MEMORANDUM
PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION
CALDERWOOD & HARKNESS LLP 1700 K Street NW, Suite 900 Washington, DC 20006
Date: March 11, 2024
To: Theresa Nakamura, General Counsel & VP of Regulatory Affairs, Genome Dx Therapeutics Inc. Kevin Driscoll, VP of Market Access & Reimbursement, Genome Dx Therapeutics Inc.
From: Sean Morrissey, Senior Associate, Healthcare & Life Sciences Christopher Aiken, Associate, Healthcare & Life Sciences
Re: Coding Strategy Analysis — Proprietary Laboratory Analyses (PLA) Code vs. Existing CPT Code for OncoPrecise GXP-47
Matter No.: 1043-00002
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I. EXECUTIVE SUMMARY
The purpose of this memorandum is to analyze whether Genome Dx Therapeutics Inc. ("GDT") should bill its forthcoming OncoPrecise GXP-47 laboratory-developed test under an existing Current Procedural Terminology ("CPT") code — primarily CPT 81455 (genomic sequencing, solid organ neoplasm, 51 or more genes) or a combination of stacked existing codes — or whether GDT should instead pursue assignment of a new Proprietary Laboratory Analyses ("PLA") code from the American Medical Association ("AMA") CPT Editorial Panel. This analysis has been prepared at the request of GDT's General Counsel and VP of Market Access & Reimbursement, pursuant to the scope of engagement defined in the February 14, 2024 engagement letter between Calderwood & Harkness LLP and GDT, which identifies PLA code application strategy as a core workstream.
Calderwood & Harkness recommends that GDT pursue a PLA code for OncoPrecise GXP-47. This recommendation is grounded in the following principal considerations:
First, a PLA code uniquely captures the proprietary Therapy Response Index ("TRI") algorithm, which is the core differentiating feature of OncoPrecise GXP-47. Existing CPT codes describe generic sequencing procedures and do not account for the algorithmic output that constitutes the primary clinical utility of the test. Without a PLA code, the TRI algorithm — and the significant investment GDT has made in developing and validating it — would be invisible in the billing and claims data infrastructure.
Second, a PLA code enables GDT to seek a test-specific Medicare reimbursement rate through the crosswalk or gapfill pricing process under the Clinical Laboratory Fee Schedule ("CLFS"), which is essential to supporting GDT's target reimbursement rate of $3,850 per test. The most closely analogous existing CPT code, CPT 81455, carries a Medicare CLFS rate of $2,919, which represents an approximately 31.9% shortfall relative to GDT's target rate — a gap that cannot be bridged without a test-specific code.
Third, a PLA code will facilitate a cleaner Local Coverage Determination ("LCD") and Molecular Diagnostic Services ("MolDx") coverage pathway with Cascade Fiscal Intermediaries, LLC ("CFI") and Ridgeline Administrative Services, LLC ("RAS"), because the test will be distinctly identified in billing and coverage systems. A specific PLA code allows the Medicare Administrative Contractors ("MACs") and the MolDx program to establish coverage criteria tied directly to OncoPrecise GXP-47's clinical indications and intended use, rather than to a generic category of tests.
Fourth, none of the existing CPT codes adequately describe OncoPrecise GXP-47's specific methodology — a 47-gene RNA expression panel producing a composite algorithmic score for immune checkpoint inhibitor therapy selection in non-small-cell lung cancer ("NSCLC") — and its distinct clinical application. Billing under a generic code would misrepresent the test's scope, create compliance risk, and undermine GDT's ability to demonstrate the test's discrete clinical and economic value.
This memorandum should be read in conjunction with the forthcoming Reimbursement Rate Analysis Memorandum, which will provide a detailed crosswalk and gapfill analysis supporting the $3,850 target rate, and with the ongoing LCD/MolDx coverage strategy work being conducted under the same engagement. The coding strategy addressed herein is a foundational prerequisite to both the reimbursement rate-setting process and the coverage pathway, and the three workstreams are interdependent.
II. BACKGROUND
A. Overview of OncoPrecise GXP-47
OncoPrecise GXP-47 is a laboratory-developed test ("LDT") designed and performed exclusively at GDT's CLIA-certified, CAP-accredited reference laboratory located at 4720 Torrey Pines Road, Suite 300, San Diego, California 92130. The laboratory operates under CLIA Certificate Number 05D2187432 and holds accreditation from the College of American Pathologists under CAP Number 9074821. The facility's National Provider Identifier is 1902847365. As a sole-source LDT, OncoPrecise GXP-47 is not commercially available as a kit or platform that other laboratories can license or purchase; all specimen processing, sequencing, algorithmic analysis, and report generation occur exclusively at the San Diego facility.
OncoPrecise GXP-47 is a 47-gene RNA expression panel that utilizes RNA extracted from formalin-fixed, paraffin-embedded ("FFPE") non-small-cell lung cancer tumor tissue specimens. The test employs next-generation sequencing ("NGS") technology to quantify expression levels across the 47-gene panel. The sequencing data are then processed through GDT's proprietary bioinformatics pipeline and Therapy Response Index algorithm to produce a composite TRI score ranging from 0 to 100. The TRI score stratifies patients into three clinically actionable categories:
• High Likelihood of Response (TRI ≥ 70): Patients in this category are predicted to derive clinically meaningful benefit from first-line immune checkpoint inhibitor therapy.
• Intermediate (TRI 40–69): Patients in this category have an uncertain predicted response, and the treating oncologist is advised to consider the TRI score alongside other clinical factors (PD-L1 expression, tumor mutational burden, patient performance status, and comorbidities) in making a treatment selection decision.
• Low Likelihood of Response (TRI < 40): Patients in this category are predicted to have a low probability of meaningful response to immune checkpoint inhibitor therapy, and platinum-based chemotherapy or alternative regimens may be more appropriate as first-line treatment.
