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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

TO: Miriam Calloway, Partner, Calderwood & Harkness LLP

FROM: Sean Morrissey, Senior Associate, and Christopher Aiken, Associate, Healthcare & Life Sciences Practice Group

DATE: February 28, 2024

RE: Medicare Coverage Landscape for NGS-Based Oncology Diagnostic Tests — Background Research Memorandum

MATTER: Genome Dx Therapeutics Inc. — OncoPrecise GXP-47 Medicare Coverage & Coding Strategy (Matter No. 1043-00002; Client No. 47832)

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I. Purpose and Scope of Memorandum

This memorandum was prepared at the direction of Miriam Calloway, Responsible Partner, in connection with Calderwood & Harkness LLP's engagement by Genome Dx Therapeutics Inc. ("GDT" or the "Company") to develop and execute a comprehensive Medicare coverage and coding strategy for GDT's OncoPrecise GXP-47 genomic diagnostic test (the "Test" or "GXP-47"). The purpose of this memorandum is to provide the engagement team with a foundational survey of the current Medicare coverage regulatory landscape applicable to next-generation sequencing ("NGS")-based oncology diagnostic tests. Specifically, this memorandum addresses the following subjects:

(a) An overview of the relevant Medicare coverage determination framework, including both the Local Coverage Determination ("LCD") and National Coverage Determination ("NCD") pathways, and the procedural and substantive requirements associated with each;

(b) The structure and role of the MolDx (Molecular Diagnostic Services) program administered by Ridgeline Administrative Services, LLC ("Ridgeline" or "RAS"), including the Technical Assessment process, evidentiary standards, and registration requirements;

(c) A survey of existing LCDs and NCDs for comparable molecular diagnostic tests, with particular emphasis on multi-gene expression panels used in oncology and tests employing proprietary algorithmic scoring methodologies;

(d) A review of current procedural coding pathways (CPT, PLA, and HCPCS) applicable to NGS-based oncology diagnostics and the reimbursement rate-setting mechanisms available to GDT;

(e) Recent CMS policy developments and rulemaking affecting genomic diagnostics, including developments concerning laboratory-developed tests ("LDTs"), Clinical Laboratory Fee Schedule ("CLFS") pricing methodology, and evolving evidence standards; and

(f) Identification of key regulatory stakeholders and procedural considerations relevant to the development and execution of GDT's coverage strategy.

This memorandum is intended as an internal research tool to inform strategy development. It will serve as the foundation for several subsequent work products that Calderwood & Harkness will prepare for GDT, including: (i) the Coding Strategy Memorandum, which will analyze the optimal CPT/PLA coding pathway for GXP-47; (ii) the LCD/MolDx Strategy Memorandum, which will set forth a detailed strategy for securing a favorable LCD through the MolDx program; and (iii) the MolDx Technical Assessment Dossier, which will compile and present the evidentiary package required for Ridgeline's technical review. Each of these deliverables is addressed at a preliminary level herein and will be the subject of dedicated analysis in forthcoming memoranda.

Background on Genome Dx Therapeutics Inc. GDT is a Delaware corporation headquartered at 4720 Torrey Pines Road, Suite 300, San Diego, California 92130. The Company operates a single CLIA-certified (CLIA Certificate No. 05D2187432), CAP-accredited (CAP Laboratory Accreditation No. 9074821) reference laboratory at its San Diego headquarters. GDT's National Provider Identifier ("NPI") is 1902847365. GDT is a clinical-stage molecular diagnostics company focused on the development and commercialization of proprietary genomic diagnostic tests for oncology applications.

Overview of OncoPrecise GXP-47. OncoPrecise GXP-47 is a 47-gene RNA expression panel laboratory-developed test performed on formalin-fixed, paraffin-embedded ("FFPE") non-small-cell lung cancer ("NSCLC") tumor tissue. The Test produces a proprietary composite Therapy Response Index ("TRI") score ranging from 0 to 100, which is designed to predict a patient's likelihood of response to immune checkpoint inhibitor ("ICI") therapy. The TRI score stratifies patients into three categories: High (TRI ≥ 70), Intermediate (TRI 40–69), and Low (TRI < 40). The intended clinical population is patients with Stage IIIB or Stage IV NSCLC who are being considered for first-line ICI therapy. Analytical validation of GXP-47 was completed on December 14, 2022, and the results were published in the Journal of Molecular Oncology Diagnostics (Vol. 18, Issue 4, pp. 412–429, December 2022). Clinical validation is ongoing through the CLARITY-LUNG trial (ClinicalTrials.gov Identifier: NCT05891247), a prospective, multi-site, blinded study being conducted at 14 U.S. clinical sites with a target enrollment of 1,200 patients. As of the engagement kickoff, enrollment stood at approximately 847 of 1,200 patients (approximately 70.6%). The CLARITY-LUNG trial is designed to assess the positive predictive value ("PPV") and negative predictive value ("NPV") of the TRI score for 12-month progression-free survival on ICI therapy.

II. Overview of Medicare Coverage Determination Framework

A. Statutory and Regulatory Foundation

Medicare coverage for clinical laboratory tests, including molecular diagnostic tests, is governed by a well-established statutory and regulatory framework. At its core, Medicare Part B covers diagnostic laboratory tests that are "reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member." This standard is codified in Section 1862(a)(1)(A) of the Social Security Act, 42 U.S.C. § 1395y(a)(1)(A), and constitutes the fundamental legal predicate for all Medicare coverage determinations. A test that does not satisfy the "reasonable and necessary" standard is excluded from Medicare coverage regardless of whether it is otherwise within a recognized Medicare benefit category.

The procedural framework for Medicare coverage determinations is set forth in 42 C.F.R. Part 405, Subpart I, which establishes the processes by which CMS and its contractors make and review coverage decisions. These regulations distinguish between National Coverage Determinations, which are made by CMS and apply uniformly across all Medicare Administrative Contractor jurisdictions, and Local Coverage Determinations, which are made by individual MACs and apply only within their respective jurisdictions.

Additional operational guidance is found in the Medicare Program Integrity Manual (CMS Publication 100-08), which addresses coverage determination procedures, claims processing standards, and program integrity requirements applicable to clinical laboratory services, and the Medicare Claims Processing Manual (CMS Publication 100-04), which contains detailed billing and coding instructions for clinical laboratory tests, including molecular diagnostic tests. Chapter 16 of Publication 100-04, addressing laboratory services, and Chapter 13, addressing clinical diagnostic laboratory services, are of particular relevance to molecular diagnostics coverage and reimbursement.

An important threshold consideration in the coverage analysis for any laboratory test is the distinction between benefit category determination and coverage determination. Under 42 U.S.C. § 1395x(s)(3), "diagnostic laboratory tests" are a recognized Medicare Part B benefit category. A test must first fall within a recognized benefit category before the "reasonable and necessary" coverage analysis is applied. For clinical laboratory tests, including molecular diagnostic tests such as GXP-47, the benefit category determination is generally straightforward, as diagnostic laboratory tests performed by a CLIA-certified laboratory are within the statutory benefit category. The substantive question for GXP-47 will be whether it satisfies the "reasonable and necessary" standard—a question that turns primarily on the strength of the clinical evidence supporting the test's analytical validity, clinical validity, and clinical utility.

B. Local Coverage Determinations (LCDs)

Definition and Legal Authority. Local Coverage Determinations are coverage decisions made by Medicare Administrative Contractors that are applicable within their respective geographic jurisdictions. An LCD specifies under what clinical circumstances a particular item or service is considered "reasonable and necessary" within the meaning of Section 1862(a)(1)(A) of the Social Security Act. The legal authority for LCDs is found in Section 1869(f) of the Social Security Act, 42 U.S.C. § 1395ff(f), and the implementing regulations at 42 C.F.R. § 426.400 et seq. LCDs may specify indications and limitations on coverage, applicable diagnosis codes (ICD-10-CM), procedure codes (CPT/HCPCS), documentation requirements, and other conditions of coverage. An LCD may also set forth the clinical circumstances under which a test will be deemed not reasonable and necessary, effectively establishing non-coverage criteria.

LCD Development Process. The development of an LCD follows a structured administrative process designed to provide transparency and public participation. The process typically proceeds as follows:

1. Initiation. An LCD may be initiated by the MAC based on its own assessment of coverage needs, or in response to a request from a laboratory, manufacturer, physician, or other stakeholder. In the molecular diagnostics context, the MolDx Technical Assessment process (discussed in Section III below) effectively serves as the initiation mechanism, as a positive MolDx TA recommendation triggers the MAC's development of an LCD.

2. Draft LCD. The MAC prepares a draft LCD that sets forth the proposed coverage criteria, indications and limitations, applicable coding, and documentation requirements. The draft is reviewed by the MAC's Medical Director responsible for the relevant clinical area.

3. Notice and Comment Period. The MAC publishes the draft LCD and opens a public comment period of not less than 45 days, as required by Section 1869(f)(2)(B) of the Social Security Act. Comments are accepted from interested parties, including laboratories, physicians, patient advocacy organizations, and industry stakeholders.

4. Comment Review and Final LCD. The MAC reviews all public comments, and the Medical Director may revise the LCD in response to substantive comments. The MAC then publishes the final LCD with a summary of comments received and the MAC's responses.

5. Effective Date. The final LCD becomes effective no sooner than 45 days after publication, providing affected parties with advance notice.

LCD Reconsideration and Appeal. Parties aggrieved by an LCD may seek reconsideration through the procedures set forth in 42 C.F.R. Part 426. An LCD reconsideration request may be filed by a Medicare beneficiary whose claim has been denied based on the LCD, or by an aggrieved party who can demonstrate standing. Reconsideration is reviewed by an Administrative Law Judge ("ALJ") and may result in the LCD being set aside if it is found to be inconsistent with the statutory "reasonable and necessary" standard, if the MAC failed to follow proper procedures, or if the LCD is not supported by the evidence considered by the MAC.

Jurisdictional Applicability. LCDs apply only within the issuing MAC's geographic jurisdiction. This means that a favorable LCD issued by one MAC does not automatically extend to other MAC jurisdictions, and a laboratory seeking nationwide Medicare coverage must either obtain favorable LCDs from multiple MACs or pursue a National Coverage Determination. However, within the MolDx program, participating MACs coordinate their coverage determinations through the centralized Technical Assessment process administered by Ridgeline, which provides a mechanism for achieving relatively consistent coverage across multiple MAC jurisdictions. This coordination is a significant advantage of the MolDx program and a key reason for recommending the MolDx/LCD pathway as GDT's initial coverage strategy.

Jurisdictional Analysis for GDT. GDT's San Diego laboratory falls within Medicare Administrative Contractor Jurisdiction E, which encompasses the state of California, along with other western states. Jurisdiction E is serviced by Cascade Fiscal Intermediaries, LLC ("CFI" or "Cascade"), headquartered at 2800 SW Moody Avenue, Suite 500, Portland, Oregon 97201. CFI is a MolDx-participating MAC, meaning that it utilizes the MolDx Technical Assessment process administered by Ridgeline for molecular diagnostic coverage determinations. The CFI Medical Director responsible for molecular diagnostics coverage determinations is Dr. William Hargrove, MD, FACP. The LCD Analyst assigned to genomic diagnostics at CFI is Sandra Phu.

CFI is the same MAC that issued GDT's existing LCD for OncoPrecise GXP-12, the Company's 12-gene panel used in early-stage breast cancer prognosis. That LCD, designated LCD L38472, has been effective since August 15, 2021, and was issued following a positive MolDx Technical Assessment. GDT's prior experience with CFI and the MolDx process in connection with the GXP-12 LCD provides the Company with familiarity with CFI's procedures and evidentiary expectations, which should inform and expedite the GXP-47 process.

C. National Coverage Determinations (NCDs)

Definition and Legal Authority. National Coverage Determinations are coverage decisions made by CMS at the national level that are applicable to all MACs and all Medicare beneficiaries nationwide. NCDs represent the highest level of Medicare coverage policy and supersede any contrary local coverage determinations. The legal authority for NCDs is found in Sections 1862(l) and 1869(f) of the Social Security Act, 42 U.S.C. §§ 1395y(l), 1395ff(f), and the implementing regulations at 42 C.F.R. Part 426.

NCD Process. The NCD process is considerably more formal and resource-intensive than the LCD process. It typically proceeds through the following stages:

1. Formal NCD Request or CMS Self-Initiation. An NCD may be requested formally by any interested party by submitting a written request to CMS's Coverage and Analysis Group ("CAG"). Unlike LCDs, NCDs cannot be directly initiated by the laboratory or manufacturer; rather, the decision to accept an NCD request for review lies within CMS's discretion. CMS may also self-initiate an NCD review.

