American Association for Clinical Chemistry
Better health through laboratory medicine
July 2009 Clinical Laboratory News: Healthcare Reform

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July 2009: Volume 35, Number 7


Healthcare Reform
What’s at Stake for Labs?
By Bill Malone

Right now, everyone is wishing for that crystal ball that could reveal what healthcare reform is going to look like and how it will affect patients, providers, and a host of other stakeholders. At least three U.S. House committees and two Senate panels are working on bills, heeding President Obama’s call to tackle access, quality, and cost. Lawmakers have set a self-imposed deadline of Labor Day to hash out their differences and get a bill passed.

Meanwhile, industry groups, professional associations, patient advocacy organizations, and other coalitions and lobbyists have descended on the nation’s Capitol, all trying to make their voices heard. Amid the din of opinions, plans, and predictions surrounding healthcare reform, the lab community is also determined not to sit on the sidelines. In collaborations such as the Clinical Laboratory Coalition (CLC) and through professional associations like AACC, laboratorians and IVD industry leaders are looking to take advantage of this extraordinary chance to have a say in the future direction of healthcare in the U.S.

Experts agree that now is the time to draw greater attention to the role that lab tests play in patient care. “Things are moving fast in Washington right now, and we have a really good story to tell,” said Kathleen Claessens, director, Federal Health Policy and Reimbursement for Roche Diagnostics. “Lab tests are vital to the whole healthcare reform process. Considering the central role of lab tests in screening for and diagnosing illnesses and guiding therapy, it’s crucial we get the message across that access to appropriate lab testing is key to improving the quality of care and controlling costs.”

In an effort to advance the concerns of laboratorians and help busy congressional staffers get a grasp of the big picture, AACC has put forward basic principles the association believes Congress must incorporate in any healthcare reform package. Each of these principles sets out not only what’s at stake for laboratories in healthcare reform, but what the nation as a whole can gain by supporting lab medicine (See Box, below).

AACC Proposes Six Principles for Healthcare Reform

In letters to Congressional leaders and to President Obama’s newly created office of healthcare reform, AACC is advancing six general principles that the association believes must be addressed in healthcare reform legislation. AACC staff visited with lawmakers in Washington in June to advocate for labs.

  • Ensuring Patient Access to Clinical Laboratory Testing
    AACC believes that all consumers should have access to laboratory testing, which is the cornerstone of medical care. Laboratory tests are used to detect disease before symptoms are present, diagnose disease so that treatment can begin, and monitor patient response to medical interventions. Any healthcare package should ensure that patients have access to this cost-effective medical service.
  • Fostering the Development and Adoption of Improved Technologies
    Healthcare reform must facilitate the efforts of healthcare providers and industry to devise new and better methods to assist the medical and laboratory communities identify and treat disease. This innovative ability is critical to improving patient care and is the strength of the U.S. healthcare system.
  • Improving Clinical Decision-making Through Evidence-Based Medicine
    Healthcare professionals need timely, accurate, and reliable information for making patient care decisions. AACC believes that evidenced-based research tools, such as systematic reviews and comparative effectiveness research, can play a key role in generating this much needed data.
  • Promoting Personalized Medicine to Improve Patient Outcomes
    Increasingly scientific advances in human genetics and biomarker research are moving our healthcare system towards personalized patient care, whereby healthcare professionals can select the most appropriate test for the individual, detect disease earlier, and determine the optimal therapy. Healthcare reform can assist this promising field by providing incentives for the co-development of drugs and laboratory tests, facilitating the adoption of electronic medical records and adequately reimbursing for genetic testing services.
  • Ensuring the Supply and Quality of Health Care Personnel
    The number of individuals graduating in the U.S. with science degrees has declined. This downward trend is creating a shortage of highly trained personnel in healthcare, academia, and industry. AACC supports a variety of approaches to counteract this dangerous trend, including increased funding for science education and training programs at all education levels, including programs to increase the number of clinical chemists and clinical laboratory scientists.
  • Ensuring Fair Reimbursement for Clinical Laboratory Testing
    Laboratories play a vital role in providing quality patient care. Additional reductions in reimbursement in this economic climate could jeopardize the financial viability of many laboratories, potentially reducing patient access to testing services, particularly in rural and underserved areas, and endanger patient safety. Clinical laboratories must be fairly and adequately compensated to continue to provide this vital health service.