The intended clinical use of OncoPrecise GXP-47 is to guide oncologist decision-making regarding whether to initiate first-line immune checkpoint inhibitor ("ICI") therapy — including, but not limited to, pembrolizumab (Keytruda), nivolumab (Opdivo), and atezolizumab (Tecentriq) — versus platinum-based chemotherapy in patients diagnosed with Stage IIIB or Stage IV NSCLC. The test addresses a significant unmet clinical need: current PD-L1 immunohistochemistry testing, while widely used as a companion diagnostic for ICI therapy selection, has well-documented limitations in predictive accuracy, and a meaningful proportion of patients with high PD-L1 expression fail to respond to ICI therapy while some patients with low PD-L1 expression do respond. The TRI score is designed to integrate a broader set of gene expression signals to improve predictive accuracy beyond PD-L1 testing alone.
Analytical validation of OncoPrecise GXP-47 was completed on December 14, 2022. The analytical validation study results were published in the peer-reviewed Journal of Molecular Oncology Diagnostics, Volume 18, Issue 4, pages 412–429 (December 2022). The study demonstrated that OncoPrecise GXP-47 achieves high analytical sensitivity, specificity, reproducibility, and concordance across multiple specimen types and handling conditions, meeting or exceeding performance benchmarks established for comparable NGS-based diagnostic tests.
Clinical validation of OncoPrecise GXP-47 is currently being evaluated in the CLARITY-LUNG trial (ClinicalTrials.gov Identifier NCT05891247), a prospective, multi-site, blinded clinical validation study being conducted at 14 clinical sites across the United States. The trial has an enrollment target of 1,200 patients with Stage IIIB or Stage IV NSCLC and is designed to demonstrate the clinical utility of the TRI score in predicting response to first-line ICI therapy versus platinum-based chemotherapy. Data readout from the CLARITY-LUNG trial is anticipated to support GDT's LCD application and future evidence development activities.
GDT holds a substantial intellectual property portfolio related to the OncoPrecise platform, including 14 issued United States patents and 7 pending patent applications covering various aspects of the gene panel composition, the TRI algorithm, the bioinformatics pipeline, and related methods.
B. GDT's Existing Product and Coding Precedent
GDT is not a de novo entrant to the molecular diagnostics market. The company currently markets and commercially sells OncoPrecise GXP-12, a 12-gene expression panel used in early-stage breast cancer prognosis. OncoPrecise GXP-12 is a validated, commercially available test with established Medicare coverage. Specifically, GXP-12 is reimbursed under an existing Local Coverage Determination — LCD L38472, which became effective on August 15, 2021 and was issued by Cascade Fiscal Intermediaries, LLC (CFI). GDT's experience navigating the coding, coverage, and reimbursement pathway for GXP-12 provides the company with institutional knowledge and credibility that will benefit the GXP-47 process.
However, while GXP-12's coding and coverage experience provides instructive precedent, the GXP-47 situation is distinguishable in several material respects. OncoPrecise GXP-47 involves a different cancer type (NSCLC versus breast cancer), a significantly larger gene panel (47 genes versus 12 genes), a distinct algorithmic output (the TRI score for treatment selection versus a prognostic recurrence score), and a fundamentally different clinical application (guiding first-line therapy selection between ICI and chemotherapy versus informing adjuvant therapy decisions based on recurrence risk). These differences mean that GDT cannot simply replicate the GXP-12 coding approach for GXP-47; the coding strategy must be tailored to GXP-47's unique characteristics.
C. Medicare Coding Framework Overview
The CPT code system is the national standard coding system maintained by the American Medical Association for reporting medical, surgical, and diagnostic procedures and services. CPT codes serve as the primary mechanism by which clinical laboratories communicate to payers the identity and nature of the tests they perform, and they form the basis for reimbursement rate-setting.
For purposes of this analysis, the relevant coding categories are as follows:
Category I CPT Codes are the standard codes for widely performed procedures, services, and tests. Category I codes are reviewed and updated annually by the AMA CPT Editorial Panel. In the molecular pathology and genomic testing space, Category I codes include codes such as CPT 81455 (targeted genomic sequence analysis panel, solid organ or hematolymphoid neoplasm, 51 or more genes) and other tiered genomic sequencing codes. Category I codes describe procedures generically and do not identify specific proprietary tests by name.
Proprietary Laboratory Analyses (PLA) Codes are a distinct subset of codes within the CPT code set, designated under Section 0001U through 0XXXU. PLA codes were established by the AMA CPT Editorial Panel specifically for clinical laboratory tests that are performed by a single laboratory or are available only from a single manufacturer. Unlike Category I codes, PLA codes identify the proprietary test by name and the performing laboratory or manufacturer by name in the code descriptor. This specificity makes PLA codes uniquely suited for sole-source LDTs like OncoPrecise GXP-47. Critically, PLA codes are updated on a quarterly basis by the AMA, in contrast to the annual Category I CPT update cycle, providing a significantly faster path to code assignment.
HCPCS Level II Codes are maintained by the Centers for Medicare & Medicaid Services ("CMS") and are used primarily for non-physician services, supplies, and equipment not covered by CPT codes. HCPCS Level II codes are generally not applicable to molecular diagnostic tests of the type at issue here and are not considered a viable coding pathway for OncoPrecise GXP-47.
The relevance of coding to Medicare reimbursement cannot be overstated. Each CPT or PLA code receives a payment rate under the Clinical Laboratory Fee Schedule, which is the Medicare payment system for most clinical laboratory tests. New codes — including new PLA codes — receive a CLFS payment rate through one of two methodologies: crosswalk, in which CMS assigns a rate based on the rate of an existing code with comparable resource costs and clinical utility; or gapfill, in which MACs establish a rate based on pricing data, charges, and resource costs, which CMS then uses to set a national rate. The choice of coding pathway directly determines the mechanism and timeline by which GDT will secure a Medicare reimbursement rate for OncoPrecise GXP-47.
III. ANALYSIS OF EXISTING CPT CODE OPTIONS
This section evaluates the existing CPT codes and coding approaches that could potentially be used to bill for OncoPrecise GXP-47 and explains why, in each case, the existing option is inadequate.
A. CPT Code 81455 — Genomic Sequencing, Solid Organ Neoplasm, 51+ Genes
CPT Code 81455 is described as: "Targeted genomic sequence analysis panel, solid organ or hematolymphoid neoplasm, DNA and RNA analysis when performed, 51 or more genes." This code currently carries a Medicare CLFS payment rate of $2,919 per test. CPT 81455 is the closest existing Category I CPT code to OncoPrecise GXP-47, as it covers NGS-based solid organ tumor genomic panels. It is the code that, absent a PLA code, might initially appear to be the most natural fit for GXP-47.