2. CMS Acceptance for Review. CMS reviews the formal NCD request and determines whether to accept it for internal review. Acceptance is not guaranteed, and CMS considers factors such as the significance of the item or service, the strength of the evidence base, and whether an NCD is warranted given existing local coverage decisions.

3. CAG Review. Upon acceptance, CMS's Coverage and Analysis Group conducts a comprehensive review of the clinical evidence, including published literature, clinical trial data, professional society guidelines, and other relevant materials.

4. MEDCAC Input. For complex or novel determinations, CMS may convene the Medicare Evidence Development and Coverage Advisory Committee ("MEDCAC"), a federal advisory committee that provides independent expert input on the strength and adequacy of the clinical evidence. MEDCAC convening is at CMS's discretion and is not required for every NCD.

5. Proposed Decision. CMS publishes a proposed NCD decision (either coverage, non-coverage, or coverage with conditions) and opens a public comment period, typically 30 days.

6. Final NCD. Following review of public comments, CMS issues the final NCD, which becomes effective on the date of issuance.

NCD Timeline. The NCD process is significantly longer than the LCD process. CMS's statutory timeline for NCD decisions is generally six months from the date of acceptance for internally generated reviews and twelve months for externally requested reviews. However, in practice, NCDs for complex molecular diagnostic technologies frequently take twelve months or longer, and some determinations have remained in process for multiple years. This timeline consideration is a critical factor in GDT's coverage strategy sequencing.

Coverage with Evidence Development (CED). An important NCD mechanism relevant to GDT is the Coverage with Evidence Development ("CED") framework. CED is a mechanism by which CMS may grant conditional national coverage for items or services where the available evidence is promising but not yet definitive, contingent on the Medicare beneficiary's participation in an approved clinical study or data registry. The CED framework is codified at 42 C.F.R. § 405.207 and has been used by CMS in several NCD determinations for diagnostic and therapeutic technologies.

CED is potentially relevant to GDT's coverage strategy for OncoPrecise GXP-47. As of the engagement kickoff, the CLARITY-LUNG trial has enrolled approximately 847 of 1,200 targeted patients (approximately 70.6% enrollment). If interim or final clinical validation data from CLARITY-LUNG are strong but fall short of the evidentiary bar for full, unrestricted NCD coverage, CED could serve as a viable NCD pathway. Under a CED framework, CMS would grant national coverage for GXP-47 contingent on GDT's continued collection of clinical data through CLARITY-LUNG or a supplemental registry, with full coverage to be evaluated upon completion of the required evidence development. The CED pathway carries both advantages (earlier national coverage, continued data collection) and disadvantages (conditional coverage creates uncertainty for payers and referring physicians, and CED-covered tests may face lower utilization due to the participation requirements). The CED pathway will be analyzed in greater detail in the NCD Feasibility Assessment Memorandum anticipated for delivery in May 2024.

NCD vs. LCD Strategic Considerations. The choice between pursuing an LCD and pursuing an NCD involves several strategic trade-offs that are central to GDT's coverage strategy:

• Geographic Scope. NCDs provide nationwide Medicare coverage, whereas LCDs apply only within the issuing MAC's jurisdiction. For a laboratory like GDT that operates a single reference laboratory receiving specimens from physicians nationwide, an NCD is ultimately necessary for comprehensive Medicare coverage. However, an LCD issued by CFI (covering Jurisdiction E) would enable Medicare reimbursement for a significant portion of GDT's anticipated test volume while the Company pursues broader coverage.

• Timeline. LCDs can generally be obtained in a shorter timeframe than NCDs, particularly when pursued through the MolDx program. A realistic timeline from MolDx TA dossier submission to LCD issuance is approximately six to twelve months, compared to twelve to twenty-four months or longer for an NCD.

• Evidentiary Scrutiny. While both LCDs and NCDs require a demonstration that the test is "reasonable and necessary," NCDs are subject to more rigorous evidentiary review by CMS's Coverage and Analysis Group and, potentially, MEDCAC. The MolDx TA process, while rigorous, is generally more predictable and transparent in its evidentiary expectations.

• Initiation and Control. Laboratories can directly initiate the LCD/MolDx process by submitting a TA dossier and LCD request to the MAC. NCDs, by contrast, require a formal request to CMS or CMS self-initiation, and the laboratory has less control over the timeline and process.

• Precedent. An NCD creates binding national precedent that supersedes all local coverage decisions. A favorable LCD creates persuasive but non-binding precedent that other MACs may consider but are not obligated to follow.

D. Relationship Between LCDs and NCDs

LCDs remain in effect unless and until superseded by an NCD addressing the same item or service. In the absence of an NCD, MACs retain full discretion to make local coverage decisions, and LCDs issued by one MAC do not bind other MACs. When an NCD is issued, it supersedes any inconsistent LCD, and MACs must conform their local coverage policies to the NCD.

This framework creates a well-established strategic sequencing pattern that many molecular diagnostic companies have followed successfully. The typical approach is to pursue an LCD first — because it is faster, more predictable, and within the laboratory's direct control — and then pursue an NCD for nationwide coverage expansion once the LCD is in place and additional clinical evidence has accumulated. The existence of a favorable LCD, and the real-world experience and outcomes data generated during the LCD coverage period, can strengthen the subsequent NCD application by providing evidence of test utilization, clinical adoption, and potentially, real-world clinical utility data.

This sequencing approach is contemplated for OncoPrecise GXP-47. The current strategy envisions filing an LCD request with CFI and submitting the MolDx Technical Assessment Dossier to Ridgeline in August 2024, following PLA code assignment. Upon successful LCD issuance, GDT would pursue an NCD through CMS, with the NCD pursuit estimated to commence approximately eighteen to twenty-four months after LCD issuance. This timeline allows for the accumulation of additional clinical evidence from CLARITY-LUNG final data and early commercial experience under the LCD, which will strengthen the NCD application.

III. The MolDx Program: Structure, Requirements, and Procedures

A. Overview and History

The Molecular Diagnostic Services ("MolDx") program was established in 2011 to provide a standardized, evidence-based framework for evaluating and establishing Medicare coverage for molecular diagnostic tests. Prior to MolDx, Medicare coverage determinations for molecular diagnostic tests were made independently by individual MACs, resulting in significant variation in coverage decisions, evidentiary requirements, and coding practices across jurisdictions. The MolDx program was created to address these inconsistencies and to ensure that molecular diagnostic tests covered by Medicare meet rigorous standards for analytical validity, clinical validity, and clinical utility.

The MolDx program is administered by Ridgeline Administrative Services, LLC ("Ridgeline" or "RAS"), headquartered at 1600 Hampton Street, Suite 700, Columbia, South Carolina 29201. Ridgeline serves as the central coordinating entity for the MolDx program, conducting Technical Assessments of molecular diagnostic tests and providing recommendations to participating MACs regarding coverage. The MolDx Technical Assessment Director is Dr. Catherine Embry, PhD, who oversees the scientific review of all molecular diagnostic test submissions.

The MolDx program operates across multiple participating MAC jurisdictions. Critically for GDT, Jurisdiction E — the MAC jurisdiction covering California, where GDT's reference laboratory is located — is serviced by Cascade Fiscal Intermediaries, LLC, which is a MolDx-participating MAC. This means that GDT's LCD application for OncoPrecise GXP-47 will be evaluated through the MolDx framework, with Ridgeline conducting the Technical Assessment and CFI making the formal LCD coverage decision based on Ridgeline's recommendation.

The overarching purpose of the MolDx program is to establish uniform evidence requirements, technical assessment standards, and coverage criteria for molecular diagnostic tests, thereby reducing variation in LCD decision-making across participating MAC jurisdictions and ensuring that Medicare coverage decisions for molecular diagnostics are grounded in sound scientific evidence. The MolDx program has become the de facto standard for molecular diagnostic coverage determinations and is widely regarded by industry participants, clinical laboratories, and regulatory counsel as the primary pathway for obtaining Medicare coverage for novel molecular diagnostic tests.

B. MolDx Technical Assessment Process

Laboratories seeking Medicare coverage for a new molecular diagnostic test must submit a Technical Assessment ("TA") dossier to Ridgeline for evaluation. The TA dossier is the central evidentiary submission upon which Ridgeline bases its coverage recommendation to the participating MAC. The dossier must comprehensively address the test's analytical validity, clinical validity, clinical utility, and health economic impact. The detailed requirements of the TA dossier, which will inform the MolDx Technical Assessment Dossier that Calderwood & Harkness is preparing for GDT, are summarized below.

1. Test Description and Intended Use. The dossier must contain a detailed description of the test methodology, the specific analytes measured, the specimen type and collection requirements, the clinical indication for which the test is intended, and the intended patient population. For OncoPrecise GXP-47, this section will describe: the 47-gene RNA expression panel; the FFPE NSCLC tumor tissue specimen type; the proprietary TRI score algorithm and its output (a composite score ranging from 0 to 100); the three stratification categories (High ≥ 70, Intermediate 40–69, Low < 40); and the intended clinical population of Stage IIIB/IV NSCLC patients being considered for first-line ICI therapy. This section must also address the test's intended clinical context — specifically, that the TRI score is designed to be used by oncologists, in conjunction with other clinical factors, to inform treatment decisions regarding ICI therapy versus platinum-based chemotherapy or other treatment modalities.

2. Analytical Validation. The dossier must include comprehensive evidence demonstrating the test's analytical performance characteristics. Analytical validation encompasses demonstration of test accuracy, precision (both intra-run and inter-run reproducibility), reportable range and analytical sensitivity, reference intervals, specimen stability across various storage and handling conditions, and interference testing. For GXP-47, analytical validation was completed on December 14, 2022, and the results have been published in a peer-reviewed journal (Journal of Molecular Oncology Diagnostics, Vol. 18, Issue 4, pp. 412–429, December 2022). The publication of analytical validation data in a peer-reviewed journal is a significant advantage, as MolDx reviewers place substantial weight on peer-reviewed evidence. Calderwood & Harkness will review the published analytical validation data in detail and assess whether any supplemental analytical validation studies are needed to address potential gaps identified during dossier preparation.

3. Clinical Validation. The dossier must demonstrate that the test accurately identifies the clinical condition or predicts the clinical outcome it is intended to assess. For predictive biomarker tests like GXP-47, clinical validation requires evidence that the test output (in this case, the TRI score) is associated with the clinical outcome of interest (in this case, response to ICI therapy, as measured by 12-month progression-free survival). For GDT, clinical validation evidence relies primarily on the CLARITY-LUNG trial (NCT05891247), which is a prospective, multi-site, blinded study specifically designed to validate the TRI score's predictive performance. The trial is targeting enrollment of 1,200 patients at 14 U.S. clinical sites and will assess both PPV and NPV for 12-month progression-free survival on ICI therapy. GDT has indicated that an interim analysis is planned at 50% enrollment (n=600), with final data readout projected for Q4 2024. In addition to CLARITY-LUNG, GDT is developing supplemental retrospective analyses using archived specimen cohorts to provide additional clinical validation evidence. The relative weight and sufficiency of interim versus final CLARITY-LUNG data, and the role of supplemental retrospective studies, are discussed further in Section VII of this memorandum.

4. Clinical Utility. The dossier must include evidence that use of the test improves patient outcomes, changes clinical management decisions, or provides actionable information to physicians. Clinical utility is often the most challenging evidentiary standard to satisfy, as it requires demonstration that the test's results lead to tangible improvements in clinical care — not merely that the test accurately measures what it claims to measure. For GXP-47, clinical utility evidence must demonstrate that the TRI score influences oncologist treatment decisions (e.g., selection of ICI therapy versus platinum-based chemotherapy) and that patients whose treatment was informed by TRI score-guided decisions experience better outcomes than those managed without the test. Larkfield Health Economics, LLC ("Larkfield"), through its Principal Consultant, Dr. Nathan Ostroff, has been retained directly by GDT (not by Calderwood & Harkness) to prepare the clinical utility and cost-effectiveness analyses for the MolDx dossier. Calderwood & Harkness will review and incorporate Larkfield's work product into the dossier.

5. Health Economic Analysis. The dossier should include cost-effectiveness and budget impact analyses demonstrating that the test provides value relative to existing diagnostic and treatment paradigms. Health economic evidence, while not always dispositive, can strengthen a TA dossier by demonstrating that the test produces cost savings or cost-effective outcomes at the population level. This analysis is also being prepared by Larkfield.

6. Bibliography. The dossier must include a comprehensive annotated bibliography supporting all evidence claims. Calderwood & Harkness will compile and annotate this bibliography, which is expected to encompass approximately 43 peer-reviewed publications spanning the analytical validation of GXP-47, the molecular biology of the gene expression signatures included in the panel, the clinical evidence for ICI therapy in NSCLC, the performance characteristics of the TRI algorithm, and relevant comparator studies.

