Oncology Live®
Vol. 19/No. 16
Volume 19
Issue 16

CMS Decision Helps Unlock the Potential of Next-Generation Testing

Provisions to a final national coverage determination that expanded coverage for next-generation sequencing tests have implications for any NGS-based cancer test provided to Medicare beneficiaries and will inevitably influence the coverage thinking of commercial payers.

David Parker, PhD

David Parker, PhD, associate professor of oncology and urology at Johns Hopkins Medicine

David Parker, PhD

In March of this year the Centers for Medicare & Medicaid (CMS) announced a final national coverage determination (NCD)1 that expanded coverage for next-generation sequencing (NGS) tests used as companion diagnostics for patients with cancer. The determination was made through a petition from the provider of a commercial NGS-based, multigene panel test, but its provisions have implications for any NGS-based cancer test provided to Medicare beneficiaries. The ruling will inevitably influence the coverage thinking of commercial payers as well.

The NCD is a significant development in expanding access to NGS tests for guidance of cancer treatment. The various NGS technologies enable rapid, relatively inexpensive, and high-depth mutation analysis of large numbers of genes in parallel. As such, NGS is well suited to mutation analysis for cancer, in which numerous genes have the potential to drive tumorigenicity, and a variety of targeted therapeutics are available. Although NGS can be used for single-gene analysis, its real clinical power stems from the ability to deliver a large amount of genomic information that can go beyond guiding a treatment decision for a single drug to informing an entire treatment program for a patient with cancer.

Paradoxically, it is just this wealth of information provided by NGS-based, multigene panel tests that previously inhibited payers’ coverage. With dozens of cancer-related genes being analyzed, and without FDA approval or clearance of any indications for use, payers found it difficult to determine whether such multigene tests were medically necessary for any particular type of patient. It should be noted that prior to mid-2017, all multigene NGS panel tests were laboratory developed tests (LDTs) under Clinical Laboratory Improvement Amendments. Factoring in their high cost, and the availability of cheaper, single-gene companion diagnostic tests for the available targeted therapeutics, payers frequently denied coverage.

What the NCD Says

Faced with this conundrum, over the past several years, some providers of NGS-based panel tests have worked to obtain FDA authorization via premarket approval application or 510(k) clearance, and at least 5 have now achieved this status (Table).2 Armed with the resulting defined indications for use, these providers could work with payers to establish medical necessity in those indications. The NCD is the greatest result of these efforts to date, but like most NCDs, it provides only a framework for coverage, not the details of what Medicare payment will be or how it will happen.The CMS coverage determination grants national Medicare coverage to in vitro diagnostics (IVDs) that use NGS technology, are FDA approved or cleared as companion diagnostic tests, and are performed to determine patient eligibility for appropriately indicated drugs for a class of patients with cancer defined by the NCD.

The NCD specifies 3 patient-related criteria to establish eligibility for coverage:

• The patient must have recurrent, relapsed, refractory, metastatic, or advanced stages III or IV cancer; and

• The patient must not have been previously tested using the same NGS test for the same primary diagnosis of cancer, or repeat testing using the same NGS test is undertaken only when a new primary cancer diagnosis is made by the treating physician; and

• The patient must have decided to seek further cancer treatment, such as therapeutic chemotherapy.

Likewise, the NCD specifies 3 criteria that the NGS test must meet for coverage:

• The test must have FDA approval or clearance as a companion IVD; and

• The test must have an FDA-approved or -cleared indication for use in that patient’s cancer; and

• The results must be provided to the treating physician for management of the patient using a report template to specify treatment options.

