Clinical Sequencing at the UW Collagen Diagnostic Laboratory: An institutional experience with reimbursement and competing commercial services

Abstract

Background: Next-generation sequencing (NGS) technologies pose unique challenges to traditional coverage and reimbursement mechanisms for clinical diagnostic testing. Despite rapid clinical implementation and growing test availability, reimbursement remains a substantial barrier to patient access and laboratory sustainability. The financial sustainability of academic laboratories may be further challenged by the growth in commercial genetic testing laboratories. Few reimbursement analyses on the financial sustainability of germline NGS testing have been reported outside of oncology settings. Germline NGS has a key role in genetic diagnosis for rare disorders, especially heritable connective tissue disorders (HCTDs). Rare disease patients may face additional reimbursement barriers. Given the uncertain reimbursement environment and evolving genetic testing landscape, we examined the institutional experience of an academic precision diagnostics laboratory specializing in HCTD with NGS test reimbursement and competing commercial services. Objective: The aims of this study are to assess payer distribution and average reimbursement for NGS tests, identify residual cost to insured patients, assess utilization of competing commercial services, and determine where the burden of cost for genetic testing currently lies in the academic environment. Methods: A retrospective review of administrative claims for NGS testing performed by the Collagen Diagnostic Laboratory (CDL) was undertaken. Evaluation of reimbursement was performed with use of CPT codes 81410 and 81479 and reported for two patient cohorts, one billed through UW Physicians (UWP) and the other through UW Medical Center (UWMC). Laboratory utilization data for HCTD patients referred for genetic testing at the UWMC Genetic Medicine Clinic were examined to see the percentage of patients who chose to utilize outside laboratory testing services. Cost burden and financial sustainability were assessed using the fraction of remaining charges to patients and the CDL after insurer reimbursement. Results: On average, reimbursement from third-party payers using the 81410 CPT code was at 22% (Commercial, 25%; Medicare, 0%; Medicaid, 31%; HIX, 12%) of total charges for UWP claims and 27% (Commercial, 37%; Medicare, 0%; Medicaid, 1%) for UWMC. Using CPT 81479, reimbursement was at 28% (Commercial, 32%; Medicare, 0%; Medicaid, 19%) of total charges for UWP and 33% (Commercial, 41%; Medicare, 0%; Medicaid, 6%; HIX, 0%) for UWMC. Use of commercial laboratory services was negligible. Insured patients were responsible for 26% and 15% of the respective codes’ charges billed by UWP. The CDL received no payment for 52% and 58% of claims billed by UWMC for 81410 and 81479, respectively, and 20% and 30% of claims billed by UWP, considering patient contributions as well. Conclusion: Reimbursement was inconsistent and poor, with substantial variability by payer and billing agent. Billing management played a key role in payment variation. Burden of sequencing costs often fell to the CDL, which may be indicative of the greater academic sequencing environment. Human error in the reimbursement process at the institutional level after test charge submission has significant implications for the accessibility of genomic sequencing.