintains its momentum—and adheres to the highest of standards.
Bakul Patel, Associate Director for Digital Health of FDA
Dr. Deborah Kilpatrick (Moderator), CEO of Evidation Health
Dr. Deborah Kilpatrick (Moderator), CEO of Evidation Health
10:10AM–10:50AM: Serving The Underserved Through Digital Health - Robertson Auditorium
How can we leverage opportunities to address the needs of vulnerable communities through digital health? We sit down with experts and entrepreneurs to discuss which specific underserved populations could benefit from digital health, and how to best address issues such as access, affordability, and effective design.
Sean Duffy, Co-founder & CEO of Omada Health
Veenu Aulakh, Executive Director of Center for Care Innovations
Dr. Toyin Ajayi (Moderator), Chief Health Officer at Cityblock Health
Veenu Aulakh, Executive Director of Center for Care Innovations
Dr. Toyin Ajayi (Moderator), Chief Health Officer at Cityblock Health
10:50AM–11:05AM: Break
11:05AM–11:45PM: Turning Data Into Action - Robertson Auditorium
The amount of data in healthcare is mind-bogglingly massive, growing at an annual rate of 48%. How can we enable providers to effectively use this data to provide better and more personal care to patients? We chat with three physicians on the strategies and obstacles for harnessing data to better understand human health and effectively use this information to incrementally change how care is delivered.
Dr. Jessica Mega, Chief Medical Officer at Verily
Dr. Amy Abernethy, Chief Medical Officer and SVP of Oncology at Flatiron Health
Dr. Lloyd Minor, Dean of Stanford School of Medicine
Christina Farr (Moderator), Reporter at CNBC
Dr. Amy Abernethy, Chief Medical Officer and SVP of Oncology at Flatiron Health
Dr. Lloyd Minor, Dean of Stanford School of Medicine
Christina Farr (Moderator), Reporter at CNBC
12:00PM–2:00PM: Lunch & Networking sponsored by dotHealth - Fisher Banquet Hall & Atrium
12:40-1:00PM: Speed Networking
1:05PM–1:50PM: Master Class Workshops
Five Trends for the Future of Technology, Brian Kalis of Accenture - Robertson Auditorium
Be a Data Ninja! How to Surface Insights from Rock Health Data, Megan Zweig of Rock Health - Conference Room 1
How to Win at Security, Chas Ballew of Aptible - Conference Room 2
2:00PM–2:40PM: Can Digital Health Help Solve The Opioid Crisis? - Robertson Auditorium
The US is in the midst of a historic public health crisis costing thousands of lives and billions of dollars each year: the opioid epidemic. How can digital health help address the crisis through new technologies and services to provide better access to addiction treatment and pain management? Through conversation with three entrepreneurs working in this space, we dive deep into areas where digital health already plays an active role—and where opportunities exist for further innovation in care.
Dr. Alan Levy, Chairman & CEO of Chrono Therapeutics
Chase Hensel, Co-founder & CEO of Welkin Health
David Vivero, Co-founder & CEO of Amino Health
Dr. Kelly Pfeifer (Moderator), Director, High-Value Care at California Health Care Foundation
Chase Hensel, Co-founder & CEO of Welkin Health
David Vivero, Co-founder & CEO of Amino Health
Dr. Kelly Pfeifer (Moderator), Director, High-Value Care at California Health Care Foundation
2:40PM–2:55PM: Break - Robertson Auditorium
2:55PM–3:35PM: The State And Future Of Digital Health - Robertson Auditorium
Despite the record-breaking pace at which investors are pouring their dollars into companies and the continued evolution of startups in the space, digital health is still fairly nascent. As the sector matures, what does the trajectory look like for the future—and what should you be paying attention to?
Sami Inkinen, Founder & CEO of Virta Health
Shradha Agarwal, President & Co-founder of Outcome Health
Bill Evans, Managing Director of Rock Health
Zina Moukheiber (Moderator), Contributing Editor at Forbes
Shradha Agarwal, President & Co-founder of Outcome Health
Bill Evans, Managing Director of Rock Health
Zina Moukheiber (Moderator), Contributing Editor at Forbes
3:35PM–4:10PM: Uncovering The Real Value of AI In Healthcare - Robertson Auditorium
An expert in the field of AI, Andrew Ng shares what the digital health community needs to understand about trendy technology, by separating hype from reality, while discussing how these technologies are creating real value in healthcare—today and throughout the decade ahead.