Arguments for Using CPT 81455
There are several pragmatic arguments in favor of billing under CPT 81455. First, using an existing code avoids the time and procedural effort associated with a PLA code application. GDT could begin billing immediately upon commercial launch without waiting for a new code to be assigned. Second, CPT 81455 is a well-recognized, established code that is accepted by Medicare, commercial payers, MACs, and billing systems throughout the healthcare infrastructure. There would be no confusion about code validity, and claims processing systems already support the code without requiring manual overrides or special handling. Third, because CPT 81455 has an established CLFS rate, GDT would have a known, predictable (if suboptimal) reimbursement rate from the outset, rather than facing the uncertainty associated with an unlisted code or the timeline required to establish a rate for a new PLA code.
Arguments Against Using CPT 81455
Despite these practical considerations, there are compelling reasons why CPT 81455 is not an appropriate code for OncoPrecise GXP-47, and why billing under this code would create significant compliance, reimbursement, and strategic risks.
Gene Count Mismatch. The most fundamental problem is that CPT 81455, by its explicit descriptor, applies to panels analyzing 51 or more genes. OncoPrecise GXP-47 analyzes 47 genes — four fewer than the threshold specified in the code descriptor. Billing under CPT 81455 for a 47-gene panel would be technically inaccurate. While the gene count is close to the 51-gene threshold, the AMA CPT code descriptors are not advisory — they define the scope of the code. Reporting a 47-gene test under a code that specifies "51 or more genes" could constitute incorrect coding and may raise billing compliance concerns under the False Claims Act, 31 U.S.C. §§ 3729–3733, particularly if a pattern of such billing is identified. Medicare Administrative Contractors, Recovery Audit Contractors ("RACs"), and the Office of Inspector General ("OIG") routinely scrutinize claims for coding accuracy, and a systematic practice of billing a 47-gene test under a 51+ gene code would be difficult to defend in an audit context.
Methodology Mismatch. CPT 81455 describes a broad category of targeted genomic sequence analysis — it encompasses DNA and RNA analysis for any solid organ or hematolymphoid neoplasm and is designed to capture a wide range of comprehensive genomic profiling tests. It does not capture, describe, or account for the algorithmic TRI score output, which is the core clinical utility of OncoPrecise GXP-47. The TRI score is not merely a byproduct of the sequencing analysis; it is the primary deliverable of the test and the basis on which oncologists will make treatment decisions. A code that describes only the sequencing component, without reference to the proprietary algorithmic output, fundamentally misrepresents the nature and value of OncoPrecise GXP-47.
Reimbursement Rate Limitation. The CLFS rate for CPT 81455 is $2,919 per test. GDT's target reimbursement rate for OncoPrecise GXP-47 is $3,850 per test — a figure informed by preliminary crosswalk analysis against comparable proprietary oncology diagnostics, the cost of goods sold and operational overhead associated with performing the test, and the value proposition of the TRI algorithm in guiding ICI therapy selection. The $931 shortfall between the CPT 81455 rate and GDT's target rate represents an approximately 31.9% gap below target. Over GDT's projected Year 1 volume of 8,500 tests, the use of CPT 81455 instead of a properly valued PLA code would result in an estimated revenue shortfall of approximately $7,913,500 in the first year alone. This magnitude of under-reimbursement would materially impair GDT's ability to sustain the clinical validation program, fund the commercial launch, and achieve the financial milestones required by GDT's investors and board.
Coverage Pathway Complications. If GDT bills under CPT 81455, any LCD covering OncoPrecise GXP-47 would need to reference that generic CPT code. Because CPT 81455 applies to a broad category of genomic sequencing panels from multiple laboratories, the LCD would need to either cover all tests billed under CPT 81455 that meet specified criteria (which may be broader than CFI/Ridgeline intends) or attempt to create test-specific criteria within a generic code framework — an approach that is administratively cumbersome and may not be supported by the MACs' coverage determination processes. A PLA code, by contrast, provides a clean, test-specific billing code that the LCD can reference directly.
Loss of Product Identity. Billing under a generic CPT code effectively strips OncoPrecise GXP-47 of its identity in the claims data ecosystem. Claims billed under CPT 81455 are indistinguishable from claims for other tests billed under the same code (e.g., Granite Harbor & Co.'s FoundationOne CDx, Crowne Albany Industries xT, and other comprehensive genomic profiling panels). This loss of identity has cascading consequences: GDT will be unable to track OncoPrecise GXP-47-specific utilization and claims data; outcomes research linking test results to treatment decisions and patient outcomes will be impeded; and GDT's ability to negotiate with commercial payers based on the specific value of OncoPrecise GXP-47 will be diminished.
B. CPT Code 81479 — Unlisted Molecular Pathology Procedure
CPT Code 81479 is described as: "Unlisted molecular pathology procedure." This is a catch-all code used for molecular pathology tests that do not have a specific CPT or PLA code. CPT 81479 does not have an established Medicare CLFS payment rate; reimbursement for claims submitted under this code is determined on a claim-by-claim basis or pursuant to individual MAC policies, and payment is highly variable and unpredictable.
Arguments for Using CPT 81479
The primary argument for using CPT 81479 is its immediate availability. Because it is an unlisted code, no application or approval process is required — GDT could begin billing under CPT 81479 at any time. It serves as a recognized mechanism for reporting tests that do not fit within existing specific codes, and payers understand its function within the coding system.
Arguments Against Using CPT 81479
The arguments against relying on CPT 81479 as a primary or long-term billing strategy for OncoPrecise GXP-47 are substantial and, in our assessment, dispositive.
No Established Reimbursement Rate. The most significant disadvantage of CPT 81479 is the absence of a predictable reimbursement rate. Claims submitted under unlisted codes are frequently denied outright, pended for manual review, or reimbursed at rates that bear no relationship to the cost or value of the test. The administrative burden of pursuing payment on a claim-by-claim basis is substantial, requiring GDT to submit detailed documentation, appeal denials, and engage in protracted correspondence with payers for individual claims.