TA Review Timeline. Ridgeline's review of a TA dossier typically takes 60 to 120 days from the date of submission, though complex assessments — particularly for multi-gene panels with proprietary algorithmic outputs — may take longer. During the review period, Ridgeline may request additional information or clarification from the submitting laboratory, which can extend the timeline. It is important to note that any deficiencies or gaps identified during the TA review can result in a request for additional information that may significantly delay the process.

TA Outcomes. The MolDx Technical Assessment process results in one of three outcomes:

(a) Positive Assessment. The test meets Ridgeline's evidentiary standards for analytical validity, clinical validity, and clinical utility. A positive TA recommendation is forwarded to the MAC (CFI), which then proceeds with LCD development.

(b) Negative Assessment. The evidence submitted is insufficient to support coverage. A negative TA recommendation typically results in the MAC declining to issue an LCD or issuing a non-coverage determination.

(c) Request for Additional Information. Ridgeline determines that the submitted evidence is incomplete or requires supplementation, and requests additional data or analyses from the laboratory before rendering a final TA recommendation.

Relationship Between MolDx TA and LCD. A positive MolDx Technical Assessment is, in practice, a prerequisite for a favorable LCD issued by a MolDx-participating MAC. While the MAC retains formal legal authority over the LCD decision, the MAC's Medical Director relies heavily on Ridgeline's TA recommendation in making the coverage determination. A negative MolDx TA effectively precludes a favorable LCD in MolDx-participating jurisdictions. This underscores the critical importance of preparing a comprehensive, well-supported TA dossier and the significant risk associated with submitting a dossier that contains evidentiary gaps or relies on preliminary data.

C. Unique Molecular Identifier (UMID) and Test Registration

The MolDx program requires each molecular diagnostic test to be registered in the DEX (Diagnostic Exchange) registry and assigned a Unique Molecular Identifier ("UMID"). The DEX registry serves as the central test registry for the MolDx program, allowing Ridgeline and participating MACs to track registered tests, associated evidence, and coverage status. Each test variant — defined by its specific analytes, methodology, specimen type, and intended use — requires its own UMID.

UMID registration must be completed prior to or concurrent with the TA dossier submission. The registration process requires the submitting laboratory to provide detailed test information, including the test name, methodology, analytes, specimen type, clinical indication, and performing laboratory CLIA information. Registration is completed through the DEX online portal.

GDT will need to register OncoPrecise GXP-47 in the DEX registry and obtain a UMID as part of the pre-submission process. GDT's existing test, OncoPrecise GXP-12, is already registered in the DEX registry under a separate UMID, which provides GDT with familiarity with the registration process. Calderwood & Harkness recommends initiating the GXP-47 DEX registration process promptly to ensure that the UMID is assigned prior to the targeted TA dossier submission date.

D. MolDx Evidence Standards for NGS-Based Tests

The MolDx program applies heightened evidentiary scrutiny to multi-gene NGS panels due to the inherent complexity and volume of analytes involved. Unlike single-gene or single-analyte tests, multi-gene panels present unique validation challenges because analytical and clinical performance must be demonstrated both at the individual gene/analyte level and at the panel level. This is particularly true for tests like OncoPrecise GXP-47 that combine multi-gene expression measurements with a proprietary algorithm to generate a composite score.

Ridgeline has published guidance documents setting forth evidence requirements for multi-gene panels. These documents emphasize several key principles relevant to GDT's submission:

• Per-Gene and Panel-Level Analytical Validation. Analytical validation must demonstrate performance at both the individual gene level (accuracy and reproducibility for each of the 47 genes in the panel) and the panel level (overall assay performance, including the composite TRI score output).

• Clinical Validity for Composite Scores and Algorithms. For tests that generate a proprietary algorithmic output — such as the TRI score — clinical validation must demonstrate that the algorithm itself has been validated as a predictor of the clinical outcome of interest. It is not sufficient to demonstrate clinical validity for individual gene expression measurements; the composite algorithmic output must be independently validated. This requirement is particularly relevant to GDT, as the TRI score is the clinically actionable output of GXP-47 and the basis upon which treatment decisions will be made.

• Clinical Utility for Composite Score-Guided Treatment Decisions. Clinical utility evidence must demonstrate that the composite score provides actionable information that changes clinical management and leads to improved patient outcomes. For predictive biomarker tests, this typically requires evidence that physicians change their treatment decisions based on the test result and that patients managed using score-guided treatment selection have better outcomes.

The CLARITY-LUNG trial is specifically designed to address these evidentiary requirements. The trial's primary endpoints — PPV and NPV for 12-month progression-free survival on ICI therapy — are directly relevant to the clinical validation of the TRI score as a predictive biomarker. The trial's prospective, multi-site, blinded design is intended to produce Tier 1 evidence that meets MolDx's highest evidentiary standards.

IV. Survey of Existing LCDs and NCDs for Comparable Molecular Diagnostic Tests

A. Methodology

To inform GDT's coverage strategy, Calderwood & Harkness conducted a comprehensive survey of existing Medicare coverage determinations for molecular diagnostic tests comparable to OncoPrecise GXP-47. The survey covered the CMS Medicare Coverage Database (available at https://www.cms.gov/medicare-coverage-database), MolDx and Ridgeline publications, MAC LCD indexes, and relevant industry publications. The survey focused on three categories of tests: (1) NGS-based multi-gene oncology panels that have obtained Medicare coverage; (2) gene expression profiling tests that employ algorithmic composite scores to generate clinically actionable results; and (3) tests used for treatment selection or response prediction in solid tumors. The results are organized by coverage status and relevance to OncoPrecise GXP-47. A comprehensive tabular summary of all LCDs reviewed is included in Appendix A (to be compiled separately).

B. Key Existing LCDs for Comparable Tests

1. Elara Genomic Sciences, Inc. — "GeneSight Onco-48" (PLA Code 0250U)

Elara Genomic Sciences, Inc. is a Massachusetts-based molecular diagnostics company that offers GeneSight Onco-48, a 48-gene expression panel for solid organ tumors. GeneSight Onco-48 analyzes RNA expression across 48 genes from FFPE tumor tissue specimens and generates an algorithmic composite score output used to characterize tumor biology and inform treatment planning. The test is assigned PLA Code 0250U and currently receives Medicare reimbursement at a rate of $3,742 per test.

GeneSight Onco-48 has an active LCD through a MolDx-participating MAC, establishing Medicare coverage within the issuing MAC's jurisdiction. The LCD was issued following a positive MolDx Technical Assessment and provides coverage for the test when ordered for patients with specified solid organ malignancies meeting defined clinical criteria.

Relevance to GDT. GeneSight Onco-48 is identified as the primary crosswalk comparator for OncoPrecise GXP-47 for purposes of reimbursement rate determination. The two tests share several important characteristics: similar gene panel size (48 genes vs. 47 genes), comparable specimen type (FFPE tissue), and the use of an algorithmic composite score output. These similarities support the use of GeneSight Onco-48 as a crosswalk reference for establishing the Medicare reimbursement rate for GXP-47.

Key Differentiator. GeneSight Onco-48 is a pan-tumor panel applicable across multiple solid organ tumor types, whereas OncoPrecise GXP-47 is specifically designed for NSCLC and generates a treatment-response prediction score specific to ICI therapy. This distinction is clinically significant and supports GDT's argument that GXP-47 provides a differentiated clinical utility — namely, a specific, validated prediction of ICI therapy response in a defined patient population — that justifies a reimbursement rate at or above GeneSight Onco-48's $3,742 rate.

2. Marlowe Asset Management Molecular Diagnostics, Inc. — "TumorMap Pro" (PLA Code 0239U)

Marlowe Asset Management Molecular Diagnostics, Inc. is a California-based molecular diagnostics company that offers TumorMap Pro, an NGS-based comprehensive genomic profiling panel. TumorMap Pro performs both DNA and RNA sequencing across a broad panel of genes and generates a comprehensive genomic profile that identifies actionable mutations, gene fusions, and other genomic alterations relevant to treatment selection. The test is assigned PLA Code 0239U and currently receives Medicare reimbursement at a rate of $4,206 per test.

TumorMap Pro has an active LCD through a MolDx-participating MAC, establishing Medicare coverage for the test when ordered for patients with advanced solid organ malignancies meeting defined clinical criteria.

Relevance to GDT. TumorMap Pro serves as a crosswalk comparator supporting GDT's target reimbursement rate of $3,850 per test. The $4,206 rate for TumorMap Pro demonstrates that Medicare will reimburse NGS-based oncology panels at rates above $4,000, lending support to GDT's target rate, which is $356 below TumorMap Pro's current rate.

Key Differentiator. TumorMap Pro is a broader comprehensive genomic profiling panel that analyzes both DNA and RNA, identifies actionable mutations and gene fusions, and serves a different clinical utility framework than GXP-47. While TumorMap Pro is used primarily to identify specific genomic alterations for which targeted therapies exist, GXP-47 is designed to predict overall response to a class of therapy (ICI) based on a composite gene expression profile. These differences in clinical utility framework, panel scope, and analytical methodology will need to be addressed in the crosswalk analysis.

3. CPT Code 81455 — NGS, Solid Organ Neoplasm, 51+ Genes

CPT Code 81455 is a Category I CPT code applicable to NGS panels analyzing 51 or more genes for solid organ neoplasms. This is not a PLA code; rather, it is a general category code available to any laboratory performing a qualifying NGS panel meeting the code's criteria. The current Medicare reimbursement rate for CPT 81455 is $2,919 per test.

Relevance to GDT. CPT 81455 serves as an important reference point in the crosswalk analysis. The code establishes a floor reimbursement rate for large-panel NGS testing in solid tumors. Significantly, GDT's 47-gene panel falls just below the 51-gene threshold for this code, meaning that GXP-47 does not qualify for billing under CPT 81455. This underscores the importance of obtaining a proprietary PLA code for GXP-47 rather than attempting to use existing Category I CPT codes, which would require code stacking (i.e., billing multiple lower-value codes for a single test), an approach that typically results in lower total reimbursement, coding complexity, and increased audit risk.

Reimbursement Rate Analysis. A weighted average of the three primary comparator rates yields the following:

GDT's target reimbursement rate of $3,850 represents a 6.28% premium over this weighted average. This premium is justified by the proprietary TRI algorithm, the NSCLC-specific clinical validation through a prospective clinical trial, and the differentiated clinical utility of a predictive biomarker for ICI therapy response — a clinical need for which no current Medicare-covered test provides a directly comparable validated solution. The detailed reimbursement rate analysis, including sensitivity analyses and alternative comparator scenarios, will be set forth in the Reimbursement Rate Analysis Memorandum, anticipated for delivery in May 2024.

4. Other Relevant LCDs Surveyed

Calderwood & Harkness's survey identified several additional LCDs for gene expression profiling tests in oncology that, while not direct crosswalk comparators, provide useful precedent for GDT's submission strategy:

• Breast Cancer Gene Expression Panels. Several breast cancer gene expression profiling tests with algorithmic composite scores have obtained favorable LCDs through the MolDx program. These tests share important structural similarities with GXP-47 in that they combine multi-gene expression measurements with proprietary algorithms to produce clinically actionable scores. Notably, GDT's existing OncoPrecise GXP-12 — a 12-gene expression panel used in early-stage breast cancer prognosis — has LCD L38472, effective August 15, 2021, issued by CFI. The successful coverage determination for GXP-12 provides favorable precedent for GDT within CFI's jurisdiction and demonstrates that CFI and the MolDx program have accepted GDT's general analytical platform and laboratory capabilities.

• Prostate Cancer Genomic Classifiers. Genomic classifier tests for prostate cancer that use multi-gene expression profiles to predict disease aggressiveness and inform treatment decisions have obtained favorable LCDs. These tests provide precedent for the use of composite algorithmic scores derived from gene expression data to guide treatment selection in oncology.

• Colon Cancer Recurrence Score Assays. Gene expression-based assays predicting recurrence risk in colon cancer have also obtained LCDs. These tests further demonstrate the MolDx program's willingness to cover gene expression profiling tests with algorithmic outputs when supported by adequate clinical validation and utility evidence.

Common Evidentiary Themes Across Successful LCDs. Analysis of the LCDs surveyed reveals several consistent evidentiary themes associated with successful coverage determinations:

(a) Prospective Clinical Validation. Prospective clinical validation studies are strongly preferred over retrospective analyses. Tests supported by prospective, multi-site, blinded clinical validation studies have consistently received more favorable coverage determinations than those relying solely on retrospective data.

