DermTech’s Pigmented Lesion Assay Gets Medicare Coverage

DermTech (La Jolla, CA) received a Proprietary Laboratory Analyses CPT code (0089U) for its Pigmented Lesion Assay in late October, according to CEO John Dobak, MD. Medicare reimbursement has been set at $760 per test effective January 1.

The Pigmented Lesion Assay (PLA) is a non-invasive gene expression test used for early melanoma detection. The test uses an adhesive patch, about the size of a quarter, that is applied across an entire skin lesion. The tape removes the very upper layer of the skin, called the stratum corneum.
RNA is then extracted from the collected skin cells and RT-PCR is used to assess the expression level of two specific genes, PRAME and LINC00518, associated with melanoma. If one or both of the target genes is detected, the test is positive.

Dobak notes that gene expression changes are detectable before physical changes to a skin lesion occur. In two validation studies comparing the PLA test to traditional histopathology diagnosis (n=398), the PLA demonstrated a sensitivity of 91%, a specificity of 69%, and a negative predictive value of 99%.The PLA reduces the probability of missing melanoma to less than 1% (compared to 16% for early stage melanoma with visual assessment and histopathology), according to Dobak.

DermTech performs the test at its CAP-accredited lab in southern California. DermTech is marketing the test directly to dermatologists through 22 employed sales reps. Dobak plans to double the sales rep staff by year’s end.

Challenges include educating the nation’s 12,000 dermatologists on the benefits of the PLA test. There is also a small economic disincentive because the PLA test eliminates the need for a dermatologist to perform and bill for a biopsy procedure (~$100). However, dermatologists that perform the PLA test can bill for a Level IV office visit versus a Level II visit, notes Dobak.

With financial backing from RTW Investments, HLM Venture Partners, and Irwin Jacobs, a co-founder of Qualcomm, DermTech came public by merging with a dormant publicly traded company (Constellation Alpha Capital) in early September.

DermTech reported billable test volume of 3,596 for the three months ended September 30, 2019, up 18% compared to 3,043 for the same period in 2018. Test revenue increased to $385,000 from $321,000.