Andrew Ng, Co-Chairman & Co-founder of Coursera / Adjunct Professor at Stanford University
Megan Zweig (Moderator), Director of Research at Rock Health
Megan Zweig (Moderator), Director of Research at Rock Health
Friday, October 13, 2017
A 21st-Century-Cures Compliant LCD (Detailed Rationale)
21st Century Cures Act required LCD to have an evaluation of evidence submitted and a rationale for the decision.
In the LCD clipped below, released on October 13, 2017, the NGS MAC has taken this guidance seriously and released a detailed evidence evaluation in its LCD decision. This decision compiles two reconsideration requests into one revised LCD.
The LCD mimics the "objective/subjective" sequential format used in modern NCDs, where the "evidence" is listed and described first, and then a summary and executive conclusion that a decision can be made on the evidence, and what it is.
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https://www.cms.gov/medicare-coverage-database/details/lcd-details.aspx?LCDId=35080&ContrId=310&ver=30&ContrVer=1&CntrctrSelected=310*1&Cntrctr=310&name=&DocType=Future&s=24&LCntrctr=180*1&bc=AggAAAQAAAAAAA%3d%3d&
Coverage Indications, Limitations, and/or Medical Necessity
Summary of Evidence
In the LCD clipped below, released on October 13, 2017, the NGS MAC has taken this guidance seriously and released a detailed evidence evaluation in its LCD decision. This decision compiles two reconsideration requests into one revised LCD.
The LCD mimics the "objective/subjective" sequential format used in modern NCDs, where the "evidence" is listed and described first, and then a summary and executive conclusion that a decision can be made on the evidence, and what it is.
####
####
https://www.cms.gov/medicare-coverage-database/details/lcd-details.aspx?LCDId=35080&ContrId=310&ver=30&ContrVer=1&CntrctrSelected=310*1&Cntrctr=310&name=&DocType=Future&s=24&LCntrctr=180*1&bc=AggAAAQAAAAAAA%3d%3d&
L35080 NGS MAC
Released 10/16/2017, effective 12/1/2017
Coverage Indications, Limitations, and/or Medical Necessity
Indications:
EsophyX™ is a device for performing transoral incisionless fundoplication surgery (TIF) for treating gastroesophageal reflux disease. This procedure reconstructs the valve at the top of the stomach that helps prevents acid reflux.
Benefits are not available for endoluminal treatment for Gastroesophageal Reflux Disease (GERD) using the Stretta® procedure, the Bard EndoCinch™ Suturing System, Plicator™, Enteryx® or similar treatments as these procedures are not considered reasonable and necessary for the diagnosis or treatment of an injury or disease. Benefits are not available for LINX® Reflux Management System, which is not a true endoluminal treatment but is also not considered reasonable and necessary for the diagnosis or treatment of an injury or disease.
Currently, these procedures other than TIF are considered non-covered due to the fact that current peer-reviewed literature does not support the long-term efficacy and long-term safety of the services. Claims will be denied as "not proven effective."
Benefits are not available for endoluminal treatment for Gastroesophageal Reflux Disease (GERD) using the Stretta® procedure, the Bard EndoCinch™ Suturing System, Plicator™, Enteryx® or similar treatments as these procedures are not considered reasonable and necessary for the diagnosis or treatment of an injury or disease. Benefits are not available for LINX® Reflux Management System, which is not a true endoluminal treatment but is also not considered reasonable and necessary for the diagnosis or treatment of an injury or disease.
Currently, these procedures other than TIF are considered non-covered due to the fact that current peer-reviewed literature does not support the long-term efficacy and long-term safety of the services. Claims will be denied as "not proven effective."
Limitations:
For TIF, Coverage is not extended to:
- any patient who has recurrent symptoms or other evidence of failure following a prior TIF. These procedures (repeat TIF) would be considered investigational at this time.
- any patient in which a staged procedure is being done, as described as a laparoscopic esophageal or paraesophageal diaphragmatic hernia / opening closure followed by a TIF endoscopically.
- any patient who has a preoperative hiatal hernia greater than 2 cm (this is because the FDA label for this device is for GERD associated with hiatal hernia of equal or less than 2 cm. Use in patients who have preoperative larger hiatal hernias is not appropriate without a change in the FDA approval/label.)
- any GERD patients with BMI > 35, esophagitis LA grade >B, Barrett’s esophagus > 2 cm, and presence of achalasia or esophageal ulcer or has not been on an appropriate trial of proton pump inhibitors.
Summary of Evidence
Summary of evidence for TIF:
As noted above, transoral incisionless fundoplication surgery is a method for treating gastroesophageal reflux disease. This procedure reconstructs the valve at the top of the stomach that helps prevents acid reflux.