(b) Clinical Utility Data. Evidence demonstrating that the test changes physician treatment decisions is a critical factor. Successful submissions typically include decision-impact studies showing that physicians changed their clinical management based on the test result, and ideally, that patients whose care was guided by the test experienced improved outcomes.

(c) Peer-Reviewed Publication. Publication of analytical and clinical validation data in peer-reviewed journals is expected. Unpublished data or data available only in abstract form is generally insufficient.

(d) Demonstrated Analytical Validity. Comprehensive analytical validation, including accuracy, precision, reproducibility, and specimen stability data, is a baseline requirement.

C. National Coverage Determinations for NGS-Based Tests

1. CMS NCD for NGS in Advanced Cancer (NCD 90.2)

CMS issued a National Coverage Determination for NGS-based diagnostic tests in advanced cancer patients, designated NCD 90.2. This NCD represents a landmark coverage decision for the molecular diagnostics field and establishes a framework for Medicare coverage of NGS-based testing in patients with advanced cancer.

Scope of Coverage. NCD 90.2 covers NGS as a companion diagnostic or as a comprehensive genomic profiling test for patients with recurrent, relapsed, refractory, metastatic, or advanced stage III/IV cancer who have not been previously tested with NGS for the same primary diagnosis and who have decided to seek further cancer treatment. The NCD covers both FDA-approved or FDA-cleared NGS tests and laboratory-developed tests performed by CLIA-certified, CAP-accredited laboratories that meet certain evidence and reporting criteria.

Coverage with Evidence Development (CED) Component. NCD 90.2 includes a CED component that permits coverage for NGS tests that do not yet meet all of the NCD's full-coverage criteria, contingent on the Medicare beneficiary's participation in a CMS-approved clinical study. This CED pathway was specifically designed to encourage evidence development for emerging NGS-based tests while providing Medicare beneficiaries with access to promising technologies.

Relevance to GDT. OncoPrecise GXP-47 targets Stage IIIB/IV NSCLC, a patient population that falls squarely within the "advanced cancer" population covered by NCD 90.2. However, the applicability of NCD 90.2 to GXP-47 requires careful analysis, as the NCD was primarily designed to cover comprehensive genomic profiling tests that identify actionable genomic alterations (e.g., mutations, amplifications, fusions) for which targeted therapies exist. GXP-47 is a gene expression panel (RNA-based) that predicts overall treatment response to a class of therapy (ICI) based on a composite expression profile; it does not identify specific actionable mutations or biomarkers in the traditional sense of comprehensive genomic profiling.

Whether GXP-47 can be positioned to leverage NCD 90.2 — either as a test falling within the NCD's current coverage criteria or through its CED component — or whether a separate LCD/NCD pathway is required, is a question that requires further analysis. The distinction between comprehensive genomic profiling panels identifying actionable mutations and predictive gene expression panels generating composite algorithmic scores may place GXP-47 outside the intended scope of NCD 90.2. This analysis will be addressed in the NCD Feasibility Assessment Memorandum.

2. Other Relevant NCDs

Calderwood & Harkness's survey identified several additional NCDs affecting molecular diagnostics that, while not directly applicable to GXP-47, provide useful context for understanding CMS's approach to coverage for genomic and molecular diagnostic tests. These include NCDs for pharmacogenomic testing, which addresses the use of genetic testing to guide medication selection and dosing, and NCDs for hereditary cancer genetic testing, which addresses germline genetic testing for cancer susceptibility.

A key distinction that emerges from the NCD landscape is the difference between diagnostic NGS panels identifying actionable somatic mutations (covered under NCD 90.2) and prognostic or predictive gene expression panels like GXP-47 that generate composite algorithmic scores. This distinction has significant implications for GDT's coverage pathway, as existing NCDs do not clearly encompass predictive gene expression panels with algorithmic outputs. The NCD pathway considerations for GDT will be further developed in the NCD Feasibility Assessment Memorandum, which is anticipated for delivery in May 2024.

V. Coding Pathways: CPT, PLA, and HCPCS Considerations

A. CPT Coding for Molecular Diagnostic Tests

The Current Procedural Terminology ("CPT") coding system, maintained by the American Medical Association ("AMA"), provides the procedural codes used for billing and reimbursement of molecular diagnostic tests under Medicare. The CPT coding hierarchy for molecular diagnostics includes several categories of codes, each with different characteristics and suitability for various types of tests:

• Tier 1 Codes (Category I). These are established, high-volume procedure codes applicable to well-established molecular diagnostic testing methodologies. For example, CPT Code 81455 applies to NGS panels analyzing 51 or more genes for solid organ neoplasms, and CPT Code 81445 applies to NGS panels analyzing 5 to 50 genes. These codes are available to any laboratory performing a qualifying test and are not proprietary to a specific test or laboratory.

• Tier 2 Codes (Appendix O / Category I). These are gene-specific or analyte-specific molecular pathology codes that describe the analysis of individual genes or defined gene panels. These codes are typically used for well-characterized single-gene or small-panel tests.

• PLA Codes (Appendix O, Section II). Proprietary Laboratory Analyses codes are assigned to specific laboratory tests performed by a single laboratory or licensed/manufactured by a single entity. PLA codes identify both the test and the performing laboratory, providing a unique billing code that links the test to its specific manufacturer and evidence base. PLA codes are particularly well-suited for proprietary laboratory-developed tests with unique methodologies or algorithmic outputs.

• MAAA Codes. Multianalyte Assays with Algorithmic Analyses codes (CPT 81500-series) are designed for tests that combine the results of multiple analytes using a proprietary algorithm to produce a clinically meaningful result. MAAA codes are applicable to tests like GXP-47 that integrate multi-gene expression data through a proprietary algorithm to generate a composite score.

Assessment for OncoPrecise GXP-47. OncoPrecise GXP-47 combines multi-gene expression analysis (47 genes) with a proprietary TRI algorithm to produce a composite treatment-response prediction score. This combination of multi-analyte analysis and proprietary algorithmic processing positions GXP-47 for either a PLA code or an MAAA code. Based on our preliminary analysis, a PLA code is the recommended coding pathway for GXP-47 for several reasons: PLA codes provide a unique identifier linking the test to GDT's specific laboratory and evidence base; PLA codes are generally more favorable for crosswalk-based reimbursement rate determination; and PLA codes are more commonly used by comparable molecular diagnostic tests in the oncology space (as demonstrated by the PLA codes assigned to GeneSight Onco-48 and TumorMap Pro). The detailed analysis of PLA code versus MAAA code and alternative coding strategies will be set forth in the Coding Strategy Memorandum, targeted for delivery on March 11, 2024.

B. PLA Code Application Process

The AMA CPT Editorial Panel reviews PLA code applications on a rolling quarterly basis. The application process is well-defined and follows a predictable timeline:

• Submission. The applicant laboratory submits a PLA code application to the AMA CPT Editorial Panel by the applicable quarterly deadline. The application must include a detailed test description, clinical indications, specimen type, performing laboratory CLIA information, published clinical data supporting the test, and a proposed code descriptor in AMA format.

• Review. Applications submitted by the quarterly deadline are reviewed at the next CPT Editorial Panel meeting. The Panel evaluates the application for completeness, clinical appropriateness, and consistency with CPT coding conventions.

• Approval and Publication. Upon approval, the PLA code is published in the CPT code set and becomes effective the following quarter.

Timeline for GDT. The targeted submission is the AMA CPT Editorial Panel's September 2024 meeting. The submission deadline for this meeting is June 28, 2024. To meet this deadline, Calderwood & Harkness will need to finalize the PLA code application by mid-June 2024 at the latest, allowing time for GDT review and any necessary revisions.

Proposed PLA Code Descriptor. The following preliminary code descriptor is proposed for OncoPrecise GXP-47, subject to refinement during the Coding Strategy Memorandum development and in consultation with Carraway Regulatory Advisors, Inc.:

"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."

The PLA code application will include the following GDT laboratory identifiers: CLIA Certificate No. 05D2187432; National Provider Identifier (NPI) 1902847365.

Coordination with Carraway Regulatory Advisors. GDT has retained Carraway Regulatory Advisors, Inc. ("Carraway"), through its Principal, Janet Carraway, CPC, CCS-P, located at 233 South Wacker Drive, Suite 4100, Chicago, Illinois 60606, to assist with PLA code application mechanics and crosswalk/gapfill pricing submissions. Calderwood & Harkness will work alongside Carraway on the PLA code application, with Calderwood & Harkness responsible for the substantive clinical and evidentiary components and Carraway responsible for coding format, compliance with AMA submission requirements, and pricing submission logistics.

C. HCPCS and Gapfill/Crosswalk Pricing

Once a PLA code is assigned by the AMA CPT Editorial Panel, the Medicare reimbursement rate for the new code must be established. For new codes without an existing CLFS rate, Medicare pricing is determined through one of two methodologies:

• Crosswalk. Under the crosswalk methodology, the new code is mapped to an existing code for a test with comparable resources, complexity, and clinical characteristics. The new code receives the same Medicare rate as the crosswalked code. Crosswalk is the preferred methodology when strong comparator codes exist, as it provides greater predictability and is based on established pricing.

• Gapfill. Under the gapfill methodology, each MAC independently determines the pricing for the new code based on cost data submitted by the performing laboratory, charges for the test, resources required to perform the test, and local market factors. Gapfill rates are set by each MAC individually, resulting in potential geographic variation in reimbursement. Gapfill introduces more uncertainty and variability than crosswalk.

Recommendation for GDT. Crosswalk methodology is recommended for OncoPrecise GXP-47. The three identified comparators — Elara GeneSight Onco-48 (PLA Code 0250U, $3,742), CPT 81455 ($2,919), and Marlowe Asset Management TumorMap Pro (PLA Code 0239U, $4,206) — provide a strong basis for a crosswalk-based pricing determination that supports GDT's target rate of $3,850. The weighted average of these comparators ($3,622.33) is within reasonable range of the target rate, and GDT can present a compelling case for a rate above the average based on the proprietary TRI algorithm, the NSCLC-specific clinical validation, and the differentiated clinical utility of the test. The detailed crosswalk analysis, including identification of the optimal primary comparator, sensitivity analyses, and a contingency strategy in the event the MAC selects gapfill methodology, will be set forth in the Reimbursement Rate Analysis Memorandum anticipated for delivery in May 2024.

VI. Recent CMS Policy Developments Affecting Genomic Diagnostics

A. CLFS Payment Rate Reforms

The Protecting Access to Medicare Act of 2014 ("PAMA"), Pub. L. No. 113-93, § 216, introduced significant reforms to the methodology by which Medicare Clinical Laboratory Fee Schedule ("CLFS") payment rates are determined. Under PAMA, CMS requires applicable laboratories to report data on private payer rates and test volumes for each CLFS test code during specified reporting periods. CMS then uses the reported private payer rate data to calculate weighted median rates, which become the new CLFS payment rates.

The PAMA reporting requirements have had a significant impact on reimbursement rates for molecular diagnostic tests, as private payer rates for many molecular diagnostics are lower than the pre-PAMA CLFS rates. Successive PAMA reporting cycles have resulted in downward pressure on CLFS rates for a number of high-value molecular diagnostic tests, although CMS has implemented statutory caps on annual rate reductions to moderate the pace of adjustment.

Implications for GDT. PAMA reporting cycles and the potential for future rate adjustments are a relevant consideration in GDT's pricing strategy. If GXP-47 obtains a PLA code and initial Medicare reimbursement at the target rate of $3,850, subsequent PAMA reporting cycles could result in rate adjustments if private payer rates for GXP-47 diverge from the CLFS rate. GDT's commercial payer contracting strategy — which is outside the scope of this memorandum but will be relevant to the Reimbursement Rate Analysis — should take into account the impact of private payer rates on future CLFS pricing. Specifically, GDT should seek to negotiate commercial payer rates at or above the target Medicare rate to support the CLFS rate in future PAMA reporting cycles.

B. FDA–CMS Parallel Review and Coordination

The regulatory landscape for laboratory-developed tests is evolving in ways that could significantly affect the pathway for tests like OncoPrecise GXP-47. The FDA has demonstrated increasing regulatory interest in LDTs, culminating in a proposed rule published in 2023 that would, if finalized, subject certain categories of LDTs to premarket review requirements similar to those applicable to in vitro diagnostic devices. Under the proposed rule, the FDA would phase in regulatory requirements for LDTs over a multi-year transition period, with high-risk LDTs subject to premarket approval (PMA) or de novo classification requirements.

