Medicare Date of Service Rule Creates Inconsistent Billing for Specialty Labs (Example: Sample collected during biopsy) Medicare Insurance 4 Private Insurance 0 Biopsy Performed in Biopsy Performed Biopsy Performed in Clinic in Hospital Hospital or Clinic Test Ordered Date Test Ordered Date Test Ordered Date <14 14-30 '30 . .. Days After Days After 1 .. Discharge Discharge is Specialty Lab Performs Molecular Test ?iv 4. DATE OF SERVICE USED Date of Date of Sample Date of Test Med Date .Df Biopsy or Test Collection Performance trim arch-w?: Biopsy performance 4- Lab Bills Medicare or Private Payer Hospital Bills Medicare MAC Impact of Date of Service "14 Day? Rule on Diagnostics May 2017 Biodesix Bnehringer-Ingelheim Guardant Health LUNGeuity Myriad Genetics Veracyte Overview Background The Medicare Date of Service or "14 Day? rule sets intricate laboratory billing requirements for diagnostic tests based on when tests are ordered Rule was last modified in 2006 Developed for the old world of hospital and reference laboratories - Now there are advanced diagnostic laboratories performing tests for biologically complex medical conditions that are the only entity able to perform the test and help clinicians select which treatments will work best for individual patients Current Impact 1' Depending on when a test is ordered, advanced diagnostic laboratories are required to bill the hospital not the performing laboratory?s MAC - - and then the hospital bills the hospital?s MAC Hospitals may limit access to testing for fear of inability to receive payment from MACS - Resulting in bene?ciary access issues - Resulting in delayed diagnosis that contribute to reduced efficacy of treatments i This practice is inconsistent with standard Medicare billing policy Looking Ahead This issue will become more pronounced with further advances in precision medicine and hospital consolidation Recommend that CMS solicit comments on Date of Service regulation in the CY 2018 Hospital Outpatient Prospective Payment (HOPPS) Proposed Rule Date of Service Rule History Key Activities Medicare rules require the use of "date of performance? of the test Pre?2001 Through rulemaking CMS changed the regulations for the date of 2001 service to be generally date when the "specimen is Regulations amended to allow date of service as date of performance 2006 for certain tests ordered on "archived specimens? 14 days after patient discharge from the hospital Congress recognized the issue and enacted legislation requiring CMS 2010 to run a two year demonstration to examine the Date of Service rules CMS demo limited to tests with existing codes or tests that 2012 applied for G-codes Limited participation in demo due to changes in CPT code set and 2015 report to Congress did not make any recommendations new payment system requires lab performing the test to 2017 submit private payer rates Introducing the Date of Service Rule What is the 14 Day Rule? The Medicare regulation (42 C.F.R. 5414.510) determining the date of service for a test and therefore whether a laboratory can bill Medicare directly for a diagnostic test or whether the laboratory must bill a hospital How does the 14 Day Rule Work? If laboratory tests are ordered within 14 days of a patient?s discharge then date of service is the date of Specimen collection, current regulation states that the tests should be considered part of the services rendered during the inpatient or outpatient stay and thus are part of the diagnosis related group (DRG) or Ambulatory Payment Classification (APC) payment If the tests are ordered more than 14 days after a patient? 5 discharge, the laboratory bills Medicare separately Does that mean hospitals are billing for a test they did not perform? - Yes. Separate regulations require hospitals to bill Medicare directly for services furnished when the beneficiary was at the hospital even for tests unrelated to the stay that they did not perform (42 C.F.R. 411.15(m) and 410.42) Is it logical for hospitals to bill for diagnostic tests performed within 14 days of a discharge? - No. The diagnostic test is not performed at the hospital and is unrelated to the visit Impact on Lung Cancer Outcomes IN 2014 Medicare beneficiaries with various cancer 1 types underwent molecular diagnostic testing 4 3 0 14-30 days following a hospital outpatient encounter. .. Patients with lung cancer potentially 568 experienced a delay in diagnosis of tumor's EGFR status - EGFR targeted therapy doubles progression free survival in patients with stage metastatic lung cancer2 - EGFR testing is recommended by NCCN {category 1) to guide first?line therapy for - A consensus group of experts convened by the Bonnie J. Addario foundation recommends patients begin treatment within 2 weeks of a lung cancer diagnosis in ideal circumstances? Delays in treatment for NSLC and starting on the wrong treatment can result in worse patient outcomes?r? 1. The Moran Company: 2014 Carrier 5% Standard Analytic File and 2013?2014 Outpatient 5% 2. Sequist et al. Clin Untol, 2013;3. NCCN Non-SmallCell Lung Cancer Guidelines v5.201?; 4. Dormady 5P. et al. Navigating Lung Cancer, 3rd Edition. 2015 5. 5. Zhou C, et al. Annals of Oncology 2015. 5. Schuler NI. et al. Annals of Oncology 2016. Impact on Colorectal Cancer Outcomes IN 2014 Medicare beneficiaries with various cancer 1 types underwent molecular diagnostic testing 4 3 0 14-30 days following a hospital outpatient 1 encounter. 