- Anti-Reflux Surgery Supplement to Endogastric Solutions TIF ESOPHYX Reconsideration Request NGS MAC, April 2017. This is not a peer-reviewed publication but a summary of what the procedure is and a summary of selective publications. Thus this is not a peer-reviewed publication indexed in the U.S. National Library of Medicine of the National Institutes of Health and thus not valid as supportive literature.
- Hakansson B., Montgomery M., Cadiere G, et al. Randomised clinical trial: transoral incisionless fundoplication vs. sham intervention to control chronic GERD. Alimentary Pharmacology and Therapeutics. 2015 John Wiley & Sons Ltd. This publication is indexed in the U.S. National Library of Medicine of the National Institutes. The study was blinded and divided equally into TIF and sham procedures. While the follow up period was only six (6) months, the time (average days) in remission offered by the TIF procedure (197) was significantly longer compared to those submitted to the sham intervention (107), P < 0.001. After 6 months 13/22 (59%) of the chronic GERD patients remained in clinical remission after the active intervention. Likewise, the secondary outcome measures were all in of the TIF2 procedure. No safety issues were raised.
- Stefanidis G, Viazis N, Kotsikoros N, Long-term benefit of transoral incisionless fundoplication using the esophyx device for the management of gastroesophageal reflux disease responsive to medical therapy. Diseases of the Esophagus (2017) 30, 1–8. This publication is indexed in the U.S. National Library of Medicine of the National Institutes of Health. The study initially had 45 patients who had the TIF procedure and were followed for a mean of 59 months (range 36–75). Only one patient had a complication during surgery and thus was excluded. The 44 patients all had follow-up upper endoscopy at 6 months, 1 year, and 3–5 years postoperatively. (72.7%) that completed the study follow up reported elimination of their main symptom, without the need for PPI administration (none PPI usage). Six more patients (13.6%), five with heartburn, and one with regurgitation reported half PPI dose taken for <50% of the preceding follow up period (occasional PPI usage), while six more patients (four with heartburn, one with regurgitation, and one with chest pain) reported full or half PPI dose taken for more than 50% of the preceding follow up period (daily PPI usage). This paper supports the procedure.
- Technology Coverage Statement on Minimally Invasive Surgical Options for Gastroesophageal Reflux Disease April 2016. This is a position paper from the American Gastrological Association based on its reviews of TIF publications. It is strongly supportive.
- Clinical Spotlight Review: Endoluminal Treatments for Gastroesophageal Reflux Disease (GERD)sages.org/publications/guidelines/endoluminal-treatments-for-gastroesophageal-reflux-disease-gerd. This is a statement from the Board of Governors of the Society of American Gastrointestinal and Endoscopic Surgeons (SAGES) on Mar 2017. Its recommendation is: Based on existing evidence, TIF can be performed with an acceptable safety risk in appropriately selected patients. The procedure leads to better control of GERD symptoms compared with PPI treatment in the short term (6 months), but appears to lose effectiveness during longer term follow-up and is associated with moderate patient satisfaction scores. Objective GERD measures improve similarly after TIF 2.0 compared with PPI. No comparative, controlled trials exist between TIF and surgical fundoplication, but preliminary evidence suggests that the latter can be used safely after TIF failure. (Per SAGES, this is level of evidence +++, strong recommendation)
- Vaezi M, Bril J, Mills M, et al. An Episode Payment Framework for Gastroesophageal Reflux Disease. Gastroenterology 2016;150:1019–1025. This is an economic and coding paper and not a clinical paper. It is not supportive.
- Hunter JG, Kahrilas PJ, Bell RCW, et al. Gastroenterology. 2015 Feb;148(2):324-333. The largest RCT with the lowest risk of bias is an industry-sponsored double-blind sham controlled multicenter study (RESPECT) that evaluated transoral fundoplication in patients whose symptoms were not well-controlled on proton pump inhibitors (PPIs).10 Out of 696 patients screened, 129 met inclusion and exclusion criteria and were randomized in a 2:1 ratio; 87 patients received transoral fundoplication combined with six months of placebo and 42 patients received sham surgery with six months of daily PPI therapy (sham/PPI). Control of esophageal pH improved after TF (mean 9.3% before and 6.3% after; P < .001), but not after sham surgery (mean 8.6% before and 8.9% after). This is supportive.