High Administrative Burden. Each claim submitted under CPT 81479 typically requires an accompanying detailed test description, clinical rationale, and supporting documentation. This per-claim documentation requirement imposes significant operational costs on GDT's billing and revenue cycle management functions and on the ordering providers' practices.
Incompatibility with GDT's Commercial Requirements. GDT's financial projections for OncoPrecise GXP-47 contemplate projected Year 1 volume of 8,500 tests and projected Year 1 total revenue of $34,502,500. Achieving this revenue target requires a stable, predictable reimbursement rate that can be reliably incorporated into GDT's financial models, investor communications, and commercial planning. Billing under CPT 81479 — with its inherent unpredictability, high denial rates, and protracted adjudication timelines — is fundamentally incompatible with these requirements.
MAC and MolDx Program Disfavor. The Medicare Administrative Contractors and the MolDx program strongly disfavor the use of unlisted codes for advanced molecular diagnostic tests, particularly tests that have distinct proprietary methodologies and clinical applications. Reliance on CPT 81479 may signal to CFI and Ridgeline that OncoPrecise GXP-47 lacks sufficient differentiation to warrant a specific code — a signal that could undermine GDT's credibility in the LCD and MolDx technical assessment process.
Not a Viable Long-Term Strategy. Even if CPT 81479 is used as an interim measure during the period before a PLA code is assigned, it cannot serve as GDT's permanent billing solution. The code provides no foundation for test-specific coverage determinations, rate-setting, or payer negotiations. It is, at best, a bridge — and an imperfect one.
C. Code Stacking — Multiple Existing CPT Codes
A third potential approach is "code stacking" — billing for OncoPrecise GXP-47 using a combination of multiple existing CPT codes. For example, GDT might consider billing CPT 81455 for the sequencing component of the test and CPT 81599 (unlisted multianalyte assay with algorithmic analysis) or another code for the TRI algorithmic component, thereby using multiple codes to capture the full scope of the test.
Arguments Against Code Stacking
Code stacking is not a viable strategy for OncoPrecise GXP-47 for the following reasons:
CMS and MolDx Guidance. CMS and the MolDx program have issued guidance discouraging code stacking for proprietary tests that function as a single integrated assay. OncoPrecise GXP-47 is not a sequence of discrete, independently reportable procedures; it is a single, integrated test in which the 47-gene RNA expression analysis and the TRI algorithmic processing are inseparable components of a unified diagnostic workflow. Disaggregating the test into multiple billing codes misrepresents its nature and is inconsistent with CMS coding guidelines.
Billing Complexity and Audit Risk. Code stacking creates significant billing complexity. Multiple codes on a single claim are subject to National Correct Coding Initiative ("NCCI") bundling edits, which may automatically reduce or deny one or more of the component codes. Even if the initial claims are paid, stacked coding is a frequent target of post-payment audits by RACs and the OIG, and identified overpayments would be subject to recoupment, potentially with interest and penalties.
Absence of a Single Identifiable Code for LCD Coverage. An LCD must reference specific CPT or PLA codes. If OncoPrecise GXP-47 is billed under a combination of codes, the LCD would need to address the combination — an approach that is administratively complex, difficult to enforce consistently, and not well-supported by the MAC and MolDx coverage determination frameworks.
Inconsistency with Comparable Test Approaches. Comparable proprietary oncology diagnostic tests — including the Elara GeneSight Onco-48 (PLA Code 0250U) and the Marlowe Asset Management TumorMap Pro (PLA Code 0239U) — have obtained dedicated PLA codes rather than relying on code stacking. GDT's use of a code stacking approach would be inconsistent with established industry practice and would place OncoPrecise GXP-47 at a competitive disadvantage.
D. Summary Table — Existing CPT Code Options
The following table summarizes the evaluation of existing CPT code options across key dimensions:
Conclusion: None of the existing CPT code options adequately serves GDT's coding and reimbursement objectives for OncoPrecise GXP-47. Each option presents significant deficiencies in descriptor accuracy, reimbursement rate, billing stability, coverage pathway compatibility, or compliance risk — and in most cases, multiple deficiencies simultaneously. The inadequacy of existing options underscores the need for a test-specific PLA code.
IV. ANALYSIS OF PLA CODE PATHWAY
A. Overview of PLA Code Category
Proprietary Laboratory Analyses codes, designated within the AMA CPT code set under Section 0001U through 0XXXU, are assigned to clinical laboratory tests that meet one of two criteria: (1) the test is performed by a single ("sole-source") clinical laboratory, or (2) the test is available only from a single manufacturer. The PLA code category was established by the AMA CPT Editorial Panel to address the unique coding needs of proprietary diagnostic tests — particularly advanced molecular diagnostics, genomic tests, and algorithm-driven assays — that do not fit neatly within the generic descriptors of existing Category I CPT codes.
A defining feature of PLA codes is that the code descriptor identifies the test by its proprietary name and the laboratory or manufacturer by name. This stands in contrast to Category I CPT codes, which describe procedures generically without reference to specific products or laboratories. The inclusion of the proprietary test name and laboratory identity in the PLA code descriptor serves important functions: it ensures that the code is uniquely associated with the specific test, enables clean identification in claims data and coverage determinations, and supports test-specific reimbursement rate-setting.
PLA codes are updated on a quarterly basis by the AMA CPT Editorial Panel, in contrast to the annual update cycle for Category I codes. The quarterly update cadence provides a significantly faster path from application to code assignment, which is a meaningful practical advantage for laboratories seeking to align code assignment with commercial launch timelines. PLA code applications may be submitted by the laboratory performing the test, by the test manufacturer, or by an authorized representative.
B. GXP-47's Suitability for a PLA Code
OncoPrecise GXP-47 is an ideal candidate for a PLA code, satisfying all applicable criteria.
Sole-Source Criterion. OncoPrecise GXP-47 is performed exclusively at GDT's single CLIA-certified reference laboratory in San Diego, California. The test is not available as a kit, platform, or licensed technology that other laboratories can perform. All specimen processing, NGS analysis, TRI algorithmic computation, and report generation occur solely at the San Diego facility. GDT is both the developer and the sole performing laboratory for the test. This satisfies the fundamental sole-source requirement for PLA code eligibility.