Access and Reimbursement

For patients to have the access to the tests they need, it’s clear those tests must be reimbursed by government payors or private insurers. However, nobody expects Congress to dig in to a full-blown reworking of Medicare’s clinical lab fee schedule any time soon. The fee schedule is under Medicare Part B, a byzantine system that includes a multitude of different payment structures. Instead, some lab community advocates have focused on reimbursement for new, innovative tests based on their clear ability to impact the overall cost of care for a patient, such as KRAS testing for metastatic colorectal cancer or other tests that guide costly therapies (CLN February, 2009).

Nevertheless, while genetic-based testing has raised the profile of diagnostics in recent years, laboratorians should remain guarded, said Robert Murray, JD, PhD, technical consultant with Midwest Diagnostic Pathology. “I don’t think that when anybody in Washington is talking about healthcare reform, they’re thinking about making providers any richer or their lives any easier. Congress wants to spend fewer dollars at the end of the day, and I don’t see labs getting a bigger share than they do right now.” Life in labs probably won’t be any easier when healthcare reform is in place, he cautioned. According to Murray, laboratorians need to think strategically and be prepared for adversity. For example, while competitive bidding is off the table for the time being, there are still lawmakers in Washington who like the idea, and it’s not impossible that they’ll try to bring it back.

Another danger could take the shape of expanding the diagnosis-related group (DRG) payment concept to outpatient lab services. Currently, Medicare reimburses hospitals for inpatient care based on DRGs instead of individual services and procedures, and for outpatient care based on ambulatory payment classifications (APC). However, for now, outpatient hospital-based lab services continue to be paid based on a fee schedule. If the APC system were applied to outpatient lab services, it could lead to all clinical labs competing with every other aspect of healthcare for each reimbursement dollar. Considering the challenge this has posed to hospital-based labs, this could be disastrous for independent labs.

A caveat to this scenario is that under the current scheme, hospital labs do have some advantage over independent labs, but not because of DRGs, explained Murray. Rather, because of hospital labs’ intimacy with acute care, the hospital administration, the physicians—everyone who takes care of patients knows they can’t do without the support of the lab. “But for an independent lab getting specimens by courier, if there is a different name on the pickup van, the doctor still has his or her test performed. So these labs all have to compete with each other, while a hospital lab isn’t going to start sending its emergency room specimens out to some other testing site.”

Advocates for labs are on the lookout for another peril as well: copayments for lab tests under Medicare. Unlike other services, such as physician visits, outpatient lab tests still have no copayment, and labs want it to stay that way. A copayment could keep some people from getting the tests they need.

Laboratorians might also have to come to terms with the fact that that reform initiatives and reimbursement pressures could lead to uncomfortable changes in how, where, and by whom testing is performed, suggested AACC president Barbara Goldsmith, PhD. She sees change on the horizon in the form of more point-of-care (POC), home health monitoring, and direct access testing, offering the example of the decision last year by the Center for Medicare and Medicaid Services (CMS) to expand coverage for home INR monitoring for patients taking warfarin.

With the combination of better-informed, web-savvy consumers and the push to give patients more control over their own health—as evidenced by personal health record initiatives and the increase in direct access testing—Washington’s drive for greater access to healthcare might not mean more traditional lab testing, but more testing generally through self-testing or physician offices. “More and more, for routine outpatient testing, the competition is going to be the doctors’ offices and the patients themselves,” said Goldsmith. “The more sophisticated tests will still have to come to the lab, and there is where we’ll have more of a voice. This does not mean at all that labs will become obsolete; on the contrary, the laboratorians’ expertise will be more important than ever. But the kind of testing we do in labs is going to be different.”