- Bell RCW, Barnes WE, Carter BJ, et al. Transoral incisionless fundoplication: 2-year results from the prospective multicenter U.S. study. AM Surg. 2014 Nov;80(11);1093-1105. This 24-month follow-up has been reported from a prospective multicenter registry of patients with chronic GERD who received transoral fundoplication using the EsophyX2 system with SerosaFuse fasteners. For the 100 consecutive patients who were treated in this community-based study, the median GERD symptom duration was nine years (range, one to 35 years), the median duration of PPI use was seven years (range, one to 20 years), and 92 percent of patients had incomplete symptom control despite maximal medical therapy. This three-year study provides evidence to demonstrate sustainable improvement in health outcomes, symptom relief, decrease in PPI utilization and improvement in esophageal pH with transoral fundoplication. This is supportive.
Summary of evidence for Stretta®:
The Stretta® procedure is an endoluminal treatment for GERD in which radiofrequency energy is delivered to smooth muscle of the lower esophageal sphincter (LES). A flexible catheter equipped with special needle electrodes for precise energy delivery is placed by mouth into the esophagus and carefully controlled radiofrequency energy is then delivered to the LES and gastric cardia, creating thermal lesions. The manufacturer maintains that the changes that occur immediately, and over time, result in a "tighter" LES and a less compliant gastric cardia. Additionally, the interruption of nerve pathways in the LES area is believed to reduce the incidence of inappropriate LES "relaxations," leading to an improvement in GERD symptoms. Substantial peer-reviewed evidence to fully support these assumptions needs to be published.
Summary of evidence for EndoCinch™ Suturing System and the Plicator™:
The Bard EndoCinch™ Suturing System and the Plicator™ are intended for use in endoscopic placement of suture(s) in the soft tissue of the esophagus and stomach and for approximation of tissue for treatment of symptomatic gastroesophageal reflux disease. Substantial peer-reviewed evidence to fully support these assumptions needs to be published.
Summary of evidence for Enteryx®:
Enteryx® is an endoscopic, minimally-invasive procedure in which an ethylene vinyl alcohol polymer solution is injected into one's lower esophageal sphincter muscle using a small needle. This product was recalled by the FDA in September 2005 due to adverse patient events.
Summary of evidence for LINX® Reflux Management System:
LINX® Reflux Management System - a sphincter augmentation device designed to prevent reflux due to abnormal opening of the lower esophageal sphincter (LES). The system is comprised of a small flexible band of 10 to 18 interlinked titanium beads with magnetic cores. Using standard laparoscopic techniques, the band is placed around the esophagus at the level of the gastroesophageal junction. The magnetic attraction between the beads is intended to augment the lower esophageal sphincter to prevent gastric reflux into the esophagus without compressing the esophageal wall. Unlike the other procedures mentioned, this is extraluminal, not intraluminal.
- Saino et al. (2015) reported five-year results on the 44 implant procedures of the magnetic sphincter augmentation (MAS) first performed in the world. Safety and efficacy were evaluated in a prospective, multicenter study with patients serving as their own controls. Thirty-three of the 44 patients (75%) were followed-up at five years. Enrolled patients had an abnormal esophageal pH on ambulatory monitoring, typical GERD symptoms, had been taking daily PPIs, and were between 18 and 75 years of age. Patients were excluded if they had a large hiatal hernia (> 3 cm), Grade B or higher esophagitis (Los Angeles scale), a body mass index (BMI) > 35 kg/m2, Barrett’s esophagus, motility disorders, gross esophageal anatomic abnormalities, or an allergy to titanium, stainless steel, nickel, or ferrous materials. Mean total of time the esophageal pH was < 4 was 11.9% at baseline and 4.6% at five years (P<.001), with 85% (28) of patients achieving a normal pH or a 50% reduction. Mean total GERD-HRQL scores improved from 25.7 to 2.9 (P<.001). Complete discontinuation of PPIs was achieved by 87.8% of patients. Most patients (90.9%) were satisfied with their condition at five years versus none at baseline. Side effects such as gas bloat and difficulty swallowing were no worse after the procedure. There were no long-term complications but there were three of the 44 patients (86.8%) that had a serious adverse event which resolved. Three devices were removed. Limitations of the study were noted as lack of a comparison group, loss of patients during the five-year follow-up, and lack of pH monitoring at all sites after the first year.
- Ganz et al. (2015) (in press) performed a prospective study of MAS safety and efficacy in the 100 adults who had GERD for six months or more, were partially responsive to daily proton pump inhibitors (PPIs), and had evidence of pathologic esophageal acid exposure. Exclusion criteria included a hiatal hernia > 3 cm, grade C or D esophagitis (Los Angeles scale), BMI > 35, Barrett’s esophagus, or motility disorder. Eight-five patients in 14 centers in the United States and The Netherlands were followed for five years serving as their own controls. The GERD-HRQL questionnaire was performed at baseline on and off PPIs and after the placement of the device. A 50% or great reduction occurred in 83% at five years and a 50% or more reduction of PPI use occurred in 89.4%. Daily use of PPIs was 100% at baseline and 15.3% at five years with 75.3% reporting no use. All patients reported the ability to belch and vomit with no change in dysphagia. Symptoms of bloating/gas decreased from 52% to 8.3%. No device erosions occurred; seven percent (7%) were removed. Limitations of the study were stated as lack of esophageal pH testing and manometry beyond one year and no comparison group.
