Laboratory Innovation & Operations
Clinical laboratories serve as a driving force in medical innovation. The growing demand for laboratory developed tests (LDTs) – clinical diagnostics that are often designed in response to unmet clinical needs – has revolutionized our approach to patient care and provides an essential foundation for future medical breakthroughs and “moonshots.”
Value of Clinical Labs
America’s clinical laboratories serve as the foundation for public health preparedness and response and for everyday prevention, diagnosis, and treatment of disease for patients across the country. From routine blood tests to ground-breaking genetic tests that guide therapy selection, clinical laboratories play a vital role in answering some of life’s most important questions.
For millions of Americans and their health providers, laboratory tests are the start of any comprehensive care plan, empowering patients with the answers they need to guide health care decisions. Results from laboratory tests inform 70 percent of clinical decision-making, helping patients monitor, diagnose, and treat common, chronic, and rare conditions every day, yet account for less than three percent of total health care spending. Effective use of screening and diagnostic tests allows patients to receive the right care at the right time while often reducing overall health care costs.
Clinical laboratories sit at the forefront of public health, collaborating with providers throughout the health care delivery system and with public health agencies, including through robust public-private partnerships, to advance critically needed diagnostic testing for patients everywhere, at scale. From Zika to Ebola, and now COVID-19 and monkeypox, America’s clinical laboratories have stepped up to meet the moment, developing tests, scaling testing capacity to match national demands, and providing critical surge capacity during public health crises. Laboratories’ investments in innovation have led to extraordinary advancements that are changing health care as we know it.
Protecting access to laboratory tests is essential for a strong and nimble diagnostic infrastructure and investments in innovative solutions for the patients we serve. Click here to learn more about our efforts to stop lab cuts.
Saving Access to Laboratory Services Act
In 2014, Congress passed the Protecting Access to Medicare Act (PAMA) to ensure millions of seniors could maintain access to critical health services, including laboratory tests. Yet, due to misguided implementation, PAMA has led to severe year-over-year cuts to the lab tests that over 56 million seniors rely on under Medicare.
Between 2017 and 2022, payment for common tests for diseases like diabetes, cancer, and heart disease were cut by 27 percent. The next round of Medicare cuts, scheduled to begin January 1, 2023, would slash reimbursement up to another 15 percent for more than 800 laboratory tests, resulting in a staggering 38 percent cut to tests that are widely used to screen and manage many serious diseases. Collectively, these cuts may threaten access to laboratory services for diagnosing and treating seniors across the country.
Without congressional action this year, a fourth round of Medicare cuts are scheduled to begin in January 2023 that could jeopardize access to many clinical laboratory tests used to diagnose, monitor, prevent, and manage common diseases for seniors and all patients across the country.
It is essential that Congress protect patients by acting to fix the Medicare payment model for clinical diagnostic tests. The solution to reforming PAMA is the Saving Access to Laboratory Services Act (SALSA / S. 4449 / H.R. 8188). Congress has acted three times to delay these cuts in recent years, but permanent reform is needed now. The Saving Access to Laboratory Services Act would set Medicare reimbursement back on a sustainable path by updating Medicare’s payment system, which will help protect access to clinical laboratory testing, support investment in innovation, and strengthen America’s clinical laboratory infrastructure.
Click here to visit StopLabCuts.org and learn more about the Saving Access to Laboratory Services Act.
Reimbursement and Coverage
Clinical laboratories are reimbursed for providing services to Medicare beneficiaries using either the Physician Fee Schedule (PFS) or the Clinical Laboratory Fee Schedule (CLFS), depending on the nature of the service. In addition, clinical laboratories provide services to beneficiaries of other government programs such as Medicaid, TRICARE and the Federal Employee Health Benefit Plan (FEHBP), as well as commercial plans.
Lab reimbursement in many of these programs has been reduced in recent years, and in the case of the Medicare program, annual cuts are scheduled in current law not only as a result of sequestration, but also through annual cuts built into the Affordable Care Act.
While payments for lab services are being slashed, the costs associated with providing critical laboratory services - including labor, supplies, and transportation - continue to climb.
Although many labs have managed to navigate changes in markets and reimbursement and while still continually improving quality, continued arbitrary and severe payment reductions will result in reduced access to essential tests for critically ill patients, less innovation, more closures or consolidation of businesses, and more people out of jobs.
Developing a comprehensive approach to diagnostic reform – one that fosters innovative care delivery – is vital to our ability to tackle the most challenging and complex health needs of the country. Meaningful reforms must balance federal oversight with support for cutting-edge innovations and should account for distinct differences between laboratory developed tests (LDTs) and in vitro diagnostics (IVDs).