Separately, CMS and the FDA have established a Parallel Review program that allows a manufacturer or laboratory to pursue simultaneous FDA premarket review (PMA) and CMS national coverage review (NCD) for a new test or device. The

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT
TO: Miriam Calloway, Partner, Calderwood & Harkness LLP
FROM: Sean Morrissey, Senior Associate, and Christopher Aiken, Associate, Healthcare & Life Sciences Practice Group
DATE: February 28, 2024
RE: Medicare Coverage Landscape for NGS-Based Oncology Diagnostic Tests — Background Research Memorandum
MATTER: Genome Dx Therapeutics Inc. — OncoPrecise GXP-47 Medicare Coverage & Coding Strategy (Matter No. 1043-00002; Client No. 47832)
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I. Purpose and Scope of Memorandum
This memorandum was prepared at the direction of Miriam Calloway, Responsible Partner, in connection with Calderwood & Harkness LLP's engagement by Genome Dx Therapeutics Inc. ("GDT" or the "Company") to develop and execute a comprehensive Medicare coverage and coding strategy for GDT's OncoPrecise GXP-47 genomic diagnostic test (the "Test" or "GXP-47"). The purpose of this memorandum is to provide the engagement team with a foundational survey of the current Medicare coverage regulatory landscape applicable to next-generation sequencing ("NGS")-based oncology diagnostic tests. Specifically, this memorandum addresses the following subjects:
(a) An overview of the relevant Medicare coverage determination framework, including both the Local Coverage Determination ("LCD") and National Coverage Determination ("NCD") pathways, and the procedural and substantive requirements associated with each;
(b) The structure and role of the MolDx (Molecular Diagnostic Services) program administered by Ridgeline Administrative Services, LLC ("Ridgeline" or "RAS"), including the Technical Assessment process, evidentiary standards, and registration requirements;
(c) A survey of existing LCDs and NCDs for comparable molecular diagnostic tests, with particular emphasis on multi-gene expression panels used in oncology and tests employing proprietary algorithmic scoring methodologies;
(d) A review of current procedural coding pathways (CPT, PLA, and HCPCS) applicable to NGS-based oncology diagnostics and the reimbursement rate-setting mechanisms available to GDT;
(e) Recent CMS policy developments and rulemaking affecting genomic diagnostics, including developments concerning laboratory-developed tests ("LDTs"), Clinical Laboratory Fee Schedule ("CLFS") pricing methodology, and evolving evidence standards; and
(f) Identification of key regulatory stakeholders and procedural considerations relevant to the development and execution of GDT's coverage strategy.
This memorandum is intended as an internal research tool to inform strategy development. It will serve as the foundation for several subsequent work products that Calderwood & Harkness will prepare for GDT, including: (i) the Coding Strategy Memorandum, which will analyze the optimal CPT/PLA coding pathway for GXP-47; (ii) the LCD/MolDx Strategy Memorandum, which will set forth a detailed strategy for securing a favorable LCD through the MolDx program; and (iii) the MolDx Technical Assessment Dossier, which will compile and present the evidentiary package required for Ridgeline's technical review. Each of these deliverables is addressed at a preliminary level herein and will be the subject of dedicated analysis in forthcoming memoranda.
Background on Genome Dx Therapeutics Inc. GDT is a Delaware corporation headquartered at 4720 Torrey Pines Road, Suite 300, San Diego, California 92130. The Company operates a single CLIA-certified (CLIA Certificate No. 05D2187432), CAP-accredited (CAP Laboratory Accreditation No. 9074821) reference laboratory at its San Diego headquarters. GDT's National Provider Identifier ("NPI") is 1902847365. GDT is a clinical-stage molecular diagnostics company focused on the development and commercialization of proprietary genomic diagnostic tests for oncology applications.
Overview of OncoPrecise GXP-47. OncoPrecise GXP-47 is a 47-gene RNA expression panel laboratory-developed test performed on formalin-fixed, paraffin-embedded ("FFPE") non-small-cell lung cancer ("NSCLC") tumor tissue. The Test produces a proprietary composite Therapy Response Index ("TRI") score ranging from 0 to 100, which is designed to predict a patient's likelihood of response to immune checkpoint inhibitor ("ICI") therapy. The TRI score stratifies patients into three categories: High (TRI ≥ 70), Intermediate (TRI 40–69), and Low (TRI < 40). The intended clinical population is patients with Stage IIIB or Stage IV NSCLC who are being considered for first-line ICI therapy. Analytical validation of GXP-47 was completed on December 14, 2022, and the results were published in the Journal of Molecular Oncology Diagnostics (Vol. 18, Issue 4, pp. 412–429, December 2022). Clinical validation is ongoing through the CLARITY-LUNG trial (ClinicalTrials.gov Identifier: NCT05891247), a prospective, multi-site, blinded study being conducted at 14 U.S. clinical sites with a target enrollment of 1,200 patients. As of the engagement kickoff, enrollment stood at approximately 847 of 1,200 patients (approximately 70.6%). The CLARITY-LUNG trial is designed to assess the positive predictive value ("PPV") and negative predictive value ("NPV") of the TRI score for 12-month progression-free survival on ICI therapy.
II. Overview of Medicare Coverage Determination Framework
A. Statutory and Regulatory Foundation
Medicare coverage for clinical laboratory tests, including molecular diagnostic tests, is governed by a well-established statutory and regulatory framework. At its core, Medicare Part B covers diagnostic laboratory tests that are "reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member." This standard is codified in Section 1862(a)(1)(A) of the Social Security Act, 42 U.S.C. § 1395y(a)(1)(A), and constitutes the fundamental legal predicate for all Medicare coverage determinations. A test that does not satisfy the "reasonable and necessary" standard is excluded from Medicare coverage regardless of whether it is otherwise within a recognized Medicare benefit category.
The procedural framework for Medicare coverage determinations is set forth in 42 C.F.R. Part 405, Subpart I, which establishes the processes by which CMS and its contractors make and review coverage decisions. These regulations distinguish between National Coverage Determinations, which are made by CMS and apply uniformly across all Medicare Administrative Contractor jurisdictions, and Local Coverage Determinations, which are made by individual MACs and apply only within their respective jurisdictions.
Additional operational guidance is found in the Medicare Program Integrity Manual (CMS Publication 100-08), which addresses coverage determination procedures, claims processing standards, and program integrity requirements applicable to clinical laboratory services, and the Medicare Claims Processing Manual (CMS Publication 100-04), which contains detailed billing and coding instructions for clinical laboratory tests, including molecular diagnostic tests. Chapter 16 of Publication 100-04, addressing laboratory services, and Chapter 13, addressing clinical diagnostic laboratory services, are of particular relevance to molecular diagnostics coverage and reimbursement.
An important threshold consideration in the coverage analysis for any laboratory test is the distinction between benefit category determination and coverage determination. Under 42 U.S.C. § 1395x(s)(3), "diagnostic laboratory tests" are a recognized Medicare Part B benefit category. A test must first fall within a recognized benefit category before the "reasonable and necessary" coverage analysis is applied. For clinical laboratory tests, including molecular diagnostic tests such as GXP-47, the benefit category determination is generally straightforward, as diagnostic laboratory tests performed by a CLIA-certified laboratory are within the statutory benefit category. The substantive question for GXP-47 will be whether it satisfies the "reasonable and necessary" standard—a question that turns primarily on the strength of the clinical evidence supporting the test's analytical validity, clinical validity, and clinical utility.
B. Local Coverage Determinations (LCDs)
Definition and Legal Authority. Local Coverage Determinations are coverage decisions made by Medicare Administrative Contractors that are applicable within their respective geographic jurisdictions. An LCD specifies under what clinical circumstances a particular item or service is considered "reasonable and necessary" within the meaning of Section 1862(a)(1)(A) of the Social Security Act. The legal authority for LCDs is found in Section 1869(f) of the Social Security Act, 42 U.S.C. § 1395ff(f), and the implementing regulations at 42 C.F.R. § 426.400 et seq. LCDs may specify indications and limitations on coverage, applicable diagnosis codes (ICD-10-CM), procedure codes (CPT/HCPCS), documentation requirements, and other conditions of coverage. An LCD may also set forth the clinical circumstances under which a test will be deemed not reasonable and necessary, effectively establishing non-coverage criteria.
LCD Development Process. The development of an LCD follows a structured administrative process designed to provide transparency and public participation. The process typically proceeds as follows:
1. Initiation. An LCD may be initiated by the MAC based on its own assessment of coverage needs, or in response to a request from a laboratory, manufacturer, physician, or other stakeholder. In the molecular diagnostics context, the MolDx Technical Assessment process (discussed in Section III below) effectively serves as the initiation mechanism, as a positive MolDx TA recommendation triggers the MAC's development of an LCD.
2. Draft LCD. The MAC prepares a draft LCD that sets forth the proposed coverage criteria, indications and limitations, applicable coding, and documentation requirements. The draft is reviewed by the MAC's Medical Director responsible for the relevant clinical area.
3. Notice and Comment Period. The MAC publishes the draft LCD and opens a public comment period of not less than 45 days, as required by Section 1869(f)(2)(B) of the Social Security Act. Comments are accepted from interested parties, including laboratories, physicians, patient advocacy organizations, and industry stakeholders.
4. Comment Review and Final LCD. The MAC reviews all public comments, and the Medical Director may revise the LCD in response to substantive comments. The MAC then publishes the final LCD with a summary of comments received and the MAC's responses.
5. Effective Date. The final LCD becomes effective no sooner than 45 days after publication, providing affected parties with advance notice.
LCD Reconsideration and Appeal. Parties aggrieved by an LCD may seek reconsideration through the procedures set forth in 42 C.F.R. Part 426. An LCD reconsideration request may be filed by a Medicare beneficiary whose claim has been denied based on the LCD, or by an aggrieved party who can demonstrate standing. Reconsideration is reviewed by an Administrative Law Judge ("ALJ") and may result in the LCD being set aside if it is found to be inconsistent with the statutory "reasonable and necessary" standard, if the MAC failed to follow proper procedures, or if the LCD is not supported by the evidence considered by the MAC.
Jurisdictional Applicability. LCDs apply only within the issuing MAC's geographic jurisdiction. This means that a favorable LCD issued by one MAC does not automatically extend to other MAC jurisdictions, and a laboratory seeking nationwide Medicare coverage must either obtain favorable LCDs from multiple MACs or pursue a National Coverage Determination. However, within the MolDx program, participating MACs coordinate their coverage determinations through the centralized Technical Assessment process administered by Ridgeline, which provides a mechanism for achieving relatively consistent coverage across multiple MAC jurisdictions. This coordination is a significant advantage of the MolDx program and a key reason for recommending the MolDx/LCD pathway as GDT's initial coverage strategy.
Jurisdictional Analysis for GDT. GDT's San Diego laboratory falls within Medicare Administrative Contractor Jurisdiction E, which encompasses the state of California, along with other western states. Jurisdiction E is serviced by Cascade Fiscal Intermediaries, LLC ("CFI" or "Cascade"), headquartered at 2800 SW Moody Avenue, Suite 500, Portland, Oregon 97201. CFI is a MolDx-participating MAC, meaning that it utilizes the MolDx Technical Assessment process administered by Ridgeline for molecular diagnostic coverage determinations. The CFI Medical Director responsible for molecular diagnostics coverage determinations is Dr. William Hargrove, MD, FACP. The LCD Analyst assigned to genomic diagnostics at CFI is Sandra Phu.
CFI is the same MAC that issued GDT's existing LCD for OncoPrecise GXP-12, the Company's 12-gene panel used in early-stage breast cancer prognosis. That LCD, designated LCD L38472, has been effective since August 15, 2021, and was issued following a positive MolDx Technical Assessment. GDT's prior experience with CFI and the MolDx process in connection with the GXP-12 LCD provides the Company with familiarity with CFI's procedures and evidentiary expectations, which should inform and expedite the GXP-47 process.
C. National Coverage Determinations (NCDs)
Definition and Legal Authority. National Coverage Determinations are coverage decisions made by CMS at the national level that are applicable to all MACs and all Medicare beneficiaries nationwide. NCDs represent the highest level of Medicare coverage policy and supersede any contrary local coverage determinations. The legal authority for NCDs is found in Sections 1862(l) and 1869(f) of the Social Security Act, 42 U.S.C. §§ 1395y(l), 1395ff(f), and the implementing regulations at 42 C.F.R. Part 426.
NCD Process. The NCD process is considerably more formal and resource-intensive than the LCD process. It typically proceeds through the following stages:
1. Formal NCD Request or CMS Self-Initiation. An NCD may be requested formally by any interested party by submitting a written request to CMS's Coverage and Analysis Group ("CAG"). Unlike LCDs, NCDs cannot be directly initiated by the laboratory or manufacturer; rather, the decision to accept an NCD request for review lies within CMS's discretion. CMS may also self-initiate an NCD review.
2. CMS Acceptance for Review. CMS reviews the formal NCD request and determines whether to accept it for internal review. Acceptance is not guaranteed, and CMS considers factors such as the significance of the item or service, the strength of the evidence base, and whether an NCD is warranted given existing local coverage decisions.
