Veracyte issues statement on 2016 CLFS preliminary determination and proposed PAMA rule released by CMS

Veracyte, Inc. (NASDAQ: VCYT), a molecular diagnostics company pioneering the field of molecular cytology, today issued the following statement on the 2016 Clinical Laboratory Fee Schedule (CLFS) preliminary determination and proposed Protecting Access to Medicare Act (PAMA) rule, both of which were released Friday by the Centers for Medicare and Medicaid Services (CMS).

“We disagree with the process used by CMS and the resulting 2016 preliminary Clinical Laboratory Fee Schedule rates,” said Bonnie H. Anderson, Veracyte’s president and chief executive officer. “We believe the agency went against precedent by setting rates using a ‘crosswalk’ pricing approach. As a result, prices for an entire group of precision medicine diagnostic tests, including our Afirma® Gene Expression Classifier (GEC), are based on other, lower-priced tests that differ significantly – both in technical performance and intended use.

“The process CMS used to determine its proposed rates are not consistent with CMS’s own rate setting policies for new test codes and are inconsistent with recommendations from nearly all stakeholders, including CMS’s recently established Advisory Panel on Clinical Diagnostic Laboratory Tests, which previously recommended ‘gapfill’ pricing for the Afirma GEC. We believe CMS’s proposed rate cuts go against innovation, which is the foundation of personalized medicine. Such innovation is leading to dramatic improvements in patient care and in the case of the Afirma GEC has spared an estimated 20,000 patients from unnecessary thyroid surgery.

“We plan to engage CMS – both directly and with industry partners through The Coalition for 21^st Century Medicine – to encourage the agency to use a ‘gapfill’ approach to test pricing, which we would expect to result in the rate previously set for the Afirma GEC by our local Medicare Administrative Contractor (MAC). We believe that this is achievable, given that it would adhere to historical precedent in pricing similar test codes and is also consistent with the market-based rate setting policies in the Protecting Access to Medicare Act (PAMA), which are scheduled to go into effect in 2017.”

The current Medicare rate paid for the Afirma GEC is $3,200 per test. The 2016 CLFS preliminary determination proposed rate is $2,151.81. The 2016 CLFS preliminary determination will be open to public comment for 30 days, with the final determination expected to be published in November 2015, according to the CMS website.

On Friday, CMS also released its proposed rule to more broadly modify the Medicare reimbursement rate methodology for laboratory tests under PAMA. Ms. Anderson added, “While details on the proposed PAMA rule still need to be evaluated, we believe it provides a pathway to market-based pricing for the Afirma GEC and we continue to support PAMA’s goal of bringing transparency and a market-based approach to how CMS sets Medicare rates for personalized medicine diagnostic tests.”

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