Proprietary Name and Single Entity. The test has a registered proprietary name — "OncoPrecise GXP-47" — and is developed, manufactured, and performed by a single identified entity: Genome Dx Therapeutics Inc. The PLA code descriptor will incorporate both the test name and the company name, ensuring unambiguous identification.
Proprietary Algorithmic Output. OncoPrecise GXP-47 incorporates a proprietary algorithmic output — the Therapy Response Index (TRI) score — that is unique to GDT and cannot be replicated or approximated by other laboratories or test platforms. The TRI algorithm is the product of GDT's substantial research and development investment and is protected by GDT's intellectual property portfolio, which includes 14 issued United States patents and 7 pending patent applications covering the gene panel composition, the algorithmic methodology, and related innovations. The proprietary nature of the TRI algorithm further supports the appropriateness of a test-specific PLA code.
Precedent. The PLA code pathway has been successfully utilized by comparable NGS-based oncology diagnostic tests, confirming both the feasibility and the appropriateness of this approach for GXP-47. Two particularly relevant precedents are:
• PLA Code 0250U — Elara Genomic Sciences, Inc., "GeneSight Onco-48." This is a multi-gene oncology panel with an algorithmic output, performed at a single reference laboratory. The test received a Medicare CLFS rate of $3,742 per test. The test is analogous to GXP-47 in that it is a proprietary, algorithm-driven, NGS-based oncology test performed at a single laboratory.
• PLA Code 0239U — Marlowe Asset Management Molecular Diagnostics, Inc., "TumorMap Pro." This is a solid tumor genomic profiling test with a proprietary scoring algorithm, also performed at a single reference laboratory. The test received a Medicare CLFS rate of $4,206 per test. Like GXP-47, TumorMap Pro produces an algorithmic composite score intended to guide treatment selection.
Both of these comparator tests are proprietary, algorithm-driven oncology diagnostics with single-laboratory performance — directly analogous to OncoPrecise GXP-47 in structure, methodology, and clinical application. Their successful acquisition of PLA codes and establishment of test-specific Medicare reimbursement rates provides strong precedent and a favorable landscape for GDT's application.
C. Advantages of a PLA Code for GXP-47
1. Test-Specific Reimbursement Rate
A PLA code is a prerequisite to obtaining a test-specific Medicare reimbursement rate through the crosswalk or gapfill pricing process under the CLFS. Without a unique code, there is no mechanism for CMS to assign a payment rate that reflects the specific resource costs, clinical utility, and value proposition of OncoPrecise GXP-47.
GDT's target reimbursement rate of $3,850 per test is supported by preliminary crosswalk analysis against the following comparator codes and rates:
The weighted average of these three comparator rates is $3,622.33. GDT's target rate of $3,850 represents a 6.28% premium over this weighted average. This premium can be justified by the proprietary TRI algorithm and its specific clinical utility in guiding first-line ICI therapy selection — a high-value clinical decision point with significant implications for patient outcomes and total cost of care. The detailed crosswalk and gapfill analysis, including a full justification for the 6.28% premium and an assessment of CMS's likely receptivity, will be provided in a separate Reimbursement Rate Analysis Memorandum.
2. LCD/MolDx Coverage Pathway Alignment
A unique PLA code provides CFI and Ridgeline (MolDx) with a specific, unambiguous billing code to reference in the LCD for OncoPrecise GXP-47. This enables the MACs to establish precise coverage criteria — including patient population definitions, clinical indications, ordering physician requirements, specimen type specifications, and clinical utility standards — that are tied directly to OncoPrecise GXP-47 and are not conflated with other tests billed under generic codes.
The MolDx program, which serves as the technical assessment entity for molecular diagnostic tests covered by participating MACs, strongly favors test-specific codes because they enable clean, auditable coverage determinations. A PLA code simplifies the MolDx technical assessment process by clearly defining the test under review and distinguishing it from other molecular diagnostics that may share certain technical characteristics but differ in clinical application and algorithmic methodology.
3. Product Identity and Market Differentiation
The PLA code descriptor will include "OncoPrecise GXP-47" and "Genome Dx Therapeutics Inc." by name. This naming convention, which is a standard feature of PLA codes, provides OncoPrecise GXP-47 with a distinct, recognizable identity in claims data, payer systems, electronic health records, laboratory ordering databases, and utilization management platforms. This identity is valuable not only for billing and reimbursement purposes but also for brand recognition, commercial marketing, and competitive positioning.
In a crowded oncology diagnostics market, the ability to be specifically identified by name in the coding and claims infrastructure is a significant commercial advantage. Ordering physicians, payer medical directors, and utilization management personnel can identify OncoPrecise GXP-47 by its PLA code, facilitating ordering, coverage verification, and claims adjudication.
4. Commercial Payer Negotiations
A unique PLA code facilitates negotiations with commercial payers, who increasingly require specific billing codes for coverage and contracting. Many commercial health plans will not enter into coverage agreements or negotiate reimbursement rates for tests billed under generic or unlisted codes. A PLA code provides the administrative infrastructure that commercial payers need to establish coverage policies, set contracted rates, and build the test into their utilization management and prior authorization systems.
GDT's projected commercial payer mix is 38% of total test volume, at an average reimbursement rate of $4,400 per test. The commercial payer revenue stream represents a critical component of GDT's overall revenue model, and a PLA code is essential to securing commercial payer coverage and contracting at the anticipated rate.
5. Utilization Tracking and Evidence Development
A dedicated PLA code enables GDT to track real-world utilization of OncoPrecise GXP-47 across the Medicare and commercial payer landscapes. Test-specific claims data, made possible by the PLA code, can be used to monitor adoption patterns, identify geographic or provider-level variations in utilization, and assess the test's penetration into the target patient population.
Beyond utilization tracking, a PLA code supports outcomes research and evidence development. By linking PLA-coded claims data with clinical outcomes databases, GDT can generate real-world evidence of the TRI score's predictive accuracy and clinical impact — evidence that will support future coverage expansion, including the potential pursuit of a National Coverage Determination ("NCD"), and will strengthen the clinical utility case for OncoPrecise GXP-47 across all payer channels.
