A Medical Device Daily

The Centers for Medicare & Medicaid Services is poised at the intersection of unprecedented cost containment pressure and the widest pipeline of medical technology ever known to healthcare, so its decisions carry more weight than ever before.

Unfortunately for makers of devices and diagnostics, those decisions don’t always favor new technology, and the recent proposed decision memo regarding DNA testing for colorectal cancer (CRC) was one of these.

The Feb. 7 posting of the proposed national coverage decision said that CMS agreed to examine the proposed coverage change last August from Exact Sciences (Marlborough, Massachusetts) “for Medicare coverage of stool DNA testing for CRC screening in average risk individuals” at every five years as an alternative to colonoscopy. Exact is the maker of the PreGen Plus DNA assay, which was the proposed alternative to the current standard test for colorectal cancer.

Exact did not have to pull the load alone, the decision memo noted, inasmuch as more than 150 individuals and organizations chimed in to support the move.

An analysis provided by the Agency for Healthcare Research and Quality, however, saw things differently. The Dec. 20 AHRQ report on the cost-effectiveness of the PreGen DNA test, compared to the Hemoccult II fecal occult blood test, made by Beckman Coulter (Fullerton, California), said that the latter assay has been shown to reduce mortality by 15%-33%.

However, the AHRQ analysis, which used data provided by the Cancer Intervention and Surveillance Modeling Network consortium, indicated that the benefit of DNA screening “measured in life-years gained compared with no screening, was lower than that of the annual Hemoccult II testing except for three-year testing.” AHRQ concluded, “with a per-test cost of $350, the overall costs were higher than all the other screening strategies.”

The AHRQ report says that PreGen Plus v. 1.1 “would be cost effective ... at per-test cost of $34 to $51” for tests at every five years and at $40 to $60 for tests at every three years (the PreGen Plus v. 2.0, which is still under development, was not considered).

The AHRQ report concluded that screening with PreGen “does provide a benefit in terms of life-years gained compared with no screening,” and that the DNA test will be cost effective only when “significant improvements for the DNA stool test characteristics or relative adherence with DNA stool testing compared with other available options can be demonstrated.”

The decision memo also cites the Oct. 11 warning letter FDA sent to Exact (Medical Device Daily, Nov. 13, 2007), citing the firm for allowing LabCorp (Burlington, North Carolina) to use the diagnostic. Exact’s president, Jeff Luber, told Medical Device Daily at the time that the company would seek a 510(k) for the assay.

CMS’s proposed decision is that it will not expand “the colorectal cancer screening benefit to include coverage of this test,” and cited the regulatory status of PreGen Plus. However, the decision memo noted that CMS “will consider a request for reconsideration when a commercially available stool DNA test has been cleared or approved by the FDA.” CMS expects to issue a final decision May 1.

OIG gives nod to fast-pay discounts

Payers and providers are advised to proceed cautiously regarding activities covered by Stark and anti-trust laws, but the Office of Inspector General (OIG) at the Department of Health and Human Services has issued a number of decisions that facilitate cooperation between the two industries. OIG recently issued a memo that allows a hospital system to offer discounts to payers for quick payment of hospital in-patient services.

The Jan. 30 OIG memo said that under the proposed arrangement, the unidentified health system “would offer to Medicare, Medicaid and other federal health program beneficiaries, along with other insured patients, a discount for prompt payment of their cost-sharing amounts and amounts owned for non-covered services.” The discount is designed to reduce the health system’s receivables and costs of debt collection and boost cash flow, according to the OIG memo, and the discounts “would bear a reasonable relationship to the amount of collection costs that would be avoided.”

For pre-discharge payments, the hospital’s discount schedule would consist of a 10% discount for amounts of less than $1,000 and a 15% discount for sums more than $1,000. Those discounts would fall to 5% and 10% respectively for services paid after discharge.

OIG indicated that it is willing to go along with the arrangement on the condition that the system does not “claim the waived amount as bad debt or otherwise shift the burden to Medicare or Medicaid programs, other third-party payers or individuals.” Another condition is that the provider “must make the waiver without regard to the patient’s reason for admission, length of stay or diagnostic-related group.” The discount is further barred from being part of a “price-reduction agreement.”

While OIG has agreed to the arrangement with regard to in-patient services, it is not yet ready to sign on to the idea for out-patient services, which it will evaluate separately.