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.”
America’s clinical laboratories serve as the foundation for early diagnosis, prevention and personalized care for millions of patients. From routine blood tests to ground-breaking genetic and molecular diagnostics, clinical laboratories play a vital role in improving patient outcomes and quality of life while delivering better value for the health system on the whole.
Prevention and early detection are not only beneficial to patient outcomes and quality of life, they also drive savings across the health system by helping to identify diseases and risk factors for diseases at an early stage. Diabetes alone, for example, is associated with $16 billion in annual spending that could have been avoided through earlier diagnosis and better disease management.
Signed into law on April 1, 2014, the Protecting Access to Medicare Act of 2014 (PAMA) includes the most extensive reform of the Medicare Clinical Laboratory Fee Schedule (CLFS) since it was established in 1984. Section 216 of PAMA creates a new Section 1834A of the Social Security Act, which contains many of the CLFS reforms. Starting on January 1, 2017, most rates on the CLFS will be derived from private payor rates for laboratory services. PAMA also designates certain tests as “advanced diagnostic laboratory tests” (ADLTs); includes provisions affecting coding, coverage and oversight of the CLFS; and makes some changes to CMS’s review of mis-valued codes in the Physician Fee Schedule (PFS) affecting anatomic pathology services provided by laboratories.
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).