- Warren et al. (2015) performed a retrospective cohort study of patients with GERD undergoing placement of the MAS or a Nissen fundoplication (NF) at three high-volume esopohageal centers. Inclusion criteria included age of 18 – 85 years, a documented history of GERD at least partially responsive to PPIs, and positive pH testing. Excluded were those with a prior history of gastric or esophageal surgery, a hiatal hernia > 3cm, esophageal dysmotility and/or distal esophageal amplitude of < 35 mm Hg, and the visible presence of Barrett’s or esophageal stricture. There were a total of 415 patients (201 MSA and 214 NF) compared at one year post-procedure. Although the patients were similar in age and gender, the NF patients had higher BMIs (40 vs. 32), dysphagia (39 vs. 27) DeMeester scores (39 vs. 34), microscopic Barrett’s (31% vs 18%) and hiatal hernia (69% vs. 55%). At a one-year follow-up 354 patients (169 MSA and 185 NF) had significant improvement in GERD-HRQL scores. MSA patients had a greater ability to belch and vomit with less gas bloat. Propensity matched cases (144) showed similar GERD-HRQL scores. The differences in ability to belch or vomit and gas bloat persisted in favor of MSA but mild dysphagia was higher for MSA as was resumption of daily PPIs (24 vs. 12, p = 0.02) Satisfaction rates were similar. There were no deaths and no significant differences in postoperative minor and major morbidities. Two patients had the MSA device removed and two had an NF revision. Study limitations included its retrospective nature and being performed in high-volume esophageal centers may limit its application to other centers.
- Reynolds et al. (2015) retrospectively compared charges, complications, and outcomes at one year for 119 patients undergoing MSA (54) or NF (67). Follow-up data were available for 48/52 (92%) of the MSA patients and 59/67 (88%) of the NF patients. There were no significant differences between charges, mean GERD-HRQL, or freedom from PPIs. MSA patients had a shorter operating room time and length of stay, reported less gas bloat symptoms and inability to belch or vomit. Two 30-day complications occurred in the NF group but were resolved. Noted limitations were that the study was not powered to detect a difference in PPI use and charges versus costs were compared. It was concluded that MSA might be an alternative for “gap” patients who are those having residual symptoms on PPIs but not having complicated GERD or complete lower esophageal sphincter (LES) failure.
Analysis of Evidence
(Rationale for Determination)
Gastroesophageal reflux disease (GERD) is mostly treated by medical management. As outlined in the ACG Practice Guidelines (updated in 2005) many patients are treated by empirical therapy, without the use of endoscopy. However some patients require additional diagnostic studies and interventions. The Practice Guidelines discusses the historical controversy of medical vs. surgical intervention but did establish the following two treatment guidelines:
- Antireflux surgery, performed by an experienced surgeon, is a maintenance option for the patient with well-documented GERD.
- Endoscopic therapy controls symptoms in selected patients with well-documented GERD.
These guidelines note anti-reflux surgery, performed by an experienced surgeon, is a maintenance option for the patient with well documented GERD. In these guidelines endoscopic therapy for GERD was discussed, pointing out there are three broad categories of endoscopic therapy: ‘radiofrequency application to the LES area, techniques designed to decrease reflux using endoscopic sewing devices, and techniques using an injection into the LES region.’ The guidelines also raised remaining issues, including: long-term durability, efficacy in atypical presentation of GERD patients, and efficacy of these procedures performed outside of clinical trials.
Transoral Incisionless Fundoplication (TIF):
Since these guidelines were updated in 2005, a newer endoscopic suturing technique has emerged in the literature. Transoral Incisionless Fundoplication (TIF) is an endoscopic technique. At present, the only such device currently on the market is the ExophyXTM. The FDA cleared this device. The FDA clearance is for those patients with chronic GERD, with continued responsiveness to PPIs, and a small hiatal hernia of less or equal to 2 cm. The TIF procedure is described as:
During transoral fundoplication, a General Surgeon constructs an anterior partial fundoplication of 270-300 degrees by attaching the fundus to the anterior and left lateral wall of the distal esophagus slightly above the esophagogastric junction through full thickness placation using multiple fasteners around the gastroesophageal junction. The TIF procedure has had different versions (TIF 1.0 vs. 2.0) depending on the circumferential amount of reestablishment of the valve, i.e. 220 degrees vs. 240 degrees.
