Market-Based in Practice, Not Just Theory

One of the driving forces in today’s health system is the goal of promoting and maintaining a competitive market for patients. In a “market-based” health system, consumers see the direct benefit of labs competing on quality, cost and services available – rather than an arbitrary, one-size-fits-all approach that fails to achieve any of these goals. In fact, that was one of the prevailing incentives in passing the Protecting Access to Medicare Act (PAMA) which ended the year-over-year uncertainty and disruptions to seniors’ access to critical Medicare services, including laboratory tests and diagnostics.

Which is why clinical laboratories are urging the Administration to reverse a misguided reimbursement system for lifesaving diagnostics and clinical tests that is far from a market-based model. While Health and Human Services (HHS) Secretary Alex Azar will focus this week on the importance on market-based approaches to patient care, the Administration can put its rhetoric into reality by advancing the right type of policy changes that will improve seniors’ care.

Currently, millions of seniors are facing roughly $670 million in cuts to their Medicare lab benefits and services – and more cuts are on the way over the next two years. The cuts are a direct result of HHS’ flawed, backwards approach to implementing PAMA. While Congress directed the Department to collect data on private market payment from a broad range of labs, the Department of Health and Human Services (HHS) cherry-picked data from less than 1 percent of labs across the country to determine rates for the new Medicare Clinical Laboratory Fee Schedule (CFLS).

By ignoring reimbursement data from more than 99 percent of labs, HHS is following a CFLS that completely fails to reflect the full clinical laboratory market, leading to extreme cuts to vital lab services and jeopardized care for the most vulnerable Medicare beneficiaries. A recent report from National Independent Laboratory Association (NILA) found that these cuts are leading to widespread reductions in laboratory services, including house-calls to homebound seniors and 24-hour emergency STAT testing, and access to labs in rural communities.

ACLA recently filed a lawsuit against HHS against this flawed approach that harms and jeopardizes patients. When Secretary Azar touts the benefits of a market-based approach to care, he can put his words into action by preventing the cuts to seniors’ lifesaving lab services.

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