As if reimbursement issues didn’t seem important enough already, President Obama indicated recently that he would support giving the Medicare Payment Advisory Commission (MedPAC) much greater power to influence payment policy. Under the proposed provision, MedPAC’s recommendations would become effective automatically unless a majority of Congress opposed them. Currently, MedPAC’s recommendations are just that—suggestions that Congress must take up in legislation.

Personalized Medicine

Despite public enthusiasm and strong support from President Obama when he was a Senator, personalized medicine still faces an uphill battle to become accepted into mainstream medical practice. While the promise of increased efficacy, safety, efficiency, and reduced costs might make personalized medicine seem like it should sell itself, public and private payors are not quite all on board. “Payors tend to be skeptical of new technologies because they have not seen them lead to reduced costs, but rather, in their view, to increased complexity and rising costs,” said Edward Abrahams, PhD, executive director of the Personalized Medicine Coalition (PMC), a non-profit advocacy group composed of industry, patient, and professional groups, including AACC. “Their default position tends to demand to see the evidence that new technologies lead to increased clinical utility and better outcomes for patients.”

Though Abrahams agrees that these new tests should meet high standards, he emphasized that there should be differences in the level of evidence required for diagnostic tests compared to drugs. For instance, there is no incentive from a business perspective for a company to perform controlled, randomized trials for a test as would be done for a drug.

In spite of these challenges, Abrahams said there are encouraging developments that signal that personalized medicine is creeping into the consciousness of lawmakers. One example is the comparative effectiveness research with its emphasis to consider subpopulations. Congress set aside over $1 billion for comparative effectiveness studies in the economic recovery package. “I’ve seen exponential increases of understanding. And we now have a number of senators and congressman who have focused on personalized medicine to improve healthcare, with a number of them having paid more than lip service to the idea.” PMC is hoping to reach even more lawmakers and other stakeholders with a new report, “The Case for Personalized Medicine.” The report sets out real-world examples of how personalized medicine can refine diagnosis, guide treatment, and avoid side effects from therapies. The report points out that there are now more than 200 product labels that either recommend genetic testing or mention the influence of genetic variation on drug response and safety.

Ultimately, it will be up to laboratorians to promote personalized medicine, said Abrahams. “Labs and pathologists care enormously about this because this is the future of medicine. Instead of being commoditized, they get to introduce the value of their education and expertise. And that’s where the smart ones are. And that’s why some of the large labs and labs generally are focused on this—this is where it gets exciting for them intellectually, and it should follow financially. That’s why the labs are a big part of our coalition.”

Improved Technologies

Another primary message that AACC is pushing for is continued support for new technology and innovation in lab medicine. In this arena, other lab advocacy organizations have also been particularly active, including the Advanced Medical Technology Association (AdvaMed), the American Clinical Laboratory Association (ACLA), and CLC. Roche Diagnostics’ Claessens said that in visits to Capitol Hill with other representatives from the clinical lab field, she has stressed that improved test technology like more accurate tests, improved automation, and consolidated platforms can both reduce costs to the lab and impact the delivery of healthcare through better care and improved efficiency.

Generally, her message has received a good response. “I was impressed when I spoke to the staff of members of the Senate Finance Committee recently. They’re very interested in the role labs play,” she said. “I do think the message is out there and we’re stressing it as much as we can. We’re telling them that we can’t base payment decisions solely on the marginal cost of performing a test. We have to look at how the test affects the overall treatment of that patient and how that’s affecting the cost and quality of the care they get.”

One area where the Obama administration’s focus aligns with lab interests is on preventive care, Claessens pointed out. For good preventive care, clinicians will rely on very accurate screening tests. “They’re going to need an arsenal of these prevention-oriented tests to be able to identify cases where more or less services are needed,” she said. One example is screening for methicillin-resistant Staphylococcus aureus (MRSA) in hospitals. “These tests ultimately protect a hospital’s bottom line.” One test where reimbursement has recognized the value of diagnostics is the HIV quantitative test, which is reimbursed by Medicare at almost twice the rate of other, similar tests.