As noted above, the evidence supports limited coverage for Transoral Incisionless Fundoplication (TIF).
Stretta® procedure:
At this time, open-label studies or patient registries with short term follow-ups are the dominant source of data. The overwhelming preponderance of reviewers remain equivocal in their support and have called for randomized controlled trials with long-term follow-ups. In the absence of evidence from such studies, and in the absence of wide acceptance, endoscopic treatments for GERD are not proven effective.
Thus the evidence is not sufficient and/or robust to support any change in coverage.
Enteryx® Procedure:
Based on the evidence and FDA recall of this product, change in coverage is not warranted.
LINX® Reflux Management system:
LINX® Reflux Management system and/or similar treatments are promising for treatment of patients in whom proton pump inhibitor therapy fails. Clinical data from various studies are emerging. At this time, open-label studies or patient registries with short term follow-ups are the dominant source of data. The overwhelming preponderance of reviewers remain equivocal in their support and have called for randomized controlled trials with long-term follow-ups. In the absence of evidence from such studies, and in the absence of wide acceptance, endoscopic treatments for GERD are not proven effective.
NGS finds the MAS literature to have small numbers of patients with only short follow-up periods with the exception of Saino et al. and Ganz with 44 and 100 patients respectively, noting data were available for 33/44 and 85/100. Randomized controlled studies are lacking, including head-to-head comparisons with other modes of treatment. NGS will review future literature as it becomes available and is provided.
Thus the evidence is not sufficient and/or robust to support any change in coverage.
Thursday, October 12, 2017
S 794 LCD Clarity Bill
https://www.congress.gov/bill/115th-congress/senate-bill/794/text
115th CONGRESS
1st Session |
S. 794
To amend title XVIII of the Social Security Act in order to improve the process whereby Medicare administrative contractors issue local coverage determinations under the Medicare program, and for other purposes.
IN THE SENATE OF THE UNITED STATES
March 30, 2017
Mr. Isakson (for himself, Mr. Carper, Mr. Boozman, and Ms. Stabenow) introduced the following bill; which was read twice and referred to the Committee on Finance
A BILL
To amend title XVIII of the Social Security Act in order to improve the process whereby Medicare administrative contractors issue local coverage determinations under the Medicare program, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
This Act may be cited as the “Local Coverage Determination Clarification Act of 2017”.
(a) LCD Development Process.—Section 1862(l)(5) of the Social Security Act (42 U.S.C. 1395y(l)(5)) is amended by adding at the end the following subparagraph:
“(i) IN GENERAL.—In the case of a specified local coverage determination (as defined in clause (iv)) within an area by a medicare admi‘’nistrative contractor that has entered into a contract with the Secretary under section 1874A, such medicare administrative contractor must take the following actions with respect to such determination before such determination may take effect:
“(I) Publish on the public Internet website of the medicare administrative contractor a proposed version of the specified local coverage determination (in this section referred to as a ‘draft determination’), a written rationale for the draft determination, and a description of all evidence relied upon and considered by the medicare administrative contractor in the development of the draft determination.
“(II) Not later than 60 days after the date on which the medicare administrative contractor publishes the draft determination in accordance with subclause (I), convene one or more open, public meetings to review the draft determination, receive comments with respect to the draft determination, and secure the advice of an expert panel (such as a carrier advisory committee described in chapter 13 of the Medicare Program Integrity Manual in effect on August 31, 2015), with respect to the draft determination. The medicare administrative contractor shall make available means for the public to attend such meetings remotely, such as via teleconference.
“(III) With respect to each meeting convened pursuant to subclause (II), post on the public Internet website of the medicare administrative contractor, not later than 14 days after such meeting is convened, a record of the meeting minutes for such meeting.
“(IV) Provide a period for submission of written public comment on such draft determination that begins on the date on which all records required to be posted with respect to such draft determination under subclause (III) are so posted and that is not fewer than 30 days in duration.
“(ii) FINALIZING A SPECIFIED LOCAL COVERAGE DETERMINATION.—A medicare administrative contractor that has entered into a contract with the Secretary under section 1874A shall, with respect to a specified local coverage determination, post on the public Internet website of the medicare administrative contractor the following information before the specified local coverage determination (in this section referred to as the ‘final determination’) takes effect—
“(I) a response the issues raised at meetings convened pursuant to clause (i)(II) with respect to the draft determination;
“(II) the rationale for the final determination;
“(III) in the case that the medicare administrative contractor considered qualifying evidence in the development of the determination that was not described in the written notice provided pursuant to clause (i)(I), a description of such qualifying evidence; and
“(IV) an effective date for the final determination that is not less than 30 days after the date on which such determination is so posted.
