Leadership Series Interview with Charles Mathews, Vice President at Boston Healthcare

In this exclusive Slone Partners’ interview, senior health care reimbursement consultant, Charles Mathews, shares his views on the industry and overcoming the challenges and obstacles that it faces. He also addresses the development of clinical utility evidence for molecular diagnostics and laboratory tests, offers his perspective on the potential implications of health reform legislation, and provides valuable advice on commercializing new diagnostics products.

Slone Partners: Reimbursement has emerged as a big issue for diagnostic innovators. Is there much hope for improvements to the reimbursement environment?

Charles Mathews: Reimbursement is really just about securing payment for the value of medical technologies. Diagnostic testing holds considerable value; value that far outweighs the cost of providing such technologies. When assessing the reimbursement environment for diagnostics, we have, as an industry, inadequately defined and articulated the value we bring to the table. The industry has also seen a few bad actors that have taken advantage of the vagaries of the current coding and billing system to reap temporary rewards.

We have come to accept and approach reimbursement strategies with the mindset: “it’s not quite perfect, but it is better than nothing.” I believe things will improve if we unify around how to define and demonstrate the value of diagnostic testing and hold our peers and ourselves accountable for meeting these standards.

Slone Partners: Over the last few years, there has been a lot of discussion around clinical utility for molecular diagnostics and laboratory tests. How has that evolved?

Charles Mathews: The importance of showing clinical utility to payers is a subject frequently discussed and debated in the healthcare industry. It is also an area of great ambiguity. In an effort to address this, I often focus my discussions with payers on what they think clinical utility is, and I have learned that the payers themselves are also unclear on what clinical utility should mean. I try to delineate ‘wants’ versus real needs. Payers have also become accustomed to seeing big randomized controlled trials with years of outcome data: however, this evidence model initially built around pharmaceuticals, will not work here. The return on investment (ROI) on developing that level of evidence just isn’t there.

I think it is up to us to define and shape what evidence for clinical utility needs to look like. The answer is very specific in presenting ideas and suggestions. For example, rather than simply proposing a registry, we could specify that we will do a prospective observational study involving 650 patients and 5 sites. As a result, we can get more specific feedback on refining study design and how to execute it.

Slone Partners: What applications of molecular diagnostics do you see making an early impact when it comes to reimbursement?

Charles Mathews: There are so many interesting and exciting areas of innovation occurring in diagnostics. I will highlight just a few. First, the transition of next generation sequencing from a research tool to a technology that is widely applied in the clinical space is revolutionary. The depth and breadth of information provided by sequencing opens an array of opportunities for the future of diagnostics. However, payers are still operating under the notion that each additional gene adds additional costs and price determines results. To help them move beyond this type of thinking we need to redefine what constitutes ‘clinically actionable.’ It is more than just companion diagnostics. It might also include identifying genes that would qualify people for enrollment in clinical trials.

The other area I am interested in is point of care molecular diagnostics. We are now able to take complex molecular tools and put them in smaller devices that can be used in less complex settings. This has the potential to re-shape how different conditions are treated. For example, right now many antibiotics are used empirically while we wait for culture results to tell us what pathogen we are dealing with and how we should treat it. With multiplex molecular technologies, you know how to tackle an infection correctly on day one. The challenge here, like sequencing, is defining how much is enough to include in the panel and how to justify all of those results that were simply negative.

Finally, diagnostic companies that are not in-vitro diagnostic companies really intrigue me. I am referring to new players who realize the value of diagnostics as information tools and see the potential real value in sorting data produced by multiplex platforms, as described above. If we can work out a way to be paid as information providers, rather than simply test performers, that will be exciting.

Slone Partners: There is a lot of discussion about health reform and the potential demise of Obamacare. What impact do you think that will have on our industry?

Charles Mathews: I believe there are two parts that we need to be considering: the expanded access to health insurance and payment reform, and the broader shift from a fee-for-service structure to value-based care in a population health type system (e.g. Accountable Care Organizations). Interestingly, payment reform has been in the works for decades. Reform began before Obamacare and will likely continue even if the structure is altered in any significant way.

The question for the diagnostic industry is what do we do in a value-based system? This comes back to the points I made earlier about defining and articulating value, however now the audience is different. Instead of telling a payer how you create your test, you need to convince a value assessment committee at a hospital system on the test’s utility. Alternatively, instead of worrying about your CPT code, you need to show an ACO how the testing system and the informatics overlay will more effectively manage the care of their chronic disease patients.

Slone Partners: In an increasingly complex healthcare marketplace, what advice would you give to a start-up looking to commercialize novel diagnostics?

I think many people get fixated on just reimbursement. It is complicated and there is a lot of pressure from investors, etc. to resolve it promptly. However, reimbursement, at its core, is really about defining and showing your value. If you give me a diagnostic product that has a significant impact on clinical decision-making, I can develop health economic models and payer materials that reflect that value. However, if the underlying technology and science are not linked directly to care impact, then I will have a much harder time.

About Charles Mathews

Mr. Mathews has worked on a variety of diagnostic reimbursement projects involving the analysis, development, and implementation of coding, coverage, and payment strategies for both emerging and established innovators. This includes involvement in the commercialization of over 100+ different test products in the cancer, diabetes, cardiovascular disease, and infectious disease spaces.

These tests range from simple point of care technologies to esoteric molecular approaches involving drug diagnostic combinations. He has knowledge gained by working not only with IVD platform and kit developers but also sole-source laboratories that are pursuing value-based pricing. He also has specific knowledge and expertise in the development of global market access plans for companion diagnostics.

Mr. Mathews’ prior experience includes several years of working on health policy issues as a legislative aide on Capitol Hill. He also worked for the government affairs office of a biotechnology company and has worked on a National Institutes of Health sponsored clinical trial focused on genetic testing for Alzheimer’s disease. Mr. Mathews completed his undergraduate work at Colgate University and received a Master’s Degree in Public Policy at Duke University.

Read our exclusive interview with Phyllis Whiteley, Ph.D., Venture Partner at WildCat Venture Partners & at Mohr Davidow Ventures

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