“If in healthcare reform there is recognition, at minimum, of the critical role laboratory tests play in contributing to quality patient care and improved outcomes, I think that would be excellent. If we’re really going to expand coverage to 47 million Americans that are uninsured right now, at some point Congress is going to look at how this gets paid for, and we want to make sure those dollars don’t come away from lab testing,” said Claessens.

Evidence-Based Lab Medicine

Evidence-based medicine has already garnered attention from policymakers as one of the early healthcare-related initiatives to receive funding through the American Recovery and Reinvestment Act (ARRA). In fact, Congress increased funding to the Agency for Healthcare Research and Quality (AHRQ) for comparative effectiveness and other evidence-based research ten-fold, from $30 million to $300 million. Several AHRQ projects have tackled evidence for diagnostic tests, which fall under the rubric of evidence-based lab medicine (EBLM). “EBLM is an important part of healthcare reform because ultimately we’re trying to provide better use of laboratory resources,” said David Alter, MD, a clinical pathologist for Spectrum Health. He called attention to the fact that laboratorians are still grappling with exactly what EBLM should be doing for lab medicine.

“Where this all goes is that there is a potential for a lot of inappropriate ordering.” He offered the example of a patient that presents with shortness of breath and a history suspicious for heart failure or pulmonary embolism. In this case, the physician should be focusing on the patient’s heart and lungs. But on top of this, the physician orders a comprehensive metabolic panel. “But what does the CMP truly add when you have a patient that comes in with a heart/lung issue? In the perfect world, there would be some way to clinically decide ‘no, you don’t need a CMP, or you don’t need one every day.’ But we’re not there yet.”

On the other hand, Alter underscored the fact that new evidence can also lead to a new appreciation for common tests like the basic metabolic profile (BMP), not only trendy molecular tests. He mentioned a recent paper in the American Heart Journal in which the authors examined large, prospectively followed populations and found that a BMP risk model had a highly significant predictive ability for death.

Even with the growing awareness of EBLM, laboratorians are going to have to continue to work extra hard to get the lab in the spotlight and compete with drugs for attention, Alter said. “The problem is that people want dramatic, quick, noticeable differences in outcomes. And what we can provide as laboratorians isn’t always dramatic, quick, or noticeable.”

Lab Workforce

For at least a decade, the lab community has experienced ever-increasing anxiety over the supply of qualified people to staff labs. Labs are feeling particularly vulnerable now, as it looks like several clinical laboratory scientist training programs at universities around the country will be shuttered. If lawmakers at the federal and state level really care about quality in healthcare reform, they’ll have to start paying attention, said Sharon Ehrmeyer, PhD, MT(ASCP), CLS/MT program director and professor of pathology and laboratory medicine at the University of Wisconsin, Madison. Her program is among those recently targeted for closure. “The government says they want to spend less, but not cut quality. But if they don’t take care to make sure that qualified people are there to do the testing, in effect they are cutting quality—eventually increasing costs and leading to poor outcomes.”

On at least two counts there are signs of hope, she said. First, the increasing prevalence of POCT could bring new recognition of the lab from the general public, since most people still have only a vague idea of what a clinical laboratorian does in the first place. Ehrmeyer offered a tongue-in-cheek illustration: if laboratorians decided to strike like nurses have done, the lab would close down and physicians wouldn’t have their results. “But would it make a difference? I think the public reaction would be, ‘who are these people?’”

A strategy that’s met with some success for lab training programs is applying for ARRA stimulus funds set aside specifically for healthcare job training. The stimulus provides $250 million through the Department of Labor’s Community-Based Job Training Grants (CBJTG) program. Lab training programs in Minnesota received $2 million from CBJTG last year. Other training programs are lobbying their own states with similar proposals.

At the end of the day, part of the blame for the staffing problem lies with laboratorians themselves, said Ehrmeyer. “We really have not defined ourselves well, and we’ve been talking about this problem for a long time with not much to show for it.”