Revenue Recovery for Hospitals and Precision Medicine

June 27, 2019

Smiling young female doctor standing in a hospital corridor with two medical colleagues talking in the background

One of the challenges in revenue recovery for hospitals is the increasing move toward precision medicine. As technologies and procedures evolve that are customized for individual patients down to the genome level, coding must work to specify this so that payers understand and approve claims.

In an article on how precision medicine — a medical model that proposes the customization of healthcare, with medical decisions, treatments, practices or products being tailored to the individual patient — is going mainstream, “Healthcare Finance” editors detail the current reimbursement challenge. They quote Assaf Halevy, CEO and founder of 2bPrecise, who says that significant challenges remain in establishing payment for diagnostic tests that reflect the value of the care, making it difficult for payers to set rates. Insurers need to be able to monitor the value of the payments. Currently, about 200 billing codes associate with 70,000 tests.

“Payers also struggle to determine how to make precision medicine available to their members. The current state of genomic advancements — some of which, like Luxturna, offer new hope for patients with rare disorders but cost hundreds of thousands of dollars per treatment — don’t fit well with traditional managed care models. As a result, payers struggle to support access to precision medicine while ensuring quality of care and effectively controlling costs.” — from an article at Informed DNA, earlier this year.

In a 2018 research article on “Precision Medicine: from Science to Value,” Geoffrey S Ginsburg and Kathryn A Phillips argue that “Precision medicine is poised to have an impact on patients, healthcare delivery systems and research participants in ways that were only imagined 15 years ago when the human genome was first sequenced. While discovery using genome-based technologies has accelerated, these have only begun to be adopted into clinical medicine.“ Later in the article, they also note the reimbursement challenge: “As with all new healthcare interventions, implementation will be stymied if such interventions do not provide demonstrated value or if payers and consumers are unwilling to pay for them. There remain many challenges to determining “if and when“ PM provides sufficient value relative to its costs, and whether payers should reimburse for PM testing.” The researchers also list some scholarly assessments of economic value for precision medicine.

What do payers make of precision medicine? Already in 2018, “Health IT Analytics” editors found that “payers are starting to experiment with value-based care contracts to control the costs of precision medicine while expanding availability of genetic testing.” But they also note that “the American Medical Association (AMA) has already expressed frustration about the mismatch between the progress of precision medicine and its payment.”

The AMA article linked in that report observes the “frustration” over provider payments for precision medicine:

“Precision medicine tests, technologies and therapeutics are increasingly being adopted into clinical practice as evidence of their effectiveness grows,” said AMA Board Member William E. Kobler, MD. “However, many patients do not have access to precision medicine because most public and private health insurers do not offer coverage for genetic or genomic services unless certain clinical criteria and evidentiary standards are met. As a result, access to this next generation of clinical testing services is often limited.”

Can Congress help?  For its part, Congress is working on moving things along. Representative Eric Swalwell introduced a bipartisan bill in the House of Representatives called the “Advancing Access to Precision Medicine Act.” At the time of introduction in 2018, Swalwell said, “It’s time to use technology to transform our healthcare system to focus on the uniqueness of every patient — this is the future of medicine. Genetic and genomic testing technology is getting better every day. We’re working in a bipartisan way to look ahead for ways to make it more accessible to Americans, in order to improve and save lives.” The Act would direct HHS to work with the National Academy of Medicine to reduce barriers “to the utilization of genetic and genomic testing.” But so far, a look at shows the bill has been stalled for the past year.

What’s next for revenue recovery for hospitals amid the rise of precision medicine? Congress seems stalled on at least one bill to promote change, and physicians groups remain frustrated as they seek to use precision medicine for better patient healthcare outcomes. Meanwhile, visionaries at the World Economic Forum (WEF) and other organizations continue to drive for the benefits to be derived from these related medical technologies and procedures.

In a column written this year at WEF, Nilesh Jain laid out the case like this: “Healthcare is rapidly moving towards precision medicine, which offers a deeper understanding of human physiology using genetic insights and advances in technology. This is pivotal in alleviating unnecessary suffering related to medical care, due to unintended side effects which can result from the current one-size-fits-all approach. It will also reduce the cost of treatment by eliminating ineffective treatment plans at outset based on data insights.”

This all sounds good, and precision medicine does look like the future, but as Jain also notes, “Genetic discoveries and technological firepower have outpaced systems for effective provision, overwhelming providers of care as well as payers and regulators.”  The general message is that precision medicine is continuing to rapidly evolve, and as both providers and payers play catch up, it becomes an increasingly important focus area for revenue recovery for hospitals.  We will report — stay tuned.

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