D. Disadvantages and Risks of a PLA Code
We have carefully considered the potential disadvantages and risks associated with pursuing a PLA code and address each below.
1. Timeline Dependency
Obtaining a PLA code requires submission to and approval by the AMA CPT Editorial Panel, which introduces a timeline dependency into GDT's commercial planning. The next available submission deadline for a PLA code application is June 28, 2024, for consideration at the AMA CPT Editorial Panel's September 2024 meeting. If the code is approved at that meeting, the effective date would be approximately Q1 2025, aligning with the next quarterly PLA code update cycle.
This timeline means that GDT will not have an assigned PLA code prior to approximately January 1, 2025, even under the most favorable scenario. If GDT intends to commence commercial billing prior to that date, it will need an interim billing strategy (discussed below). Moreover, any delay in the PLA code submission process — whether due to application preparation issues, AMA procedural requirements, or requests for additional information from the AMA CPT Editorial Panel — would push the code assignment further out, potentially to the next quarterly cycle.
2. Interim Billing Gap
Until the PLA code is assigned and effective, GDT would need to bill under CPT 81479 (unlisted molecular pathology procedure) or another interim arrangement. As discussed in Section III.B above, billing under CPT 81479 results in uncertain and unpredictable reimbursement. This interim billing gap is a real but manageable risk: GDT should plan its commercial launch timeline to minimize the gap period, and should prepare robust claim documentation (including a detailed test description, clinical utility statement, and pricing justification) to support manual adjudication of CPT 81479 claims during the interim period. The separate Reimbursement Rate Analysis Memorandum will address interim billing strategies in greater detail.
3. Application Effort and Cost
Preparing a compliant PLA code application requires detailed documentation of the test methodology, clinical indications, specimen type, laboratory credentials, and supporting clinical evidence. This documentation effort involves time and resources from both Calderwood & Harkness and GDT's internal teams. However, this risk is substantially mitigated by the overlap between the PLA application documentation and the MolDx technical assessment dossier that is being prepared concurrently under the same engagement. Much of the substantive content — test description, clinical indications, analytical validation data, laboratory credentials — will be prepared once and adapted for both purposes. The marginal effort of the PLA application, relative to the MolDx dossier, is modest.
4. No Guarantee of Approval
While PLA code applications are generally approved by the AMA CPT Editorial Panel if the test meets the sole-source criteria and the application is complete and properly formatted, there is an inherent procedural risk that the application could be rejected or that the Panel could request additional information, resulting in a delay to the next quarterly cycle. Based on our review of recent PLA code application outcomes and our understanding of GXP-47's characteristics, we assess this risk as low. OncoPrecise GXP-47 clearly satisfies the sole-source criterion, has a well-defined proprietary name and laboratory identity, and presents no unusual characteristics that would give the Panel cause for concern. Nevertheless, we will prepare the application to the highest standard to minimize any risk of rejection or delay.
E. Proposed PLA Code Descriptor
Calderwood & Harkness, in coordination with Carraway Regulatory Advisors, Inc. (Janet Carraway, CPC, CCS-P, Principal), has developed the following proposed PLA code descriptor for OncoPrecise GXP-47:
"OncoPrecise GXP-47 (Genome Dx Therapeutics Inc.), genomic profiling, non-small-cell lung cancer, 47-gene RNA expression panel, formalin-fixed paraffin-embedded tissue, algorithm-derived Therapy Response Index (TRI) score."
This proposed descriptor has been crafted to conform to the AMA's PLA code formatting requirements and to comprehensively describe the test. The descriptor elements are as follows:
• Proprietary test name: "OncoPrecise GXP-47" — required by AMA PLA formatting guidelines to identify the specific test.
• Laboratory/manufacturer identification: "(Genome Dx Therapeutics Inc.)" — required by AMA PLA formatting guidelines to identify the entity performing or manufacturing the test.
• Clinical application: "genomic profiling, non-small-cell lung cancer" — identifies the disease category and general clinical context.
• Methodology: "47-gene RNA expression panel" — specifies the technical scope of the test, including the number of genes and the analyte type (RNA expression).
• Specimen type: "formalin-fixed paraffin-embedded tissue" — identifies the required specimen type, consistent with the test's analytical validation.
• Algorithmic output: "algorithm-derived Therapy Response Index (TRI) score" — identifies the proprietary algorithmic output that is the core clinical deliverable of the test.
The proposed descriptor is subject to review and potential modification by the AMA CPT Editorial Panel. We will work with Carraway Regulatory Advisors to ensure that the descriptor remains compliant with any evolving AMA formatting requirements and that any modifications requested by the Panel preserve the essential identifying elements.
V. AMA CPT EDITORIAL PANEL — SUBMISSION REQUIREMENTS AND TIMELINE
A. Application Components
The PLA code application to the AMA CPT Editorial Panel must include the following components:
1. Completed PLA Code Application Form. The AMA provides a standardized application form for PLA code requests. The form must be completed in full, using the format specified by the AMA, and must include all required data fields.
2. Test Description and Clinical Indications. A comprehensive narrative describing the test, including its clinical purpose, intended patient population, the clinical decisions it is designed to inform, and the clinical utility it provides.
3. Specimen Type and Methodology Description. A detailed technical description of the specimen requirements (FFPE NSCLC tumor tissue), the analytical methodology (47-gene RNA expression panel via next-generation sequencing), and the algorithmic processing (TRI score computation).
4. Laboratory Information. Complete identification of the performing laboratory, including:
• CLIA Certificate Number: 05D2187432
• CAP Accreditation Number: 9074821
• National Provider Identifier: 1902847365
• Laboratory Name: Genome Dx Therapeutics Inc.
• Laboratory Address: 4720 Torrey Pines Road, Suite 300, San Diego, CA 92130
5. Supporting Clinical Literature. Published clinical evidence supporting the test's analytical and clinical validity, including the analytical validation study published in the Journal of Molecular Oncology Diagnostics, Volume 18, Issue 4, pages 412–429 (December 2022). Additional supporting literature regarding the clinical utility of RNA expression profiling for ICI therapy selection in NSCLC will be included as supplementary references.
