Lowering Health Care Costs Through the Intersection of Genetic Testing and Value-Based Care

The field of precision medicine and genetic testing has seen a significant rise in adoption in recent years, with the enhanced ability of early detection for certain diseases, including cancer, cardiovascular disease, sickle cell disease and more. Beyond identification, genetic testing can help accurately evaluate risk, and tailor the resulting treatment plan, to provide more effective, life-saving care. As a result, the industry has exploded exponentially, with the global genetic testing market expected to be worth $22 billion by 2024.

While advancements in precision medicine pose great benefits to the US population, these services and tests remain quite costly, with some exceeding $2,000 for a single occurrence depending on the complexity of the order. Rising health care costs show no signs of slowing, either—with health care expenditures increasing 1.1% faster than the annual gross domestic product (GDP), and US healthcare spending expected to reach $6.2 trillion by 2028. With health care cost reduction and value-based payments top of mind for state Medicaid agencies, questions around genetic testing reimbursement remains at the forefront for many state plans and payer organizations as they simultaneously work to improve health outcomes for members.

The Value of Genetic Testing in Improving Outcomes and Reducing Costs

At face value, genetic testing pricing can appear unreasonable, or even unnecessary when there are less expensive, more frequently used methods available. But with the health care industry continuing to shift towards more value-based care models, genetic testing can play a role in contributing to the common goal of providing more quality care while lowering costs.

For example, it is widely acknowledged that prescribing medication requires some amount of trial and error. A drug that successfully treats one person’s symptoms can result in adverse side effects for another. Through genetic testing, physicians have a better understanding of how certain medications will affect certain genes. This allows them to more accurately prescribe medication for a faster recovery with fewer costs.

A study of 13,000 behavioral health patients revealed that those who were treated via genetic testing received less medication and were 17% more likely to continue taking their prescription as prescribed. In addition to the physical benefits of faster and more effective treatment, patients who were treated using genetic testing saved an average of $1,036 in annual drug costs compared to those without testing.

Despite its promise, state Medicaid agencies have an uphill battle to prove the upfront costs of genetic testing unequivocally result in a lower overall cost of care. In advance of additional research showcasing the benefits of this type of testing, state Medicare agencies and payer organizations can observe the following best practices to ensure correct genetic test claims payments and highlight overall lower costs.

Take a closer look at claims data—Analyzing genetic testing claims data is an important first step in ensuring an accurate and holistic view of the financials surrounding precision medicine. State plans frequently find signs of overbilling with common genetic tests such as prenatal testing, diagnostic testing, pre-symptomatic and predictive testing, newborn screening, and more. Common issues include incorrect coding, claims for more than one test at a time, and not adhering to the state Medicaid agency’s medical necessity rules.

Maintain up-to-date reimbursement policies—As previously discussed, clinical evidence highlighting improved health outcomes for members as a result of genetic testing is essential for receiving reimbursement. Having in-house genetic testing experts or consultants to provide insight on the latest advancements will be important to developing and maintaining updated reimbursement policies that highlight the necessity of the claim.

Leverage technology to identify overpayments—To combat inaccurate genetic test claims, certain technologies are available to prevent overpayment. Implementing a solution with claims-filtering algorithms and payment integrity rules will help to analyze inappropriate code combinations and identify incorrect bill volumes to ultimately prevent fraud waste and abuse.

There is no doubt the acceptance and adoption of precision medicine and genetic testing are on the rise, with the potential to revolutionize the identification and treatment of previously incurable diseases. When considered in conjunction with the rising popularity of value-based care models—genetic testing becomes even more promising to providing better health outcomes at less cost. In fact, a study revealed that 73% of health care respondents believe the value-based care model will be the future primary payment method for precision medicine. To stay abreast with the movement toward genetic testing and value-based care, payer organizations will need to continue to evolve and hone their abilities to provide a better health care system for us all.

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