3. CAG Review. Upon acceptance, CMS's Coverage and Analysis Group conducts a comprehensive review of the clinical evidence, including published literature, clinical trial data, professional society guidelines, and other relevant materials.
4. MEDCAC Input. For complex or novel determinations, CMS may convene the Medicare Evidence Development and Coverage Advisory Committee ("MEDCAC"), a federal advisory committee that provides independent expert input on the strength and adequacy of the clinical evidence. MEDCAC convening is at CMS's discretion and is not required for every NCD.
5. Proposed Decision. CMS publishes a proposed NCD decision (either coverage, non-coverage, or coverage with conditions) and opens a public comment period, typically 30 days.
6. Final NCD. Following review of public comments, CMS issues the final NCD, which becomes effective on the date of issuance.
NCD Timeline. The NCD process is significantly longer than the LCD process. CMS's statutory timeline for NCD decisions is generally six months from the date of acceptance for internally generated reviews and twelve months for externally requested reviews. However, in practice, NCDs for complex molecular diagnostic technologies frequently take twelve months or longer, and some determinations have remained in process for multiple years. This timeline consideration is a critical factor in GDT's coverage strategy sequencing.
Coverage with Evidence Development (CED). An important NCD mechanism relevant to GDT is the Coverage with Evidence Development ("CED") framework. CED is a mechanism by which CMS may grant conditional national coverage for items or services where the available evidence is promising but not yet definitive, contingent on the Medicare beneficiary's participation in an approved clinical study or data registry. The CED framework is codified at 42 C.F.R. § 405.207 and has been used by CMS in several NCD determinations for diagnostic and therapeutic technologies.
CED is potentially relevant to GDT's coverage strategy for OncoPrecise GXP-47. As of the engagement kickoff, the CLARITY-LUNG trial has enrolled approximately 847 of 1,200 targeted patients (approximately 70.6% enrollment). If interim or final clinical validation data from CLARITY-LUNG are strong but fall short of the evidentiary bar for full, unrestricted NCD coverage, CED could serve as a viable NCD pathway. Under a CED framework, CMS would grant national coverage for GXP-47 contingent on GDT's continued collection of clinical data through CLARITY-LUNG or a supplemental registry, with full coverage to be evaluated upon completion of the required evidence development. The CED pathway carries both advantages (earlier national coverage, continued data collection) and disadvantages (conditional coverage creates uncertainty for payers and referring physicians, and CED-covered tests may face lower utilization due to the participation requirements). The CED pathway will be analyzed in greater detail in the NCD Feasibility Assessment Memorandum anticipated for delivery in May 2024.
NCD vs. LCD Strategic Considerations. The choice between pursuing an LCD and pursuing an NCD involves several strategic trade-offs that are central to GDT's coverage strategy:
• Geographic Scope. NCDs provide nationwide Medicare coverage, whereas LCDs apply only within the issuing MAC's jurisdiction. For a laboratory like GDT that operates a single reference laboratory receiving specimens from physicians nationwide, an NCD is ultimately necessary for comprehensive Medicare coverage. However, an LCD issued by CFI (covering Jurisdiction E) would enable Medicare reimbursement for a significant portion of GDT's anticipated test volume while the Company pursues broader coverage.
• Timeline. LCDs can generally be obtained in a shorter timeframe than NCDs, particularly when pursued through the MolDx program. A realistic timeline from MolDx TA dossier submission to LCD issuance is approximately six to twelve months, compared to twelve to twenty-four months or longer for an NCD.
• Evidentiary Scrutiny. While both LCDs and NCDs require a demonstration that the test is "reasonable and necessary," NCDs are subject to more rigorous evidentiary review by CMS's Coverage and Analysis Group and, potentially, MEDCAC. The MolDx TA process, while rigorous, is generally more predictable and transparent in its evidentiary expectations.
• Initiation and Control. Laboratories can directly initiate the LCD/MolDx process by submitting a TA dossier and LCD request to the MAC. NCDs, by contrast, require a formal request to CMS or CMS self-initiation, and the laboratory has less control over the timeline and process.
• Precedent. An NCD creates binding national precedent that supersedes all local coverage decisions. A favorable LCD creates persuasive but non-binding precedent that other MACs may consider but are not obligated to follow.
D. Relationship Between LCDs and NCDs
LCDs remain in effect unless and until superseded by an NCD addressing the same item or service. In the absence of an NCD, MACs retain full discretion to make local coverage decisions, and LCDs issued by one MAC do not bind other MACs. When an NCD is issued, it supersedes any inconsistent LCD, and MACs must conform their local coverage policies to the NCD.
This framework creates a well-established strategic sequencing pattern that many molecular diagnostic companies have followed successfully. The typical approach is to pursue an LCD first — because it is faster, more predictable, and within the laboratory's direct control — and then pursue an NCD for nationwide coverage expansion once the LCD is in place and additional clinical evidence has accumulated. The existence of a favorable LCD, and the real-world experience and outcomes data generated during the LCD coverage period, can strengthen the subsequent NCD application by providing evidence of test utilization, clinical adoption, and potentially, real-world clinical utility data.
This sequencing approach is contemplated for OncoPrecise GXP-47. The current strategy envisions filing an LCD request with CFI and submitting the MolDx Technical Assessment Dossier to Ridgeline in August 2024, following PLA code assignment. Upon successful LCD issuance, GDT would pursue an NCD through CMS, with the NCD pursuit estimated to commence approximately eighteen to twenty-four months after LCD issuance. This timeline allows for the accumulation of additional clinical evidence from CLARITY-LUNG final data and early commercial experience under the LCD, which will strengthen the NCD application.
III. The MolDx Program: Structure, Requirements, and Procedures
A. Overview and History
The Molecular Diagnostic Services ("MolDx") program was established in 2011 to provide a standardized, evidence-based framework for evaluating and establishing Medicare coverage for molecular diagnostic tests. Prior to MolDx, Medicare coverage determinations for molecular diagnostic tests were made independently by individual MACs, resulting in significant variation in coverage decisions, evidentiary requirements, and coding practices across jurisdictions. The MolDx program was created to address these inconsistencies and to ensure that molecular diagnostic tests covered by Medicare meet rigorous standards for analytical validity, clinical validity, and clinical utility.
The MolDx program is administered by Ridgeline Administrative Services, LLC ("Ridgeline" or "RAS"), headquartered at 1600 Hampton Street, Suite 700, Columbia, South Carolina 29201. Ridgeline serves as the central coordinating entity for the MolDx program, conducting Technical Assessments of molecular diagnostic tests and providing recommendations to participating MACs regarding coverage. The MolDx Technical Assessment Director is Dr. Catherine Embry, PhD, who oversees the scientific review of all molecular diagnostic test submissions.
The MolDx program operates across multiple participating MAC jurisdictions. Critically for GDT, Jurisdiction E — the MAC jurisdiction covering California, where GDT's reference laboratory is located — is serviced by Cascade Fiscal Intermediaries, LLC, which is a MolDx-participating MAC. This means that GDT's LCD application for OncoPrecise GXP-47 will be evaluated through the MolDx framework, with Ridgeline conducting the Technical Assessment and CFI making the formal LCD coverage decision based on Ridgeline's recommendation.
The overarching purpose of the MolDx program is to establish uniform evidence requirements, technical assessment standards, and coverage criteria for molecular diagnostic tests, thereby reducing variation in LCD decision-making across participating MAC jurisdictions and ensuring that Medicare coverage decisions for molecular diagnostics are grounded in sound scientific evidence. The MolDx program has become the de facto standard for molecular diagnostic coverage determinations and is widely regarded by industry participants, clinical laboratories, and regulatory counsel as the primary pathway for obtaining Medicare coverage for novel molecular diagnostic tests.
B. MolDx Technical Assessment Process
Laboratories seeking Medicare coverage for a new molecular diagnostic test must submit a Technical Assessment ("TA") dossier to Ridgeline for evaluation. The TA dossier is the central evidentiary submission upon which Ridgeline bases its coverage recommendation to the participating MAC. The dossier must comprehensively address the test's analytical validity, clinical validity, clinical utility, and health economic impact. The detailed requirements of the TA dossier, which will inform the MolDx Technical Assessment Dossier that Calderwood & Harkness is preparing for GDT, are summarized below.
1. Test Description and Intended Use. The dossier must contain a detailed description of the test methodology, the specific analytes measured, the specimen type and collection requirements, the clinical indication for which the test is intended, and the intended patient population. For OncoPrecise GXP-47, this section will describe: the 47-gene RNA expression panel; the FFPE NSCLC tumor tissue specimen type; the proprietary TRI score algorithm and its output (a composite score ranging from 0 to 100); the three stratification categories (High ≥ 70, Intermediate 40–69, Low < 40); and the intended clinical population of Stage IIIB/IV NSCLC patients being considered for first-line ICI therapy. This section must also address the test's intended clinical context — specifically, that the TRI score is designed to be used by oncologists, in conjunction with other clinical factors, to inform treatment decisions regarding ICI therapy versus platinum-based chemotherapy or other treatment modalities.
2. Analytical Validation. The dossier must include comprehensive evidence demonstrating the test's analytical performance characteristics. Analytical validation encompasses demonstration of test accuracy, precision (both intra-run and inter-run reproducibility), reportable range and analytical sensitivity, reference intervals, specimen stability across various storage and handling conditions, and interference testing. For GXP-47, analytical validation was completed on December 14, 2022, and the results have been published in a peer-reviewed journal (Journal of Molecular Oncology Diagnostics, Vol. 18, Issue 4, pp. 412–429, December 2022). The publication of analytical validation data in a peer-reviewed journal is a significant advantage, as MolDx reviewers place substantial weight on peer-reviewed evidence. Calderwood & Harkness will review the published analytical validation data in detail and assess whether any supplemental analytical validation studies are needed to address potential gaps identified during dossier preparation.
3. Clinical Validation. The dossier must demonstrate that the test accurately identifies the clinical condition or predicts the clinical outcome it is intended to assess. For predictive biomarker tests like GXP-47, clinical validation requires evidence that the test output (in this case, the TRI score) is associated with the clinical outcome of interest (in this case, response to ICI therapy, as measured by 12-month progression-free survival). For GDT, clinical validation evidence relies primarily on the CLARITY-LUNG trial (NCT05891247), which is a prospective, multi-site, blinded study specifically designed to validate the TRI score's predictive performance. The trial is targeting enrollment of 1,200 patients at 14 U.S. clinical sites and will assess both PPV and NPV for 12-month progression-free survival on ICI therapy. GDT has indicated that an interim analysis is planned at 50% enrollment (n=600), with final data readout projected for Q4 2024. In addition to CLARITY-LUNG, GDT is developing supplemental retrospective analyses using archived specimen cohorts to provide additional clinical validation evidence. The relative weight and sufficiency of interim versus final CLARITY-LUNG data, and the role of supplemental retrospective studies, are discussed further in Section VII of this memorandum.
4. Clinical Utility. The dossier must include evidence that use of the test improves patient outcomes, changes clinical management decisions, or provides actionable information to physicians. Clinical utility is often the most challenging evidentiary standard to satisfy, as it requires demonstration that the test's results lead to tangible improvements in clinical care — not merely that the test accurately measures what it claims to measure. For GXP-47, clinical utility evidence must demonstrate that the TRI score influences oncologist treatment decisions (e.g., selection of ICI therapy versus platinum-based chemotherapy) and that patients whose treatment was informed by TRI score-guided decisions experience better outcomes than those managed without the test. Larkfield Health Economics, LLC ("Larkfield"), through its Principal Consultant, Dr. Nathan Ostroff, has been retained directly by GDT (not by Calderwood & Harkness) to prepare the clinical utility and cost-effectiveness analyses for the MolDx dossier. Calderwood & Harkness will review and incorporate Larkfield's work product into the dossier.
5. Health Economic Analysis. The dossier should include cost-effectiveness and budget impact analyses demonstrating that the test provides value relative to existing diagnostic and treatment paradigms. Health economic evidence, while not always dispositive, can strengthen a TA dossier by demonstrating that the test produces cost savings or cost-effective outcomes at the population level. This analysis is also being prepared by Larkfield.
