Obstacles in the Path? Medicare’s National Coverage Determination on Next-Generation Sequencing Has Significant Implications for Precision Medicine

by Epstein Becker & Green

Epstein Becker & Green

A controversial new Medicare national coverage determination (“Medicare NCD”) for certain next-generation sequencing (“NGS”) tests published by the Centers for Medicare & Medicaid Services (“CMS”) on March 16, 2018, could have a significant impact on clinical laboratories developing and offering NGS-based testing for cancer diagnosis and treatment. Under the new Medicare NCD, only “companion” in vitro diagnostic (“IVD”) devices can be Medicare-covered tests nationwide—and solely for Medicare patients with advanced cancer. The Medicare NCD would give Medicare administrative contractors (“MACs”) discretion to cover other NGS-based tests not meeting these criteria (although whether and how MACs will choose to do so remains uncertain). The Medicare NCD also may deter private commercial payors from covering these tests, which could limit patient access to these tests.

A “companion diagnostic” is an IVD device that “provides information that is essential for the safe and effective use of a corresponding therapeutic product.” As the U.S. Food and Drug Administration (“FDA”) considers companion diagnostics essential, the use of an IVD companion diagnostic must be stipulated in the instructions for use of both the therapeutic product and the approved IVD device.

Currently, there are just four FDA-approved tests that meet the new Medicare NCD criteria. Many cancer diagnostic tests, including those that use NGS technology, are performed by clinical laboratories as laboratory developed tests (“LDTs”)—which do not require FDA review. Even if an NGS test does receive FDA marketing authorization, the NGS test will not be covered nationally under the Medicare NCD unless it is designated as a “companion” diagnostic.

What Is NGS?

NGS is a method for rapidly sequencing large segments of the human genome. NGS technology can substantially increase the efficiency and accuracy of genetic sequencing and lower its cost. Consequently, NGS has been adopted rapidly by both genetic researchers and by some clinical laboratories, and NGS has supplanted older technologies, such as Sanger sequencing, as the preferred method for large-scale gene sequencing.

Current uses of NGS testing in oncology include the detection of both inherited and sporadic mutations in individuals diagnosed with cancer. This information can help guide treatment decisions, including the selection of therapeutic agents. NGS testing also is used in cancer predisposition testing to identify certain heritable mutations that increase cancer risk. An ongoing challenge arising from the rapid clinical integration of NGS testing is the need for evidence correlating mutations with patient symptoms and prognosis (clinical validity) as well as evidence demonstrating that testing patients leads to better health outcomes (clinical utility). A number of government agencies and professional organizations have been focused on developing standards for NGS test development and validation and to create mechanisms for systematic data collection.

Medicare Coverage Requirements

The Medicare statute provides that services associated with technologies like NGS testing can be Medicare-covered only if “reasonable and necessary” for the diagnosis or treatment of an illness or injury. Coverage and reimbursement also may be available on a temporary basis through the “Coverage with Evidence Development” (“CED”) policy if CMS determines that the item or service can be reasonable and necessary, but that further clinical studies or additional data collection are still needed to make a final determination. CMS uses a defined process for reaching national coverage determinations.

The New Medicare NCD

The NGS Medicare coverage determination review was requested by a developer of a comprehensive genomic profiling test. Although the test developer had not initially submitted the test for FDA review because the test is an LDT that the agency has generally not regulated, the developer ultimately obtained approval through FDA’s Breakthrough Devices program. The developer also sought parallel FDA and CMS review, under which both agencies review data simultaneously to streamline the approval and coverage decisions.

The NGS Medicare coverage determination review, finalized in the March 16, 2018, decision memo, applies to all NGS-based companion diagnostics, not just to the test that was the subject of parallel review. The new coverage decision operates largely within a framework in which different coverage rules apply depending on the route to market for a given NGS test. Nevertheless, the final Medicare NCD as adopted by CMS creates disincentives for LDTs, which historically have not been subject to FDA review.

The final Medicare NCD sets up two possible pathways to Medicare coverage with very different criteria and levels of certainty. Under both pathways, NGS testing must be ordered by a treating physician and performed in a CLIA-certified laboratory. Both pathways would exclude newly diagnosed cancer patients and those with earlier-stage disease. The final Medicare NCD also jettisoned the option for CED for tests that were not FDA approved “companion” diagnostics.

NGS as an FDA-Cleared or -Approved Companion IVD

Under the first pathway, effective immediately Medicare coverage will be available for patients who have “recurrent, relapsed, refractory, metastatic, or advanced stages III or IV cancer,” who have not been tested previously with the same NGS test, and who have decided to undergo cancer treatment such as chemotherapy. The NGS test must be performed by a CLIA-certified laboratory and must be (i) an FDA-approved companion in vitro diagnostic, (ii) used in accordance with the FDA-approved indication for use, and (iii) reported to the treating physician using a report template to “specify treatment options.”

