March 10, 2005


In This Issue . . .

Bringing Genetic and Molecular Testing In-House: How Can a Small Lab Do It?

Bringing Genetic and Molecular Testing In-House: How Can a Small Lab Do It?

Reimbursement of genetic-based and molecular tests is still limited, but that doesn’t mean the market segment is not growing—it’s still climbing at a nice clip of 20% a year, which is three to four times the annual growth rate of conventional testing. But while the demand for these types of tests may be growing, reimbursement is still limited. Consequently, many smaller labs not only find genetic and molecular tests problematic from a financial standpoint, but in some cases performing the tests is nearly impossible since many pathologists and other clinical laboratorians are not trained in genetic laboratory work. However, given the continued volume growth of this segment of the industry and potential for future Medicare coverage, smaller labs are choosing to wade into the molecular testing territory. This month, Strategies looks at how one lab is managing to do some genetic tests in-house rather than send them out to a commercial lab.

When the human papillomavirus (HPV) test went on the market, Jim Marino, CEO of Seacoast Pathology (Exeter, N.H.), knew he wanted to offer it to his customers as part of the lab’s menu of cytology tests. But Seacoast had neither the equipment nor knowledge to do the testing itself. “I was the supervisor of the lab, and I had no background in any other area other than cytology,” said Marino. “Molecular testing was completely unknown to me.” After about a year of sending out specimens to reference labs for testing through hybrid capture and then polymerase chain reaction (PCR) testing, Marino was anxious to find a quicker processing solution. Turn-around times were typically one to two weeks, and customers were complaining.

“My hopes were that at some point we could bring the tests in-house just so we could cut down on the turn-around time and be able to control the information that we were getting,” he explained. “One of the things that we wanted to do was send out an integrated report with the HPV results in the cytology report, including recommendations in that report based on the HPV typing.”

In 2003, Marino contracted with Access Genetics (Minneapolis, Minn.) to set up a home-based molecular testing system that would process samples through a Web portal. Since the system was implemented, turn-around times have diminished from weeks to one or two days. Seacoast does all the technical work—they extract the DNA, purify it, do the PCR reaction, amplify it, and then set it up on a gel electrophoresis. Then they photograph the gel and transmit the image to Access Genetics through a Web link. Access Genetics then interprets the image, and sends the results back to Seacoast through the Web portal, where it is incorporated into the information system.

“Our volumes have grown tremendously,” said Marino. “We probably do 1,000-1,500 molecular tests a month. That includes HPV, but it also includes Chlamydia and gonorrhea testing, which we can do with the same DNA.” In the near future, the lab plans to add cystic fibrosis testing to their gene-based offerings.

A Closer Tie to Physicians

While this segment of the lab industry is healthy, many physicians are unfamiliar and inexperienced with genetic and molecular testing. Many clinicians are loathe to order a genetic test because they see it as a long process, where tests need to be sent out to a large reference lab and weeks pass before they get a result. This is the key reason why smaller, local labs doing genetic tests at faster turn-around times are important, explained Access Genetic’s founder Ronald McGlennen, MD, who is also an Associate Professor of Pathology at the University of Minnesota Medical School in St. Paul. “If we could give molecular testing a more local flavor, and create that intimacy, then physicians would become used to seeing this data and they would order it more regularly,” he explained.

In addition to improving the turn-around times, McGlennen also feels it’s important to look at the benefits of combining molecular genetics with conventional laboratory tests. For example, Factor 5 Leiden and Factor 2 prothrombin are significant risk factors for abnormal blood clot formation, but most physicians and clinicians will stick to the conventional coagulation testing. Using thrombophilia tests, including Factor 5 Leiden and Factor 2 prothrombin assays, in concert with the more routine tests will create an association and expose physicians to the clinical value of these genetic tests.

“I’m not trying to promote the use of molecular as a stand alone concept, but rather one that goes in concert with standard and forthright laboratory strategies,” he added. “To make these molecular tests more relevant, we need to decrease turn-around times and we need to tie them to these other lab tests.”

Reality and Reimbursement

Even if turn-around times shrink and relevance becomes apparent, financial questions for these tests remain, which can be a frustration for small labs that want to offer molecular and genetic tests to their customers.

Predicting reimbursement for clients is, at best, an educated guessing game, according to McGlennen. When working on projected costs and reimbursement figures, he bases these numbers on Medicare averages. If the business model is built off these averages, he explained, then any reimbursement above and beyond is considered a positive. Sometimes the Medicare average projections are not accurate for a particular client, he added, which is why the company has a consultant who provides regional reimbursement data for customers. “All of Access Genetics’ tests for HPV, gonorrhea, Chlamydia, cystic fibrosis, and thrombophilia are reimbursed nationwide at or above Medicare reimbursement levels,” said McGlennen.

On the client side, Seacoast has tried to keep testing costs down enough so that the reimbursement they do get will cover the costs and make a reasonable profit. “With the HPV testing, since it’s so new and we are in a lower reimbursement area compared to other regions, it has taken a little more time, although it is working well,” explained Marino. “Chlamydia and gonorrhea tests are much easier because the insurance carriers are used to paying for them. However, HPV reimbursement is taking a little longer. Just like any new test, it takes time to educate the patients and insurance companies.”

For more information:
Access Genetics,

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