From the June 2022 issue of HealthCare Business News magazine


The principles that apply to optional supplies such as IV contrast do not apply for most novel diagnostic radiopharmaceuticals; thus, reimbursement methods — including bundling — that were initially created for CT and MR scans should not be used for most novel diagnostic radiopharmaceuticals and PET scans.

Diagnostic radiopharmaceuticals are required to perform PET scans

Unlike IV contrast, a diagnostic radiopharmaceutical is not an optional part of the process of generating a PET or SPECT scan in a nuclear medicine department; in fact, it is essential. The scan is simply a 3D map of where in the body the diagnostic radiopharmaceutical has gone. Without the diagnostic radiopharmaceutical, the PET or SPECT scanner cannot create any images. One could say the diagnostic radiopharmaceutical is the scan. A diagnostic PET or SPECT radiopharmaceutical is injected into the blood and is designed to target sites of disease within the body. Advanced PET and SPECT scans use newer precision diagnostic radiopharmaceuticals for conditions such as cancer, neurological disorders, and heart disease. For example, 68Ga-DOTATATE PET finds neuroendocrine cancer hiding in the body, 68Ga-PSMA-11 PET finds prostate cancer hiding in the body, and 123I-Ioflupane SPECT assesses dopamine in the brain to help diagnose movement disorders. Therefore, the type of PET or SPECT image created by each diagnostic radiopharmaceutical is dependent on its indication. Also, unlike the IV contrast example used earlier, the newer precision diagnostic radiopharmaceuticals are often expensive for a medical center to purchase or produce, with a cost greater than the combined reimbursed insurance payment (e.g., Medicare) to perform and interpret the resulting PET or SPECT scan. Given these differences, it is not appropriate to think of newer precision diagnostic radiopharmaceuticals as optional inexpensive supplies for a PET or SPECT scan that can be bundled with the cost of the scan.

PET and SPECT scans are required to select patients for radiopharmaceutical anti-cancer therapy
Some of these novel diagnostic radiopharmaceuticals and the PET and SPECT scans they create are required to identify if patients are eligible for related radiopharmaceutical anti-cancer therapies. These scans allow doctors to see if a diagnostic radiopharmaceutical sticks to a given patient’s cancer as intended, and in this way the PET scan helps predict whether the related therapeutic radiopharmaceutical is also likely to stick to a given patient’s cancer, and thus, whether the patient is a good candidate for the therapy. Therefore, a PET or SPECT scan generated from a novel diagnostic radiopharmaceutical is often required prior to billing for a therapeutic anti-cancer radiopharmaceutical. For example, a PET scan with 68Ga-DOTATATE or similar radiopharmaceutical is required prior to 177Lu-DOTATATE anti-cancer therapy, and a PET scan performed with 68Ga-PSMA-11 or similar radiopharmaceutical is required prior to 177Lu-PSMA-617 anti-cancer therapy. Thus, lack of access to a novel diagnostic radiopharmaceutical can result in lack of access to a related cancer therapy.

The initial intent of the Medicare pass-through policy was to increase patients’ access
Under current hospital outpatient prospective system (HOPPS) policy, Medicare reimburses for the true cost of these novel diagnostic radiopharmaceuticals within a 3-year period of transitional pass-through, a designation given to certain “new drugs, devices and biological agents that were not paid for as a hospital outpatient department service, and whose cost is ‘not insignificant’ in relation to the payment for the procedures or services associated with it.” For products with pass-through status that are used in a hospital setting, 100% of the cost for patients is covered by Medicare Part B, and no copayment applies. Pass-through is intended to encourage the use of newly FDA-approved products and to boost Medicare patients’ access to innovative diagnostics and therapies by temporarily paying more than established facility fees. The Medicare payment during these three years equals average sales price plus 6%. However, after the term expires, the diagnostic radiopharmaceutical reimbursement rate is sometimes as low as 7% of their pass-through rate. The resulting financial loss is absorbed by the medical facility and as a result they may close the practice. Unfortunately, the cost of these novel diagnostic radiopharmaceuticals does not fall fast enough to make this model successful for the intended goal of increasing access.

June 2022 Magazine

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