6. Attestation of Sole-Source Status. A signed attestation from an authorized GDT officer confirming that OncoPrecise GXP-47 is performed exclusively at GDT's single reference laboratory and is not available as a kit, platform, or licensed technology from any other source.
7. Cover Letter. A cover letter submitted on behalf of GDT (or by GDT's authorized representative) introducing the application, summarizing the basis for the PLA code request, and identifying contact persons for AMA follow-up.
B. Submission Timeline
The PLA code application timeline is driven by the AMA CPT Editorial Panel's quarterly consideration cycle. The relevant dates for GDT's application are as follows:
• Submission Deadline: June 28, 2024, for consideration at the AMA CPT Editorial Panel's September 2024 meeting.
• AMA CPT Editorial Panel Meeting: September 2024 (exact date is typically mid-to-late September; the precise date will be confirmed by the AMA in advance of the meeting).
• Expected Code Effective Date (if approved): Q1 2025. PLA codes approved at the September meeting typically become effective on January 1 of the following year or within the next quarterly PLA code update cycle, depending on the timing of CMS's code activation process.
Working backward from the June 28, 2024 submission deadline, the following preparation timeline has been established:
This timeline provides adequate buffer for iterative review, revision, and quality assurance. Calderwood & Harkness will manage the timeline proactively and will alert GDT immediately if any milestone is at risk of delay.
C. Role of Carraway Regulatory Advisors
Carraway Regulatory Advisors, Inc. — led by Janet Carraway, CPC, CCS-P, Principal, and located at 233 South Wacker Drive, Suite 4100, Chicago, IL 60606 — has been retained by GDT to assist with coding mechanics, AMA submission formatting, and technical coding compliance review. Carraway brings deep expertise in the AMA PLA code application process, having successfully prepared and submitted PLA applications for multiple molecular diagnostic tests.
The division of responsibilities between Calderwood & Harkness and Carraway is as follows:
• Calderwood & Harkness will prepare the substantive content of the PLA code application, including the test description, clinical indications narrative, clinical utility discussion, legal attestations, and cover letter. Calderwood & Harkness will also provide legal review of the final application to ensure compliance with applicable regulatory requirements.
• Carraway Regulatory Advisors will handle coding-specific formatting, AMA submission logistics and procedural compliance, technical coding review (including verification that the proposed code descriptor conforms to AMA formatting conventions), and coordination with the AMA CPT Editorial Panel staff as needed.
Coordination between the two teams will be managed by Christopher Aiken (Calderwood & Harkness) and Kevin Driscoll (GDT), who will serve as the primary points of contact for day-to-day communications, document exchange, and timeline management.
VI. INTERACTION WITH LCD/MOLDX COVERAGE STRATEGY
A. Sequencing of PLA Code and LCD Filing
The coding strategy and coverage strategy for OncoPrecise GXP-47 are interdependent, and their sequencing must be carefully managed. Ideally, the PLA code assignment should precede or coincide with the LCD filing with Cascade Fiscal Intermediaries, LLC (CFI) and the MolDx technical assessment submission to Ridgeline Administrative Services, LLC (RAS). A specific, assigned PLA code strengthens the LCD application by providing the MACs with a defined billing code to reference in the coverage determination, simplifying claims processing, and eliminating ambiguity about the identity of the covered test.
GDT's target LCD filing date is August 2024. Under the proposed timeline, the PLA code application will have been submitted to the AMA by June 28, 2024 — approximately two months before the LCD filing. However, the PLA code will not have been formally assigned at the time of LCD filing, because the AMA CPT Editorial Panel will not consider the application until its September 2024 meeting.
It is permissible, and not uncommon, to reference a pending PLA code in an LCD request and MolDx technical assessment dossier. GDT's LCD application can describe the PLA code application, reference the proposed code descriptor, and indicate the expected code effective date. Once the PLA code is assigned, GDT can provide the assigned code number to CFI and Ridgeline for incorporation into the final LCD. We recommend this approach as the most effective means of aligning the coding and coverage timelines without delaying the LCD filing.
The MolDx technical assessment dossier, which is being developed concurrently by Calderwood & Harkness in collaboration with Larkfield Scientific Consulting (Dr. Nathan Ostroff), will reference the proposed PLA code descriptor throughout and will be updated to include the assigned PLA code number once it becomes available. This ensures consistency between the coding application and the coverage dossier and presents a unified, narrative to the MACs and MolDx program.
B. Impact on Reimbursement Rate Setting
Once the PLA code is assigned, CMS will initiate the process of establishing a Medicare reimbursement rate for the new code through the crosswalk or gapfill process under the CLFS. The mechanics of this process are as follows:
Under the crosswalk methodology, CMS assigns the new code a payment rate equal to the existing CLFS rate of a comparator code that CMS determines is analogous in terms of resource costs, test complexity, and clinical utility. GDT can influence this process by submitting a crosswalk recommendation identifying specific comparator codes and providing a rationale for why those comparators are appropriate.
Under the gapfill methodology, MACs establish a payment rate for the new code based on range data sources, including charges, resources required, and analogy to other tests. CMS then uses the MAC-determined rates to set a national CLFS rate. The gapfill process is typically used when no adequate crosswalk comparator exists.
GDT's strategy should be to advocate strongly for a crosswalk methodology, identifying Elara 0250U ($3,742) and Marlowe Asset Management 0239U ($4,206) as the primary comparators, with CPT 81455 ($2,919) as a secondary reference. The detailed crosswalk and gapfill analysis — including the rationale for GDT's $3,850 target rate, the justification for the 6.28% premium over the weighted average of comparators, and the identification of any risks in the CMS rate-setting process — will be provided in the separate Reimbursement Rate Analysis Memorandum, which Calderwood & Harkness will deliver following completion of the crosswalk research.
VII. RECOMMENDATION
Based on the foregoing analysis, Calderwood & Harkness's recommendations are as follows:
Primary Recommendation. GDT should pursue a PLA code for OncoPrecise GXP-47, targeting submission of the PLA code application to the AMA CPT Editorial Panel by the June 28, 2024 deadline for consideration at the September 2024 meeting.