6. Bibliography. The dossier must include a comprehensive annotated bibliography supporting all evidence claims. Calderwood & Harkness will compile and annotate this bibliography, which is expected to encompass approximately 43 peer-reviewed publications spanning the analytical validation of GXP-47, the molecular biology of the gene expression signatures included in the panel, the clinical evidence for ICI therapy in NSCLC, the performance characteristics of the TRI algorithm, and relevant comparator studies.
TA Review Timeline. Ridgeline's review of a TA dossier typically takes 60 to 120 days from the date of submission, though complex assessments — particularly for multi-gene panels with proprietary algorithmic outputs — may take longer. During the review period, Ridgeline may request additional information or clarification from the submitting laboratory, which can extend the timeline. It is important to note that any deficiencies or gaps identified during the TA review can result in a request for additional information that may significantly delay the process.
TA Outcomes. The MolDx Technical Assessment process results in one of three outcomes:
(a) Positive Assessment. The test meets Ridgeline's evidentiary standards for analytical validity, clinical validity, and clinical utility. A positive TA recommendation is forwarded to the MAC (CFI), which then proceeds with LCD development.
(b) Negative Assessment. The evidence submitted is insufficient to support coverage. A negative TA recommendation typically results in the MAC declining to issue an LCD or issuing a non-coverage determination.
(c) Request for Additional Information. Ridgeline determines that the submitted evidence is incomplete or requires supplementation, and requests additional data or analyses from the laboratory before rendering a final TA recommendation.
Relationship Between MolDx TA and LCD. A positive MolDx Technical Assessment is, in practice, a prerequisite for a favorable LCD issued by a MolDx-participating MAC. While the MAC retains formal legal authority over the LCD decision, the MAC's Medical Director relies heavily on Ridgeline's TA recommendation in making the coverage determination. A negative MolDx TA effectively precludes a favorable LCD in MolDx-participating jurisdictions. This underscores the critical importance of preparing a comprehensive, well-supported TA dossier and the significant risk associated with submitting a dossier that contains evidentiary gaps or relies on preliminary data.
C. Unique Molecular Identifier (UMID) and Test Registration
The MolDx program requires each molecular diagnostic test to be registered in the DEX (Diagnostic Exchange) registry and assigned a Unique Molecular Identifier ("UMID"). The DEX registry serves as the central test registry for the MolDx program, allowing Ridgeline and participating MACs to track registered tests, associated evidence, and coverage status. Each test variant — defined by its specific analytes, methodology, specimen type, and intended use — requires its own UMID.
UMID registration must be completed prior to or concurrent with the TA dossier submission. The registration process requires the submitting laboratory to provide detailed test information, including the test name, methodology, analytes, specimen type, clinical indication, and performing laboratory CLIA information. Registration is completed through the DEX online portal.
GDT will need to register OncoPrecise GXP-47 in the DEX registry and obtain a UMID as part of the pre-submission process. GDT's existing test, OncoPrecise GXP-12, is already registered in the DEX registry under a separate UMID, which provides GDT with familiarity with the registration process. Calderwood & Harkness recommends initiating the GXP-47 DEX registration process promptly to ensure that the UMID is assigned prior to the targeted TA dossier submission date.
D. MolDx Evidence Standards for NGS-Based Tests
The MolDx program applies heightened evidentiary scrutiny to multi-gene NGS panels due to the inherent complexity and volume of analytes involved. Unlike single-gene or single-analyte tests, multi-gene panels present unique validation challenges because analytical and clinical performance must be demonstrated both at the individual gene/analyte level and at the panel level. This is particularly true for tests like OncoPrecise GXP-47 that combine multi-gene expression measurements with a proprietary algorithm to generate a composite score.
Ridgeline has published guidance documents setting forth evidence requirements for multi-gene panels. These documents emphasize several key principles relevant to GDT's submission:
• Per-Gene and Panel-Level Analytical Validation. Analytical validation must demonstrate performance at both the individual gene level (accuracy and reproducibility for each of the 47 genes in the panel) and the panel level (overall assay performance, including the composite TRI score output).
• Clinical Validity for Composite Scores and Algorithms. For tests that generate a proprietary algorithmic output — such as the TRI score — clinical validation must demonstrate that the algorithm itself has been validated as a predictor of the clinical outcome of interest. It is not sufficient to demonstrate clinical validity for individual gene expression measurements; the composite algorithmic output must be independently validated. This requirement is particularly relevant to GDT, as the TRI score is the clinically actionable output of GXP-47 and the basis upon which treatment decisions will be made.
• Clinical Utility for Composite Score-Guided Treatment Decisions. Clinical utility evidence must demonstrate that the composite score provides actionable information that changes clinical management and leads to improved patient outcomes. For predictive biomarker tests, this typically requires evidence that physicians change their treatment decisions based on the test result and that patients managed using score-guided treatment selection have better outcomes.
The CLARITY-LUNG trial is specifically designed to address these evidentiary requirements. The trial's primary endpoints — PPV and NPV for 12-month progression-free survival on ICI therapy — are directly relevant to the clinical validation of the TRI score as a predictive biomarker. The trial's prospective, multi-site, blinded design is intended to produce Tier 1 evidence that meets MolDx's highest evidentiary standards.
IV. Survey of Existing LCDs and NCDs for Comparable Molecular Diagnostic Tests
A. Methodology
To inform GDT's coverage strategy, Calderwood & Harkness conducted a comprehensive survey of existing Medicare coverage determinations for molecular diagnostic tests comparable to OncoPrecise GXP-47. The survey covered the CMS Medicare Coverage Database (available at https://www.cms.gov/medicare-coverage-database), MolDx and Ridgeline publications, MAC LCD indexes, and relevant industry publications. The survey focused on three categories of tests: (1) NGS-based multi-gene oncology panels that have obtained Medicare coverage; (2) gene expression profiling tests that employ algorithmic composite scores to generate clinically actionable results; and (3) tests used for treatment selection or response prediction in solid tumors. The results are organized by coverage status and relevance to OncoPrecise GXP-47. A comprehensive tabular summary of all LCDs reviewed is included in Appendix A (to be compiled separately).
B. Key Existing LCDs for Comparable Tests
1. Elara Genomic Sciences, Inc. — "GeneSight Onco-48" (PLA Code 0250U)
Elara Genomic Sciences, Inc. is a Massachusetts-based molecular diagnostics company that offers GeneSight Onco-48, a 48-gene expression panel for solid organ tumors. GeneSight Onco-48 analyzes RNA expression across 48 genes from FFPE tumor tissue specimens and generates an algorithmic composite score output used to characterize tumor biology and inform treatment planning. The test is assigned PLA Code 0250U and currently receives Medicare reimbursement at a rate of $3,742 per test.
GeneSight Onco-48 has an active LCD through a MolDx-participating MAC, establishing Medicare coverage within the issuing MAC's jurisdiction. The LCD was issued following a positive MolDx Technical Assessment and provides coverage for the test when ordered for patients with specified solid organ malignancies meeting defined clinical criteria.
Relevance to GDT. GeneSight Onco-48 is identified as the primary crosswalk comparator for OncoPrecise GXP-47 for purposes of reimbursement rate determination. The two tests share several important characteristics: similar gene panel size (48 genes vs. 47 genes), comparable specimen type (FFPE tissue), and the use of an algorithmic composite score output. These similarities support the use of GeneSight Onco-48 as a crosswalk reference for establishing the Medicare reimbursement rate for GXP-47.
Key Differentiator. GeneSight Onco-48 is a pan-tumor panel applicable across multiple solid organ tumor types, whereas OncoPrecise GXP-47 is specifically designed for NSCLC and generates a treatment-response prediction score specific to ICI therapy. This distinction is clinically significant and supports GDT's argument that GXP-47 provides a differentiated clinical utility — namely, a specific, validated prediction of ICI therapy response in a defined patient population — that justifies a reimbursement rate at or above GeneSight Onco-48's $3,742 rate.
2. Marlowe Asset Management Molecular Diagnostics, Inc. — "TumorMap Pro" (PLA Code 0239U)
Marlowe Asset Management Molecular Diagnostics, Inc. is a California-based molecular diagnostics company that offers TumorMap Pro, an NGS-based comprehensive genomic profiling panel. TumorMap Pro performs both DNA and RNA sequencing across a broad panel of genes and generates a comprehensive genomic profile that identifies actionable mutations, gene fusions, and other genomic alterations relevant to treatment selection. The test is assigned PLA Code 0239U and currently receives Medicare reimbursement at a rate of $4,206 per test.
TumorMap Pro has an active LCD through a MolDx-participating MAC, establishing Medicare coverage for the test when ordered for patients with advanced solid organ malignancies meeting defined clinical criteria.
Relevance to GDT. TumorMap Pro serves as a crosswalk comparator supporting GDT's target reimbursement rate of $3,850 per test. The $4,206 rate for TumorMap Pro demonstrates that Medicare will reimburse NGS-based oncology panels at rates above $4,000, lending support to GDT's target rate, which is $356 below TumorMap Pro's current rate.
Key Differentiator. TumorMap Pro is a broader comprehensive genomic profiling panel that analyzes both DNA and RNA, identifies actionable mutations and gene fusions, and serves a different clinical utility framework than GXP-47. While TumorMap Pro is used primarily to identify specific genomic alterations for which targeted therapies exist, GXP-47 is designed to predict overall response to a class of therapy (ICI) based on a composite gene expression profile. These differences in clinical utility framework, panel scope, and analytical methodology will need to be addressed in the crosswalk analysis.
3. CPT Code 81455 — NGS, Solid Organ Neoplasm, 51+ Genes
CPT Code 81455 is a Category I CPT code applicable to NGS panels analyzing 51 or more genes for solid organ neoplasms. This is not a PLA code; rather, it is a general category code available to any laboratory performing a qualifying NGS panel meeting the code's criteria. The current Medicare reimbursement rate for CPT 81455 is $2,919 per test.
Relevance to GDT. CPT 81455 serves as an important reference point in the crosswalk analysis. The code establishes a floor reimbursement rate for large-panel NGS testing in solid tumors. Significantly, GDT's 47-gene panel falls just below the 51-gene threshold for this code, meaning that GXP-47 does not qualify for billing under CPT 81455. This underscores the importance of obtaining a proprietary PLA code for GXP-47 rather than attempting to use existing Category I CPT codes, which would require code stacking (i.e., billing multiple lower-value codes for a single test), an approach that typically results in lower total reimbursement, coding complexity, and increased audit risk.
Reimbursement Rate Analysis. A weighted average of the three primary comparator rates yields the following:
GDT's target reimbursement rate of $3,850 represents a 6.28% premium over this weighted average. This premium is justified by the proprietary TRI algorithm, the NSCLC-specific clinical validation through a prospective clinical trial, and the differentiated clinical utility of a predictive biomarker for ICI therapy response — a clinical need for which no current Medicare-covered test provides a directly comparable validated solution. The detailed reimbursement rate analysis, including sensitivity analyses and alternative comparator scenarios, will be set forth in the Reimbursement Rate Analysis Memorandum, anticipated for delivery in May 2024.
4. Other Relevant LCDs Surveyed
Calderwood & Harkness's survey identified several additional LCDs for gene expression profiling tests in oncology that, while not direct crosswalk comparators, provide useful precedent for GDT's submission strategy:
• Breast Cancer Gene Expression Panels. Several breast cancer gene expression profiling tests with algorithmic composite scores have obtained favorable LCDs through the MolDx program. These tests share important structural similarities with GXP-47 in that they combine multi-gene expression measurements with proprietary algorithms to produce clinically actionable scores. Notably, GDT's existing OncoPrecise GXP-12 — a 12-gene expression panel used in early-stage breast cancer prognosis — has LCD L38472, effective August 15, 2021, issued by CFI. The successful coverage determination for GXP-12 provides favorable precedent for GDT within CFI's jurisdiction and demonstrates that CFI and the MolDx program have accepted GDT's general analytical platform and laboratory capabilities.
• Prostate Cancer Genomic Classifiers. Genomic classifier tests for prostate cancer that use multi-gene expression profiles to predict disease aggressiveness and inform treatment decisions have obtained favorable LCDs. These tests provide precedent for the use of composite algorithmic scores derived from gene expression data to guide treatment selection in oncology.
• Colon Cancer Recurrence Score Assays. Gene expression-based assays predicting recurrence risk in colon cancer have also obtained LCDs. These tests further demonstrate the MolDx program's willingness to cover gene expression profiling tests with algorithmic outputs when supported by adequate clinical validation and utility evidence.
Common Evidentiary Themes Across Successful LCDs. Analysis of the LCDs surveyed reveals several consistent evidentiary themes associated with successful coverage determinations:
(a) Prospective Clinical Validation. Prospective clinical validation studies are strongly preferred over retrospective analyses. Tests supported by prospective, multi-site, blinded clinical validation studies have consistently received more favorable coverage determinations than those relying solely on retrospective data.
