October 2011 Clinical Laboratory News: Regulatory Profiles

Industry Profiles

Bundled Hospital Payment Program Kicks Off

The U.S. Department of Health and Human Services (HHS) launched a new program that will bundle payments for services delivered across an episode of hospital-based care rather than paying for services separately, including lab testing. HHS hopes the payments will give providers incentives to coordinate care, improve the quality of care, and save money for Medicare.

Created under the Affordable Care Act, the Bundled Payments Initiative aims to improve care for patients while they are in the hospital and after they are discharged. Doctors, hospitals, and other healthcare providers can apply to participate in the program.

The Request for Applications (RFA) outlines four broad approaches to bundled payments. Providers will have flexibility to determine which episodes of care and which services will be bundled. In the first model, the Centers for Medicare and Medicaid Services (CMS) simply pays hospitals a discounted fee for an inpatient stay; in the second, a single payment covers the inpatient stay and post-acute care for a minimum of 30 or 90 days after discharge; in the third model, the single payment encompasses post-acute care starting from the time the patient is discharged from inpatient care to a minimum of 30 days after discharge; and in the fourth model, CMS makes a single prospective bundled payment to the hospital to be used for all inpatient services provided by the hospital, physicians, and other practitioners.

The Bundled Payments Initiative is based on results from previous demonstration projects HHS conducted. For example, a Medicare heart bypass surgery bundled payment demonstration saved the program $42.3 million, or roughly 10% of expected costs, and saved patients $7.9 million in coinsurance while improving care and lowering hospital mortality.

More information about the program is available online. An email address has been set up for specific questions as well, BundledPayments@cms.hhs.gov.

NIH Tightens Financial Conflict of Interest Rules for Researchers

In keeping with a trend in academia and industry, the National Institutes of Health (NIH) released new rules on conflicts of interest for researchers that will require disclosure of more information as well as set a lower threshold for when financial conflicts must be disclosed. NIH had not updated the rules since 1995.

The new constraints in the final rule will: 1) require investigators to disclose to their institutions all of their significant financial interests related to their institutional responsibilities; 2) lower from $10,000 to $5,000 the monetary threshold at which significant financial interests require disclosure; 3) require institutions to report additional information on identified financial conflicts of interest and how they are being managed; 4) require institutions to make more information accessible to the public; 5) require investigators to complete training related to the regulations and their institution’s financial conflict of interest policy.

More information about the major changes to the regulations can be found in the Federal Register announcement online.

Plan to Streamline Regulations Covers FDA Device Review

The Department of Health and Human Services (HHS) released its final “Plan for Retrospective Review of Existing Rules,” which targets areas where regulations can be simplified, including regulation of medical devices such as diagnostic tests. President Obama signed an executive order in January that required all federal agencies to review all regulation and make sure it was cost-effective and imposed the least burden on society possible.

One area of focus in the plan is medical devices. Under the plan, the Food and Drug Administration (FDA) will maintain its ongoing review of classifications of medical devices based on risks to determine whether a particular device can be reclassified to a lower level. The plan also affirms FDA’s 510(k) improvement program. Other FDA plans include the ongoing Medical Device Innovation initiative, which offers special priority review for unique, innovative products.

The plan is available from the HHS website.

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