Rationale Summary. This recommendation is grounded in the following cumulative considerations:
1. Existing CPT codes are inadequate. CPT 81455 presents a gene count mismatch, a methodology mismatch, a $931/test reimbursement shortfall, coverage pathway complications, and compliance risks. CPT 81479 offers no established reimbursement rate and imposes unsustainable administrative burdens. Code stacking is disfavored by CMS and the MolDx program, creates audit risk, and does not support a clean LCD.
2. A PLA code captures the proprietary nature of GXP-47. The PLA code descriptor will identify OncoPrecise GXP-47 by name, specify the 47-gene RNA expression methodology, and describe the proprietary TRI algorithm — none of which are captured by any existing CPT code.
3. A PLA code supports a premium reimbursement rate. A test-specific PLA code is necessary for GDT to pursue a $3,850/test Medicare reimbursement rate through the crosswalk or gapfill process, supported by comparables Elara 0250U ($3,742) and Marlowe Asset Management 0239U ($4,206).
4. A PLA code aligns with the LCD/MolDx coverage pathway. A specific billing code enables CFI and Ridgeline to establish a clean, test-specific LCD for OncoPrecise GXP-47.
5. The PLA code approach is consistent with industry precedent. Comparable proprietary oncology diagnostics — Elara GeneSight Onco-48 (0250U) and Marlowe Asset Management TumorMap Pro (0239U) — have successfully obtained PLA codes and test-specific reimbursement rates through this pathway.
6. The timeline is compatible with GDT's commercial planning. The PLA code application timeline (submission by June 28, 2024; potential approval September 2024; effective Q1 2025) aligns with GDT's commercial launch planning and the anticipated CLARITY-LUNG trial data readout timeline.
Alternative/Fallback Strategy. If the PLA code application cannot be submitted by the June 28, 2024 deadline, or if the AMA CPT Editorial Panel rejects the application or requests additional information, GDT should implement the following fallback approach:
• Interim Billing. GDT should plan for interim billing under CPT 81479 (unlisted molecular pathology procedure) with a well-documented test description, clinical utility statement, and pricing justification to support manual claim adjudication. Calderwood & Harkness will prepare a standardized claim documentation package for this purpose.
• Resubmission at Next Available Cycle. GDT should pursue the PLA code application at the next available AMA quarterly submission cycle, addressing any deficiencies identified by the Panel and incorporating any additional clinical evidence that may become available.
• MAC Communication. GDT should proactively communicate with CFI and Ridgeline regarding the pending PLA code application status and the interim billing arrangement, to avoid any adverse inferences from the use of an unlisted code.
VIII. NEXT STEPS AND ACTION ITEMS
The following table sets forth the immediate action items, responsible parties, and target dates for the PLA code application and related workstreams:
We will schedule a working call with Theresa Nakamura, Kevin Driscoll, and Janet Carraway during the week of March 18, 2024 to confirm the action plan, discuss any questions regarding this memorandum, and initiate the draft PLA application preparation. Christopher Aiken will coordinate scheduling.
IX. QUALIFICATIONS AND LIMITATIONS
This memorandum constitutes legal advice provided by Calderwood & Harkness LLP to Genome Dx Therapeutics Inc. in connection with Matter No. 1043-00002 and is protected by the attorney-client privilege. This memorandum is intended solely for the use of the named recipients and other authorized personnel of Genome Dx Therapeutics Inc. and should not be disclosed to third parties without the prior written consent of Calderwood & Harkness LLP, except as may be necessary to share with GDT's retained advisors (including Carraway Regulatory Advisors, Inc.) who are subject to appropriate confidentiality obligations.
The analysis set forth in this memorandum is based on the current AMA CPT coding framework, CMS Clinical Laboratory Fee Schedule pricing methodology, MolDx program requirements, and applicable Medicare Administrative Contractor policies as of the date of this memorandum (March 11, 2024). The AMA, CMS, MACs, and the MolDx program periodically revise their policies, procedures, and requirements, and any such changes occurring after the date of this memorandum may affect the analysis and recommendations contained herein. Calderwood & Harkness will monitor relevant developments and will advise GDT of any material changes.
This memorandum does not address the U.S. Food and Drug Administration ("FDA") regulatory status of OncoPrecise GXP-47, including any questions related to the FDA's regulation of laboratory-developed tests, premarket review requirements, or compliance with FDA guidance documents. FDA regulatory considerations are a separate matter that is outside the scope of this engagement and should be addressed by GDT's FDA regulatory counsel.
The reimbursement rate target of $3,850 per test referenced throughout this memorandum is an aspirational target informed by preliminary crosswalk analysis against comparable proprietary oncology diagnostic tests. The actual Medicare CLFS rate for OncoPrecise GXP-47 will be determined by CMS through the crosswalk or gapfill process following PLA code assignment. Calderwood & Harkness cannot guarantee that CMS will assign a rate equal to or exceeding the target rate. The forthcoming Reimbursement Rate Analysis Memorandum will provide a more detailed assessment of the likelihood of achieving the target rate and will identify strategies to optimize the rate-setting outcome.
Calderwood & Harkness has coordinated with Carraway Regulatory Advisors, Inc. on coding-specific aspects of this analysis, including the proposed PLA code descriptor and AMA submission requirements. Carraway's independent views on coding mechanics and AMA procedural requirements should be considered alongside this legal analysis. To the extent that there are any differences between Calderwood & Harkness's legal analysis and Carraway's coding guidance, we will work collaboratively to resolve them and will advise GDT of any material divergence.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Sean Morrissey Senior Associate, Healthcare & Life Sciences
By: ________
Christopher Aiken Associate, Healthcare & Life Sciences
Reviewed by:
________________________________________
Miriam Calloway Partner, Healthcare & Life Sciences
cc:
Miriam Calloway, Partner, Calderwood & Harkness LLP Joel Strauss, Partner, Calderwood & Harkness LLP Janet Carraway, CPC, CCS-P, Principal, Carraway Regulatory Advisors, Inc.
PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION This memorandum is protected by the attorney-client privilege and constitutes confidential legal advice. It is intended solely for the use of the named recipients and authorized personnel of Genome Dx Therapeutics Inc. Unauthorized disclosure, copying, or distribution is prohibited.