“(iii) LIMITATION ON DETERMINATIONS ACROSS JURISDICTIONS.—Notwithstanding any plan under section 1862(l)(5)(A), in the case of a contract with a medicare administrative contractor under section 1874A, such medicare administrative contractor may not finalize a specified local coverage determination pursuant to clause (ii) with respect to a geographic area that applies, or has the effect of applying, outside such area. In the case that such a medicare administrative contractor wishes to adopt, with respect to a specific geographic area a specified local coverage determination developed for a different geographic area, such medicare administrative contractor may not so adopt such determination unless, prior to so adopting such determination, such medicare administrative contractor independently evaluates and considers the qualifying evidence supporting the determination as applicable to such specific geographic area and makes a local coverage determination for such area in accordance with this subparagraph.
“(iv) SPECIFIED LOCAL COVERAGE DETERMINATION DEFINED.—For purposes of this subparagraph, the term ‘specified local coverage determination’ means, with respect to a geographic area—
“(I) a new local coverage determination (regardless of whether such determination made by a medicare administrative contractor that has entered into a contract with the Secretary under section 1874A and is based upon a specified local coverage determination that previously has been made with respect to another geographic area, or by another such medicare administrative contractor);
“(II) a revised local coverage determination for such geographic area that restricts one or more existing coverage criteria for such area (such as by adding noncovered indications to an existing local coverage determination or by deleting previously covered ICD–9 or ICD–10 codes);
“(III) a revised local coverage determination that makes a substantive revision to one or more existing local coverage determinations; and
“(IV) any other local coverage determination specified by the Secretary pursuant to regulations.
“(v) QUALIFYING EVIDENCE DEFINED.—For purposes of this subparagraph, the term ‘qualifying evidence’ means either of the following:
“(I) Scientific evidence published in peer-reviewed medical literature, such as randomized clinical trials or other studies.
“(II) A general consensus of the applicable medical community (such as a consensus evinced through a recognized standard of practice in such medical community) that is supported by information provided by a recognized medical authority, such as a professional medical society.”.
(b) LCD Reconsideration Process.—Section 1869(f) of the Social Security Act (42 U.S.C. 1395ff(f)) is amended—
(1) in paragraph (2)(A), by inserting “(and, as applicable, the limitations under paragraphs (8) and (9))” before the colon;
(2) in paragraph (5), by inserting “(other than under paragraphs (8) and (9))” after “this subsection”;
(3) by redesignating paragraph (8) as paragraph (12); and
(4) by inserting after paragraph (7) the following new paragraphs:
“(8) MEDICARE ADMINISTRATIVE CONTRACTOR RECONSIDERATION PROCESS FOR SPECIFIED LOCAL COVERAGE DETERMINATIONS.—For purposes of paragraph (2)(A), the limitations described in this paragraph are that, upon the filing of a request by an interested party with respect to a specified local coverage determination by a medicare administrative contractor that has entered into a contract with the Secretary under section 1874A, the medicare administrative contractor shall reconsider such determination in accordance with the following process:
“(A) Not later than 30 days after such a request is filed with the medicare administrative contractor by the interested party with respect to such determination, the medicare administrative contractor shall—
“(i) determine whether the request is an applicable request; and
“(ii) in the case that the request is not an applicable request, inform the interested party of the reasons why such request is not an applicable request.
“(B) In the case that the medicare administrative contractor determines under subparagraph (A) that the request described in such subparagraph is an applicable request, the medicare administrative contractor shall, not later than 90 days after the date on which the request was filed with the medicare administrative contractor, take the actions described in subparagraphs (C), (D), and (E) with respect to the determination.
“(C) The action described in this subparagraph is the action of specifying whether any of the following statements is applicable to the determination:
“(i) The determination did not apply, or inaccurately applied, qualifying evidence relevant to such determination.
“(ii) The determination used language that exceeded the scope of the intended purpose of the determination.
“(iii) The determination was incorrect in its determination of whether such item or service is reasonable and necessary for the diagnosis or treatment of illness or injury under section 1862(a)(1)(A).
“(iv) The determination failed to describe, with respect to such an item or service, the clinical conditions to be used for purposes of determining whether such item or service is reasonable and necessary for the diagnosis or treatment of illness or injury under section 1862(a)(1)(A).
“(v) The determination does not apply with respect to items or services to which it was intended to apply.