Potential Medicare Coverage for Other NGS Tests

Under the second pathway, coverage may be available for tests that are not FDA-approved companion diagnostics at the discretion of the local MACs that handle the Medicare fee-for-service claims filed by providers and suppliers. The Medicare NCD would limit a MAC’s coverage discretion to patients who have (i) “recurrent, relapsed, refractory, metastatic, or advanced stages III or IV cancer”; (ii) not been tested previously using the same NGS test for the same primary cancer; and (iii) elected to undergo further cancer treatment, such as chemotherapy.

Stakeholder Response

More than 300 comments were submitted to CMS in response to a draft local coverage determination (“LCD”) for NGS that was issued on November 30, 2017. While some commenters expressed support for aspects of the proposal, a majority raised significant concerns about the adverse impact of the limitations imposed by the proposed Medicare NCD on patient access to existing tests and to the development of new NGS-based tests. They warned that not all NGS-based tests are the same, and many criticized CMS’s fundamental approach of making a coverage decision based on the method used by a laboratory to perform testing rather than on the type of test performed using that method, which, they cautioned, could lead to the use of other less effective technologies to perform testing.

With respect to the CED pathway, many stakeholders expressed concern about the inability of clinical laboratories to meet the data collection requirements proposed by CMS; some proposed changes to the CED requirements to reduce the burden on individual clinical laboratories.

Stakeholders also were largely critical of CMS’s proposal to exclude all tests other than FDA-approved companion diagnostics from the first category, arguing that many established LCDs currently in place for scientifically valid and medically necessary NGS-based laboratory tests would be eliminated. A few stakeholders strongly supported the reliance on FDA approval, viewing FDA’s historically rigorous quality requirements for manufacturers as necessary for coverage of NGS-based tests and the further integration of such tests into clinical practice.


A new technology’s FDA profile has long been a Medicare coverage consideration; however, this has not been the case with LDTs because FDA has historically exercised “enforcement discretion” with respect to such tests. While FDA has, at various times, considered comprehensive LDT regulation, in 2017 FDA decided to discontinue development of a proposed regulatory framework after concluding that more research and discussion with stakeholders was needed. Ironically, the Medicare NCD indirectly reopens the LDT debate by restricting Medicare national coverage to LDTs that have received FDA approval as companion diagnostics.

The Medicare NCD excludes several large categories of potential patients; no Medicare coverage would be available for NGS tests performed for patients with stage I or II cancers, and Medicare coverage is not available for tests performed for patients with an initial cancer diagnosis, even if chemotherapy is the preferred treatment option.

Also, the Medicare NCD abandoned a CED proposal in the November 30, 2017, draft LCD that would have permitted Medicare coverage for NGS tests that have not been approved or cleared by FDA, as long as the Medicare beneficiaries are enrolled in an NIH-NCI National Clinical Trial Network clinical trial where the NGS test is part of the trial protocol. In its review of the submitted comments, CMS explained that CED was unnecessary because there already are studies underway to evaluate the impact of NGS on health outcomes. Nevertheless, by foreclosing a CED option and potential Medicare reimbursement, developers, laboratories, and other stakeholders may face an additional barrier that may significantly delay or deter the development of new NGS assays.

The portion of the Medicare NCD that may create the most ambiguity involves tests subject to MAC discretionary coverage. The Medicare NCD does not identify the criteria that MACs should use to make a coverage decision for an individual NGS test. Without any further guidance, MACs have the option to (i) cover NGS tests on a case-by-case basis, (ii) apply the criteria in the Medicare Program Integrity Manual that apply to LCDs, or (iii) issue their own LCDs, which can range from fully positive to fully negative. The lack of criteria in the Medicare NCD could make it difficult to challenge a MAC’s denial of coverage, since it would be more difficult to argue that a denial of coverage is either contrary to the available evidence or completely arbitrary.

Even when a MAC decides to cover an NGS test, laboratories should be careful to retain documentation that the test results were reported to the treating physician for purposes of managing the patient’s treatment. In the past, some Medicare contractors have denied claims based on either ambiguous or missing information in the laboratory’s report.


Entities affected by the Medicare NCD, including health systems, clinical laboratories, health care professionals, and patients, should carefully assess its impact on their current and future activities and the potential opportunities to influence CMS Medicare coverage going forward. Although national coverage determinations are usually CMS’s final position on Medicare coverage, stakeholders may need to seek CMS guidance in specific cases. Moreover, significant issues may form the basis for a request to reopen the Medicare NCD so that it can be revised to reflect changes in technology, clinical evidence, and patient outcomes. Finally, since the Medicare NCD is limited to Medicare coverage, it remains to be seen how the Medicare program will determine reimbursement rates for NGS tests.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Epstein Becker & Green | Attorney Advertising

Written by:

Epstein Becker & Green

Epstein Becker & Green on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.