A Reimbursement & PGx Discussion Featuring Richard Roth

Richard Roth’s Credentials:

Richard Roth has been working in the lab business since 2001, first with AmeriPath where he worked with GIs, OB gyns urologists, and oncologists. After 6 years at AmeriPath, Richard ventured into a water filtration company (yes, you read that right)! But Richard wanted to get back to the lab space, and missed having a direct impact on improving the patient care experience. This time, he wanted to focus on genetic testing. The term “personalized medicine” had just come about, and was gaining increasing popularity due to the positive effects genetics testing and personalized medicine was already having on patients.

Since then, Richard has now owned 2 PGx labs, both have since been sold. Now Richard and his wife, Christy, own a consulting company Roths Genetics Resources to help labs implement genetic testing in their current lab or help ambitious individuals build a new lab.

Richard’s Focus Areas:

“What I found when I started my first lab was that it was extremely difficult to find someone to help,” explained Richard. “I was in a brand new space and had little experience with the nuances of setting up a lab – especially a PGx lab. Even the manufacturers couldn’t help me and only had so much information to offer. And candidly, the information I did get from manufacturers was throw away – it didn’t help me at all.”

PGx Labs Face Difficulties With:

  1. Developing panels and chips by determining which genes and corresponding mutations to include
  2. Using translation software to interpret test results into an easy to read report that can be interpreted by the referring physician or group
  3. Advising on laboratory developed tests (LDTs), since sales reps and manufacturers can’t legally advise and cannot provide validation or methodology

What Does Your Consulting Practice Entail?

Because of all the moving parts a new lab (or existing lab that wants to get into PGx or more complex genomics testing), need a resource that can help them navigate the nuances and unknowns of starting or growing a lab. In as little as 6-8 weeks, Richard and Christy help PGx labs accomplish what would take months, if not a year on their own. They help labs with necessary steps, big and small:

  • Order equipment and supplies
  • Build out or design lab configuration
  • Develop panels for target markets such as cardiology, pain management, psychiatry, oncology and wellness
  • Validate methodology and tests to ensure analyzer consistency
  • Write protocols for analyzers
  • Quality control
  • Train staff on equipment
  • Hiring/staffing
  • Standard Operating Procedures (SOPs)
  • Initiate LIS through Pathagility
  • Develop patient education materials

Reimbursements: The Hottest Issue For PGx/Genomics Labs Today

A Brief Reimbursements History:

Prior to 2013, reimbursements used “Stacked Code”. With stacked codes, different Current Procedural Terminology (CPT) codes were designated to different parts of the testing process. In this scenario, the extraction of DNA was one code. The amplification was another code. And on and on.  By the time a sample was processed, multiple codes were billed totaling an exorbitant rate. Collectively, there needed to be a decision for how to proceed – another way to handle this issue.  Medicare vowed to modify the billing and reimbursements by the start of 2013, instead new CPT codes weren’t determined until October 2013.  From January to October, labs were not reimbursed by Medicare for PGx testing, causing some to go out of business.

Medicare and private insurances solution was to give a CPT code for each relevant gene tested.  In theory, that’s ok, but Richard explains one of the problems:

“If a lab tests 5 genes and each one has a CPT code associated with it, the reimbursements were so high that individuals with no knowledge of the industry cut corners and flooded the market like a gold rush to start labs and conduct genetic testing, all with the goal of making money from these tests. For example, CYP2D6 is a complex gene responsible for the metabolism of dozens of medications.  A lab could test CYP2D6 only running 2-3 mutations but getting reimbursed the same as a lab testing 17 mutations for the same gene.”

In Short, What’s the Issue With Reimbursements?

Eventually, Palmetto stopped reimbursing along with others (like Blue Cross). Too many labs were testing PGx and the reimbursements were too high for insurance providers to keep up. The problem is Medicare isn’t government run – it’s privately run – so they look at short term savings vs long term. According to Richard, “If you get the patient on the right medication the first time, it will cut costs in the long run (reduced Dr. visits, less money spent on medication, less testing, etc), but Medicare hasn’t looked at it that way.”

What Do You Think Will Happen to Reimbursements?

What the officials say is going to happen: in 2017, instead of a local coverage determination (LCD) where each MAC jurisdiction decides reimbursements, officials will unveil a national coverage determination (NCD). All will reimburse the same amount. From what Richard has heard, he believes this reimbursement will be around $300- $400 per test.

How Should PGx/Genomics Labs Prepare For the Future?

Labs that want to innovate and prepare for the future should look closely at the technology they are using. For instance, Richard explains that if your lab did sequencing 5 years ago, it would cost upwards of $1,000 per patient. Now, cost per test is way down because of technology advancements. If you run tests on an entire genome, the information that comes from the tests is days and days long. He explains that you have to have some sort of bioinformatic translational software that translates the data for desired testing result.

The PGx and genomics space is changing so fast and many more genes are constantly being identified . If you aren’t constantly researching and educating yourself, you are already behind.  It’s equally important to keep up on lab technology to help your lab improve efficiencies, quality, and positively affect the patient care experience, which is the entire reason for PGx and genomics testing in the first place. The patient should always, always be first.