What it Means for Patient Care

The NGS Test’s Indication Ultimately Determines the Patient’s Coverage

Otherwise, the NCD defers Medicare coverage decisions to the Medicare administrative contractors (MACs) for non—FDA-approved or -cleared NGS LDTs performed for patients with cancer meeting the same criteria. The determination does not address coverage for noncancer NGS testing, and notably, it does not seem to explicitly exclude any NGS testing from coverage. In other words, if an NGS test is not positively covered through the NCD, it is left to the MACs to make the coverage decision, in what effectively amounts to a continuation of the status quo.As the NCD’s draft language has fewer than 500 words, some interpretation has to occur for implementation and application to specific patients. While implementation is still unfolding, at least 2 implications for patient care already seem clear.The patient criteria for coverage are fairly broad, in the sense that testing for any cancer potentially may be covered in the event that the disease is advanced. However, the requirement that the NGS test have a labeled indication for the patient’s specific cancer imposes practical limits on coverage. For example, the FoundationOne CDx test currently has labeled companion diagnostic indications for melanoma, non—small cell lung cancer (NSCLC), breast cancer, colorectal cancer, and ovarian cancer. As a result, physicians may expect automatic national Medicare coverage of this test for these 5 cancer types, although not for others. In contrast, the Thermo Fisher Oncomine Dx Target Test is currently indicated only for NSCLC. Therefore, even though both tests assess the BRAF V600E biomarker, which is clinically actionable with targeted therapeutics in melanoma as well as NSCLC, the lack of a melanoma indication for the Oncomine Dx Target Test means that it would not automatically be covered under the NCD for use in a patient with melanoma.

Table. Approved or Cleared Next-Generation Sequencing Tests

Test Reports Will Become More Clearly Actionable

Accordingly, to ensure coverage, treating physicians will need to carefully match patients with the specific NGS test being ordered. If it does not appear that the NCD will ensure coverage, then the applicable MAC’s local coverage determinations (LCDs) should be checked. It is worth noting that separate from the NCD process, the MolDX Program administered by the Palmetto MAC has developed draft LCDs granting coverage in certain tumor types for comprehensive genomic profiling—a more inclusive term used to describe NGS as well as other analytical approaches that could detect the same genomic variations. Three other MACs (Wisconsin Physicians Service, Noridian Healthcare, and CGS Administrators) have developed essentially identical draft LCDs. Moreover, since the MolDX program is acknowledged as the de facto Medicare center of excellence for molecular diagnostics decision making, other MACs without LCDs may still align with the MolDX position in granting or restricting coverage. If coverage is uncertain, the testing laboratory may require treating physicians to verify the patient’s diagnosis and disease stage and facilitate the completion of an advanced beneficiary notice (ABN) to allow the patient to be billed in the event of noncoverage.The NCD also stipulates that “results must be provided to the treating physician for management of the patient using a report template to specify treatment options.” Historically, the reports from large, multigene panel NGS tests have been daunting for physicians to interpret. Typically they present exhaustive information about specific genomic alterations at the base pair level and use the jargon of molecular geneticists. Usually the reports include citations of key literature describing the potential clinical importance of the mutations, a list of drugs that might be indicated or contraindicated for that alteration in various cancer types, and an additional list of clinical trials for which the patient might be eligible. As a result, many oncologists have difficulty knowing how to use the information for patient care, and some have shied away from using NGS testing to inform their treatment decision making.

