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CMS to Cover Next-Gen Sequencing for Cancer: Implications for MCOs


In a decision reached through the joint FDA/CMS Parallel Review process, CMS has granted national Medicare coverage to next-generation sequencing tests approved or cleared by the FDA as companion diagnostics for cancer therapies. This is clearly a win for Medicare beneficiaries and some NGS test providers-but is it also good news for MCOs?





CMS recently announced a final national coverage determination (NCD) expanding coverage for next-generation sequencing (NGS) tests used as companion diagnostics for cancer patients. The determination was made through parallel review by the FDA and CMS of a specific commercial NGS-based multigene panel test, but its provisions apply to Medicare beneficiaries for any NGS test, including both companion diagnostics (CDx) and other laboratory-developed tests (LDTs), for the specified classes of cancer patients.

The NCD is a significant development in expanding availability of NGS tests for guidance of cancer treatment. The determination grants national Medicare coverage to FDA-approved or cleared CDx in vitro diagnostics (IVD) that use NGS technology and are performed to determine eligibility for appropriately indicated drugs for a class of cancer patients that the NCD defines fairly broadly. The NCD also defers to the Medicare administrative contractors (MACs) coverage decisions for non-FDA approved or cleared NGS LDTs performed for the same class of cancer patients. Together, these coverage rulings appear to address most clinical NGS cancer testing currently being performed, and importantly, do not appear to discriminate against any with regard to coverage at the national level.

Because the NCD addresses only NGS testing for cancer, it does not direct any change in coverage for non-cancer NGS testing. As a result, NGS CDx tests ordered for diseases and disorders other than cancer would not be automatically covered under the NCD.

The NCD also defers coverage determinations for other (non-CDx) NGS LDTs to the MACs, and does not appear to offer guidance to the MACs on how they should be handled. Separate from the NCD process, the Palmetto MolDx program has developed draft local coverage determinations (LCDs) for comprehensive genomic profiling (CGP) granting coverage in certain tumor types for CGP tests that have been covered by MolDx following review through their technology assessment process. Three other MACs (Wisconsin Physicians Service, Noridian, and CGS) have developed essentially identical draft LCDs, and therefore are expected to follow the Palmetto MolDx lead in development of future LCDs. Moreover, since the MolDx program is acknowledged as the de facto Medicare center of excellence for molecular diagnostics decision making, we do not expect other MACs to deviate dramatically from the MolDx position in granting or restricting coverage of other NGS LDTs.

The final NCD does not require the MACs to distinguish among CLIA-certified NGS LDTs, or to take any particular action regarding non-CDx NGS LDTs for which the MACs may have already determined coverage. It is expected that the MACs will allow most, if not all, of their current cancer-related NGS LDT coverage positions to stand (except perhaps to exclude patient-specific coverage to comply with the disease status conditions in the NCD). Additionally, we do not expect that any MACs (with the possible exception of Palmetto, through the MolDx program) will attempt to proactively review other NGS LDTs for specific coverage determinations, instead addressing those LDTs as coverage is sought by the laboratories.

While the NCD appears to be good news for Medicare beneficiaries, as well as the pharma and NGS diagnostics industries, it still specifies cancer stage limitations that need to be considered. Additionally, coding and payment rules to implement the NCD are still being developed, and the final determination of what is paid for and how much is paid will significantly affect the practical impact of the coverage determination.

With those caveats, here are some key considerations for MCOs to keep in mind:

  • With the NCD as coverage precedent, MCOs will feel increased pressure to allow access to NGS testing for CDx applications in cancer. While CMS officially cannot consider cost in its coverage decisions, MCOs do not have such restrictions, and so will need to determine whether multigene NGS panel tests are a cost-effective alternative for cancer CDx testing.
  • Coding and payment under the NCD have not yet been specified, and could range from coding and payment for only the specific CDx tests ordered, to coding and payment for the whole panel even if only a single gene was ordered. MCOs can look for guidance to Medicare’s final coding and reimbursed amounts for the NGS CDx tests, but (if coverage is granted) will need to decide on their own optimized medical policy implementation, possibly taking advantage of direct negotiation with the NGS panel testing laboratories.
  • Manufacturers of targeted drugs for which NGS CDx tests may be performed undoubtedly will be aware of the cancer stage limitations in the NCD and the extent to which they align with their products’ indicated populations. In implementing their own policies, MCOs will need to decide whether to follow the disease stage limitations in the NCD, or adapt them to both the specific disease demographics of their own cancer-patient populations, and their own assessments of the cost-effectiveness of NGS panel testing in those populations.


David Parker, PhD, is senior vice president,Diagnostics Solutions at Precision for Medicine.

Karen Richards is senior vice president, In Vitro Diagnostics and Quality at Precision for Medicine.

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