Personalized Medicine Reimbursement

The Personalized Medicine Coalition tracks issues of interest to companies and researchers focused on use of increased knowledge of human genetics and biochemistry, and the variation in individual biochemistry, to change and improve medical care.  The field has enormous potential to completely reshape how individuals’ health and health care are managed and delivered.  But as with all developments in health care, its future is largely dependent on regulatory and reimbursement policies.  A new report by the Coalition focuses on reimbursement impediments to the use of personalized diagnostics.   (PMC Report)

Diagnostics are the critical element of personalized medicine–they are what allows determination of the individual genetic and other variation that may have clinical relevance to decisions about drug prescribing, radiation therapy use, diet, etc.  Many new biologic drugs have companion diagnostics to guide their use.  The historic system for reimbursing diagnostic tests does not work well for personalized medicine ones.  The codes do not allow precise description of a particular test, as opposed to methods; the coverage determination process is not well-described or standardized by payers, including Medicare; and reimbursement may not reflect the underlying costs involved in developing and running these diagnostics.

This poorly functioning reimbursement environment tends to inhibit both development of the tests and their widespread adoption in routine medical care.  The Report sets out in some details the issues but has few recommendations for reform.  There are many concerns about the clinical validity and utility of some personalized diagnostics but many are proven and many more will be.  Policymakers need to be sure the tests are appropriately regulated, but also need to ensure that barriers are removed to use of tests that will improve the quality of care and the health of patients.