(b) Clinical Utility Data. Evidence demonstrating that the test changes physician treatment decisions is a critical factor. Successful submissions typically include decision-impact studies showing that physicians changed their clinical management based on the test result, and ideally, that patients whose care was guided by the test experienced improved outcomes.
(c) Peer-Reviewed Publication. Publication of analytical and clinical validation data in peer-reviewed journals is expected. Unpublished data or data available only in abstract form is generally insufficient.
(d) Demonstrated Analytical Validity. Comprehensive analytical validation, including accuracy, precision, reproducibility, and specimen stability data, is a baseline requirement.
C. National Coverage Determinations for NGS-Based Tests
1. CMS NCD for NGS in Advanced Cancer (NCD 90.2)
CMS issued a National Coverage Determination for NGS-based diagnostic tests in advanced cancer patients, designated NCD 90.2. This NCD represents a landmark coverage decision for the molecular diagnostics field and establishes a framework for Medicare coverage of NGS-based testing in patients with advanced cancer.
Scope of Coverage. NCD 90.2 covers NGS as a companion diagnostic or as a comprehensive genomic profiling test for patients with recurrent, relapsed, refractory, metastatic, or advanced stage III/IV cancer who have not been previously tested with NGS for the same primary diagnosis and who have decided to seek further cancer treatment. The NCD covers both FDA-approved or FDA-cleared NGS tests and laboratory-developed tests performed by CLIA-certified, CAP-accredited laboratories that meet certain evidence and reporting criteria.
Coverage with Evidence Development (CED) Component. NCD 90.2 includes a CED component that permits coverage for NGS tests that do not yet meet all of the NCD's full-coverage criteria, contingent on the Medicare beneficiary's participation in a CMS-approved clinical study. This CED pathway was specifically designed to encourage evidence development for emerging NGS-based tests while providing Medicare beneficiaries with access to promising technologies.
Relevance to GDT. OncoPrecise GXP-47 targets Stage IIIB/IV NSCLC, a patient population that falls squarely within the "advanced cancer" population covered by NCD 90.2. However, the applicability of NCD 90.2 to GXP-47 requires careful analysis, as the NCD was primarily designed to cover comprehensive genomic profiling tests that identify actionable genomic alterations (e.g., mutations, amplifications, fusions) for which targeted therapies exist. GXP-47 is a gene expression panel (RNA-based) that predicts overall treatment response to a class of therapy (ICI) based on a composite expression profile; it does not identify specific actionable mutations or biomarkers in the traditional sense of comprehensive genomic profiling.
Whether GXP-47 can be positioned to leverage NCD 90.2 — either as a test falling within the NCD's current coverage criteria or through its CED component — or whether a separate LCD/NCD pathway is required, is a question that requires further analysis. The distinction between comprehensive genomic profiling panels identifying actionable mutations and predictive gene expression panels generating composite algorithmic scores may place GXP-47 outside the intended scope of NCD 90.2. This analysis will be addressed in the NCD Feasibility Assessment Memorandum.
2. Other Relevant NCDs
Calderwood & Harkness's survey identified several additional NCDs affecting molecular diagnostics that, while not directly applicable to GXP-47, provide useful context for understanding CMS's approach to coverage for genomic and molecular diagnostic tests. These include NCDs for pharmacogenomic testing, which addresses the use of genetic testing to guide medication selection and dosing, and NCDs for hereditary cancer genetic testing, which addresses germline genetic testing for cancer susceptibility.
A key distinction that emerges from the NCD landscape is the difference between diagnostic NGS panels identifying actionable somatic mutations (covered under NCD 90.2) and prognostic or predictive gene expression panels like GXP-47 that generate composite algorithmic scores. This distinction has significant implications for GDT's coverage pathway, as existing NCDs do not clearly encompass predictive gene expression panels with algorithmic outputs. The NCD pathway considerations for GDT will be further developed in the NCD Feasibility Assessment Memorandum, which is anticipated for delivery in May 2024.
V. Coding Pathways: CPT, PLA, and HCPCS Considerations
A. CPT Coding for Molecular Diagnostic Tests
The Current Procedural Terminology ("CPT") coding system, maintained by the American Medical Association ("AMA"), provides the procedural codes used for billing and reimbursement of molecular diagnostic tests under Medicare. The CPT coding hierarchy for molecular diagnostics includes several categories of codes, each with different characteristics and suitability for various types of tests:
• Tier 1 Codes (Category I). These are established, high-volume procedure codes applicable to well-established molecular diagnostic testing methodologies. For example, CPT Code 81455 applies to NGS panels analyzing 51 or more genes for solid organ neoplasms, and CPT Code 81445 applies to NGS panels analyzing 5 to 50 genes. These codes are available to any laboratory performing a qualifying test and are not proprietary to a specific test or laboratory.
• Tier 2 Codes (Appendix O / Category I). These are gene-specific or analyte-specific molecular pathology codes that describe the analysis of individual genes or defined gene panels. These codes are typically used for well-characterized single-gene or small-panel tests.
• PLA Codes (Appendix O, Section II). Proprietary Laboratory Analyses codes are assigned to specific laboratory tests performed by a single laboratory or licensed/manufactured by a single entity. PLA codes identify both the test and the performing laboratory, providing a unique billing code that links the test to its specific manufacturer and evidence base. PLA codes are particularly well-suited for proprietary laboratory-developed tests with unique methodologies or algorithmic outputs.
• MAAA Codes. Multianalyte Assays with Algorithmic Analyses codes (CPT 81500-series) are designed for tests that combine the results of multiple analytes using a proprietary algorithm to produce a clinically meaningful result. MAAA codes are applicable to tests like GXP-47 that integrate multi-gene expression data through a proprietary algorithm to generate a composite score.
Assessment for OncoPrecise GXP-47. OncoPrecise GXP-47 combines multi-gene expression analysis (47 genes) with a proprietary TRI algorithm to produce a composite treatment-response prediction score. This combination of multi-analyte analysis and proprietary algorithmic processing positions GXP-47 for either a PLA code or an MAAA code. Based on our preliminary analysis, a PLA code is the recommended coding pathway for GXP-47 for several reasons: PLA codes provide a unique identifier linking the test to GDT's specific laboratory and evidence base; PLA codes are generally more favorable for crosswalk-based reimbursement rate determination; and PLA codes are more commonly used by comparable molecular diagnostic tests in the oncology space (as demonstrated by the PLA codes assigned to GeneSight Onco-48 and TumorMap Pro). The detailed analysis of PLA code versus MAAA code and alternative coding strategies will be set forth in the Coding Strategy Memorandum, targeted for delivery on March 11, 2024.
B. PLA Code Application Process
The AMA CPT Editorial Panel reviews PLA code applications on a rolling quarterly basis. The application process is well-defined and follows a predictable timeline:
• Submission. The applicant laboratory submits a PLA code application to the AMA CPT Editorial Panel by the applicable quarterly deadline. The application must include a detailed test description, clinical indications, specimen type, performing laboratory CLIA information, published clinical data supporting the test, and a proposed code descriptor in AMA format.
• Review. Applications submitted by the quarterly deadline are reviewed at the next CPT Editorial Panel meeting. The Panel evaluates the application for completeness, clinical appropriateness, and consistency with CPT coding conventions.
• Approval and Publication. Upon approval, the PLA code is published in the CPT code set and becomes effective the following quarter.
Timeline for GDT. The targeted submission is the AMA CPT Editorial Panel's September 2024 meeting. The submission deadline for this meeting is June 28, 2024. To meet this deadline, Calderwood & Harkness will need to finalize the PLA code application by mid-June 2024 at the latest, allowing time for GDT review and any necessary revisions.
Proposed PLA Code Descriptor. The following preliminary code descriptor is proposed for OncoPrecise GXP-47, subject to refinement during the Coding Strategy Memorandum development and in consultation with Carraway Regulatory Advisors, Inc.:
"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."
The PLA code application will include the following GDT laboratory identifiers: CLIA Certificate No. 05D2187432; National Provider Identifier (NPI) 1902847365.
Coordination with Carraway Regulatory Advisors. GDT has retained Carraway Regulatory Advisors, Inc. ("Carraway"), through its Principal, Janet Carraway, CPC, CCS-P, located at 233 South Wacker Drive, Suite 4100, Chicago, Illinois 60606, to assist with PLA code application mechanics and crosswalk/gapfill pricing submissions. Calderwood & Harkness will work alongside Carraway on the PLA code application, with Calderwood & Harkness responsible for the substantive clinical and evidentiary components and Carraway responsible for coding format, compliance with AMA submission requirements, and pricing submission logistics.
C. HCPCS and Gapfill/Crosswalk Pricing
Once a PLA code is assigned by the AMA CPT Editorial Panel, the Medicare reimbursement rate for the new code must be established. For new codes without an existing CLFS rate, Medicare pricing is determined through one of two methodologies:
• Crosswalk. Under the crosswalk methodology, the new code is mapped to an existing code for a test with comparable resources, complexity, and clinical characteristics. The new code receives the same Medicare rate as the crosswalked code. Crosswalk is the preferred methodology when strong comparator codes exist, as it provides greater predictability and is based on established pricing.
• Gapfill. Under the gapfill methodology, each MAC independently determines the pricing for the new code based on cost data submitted by the performing laboratory, charges for the test, resources required to perform the test, and local market factors. Gapfill rates are set by each MAC individually, resulting in potential geographic variation in reimbursement. Gapfill introduces more uncertainty and variability than crosswalk.
Recommendation for GDT. Crosswalk methodology is recommended for OncoPrecise GXP-47. The three identified comparators — Elara GeneSight Onco-48 (PLA Code 0250U, $3,742), CPT 81455 ($2,919), and Marlowe Asset Management TumorMap Pro (PLA Code 0239U, $4,206) — provide a strong basis for a crosswalk-based pricing determination that supports GDT's target rate of $3,850. The weighted average of these comparators ($3,622.33) is within reasonable range of the target rate, and GDT can present a compelling case for a rate above the average based on the proprietary TRI algorithm, the NSCLC-specific clinical validation, and the differentiated clinical utility of the test. The detailed crosswalk analysis, including identification of the optimal primary comparator, sensitivity analyses, and a contingency strategy in the event the MAC selects gapfill methodology, will be set forth in the Reimbursement Rate Analysis Memorandum anticipated for delivery in May 2024.
VI. Recent CMS Policy Developments Affecting Genomic Diagnostics
A. CLFS Payment Rate Reforms
The Protecting Access to Medicare Act of 2014 ("PAMA"), Pub. L. No. 113-93, § 216, introduced significant reforms to the methodology by which Medicare Clinical Laboratory Fee Schedule ("CLFS") payment rates are determined. Under PAMA, CMS requires applicable laboratories to report data on private payer rates and test volumes for each CLFS test code during specified reporting periods. CMS then uses the reported private payer rate data to calculate weighted median rates, which become the new CLFS payment rates.
The PAMA reporting requirements have had a significant impact on reimbursement rates for molecular diagnostic tests, as private payer rates for many molecular diagnostics are lower than the pre-PAMA CLFS rates. Successive PAMA reporting cycles have resulted in downward pressure on CLFS rates for a number of high-value molecular diagnostic tests, although CMS has implemented statutory caps on annual rate reductions to moderate the pace of adjustment.
Implications for GDT. PAMA reporting cycles and the potential for future rate adjustments are a relevant consideration in GDT's pricing strategy. If GXP-47 obtains a PLA code and initial Medicare reimbursement at the target rate of $3,850, subsequent PAMA reporting cycles could result in rate adjustments if private payer rates for GXP-47 diverge from the CLFS rate. GDT's commercial payer contracting strategy — which is outside the scope of this memorandum but will be relevant to the Reimbursement Rate Analysis — should take into account the impact of private payer rates on future CLFS pricing. Specifically, GDT should seek to negotiate commercial payer rates at or above the target Medicare rate to support the CLFS rate in future PAMA reporting cycles.
B. FDA–CMS Parallel Review and Coordination
The regulatory landscape for laboratory-developed tests is evolving in ways that could significantly affect the pathway for tests like OncoPrecise GXP-47. The FDA has demonstrated increasing regulatory interest in LDTs, culminating in a proposed rule published in 2023 that would, if finalized, subject certain categories of LDTs to premarket review requirements similar to those applicable to in vitro diagnostic devices. Under the proposed rule, the FDA would phase in regulatory requirements for LDTs over a multi-year transition period, with high-risk LDTs subject to premarket approval (PMA) or de novo classification requirements.
Separately, CMS and the FDA have established a Parallel Review program that allows a manufacturer or laboratory to pursue simultaneous FDA premarket review (PMA) and CMS national coverage review (NCD) for a new test or device. The

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