Implications for the Future of Cancer Biomarker Testing

Payment Amounts Are Uncertain, but Early Steps Are Encouraging

Private Payer Coverage Will Improve—Eventually

The Door Is Open for Broader Coverage of NGS-Based Cancer Testing

Key Takeaways

The NCD now requires that a covered test must enable “management of the patient using a report template to specify treatment options.” Because NCD-covered NGS tests must be FDA approved for companion diagnostic indications that match the patient’s disease, treating physicians should expect that future reports from covered tests will clearly specify up front whether the patient is a candidate for the targeted therapies specifically indicated for his or her cancer.The NCD appears to be good news for Medicare beneficiaries as well as current NGS-based cancer test providers and pharma companies with biomarker-targeted therapeutics. On several fronts, it also appears to be a positive development for the use and testing of biomarkers in cancer treatment.Although the NCD establishes the parameters of national Medicare coverage for NGS-based cancer tests, it does not specify how the tests should be coded or how much the program will pay for them. The NCD provides coverage of NGS tests with companion diagnostic indications, but each of these indications could alternatively be addressed with a more targeted, nonsequencing test. It is therefore reasonable to question whether Medicare (or any payer) will pay several thousand dollars for a large, multigene panel NGS test ordered to assess a single companion diagnostic biomarker when a single-marker assay could inform the same treatment decision for several hundred dollars. In the coming months, it is likely that CMS will issue program guidance addressing this aspect of the NCD’s implementation, but in the meantime, NGS test providers are working to establish unique coding and test designations that could give them more control of their payment destinies. Both the Oncomine and FoundationOne CDx tests have been awarded unique, test-specific “Proprietary Laboratory Assay” codes. This affords Thermo Fisher and Foundation Medicine the opportunity to propose and argue for Medicare payment-setting rationales that maximize the payments for their tests. Foundation Medicine has gone a step further by obtaining designation of FoundationOne CDx as an “Advanced Diagnostic Laboratory Test” in mid-May. Under the Protecting Access to Medicare Act, regulations will require Medicare to pay list price for the test for 3 calendar quarters as the company negotiates payment with private payers whose payment rates will ultimately determine the Medicare payment amount.Because of Medicare’s size and influence as a payer and its unique role in administering multiple aspects of the payment process for clinical lab tests, its coverage decisions on NGS-based tests will continue to be very influential for private payers. That said, in this instance, private payers and CMS are not necessarily moving in lockstep. Private payers occasionally have taken the lead in establishing coverage, as Regence BlueCross BlueShield did in agreeing to cover the Oncomine test for its FDA-approved indications in advance of the NCD. More commonly, private payers wait for CMS to agree that a complex diagnostic test is “reasonable and necessary” before agreeing to provide coverage, and even then it may lag behind. Such is the case with Anthem, which in a medical policy it reviewed as recently as May 2018, still lists FoundationOne CDx as investigational and not medically necessary.3 Nevertheless, it is clear that as more NGS tests gain FDA approval and demonstrate both evidence-based clinical utility and cost-effectiveness for treatment management, additional private payers will grant coverage.Clinicians, payers, and regulators alike recognize the potential for NGS-based cancer tests to enable cancer treatment guidance that is both clinically superior and more cost-effective than current standards of care. The proliferation of basket and umbrella trials in recent years signals strong interest in understanding the potential of molecular biomarker signatures to guide effective treatment in a variety of tumor types and disease stages. As these trials start to yield positive outcomes resulting in expanded payer coverage of biomarker-targeted drugs for multiple tumor types, first-line treatment, and earlier disease stages, we should expect to see coverage of NGS testing expanding to match coverage of the treatments guided by the tests.As we look forward, what are some key takeaways for the oncology community from this groundbreaking coverage determination? First, for the foreseeable future, NGS test coverage likely will be tied to FDA-approved or -cleared indications for treatment guidance. CMS clearly indicated its desire that NGS test results be directly actionable through biomarker-targeted therapeutics. While such tests may offer additional clinically relevant prognostic information, by limiting coverage to tests with companion diagnostic approvals, CMS has signaled its reluctance to reimburse for this information, and private payers are likely to follow suit. Second, we should therefore expect test providers to compete for treating physicians’ orders by continuing to improve the practical clinical actionability of their reports. Finally, as multigene panel NGS tests increase the breadth of their clinical utility and gain acceptance as the standard of care with improved payer coverage, we should expect their administrative burden on treating physicians—for example, Medicare ABNs and private payer prior authorizations— to diminish.

There is no doubt that the NCD for NGS-based cancer testing represents a threshold crossed for access to advanced, clinically useful molecular information for patients with cancer. The next several years will be an exciting time for oncology as our growing understanding of cancer’s molecular etiology enables more sophisticated treatment approaches and steadily improving patient outcomes.


  1. CMS finalizes coverage of next generation sequencing tests, ensuring enhanced access for cancer patients [news release]. Baltimore, MD: The Centers for Medicare & Medicaid Services; March 16, 2018. 2018-Press-releases-items/2018-03-16.html. Accessed June 28, 2018.
  2. List of cleared or approved companion diagnostic devices. FDA website. InVitroDiagnostics/ucm301431.htm. Accessed June 28, 2018
  3. Medical policy: molecular profiling and proteogenomic testing for the evaluation of malignant tumors. Anthem. policies/mp_pw_c150728.htm. Published June 6, 2018. Accessed August 10, 2018.
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