“(vi) The determination is erroneous for another reason that the medicare administrative contractor identifies.
“(D) The action described in this subparagraph, with respect to the determination, is the action of taking, based on the specification under subparagraph (C) of whether any of the statements in such subparagraph applied to such determination, one or more of the following actions:
“(i) Making no change in the determination.
“(ii) Rescinding a part of the determination (including, as applicable, the entire determination).
“(iii) Modifying the determination to restrict the coverage provided under this title for an item or service that is subject to the determination.
“(iv) Modifying the determination to expand the coverage provided under this title for an item or service that is subject to the determination.
“(E) The action described in this subparagraph is the action of making publicly available a written description of the action taken under subparagraph (D) with respect to the determination.
“(9) AGENCY EVALUATION OF RECONSIDERATION DECISION.—For purposes of paragraph (2)(A), the limitations described in this paragraph are that, in the case that an interested party that filed an applicable request under paragraph (8) with respect to a specified local coverage determination files with the Secretary, on a date that is not later than 120 days after the date on which a medicare administrative contractor takes an action described under paragraph (8)(D) with respect to such determination, an appeal with respect to such decision in such form and manner as the Secretary may require, the Secretary shall, not later than 30 days after such appeal is filed—
“(A) specify which, if any, of the statements in subparagraph (C) of paragraph (8) is applicable to the determination; and
“(B) based on such specification, take one of the actions described in subparagraph (D) of such paragraph with respect to the determination.
The Secretary shall apply subparagraph (A) as though the reference to ‘the medicare administrative contractor’ in clause (vi) of paragraph (8)(C) were a reference to the Secretary.
“(A) The term ‘applicable request’ means a request that is submitted in fiscal year 2018 or a subsequent fiscal year, that is solely with respect to a specified local coverage determination, and that includes a description of the rationale for such request and any evidence supporting such request. For purposes of the preceding sentence, the Secretary may not require, as a condition of treating a request with respect to such a determination as an applicable request, that the request contain qualifying evidence that was not considered in the development of such determination.
“(B) The term ‘interested party’ means, with respect to a specified local coverage determination within an area by a medicare administrative contractor that has entered into a contract with the Secretary under section 1874A—
“(i) a provider of services or supplier that, in such area, furnishes, provides, or supplies items or services that are subject to such determination; or
“(ii) an organization that represents such a provider of services or supplier.
“(C) The term ‘qualifying evidence’ has the meaning given such term by clause (v) of section 1862(l)(5)(D).
“(D) The term ‘specified local coverage determination’ has the meaning given such term by clause (iv) of such section.
“(A) IN GENERAL.—The Secretary shall, within the Centers for Medicare & Medicaid Services, appoint a Medicare Reviews and Appeals Ombudsman (referred to in this paragraph as the ‘Ombudsman’).
“(B) DUTIES.—The Ombudsman shall, with respect to specified local coverage determinations, carry out the following duties:
“(i) Provide interested parties (as defined in paragraph (10)(B)) with administrative and technical assistance in filing requests under paragraph (8) and appeals under paragraph (9).
“(ii) Make publicly available in a uniform, consistent, and easily understood format the following information for each 12-month period:
“(I) The number of requests filed with medicare administrative contractors under paragraph (8), and of appeals filed with the Secretary under paragraph (9), during such period.
“(II) With respect to such requests during such period, the number of times that medicare administrative contractors took, with respect to the actions described subparagraph (A)(iv) of such paragraph, each such action.
“(III) With respect to such appeals during such period, the number of times that the Secretary took each such action.
“(IV) With respect to the numbers made available under subclauses (I), (II), and (III), the number of each such number that is attributable to—
“(aa) each medicare administrative contractor; and
“(bb) each interested party (as defined in paragraph (10)(B)).
“(V) Measures of the responsiveness of medicare administrative contractors with respect to requests filed with such medicare administrative contractors under paragraph (8).
“(aa) the efficacy and efficiency of the process described in paragraph (8); and
“(bb) communication with individuals entitled to benefits under part A or enrolled under part B, providers of services, and suppliers regarding such process.”.
(c) Promulgation Of Regulations; Application Date.—The Secretary of Health and Human Services shall promulgate regulations to carry out paragraph (5)(D) of section 1862(l) of the Social Security Act (42 U.S.C. 1395y(l)), as added by subsection (a), and paragraphs (8) and (9) of section 1869(f) of such Act (42 U.S.C. 1395ff(f)), as inserted by subsection (b), in such a manner as to ensure that the processes described in such paragraphs are fully implemented by October 1, 2017.
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