As sequencing moves into clinical use, insurers balk

CHICAGO (Reuters) - Aimee Robeson just wants an answer.

Joe Smith rides on a swing with his daughter Rowan as his wife Andrea plays with her children Norah and Chase at a playground in Winthrop Harbor, Illinois, May 9, 2014. REUTERS/Jim Young

Her son, Christian, was born in 2010 with multiple, mysterious syndromes that leave him unable to speak, chew, or walk on his own.

Initial genetic tests failed to provide a diagnosis. Aimee’s hopes are now pinned on a new test called exome sequencing that searches all the protein-making genes for glitches that could explain Christian’s condition.

Once strictly the domain of research labs, gene-sequencing tests increasingly are being used to help understand the genetic causes of rare disease, putting insurance companies in the position of deciding whether to pay the $5,000 to $17,000 for the tests.

As use of the new technology has grown, a number of insurers, including Blue Cross Blue Shield, have reacted by putting the brakes on reimbursement, according to interviews with researchers, diagnostic experts and insurance executives. Insurers are demanding proof that the results will lead to meaningful treatments among the estimated 2 million Americans with a serious, undiagnosed disease, still an unlikely prospect in the majority of cases.

Genetics experts say that sequencing more than doubles the chances that families get a diagnosis, and saves spending on multiple tests of single genes. Even if no treatment is found, the tests can also end hugely expensive medical odysseys as parents frantically search for the cause of their child’s furtive illness.

Until the reimbursement issue is resolved, some smaller diagnostics players will likely stay on the sidelines, leaving the field to early adopters of the technology such as Ambry Genetics and Bio-Reference Laboratories’ GeneDx. And families short on resources like the Robesons will be left scrambling for funding.


Howard Jacob was the first to use gene-sequencing tools to unravel the mystery of a rare disease in 2009, leading to a bone marrow transplant that saved a little boy named Nic Volker.

Five years later, Jacob’s molecular genetics lab at the Medical College of Wisconsin has done more than three dozen whole genome sequences, a test that reads the more than 3 billion letters that make up the human genetic code. They have sequenced 400 whole exomes, tests that look only at the protein-making segments of DNA known as exons, which represent 2 percent of the genome but account for 85 percent of disease-causing mutations.

Baylor College of Medicine in Houston, Texas, has handled 3,500 exome-sequencing cases since it started offering the test in 2011. A study of its first 250 cases showed whole exome sequencing identified the disease-causing gene in 25 percent of cases. Since the findings were published last October, the rate has increased to 28 percent as the list of known mutations has grown, said Dr. Christine Eng, who directs Baylor’s Whole Genome Sequencing Laboratory.

Eng said insurance companies initially paid for most of the tests, but as volume has increased, more claims are getting denied. “There are some companies that are saying out and out, we won’t cover this test.”

Dr. Allen Bale, director of the DNA Diagnostic Lab at Yale School of Medicine in Connecticut, has seen a 500 percent increase in orders for exome sequencing since 2011. The lab does about 750 whole exome tests a year, and there, too, reimbursement is becoming an issue.

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Bale said Medicare does not cover the tests. Other insurers pay enough so the lab can break even.

“There’s a lot of testing we’re doing that’s getting denied. We appeal it,” he said. “A lot of time that works, but it’s case by case.”


Although gene sequencing is still far from mainstream, its rapidly dropping cost - which has fallen from $3 billion for the first gene map in 2003 to as little as $1,000 this year - has made the tests increasingly attractive. In cases like Christian’s, doctors say it offers a more comprehensive way to diagnose unexplained syndromes, replacing the guessing game in which tests are ordered based on what they think the problem might be.

Insurers are not yet convinced.

Dr. Julie Kessel, who directs coverage policy for Cigna, said sequencing requests were scarcely noticed five years ago. Now, “they’re very, very much on the radar.” Cigna generally does not cover whole genome or whole exome sequencing unless there is a clear clinical reason.

Last August, one of the industry’s biggest players, Blue Cross Blue Shield, issued a report saying exome sequencing might pinpoint the genetic cause of disease in up to half of patients, but only a fraction of those will be able to use that as guidance because treatments don’t exist yet. Since then, Blues plans in Louisiana, North Carolina and Pennsylvania have deemed exome sequencing “investigational,” meaning not eligible for coverage.

Christian’s own insurance company, Pennsylvania Medicaid provider UPMC for You, “didn’t budge at all,” Aimee Robeson said. The family hired an attorney and appealed, but lost. The company wanted proof the test would offer a benefit. Christian’s geneticist wrote a letter listing reasons it might, but the judge wasn’t swayed.

Insurers say their objections stem from a lack of evidence that the tests can improve patient care.

There are some celebrated examples that it can, such as the Volker case or Noah and Alexis Beery of California, whose genetic defect left them with health problems similar to cerebral palsy. Genome sequencing led to highly effective treatments to replace the missing neurotransmitters that were causing their symptoms.

In most cases, however, finding a treatment “is vanishingly rare because we’re only just making these discoveries,” said Dr. Teri Manolio of the National Human Genome Research Institute, a part of the National Institutes of Health.

At Aetna Inc, Dr. James Cross, vice president of national medical policy and operations, said sequencing has gotten ahead of the evidence.

Traditionally the company has made coverage decisions based on the individual test and whether it affects patient outcomes, he said. “With sequencing, you’ve got a lot of information that we don’t have that kind of evidence around.”

For Ambry Genetics, the first commercial lab to offer whole exome sequencing, insurance coverage is “all over the map” for the company’s $5,800 test, said billing director Marsha McDonagh. She works with Blue Cross, Cigna, Aetna, UnitedHealthcare and several Medicaid plans, among others. “The ones least receptive right now are the Blues,” she said.

Consultant Stephane Budel of DeciBio believes the reimbursement issue is stifling competition among diagnostics providers. Industry players range from those just ramping up, such as MolecularHealth and Selah Genomics, to midsize companies such as Ambry and GeneDx and giants such as Illumina and Thermo Fisher Scientific’s Life Technologies.

“There’s definitely a number of smaller players that are waiting for this to be sorted out,” said Budel. He believes insurers’ concerns will fall away as sequencing costs continue to fall in the next few years. “There is very little doubt it is going to become standard of care.”


Even without treatments, a diagnosis gives parents the ability to make better-informed family-planning decisions and puts a stop to repeated testing that can cost tens of thousands of dollars.

“There’s a monumental relief with diagnosis. It changes everything,” said Dr. Richard Gibbs, director of the Baylor Human Genome Sequencing Center, who sequenced the Beery twins.

Andrea Smith of Winthrop Harbor, Illinois, realized her son Ethan had a serious problem when a virus turned his urine “the color of Coca-Cola.” With her next boy, Chase, a virus caused kidney failure; the same happened with her youngest child, Norah. A fourth had no symptoms.

Doctors suspected a genetic form of atypical hymolytic-uremic syndrome, a kidney disorder. Their case was so compelling that doctors at Children’s Hospital of Wisconsin offered to sequence Norah’s genome, funded by a research grant.

They learned that three of her children inherited the disorder, and the fourth is a carrier. But testing also showed the defect could be corrected with a kidney transplant. Smith says it’s too early to consider that option for her children, but she’s glad to know she has one.

Aimee Robeson may soon get an answer as well. Members of her church are paying the $7,000 for Christian’s test.

“I’m relieved it’s getting done,” Aimee said. “I want to make sure if there is anything that I could do for my son, that I did it.”

Reporting by Julie Steenhuysen; Editing by Michele Gershberg and Prudence Crowther