How to Get Payers and Providers on the Same Page with Genetic Testing Reimbursement

Editor’s note: For up-to-the minute insights from the nation’s first movers and early adopters in the field of precision medicine, the Precision Medicine Institute Symposium 2019 is taking place Thursday and Friday, May 2-3, at the Sheraton Hotel in New Orleans.

When it comes to challenges hindering the advancement of precision medicine, reimbursement appears to be among the most difficult to solve.

After all, insurers are accustomed to paying less than $250 in laboratory costs per patient per year, while a single genetic test can cost over $1,000, says Michael Astion, MD, PhD, a clinical pathologist who is the Medical Director in the Department of Laboratories at Seattle Children’s Hospital and a Clinical Professor of Laboratory Medicine at the University of Washington. Meanwhile, laboratories simply want to be paid fairly for medically necessary testing, and patients want to have a reasonable out-of-pocket expense.

“The usual approach is that payers and laboratory providers just sort of yell at each other,” Astion says. “Providers accuse insurers of being helplessly out-of-date profit mongers, while insurers accuse laboratories of marketing tests before having evidence that they’re ready for prime time.” Insurers also face a perpetual battle against fraud, waste, and abuse.

Thus, the conflict rages on, as attacks on a group’s intelligence or ethics only undermine resolution.

Michael Astion

Michael Astion, MD, PhD (above), is working actively, through grants and intellectual property held by Seattle Children’s Hospital and the University of Washington, with the insurance industry in the United States to create utilization management rules for clinical laboratory testing.


Enter Patient-centered Laboratory Utilization Guidance Services (PLUGS), a non-profit laboratory stewardship collaboration within Seattle Children’s Hospital Department of Laboratories. The program, founded by Astion and colleagues in 2013, is based on the philosophy of the “two rights,” he says.

“The two rights basically says that there’s reason to believe the opposite of my beliefs are true. The idea is that I look at your problems, you look at mine, and then we try to align,” Astion says. “We align by understanding each other’s pain points, looking at each other’s evidence, and then reaching a compromise.”

PLUGS originated to help children’s hospitals, which encounter the majority of serious inherited disease, Astion says. “Pediatric providers like ourselves were hit first by nonpayment by insurance companies for genetic testing because they didn’t understand it, didn’t have policies around it, and declared it experimental and investigational.”

In response, the nonprofit began developing medical necessity criteria for patients whom such tests could help. The message to payers: “I [the provider] am willing to present you with data. I’m willing to be audited that I’m not coding fraudulently. I’m willing to provide a set of standards and provide adequate documentation,” Astion says. “If I’m willing to do those things, you should pay me—and pay me with a modest profit.”

How Relationships Shape Perspective

Today, the PLUGS network includes nearly 100 members, including most major commercial laboratories, laboratories inside influential health systems, and lab thought leaders across specialties. The nonprofit also aids health insurers by studying claims data to help them identify—and then block—fraud, waste, and abuse.

“That warms people in terms of their relationship with each other,” Astion says. “When they [insurers] have the money saved by blocking abuses in their hand, we say, ‘Maybe you could look at our testing through a lens that’s a bit more liberal and forgiving—and accept this medical necessity policy and access it through some simpler administrative policies.”

PLUGS’ writing and providing medical necessity policies also saves insurers significant expense, as it can cost up to $300 per hour, for at least 80 hours, to hire a traditional pathologist and editors to write the policy. “Smaller plans don’t have the resources to write these policies,” Astion says. “That’s why they’re behind [with reimbursement]. It’s not because they’re bad people.”

To learn more about how Astion and PLUGS have successfully aligned payers, providers, and patients around payment for genetic testing, register for the Precision Medicine Institute Symposium 2019, which is taking place Thursday and Friday, May 2-3, at the Sheraton Hotel in New Orleans.

“I want people to believe in the two rights. There’s enough money in the system for everybody to be paid fairly,” Astion says.

—Debra A. Shute

Related Information:

More about Michael Astion, MD, PhD

More about PLUGS

Register for “Strategies for Innovators Pursuing Excellence in Clinical Care” Precision Medicine Institute Symposium 2019

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