1: Patients with colorectal cancer potentially ?604 experienced a delay in diagnosis of tumor?s BRAF and KRAS status . A KRAS gene mutation is a predictor of response to first line treatment for metastatic colorectal cancer2 0 BRAF and KRAS testing is recommended by NCCN (category 2A) to guide therapy selection in 1. The Moran Company: 2014 Carrier 5% Standard Analytic File and 2013-2014 Outpatient 5% 2. Soeda H, et at, Phase II trial of cetuximab plus irinotecan for oxaliplatin- and irinotecan- based chemotherapy-refractory patients with advanced and/or metastatic coiorectal cancer, Oncology 2014: 3. NCCN Colon Cancer Guidelines DOS Rule Creates Inconsistent Billing for Cialty Lab (Example: Sample collected during biopsy] Medicare Insurance i Private Insurance?h 0 Biopsy Performed Biopsy Performed Biopsy Perfumed in in Hospital in Clinic or Clinic Test Ordered Date Test Ordered Date Test Ordered Date l--I I--l I--I <14 14'30 2?6! Any Miler Days After After Emmy Discharge Disrharge A ?7 a sir sir Specialty Lab Performs Molecular Test KM iv 1'v iv DATE OF SERVICE USED Date of Sample Date ofTest 9.11: E'u'l?r. Date of Bimm of Test Collection Performance 2 Biopsy 6 Lab Bills . . . H05pital Lab Medicare or Private Payer iv Hospital Bills numumwmc Consequences of these Billing Policies Inconsistent Medicare Policies force hospitals to bill Medicare for services not furnished in hospital and not related to hospital stay Beneficiary Access is Limited for Medicare covered services due to billing complexity despite these services being separately payable Reduced Efficacy of Treatment due to delaying or forgoing patient testing to avoid financial risk of not being paid by Medicare 8 Real World Examples LU NGevity - The largest national lung cancer-focused nonprofit, LUNGevity is dedicated to funding scientific research and empowering patients Chicago, IL Biodesix Boehringer-lngelheim Performs innovative blood-based genomic and 0 One of the world's 20 leading research-driven proteomic tests that help guide treatment of pharmaceutical companies striving for value patients with lung cancer through innovation Boulder, CO Germany 8: Ridgefield, CT Guardant Health Myriad Genetics 0 A pioneer in non-invasive cancer diagnostics MOIECUIBF diagnostic company 0? six and the first company to commercialize a specialties: ONCOIDEVJ Preventive Care, comprehensive genomic liquid biopsy DermatCJIoer Autoimmune, . Redwood City, CA Neuroscience - Salt Lake City, Utah Veracyte - A genomic diagnostics company that is improving patient care for thyroid cancer, lung cancer and idiopathic pulmonary fibrosis. San Francisco, CA Evaluating Date of Service Rule?s Effects Recent Evaluation Was lnconclusive . Congress passed legislation in 2010 requiring CMS to run a two-year demonstration on the impact of the Date of Service Rule Demonstration ran from January 2012 to January 2014 Report to Congress issued January 2016 Does not contain any recommendations since low participation prohibited a thorough assessment of the effects of the Date of Service rule Ask Recommend that CMS solicit comments on Date of Service regulation in the CY 2018 Hospital Outpatient Prospective Payment (HOPPS) Proposed Me: Additional Details Request public comment on excluding non- packaged lab services from the OPPS bundled billing requirements 0 In rulemaking the agency can include appropriate limitations: - Only tests that are not packaged - Only for testing on specimens collected in the hospital outpatient setting Rationale Patient access is limited under current policy Current policy is 10 years old and developed before advances in precision medicine Hospitals should not be required to bill for tests they do not perform Be consistent with Medicare policy for 11 other providers of diagnostic services imaging) for a beneficiaries after a hospital outpatient visit Additional Outreach Congressional Outreach 2016 8: 2017 Engaging Members and Staff from Committees ofJurisdiction Administration Outreach 2017 Met with representatives from the Office of Management and Budget Met with Carol Blackford - Director, Hospital Ambulatory Policy Group 2016 Met with Marc Hartstein Director, Hospital Ambulatory Policy Group Submitted a formal letter to CMS requesting that the FY 2017 Hospital Outpatient Prospective Payment Rule include a solicitation for public comment on the Date of Service rule Met with representatives from the Office of Management and Budget Recommend that CMS solicit comments on Date of Service regulation in the CY 2018 Hospital Outpatient Prospective Payment (HOPPS) Proposed Rule The Landscape of Precision Medicine Diagnostics Precision medicine diagnostics are typically performed by specialized laboratories that have expertise in the platform and clinical area. Some have developed complex tests with unique algorithms that yield a patient-specific result, allowing patients and their doctors to make more informed decisions about treatment based on a patient's unique molecular profile Typical Profile Lab is specialized in specific type of molecular testing or clinical indication Lab is unaffiliated with a hospital Some Advanced Diagnostic Laboratory Tests (ADLTs) are only performed by a single laboratory armsw VS: