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ACLA on President’s FY 2015 Budget

(Washington, D.C.) – The American Clinical Laboratory Association (ACLA) today pointed to both beneficial and harmful provisions in the President’s FY 2015 budget: drastic funding cuts that would compromise the continued delivery of high quality clinical lab services to Medicare beneficiaries and a proposal that would preserve integrity in the lab services industry. ACLA urged congressional budget leaders to oppose provisions that would reduce reimbursement for clinical laboratory services for Medicare beneficiaries by an additional $7.9 billion over ten years, amounting to an overall 14% funding reduction. However, ACLA is praising a provision recommending the removal of anatomic pathology (AP) from the Medicare in-office ancillary services (IOAS) exception to the self-referral law.

The proposed budget includes reductions, on top of cuts already scheduled under current law, and disregards that the Centers for Medicare & Medicaid Services is already moving forward to update all rates within the Clinical Laboratory Fee Schedule (CLFS) based on “technological changes”. Clinical laboratory testing represents less than 2 percent of all Medicare fee-for-service spending, yet it has been subjected to significant payment rate freezes and cuts over the last two decades—especially in the past three years. In addition to a two percent cut as a result of the FY 2013 short term Medicare Sustainable Growth Rate (SGR) patch (representing 15 percent of the offset to pay for the SGR deal), and another two percent through sequestration, the Affordable Care Act contains an annual 1.75% cut to the CLFS, that is scheduled to end in 2015. The President’s budget, however, would extend that cut each year beginning in 2016 and ending in 2023, compounding cuts upon cuts.

“Seventy percent of physician clinical decisions are based on laboratory results, many of which are critical to improving the quality of health care and lowering health care costs,” said Mertz. “The impact of these proposed cuts will not only reduce access to lab services but severely stymie innovation, including the advancement of molecular diagnostics, which have ushered in the era of personalized medicine and revolutionized the care and treatment of many chronic and life threatening diseases, including cancer.”

While ACLA strongly opposes the additional cuts to clinical laboratory services in the proposed budget, it does applaud the inclusion of a provision to close the IOAS loophole in the Stark law. A July 2013 GAO report found that self-referral for anatomic pathology services increases utilization and unnecessarily drives up Medicare spending. As a member of the Alliance for Integrity in Medicare (AIM) and supporter of the AIM recommendation to remove AP from the IOAS exception, ACLA noted that excluding AP, in addition to advanced diagnostic imaging, radiation therapy and physical therapy, would save an estimated $6 billion over 10 years according to the President’s budget.

“The exclusion of anatomic pathology in the IOAS exception is the right policy and one that will continue to foster integrity in the field of clinical laboratory services,” said Mertz. “Untargeted and broad cuts to clinical laboratories – which have no control over the volume of services ordered by physicians – should be rejected. This reform to restrict self-referral would safeguard patient safety and health care quality, as well as allow for better control of Medicare spending.”

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