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.
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 41 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.
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).