About 4 years ago, a quirk in insurance reimbursement made drug testing by mass spectrometry a lucrative business. A lab could bill at least $400 to $800 for a single urine sample, sometimes more than $1,000. The opioid crisis had increased the need for urine drug tests, and the financial incentive was so strong that many pain doctors set up their own in-house physician office laboratories (POLs) to claim their share of the profits.

I'm not going to sugarcoat it, it was relatively disastrous putting these things into physician offices beforehand—not with us, but with a lot of other companies that didn’t take it as seriously as they should have,” said Gregory Ingle, CEO of Clinical Lab Consulting, a company that has set up hundreds of drug testing laboratories in physician offices.

Consulting practices proliferated, marketing mass spectrometry equipment to doctors. Some unscrupulous companies sold old, used mass spectrometers that were never meant for clinical testing, Ingle said. Some made claims that they could set up mass spectrometry in just a couple of weeks. And because of the insurance reimbursement quirk—that each drug class was reimbursed separately—laboratories were rewarded for running full panels of drug tests on every sample, leading to overuse, said Charles Root, PhD, CEO of CodeMap LLC, a laboratory coding and reimbursement information company. “The doctors especially, since they were the ones who ordered tests as well the ones who performed them, tended to do quite a bit of testing,” Root said.

An investigation of billing data by Kaiser Health News published in November 2017 found that spending on urine drug screens and related tests quadrupled from 2011 to 2014 to about $8.5 billion a year, leading to allegations of overuse, whistleblower lawsuits, and settlements. The analysis found that in 2014, Medicare paid more for urine drug tests than on the four most-recommended cancer screenings combined.

The growth of POL drug testing was so widespread that toxicology reference laboratories felt the pressure. “We actually saw a lot of our business go toward physicians setting up their own labs,” said Andrea Terrell, PhD, DABCC, who was lab director at AIT Laboratories at the time. “We actually struggled to retain business because of the POLs.”

Insurers soon realized what was happening and changed the rules. The Centers for Medicare and Medicaid Services created new codes last year with payment tiers based on the number of analytes tested, capping out at around $200 to $250 per sample. “The rates have been slashed by virtually 80 percent now,” Root said.

A New Era for Physician Office Labs

While the frenzy for opening new POLs has calmed down, these labs have not gone away. Many pain doctors continue to operate their own drug testing laboratories, and some addiction treatment centers are now bringing testing in-house, according to Ingle. “It was primarily greed and monetary-driven in the beginning, but now it’s just become the new standard of care,” he said.

POLs can be successful if a practice invests the time and money to do it right, Ingle noted. For example, Robert B. Wilson, II, MD, board certified in anesthesiology and pain management and founder of Piedmont Interventional Pain Care in Salisbury, North Carolina, runs a successful mass spectrometry laboratory that was set up by Clinical Lab Consulting in 2015. Generating revenue was one reason for bringing testing in-house, he said, but he was not expecting to make hundreds of thousands of dollars in profits as did the early adopters. “I never saw that kind of money, ever,” Wilson said. “When I started doing my billing, it had already been adjusted down.”

Wilson’s decision to bring testing in-house mainly arose out of frustration with reference labs, he said. He felt they were too expensive and they pushed him to order unnecessary full test panels on every patient. His office had to do all the work collecting the urine samples, counseling patients about their results, and referring them to addiction treatment, as well as all the other facets of ensuring medication compliance such as counting pills—all in an environment of constantly shrinking reimbursements. “[The reference labs] were generating more revenue doing the urine screens than I was sticking needles in [the patients’] spines,” Wilson said. “We do all these things based on our clinical judgment that we never get paid to do, and by bringing in the urine screening revenue, it makes it more palatable.”

Even at the reduced mass spectrometry reimbursement rates, Wilson’s laboratory makes a small profit, he said, and it gives him more control over testing. Now the overuse of this testing is tightly regulated by Medicare and commercial insurance guidelines, Wilson noted. The allowed frequency of testing is based on the morphine milligram equivalents prescribed to patients.

Science Stretched Thin

It is not easy to bring mass spectrometry to a physician office, according to Ingle. While an immunoassay analyzer can be set up and validated in as little as a week, mass spectrometry validation takes months. A mass spectrometer is like a stove, and it’s up to the chemist or biochemical engineer to be the chef who creates the recipe, he said. “Everybody has a different way of doing it, and there’s a lot of scientific argument over who’s right.”

The instruments also have special requirements for power, climate control, and custom-made reagents. “Mass spectrometry is the hardest to implement out of any kind of lab testing, and that includes genomic testing, which we do a lot of,” Ingle said. “It’s because of the special sauce—all of the different things that can go into it.”

Physicians also need to hire appropriate staff to run mass spectrometry laboratories, presenting an additional challenge, Terrell said, who left AIT Laboratories and now works with Ingle to set up and advise POLs. “If a physician hires just a PhD analytical chemist who has no clinical laboratory training and experience, they’re not going to be successful.”

Analytical chemists might not understand the level of regulatory scrutiny involved in a clinical assay, might add tests to a panel without revalidating it, have weak quality control practices, or struggle to maintain the instrument and all the peripheral equipment, she said. Overall, she doesn’t recommend physicians run mass spectrometry laboratories. “It can work…but I have not seen it work really well in a physician office setting,” she commented.

Marion Snyder, PhD, chief science officer at Luxor Scientific, has the same misgivings and said physicians should not run their own mass spectrometry labs. She co-authored an article in January’s Journal of Applied Laboratory Medicine about the risks and difficulties of POL mass spectrometry (J Appl Lab Med 2018;2:657-9). “I don’t think this type of testing should be done in a setting where the sole driving factor is revenue generation,” Snyder said. “Over time, as the reimbursement comes down especially, there’s going to be pressure to cut corners in those labs.”

Indeed, the market for selling mass spectrometer to POLs has already essentially disappeared, Root said. Reimbursement is only going to get worse as the Protecting Access to Medicare Act takes effect, he said. “With the changes to the Clinical Laboratory Fee Schedule, it looks like it could be cut 10 percent a year further for two to three more years,” Root said. “It’s not getting any better at this stage.”

While POLs are subject to CLIA inspections, the inspectors “haven’t traditionally had the expertise or haven’t been adequately funded to support inspections of liquid chromatography-tandem mass spectrometry labs,” Snyder said. “They’re looking for the more basic maintenance procedures and things like that, but they wouldn’t necessarily understand if the science behind it is flawed or if errors are being made.”

Perhaps there should be a task force that inspects POLs to supplement CLIA or even a requirement that they be subject to a higher level of inspection, she said, adding:  “It’s something that the lab community should discuss.”

Julie Kirkwood is a freelance journalist who lives in Rochester, New York.+EMAIL: jjulkirkwood@gmail.com