How will the new rates impact providers, distributors and manufacturers?
The Centers for Medicare and Medicaid Services released its final rates for the Clinical Laboratory Fee Schedule in November, as part of the Protecting Access to Medicare Act (PAMA). The new schedule – which was to become effective Jan. 1 – is an attempt to bring the rates that Medicare pays for lab tests closer to the rates paid by private payers. (In other words, down.) If there’s good news, it’s that reimbursement for any test may be cut no more than 10 percent in years 1, 2 and 3, or 15 percent per year for the following three years.
Payment rates under the revised Clinical Laboratory Fee Schedule will be updated to reflect market rates paid by private payers every three years for most tests, according to CMS.
Repertoire Publisher Scott Adams recently interviewed POL expert Jim Poggi of Tested Insights LLC (and former director of lab business development for McKesson Medical-Surgical), to gauge the impact of the new rates on providers, distributors and manufacturers.
It’s true the federal government wants to reduce its payments for point-of-care testing, says Poggi. But by law, the maximum reduction in reimbursement for any test is 10 percent in Years 1, 2 and 3. “So folks who are concerned about gross reductions should put aside those concerns.
“The most important thing that distributor account managers and suppliers should be thinking about is having calm, rational discussions with their clients,” he says. To do so, they need to understand PAMA themselves, and then advise practices on how to deal with the shifting sands of reimbursement as well as the focus on improved outcomes and patient satisfaction. “The patient as consumer is coming into focus. Reps need to find out how their customers feel about this and what it means to them. These are things we need to think about very deeply in the next 12 months.”
PAMA will bring change. “The intent of PAMA is clear – to take the tests used most frequently and reduce reimbursement enough to get the attention of patients and physicians,” says Poggi. Tests likely to be targeted include vitamin D, PT/INR (which is already moving to coagulation clinics), and comprehensive and basic metabolic panels, particularly in the CLIA-waived space.
“Test requests for drug screens and confirmations will continue to garner debate. The opioid use epidemic and patient treatment options balanced against high reimbursement for the tests will continue to be trends.
But the enemy – if there is one – isn’t a reimbursement cut, says Poggi. It’s fear.
“The new rep – and the established rep who wants to do a better job – have to think about this through a very simple lens. First, they have to keep in mind that physician practices don’t perform labs; they see patients who need laboratory testing. That’s an important way to view the patient/physician interaction. And second, regardless of practice size, they have to look at the practice as a business.” Reps can help their customers understand how POL testing can improve and speed up their clinical decisions, and how the distributor can help the practice operate more efficiently.
Underscoring the changes in POL reimbursement is MACRA, that is, the Medicare Access and CHIP Reauthorization Act of 2015.
“MACRA has brought an emphasis on patient satisfaction and improved outcomes, that is, clinical utility,” says Poggi. Tests that are urgently needed to establish or maintain a patient program for treatment will continue to be important to Medicare.
All physician groups, regardless of size, will be affected by PAMA, he adds. “Ultimately, it’s less about the size of the group and more about how they truly feel about testing that will make the difference.” Those that tie financial outcomes directly to testing, and make clinical utility a secondary consideration, are likely to experience the most severe changes. But those that clearly link patient satisfaction and patient counseling to testing will probably be least affected. “We are seeing that emphasis from financial outcomes to patient outcomes occur over time.”
Specialists who use testing to initiate or manage a patient treatment program – e.g., cardiologists, oncologists, rheumatologists and infertility specialists – as well as those who treat patients with lipid disorders or diabetes, are likely to be less impacted than others, he continues. “In addition, you’ll see an increase in testing around genetic disorders, particularly pediatrics, oncology and fertility, a technology which is being developed rapidly, and which delivers better patient outcomes.”
Many of the tests considered for payment increases fall into specific categories: DNA/genetic tests (including DNA probes for Mycoplasma pneumonia); cytopathology; and microbiology/antibiotic susceptibility, says Poggi. “In general, these tests are not high volume in the POL, but they do point to increased acknowledgement of antibiotic stewardship and also the increasing role of molecular tests in lab medicine.”
While many respiratory tests (strep, flu, etc.) will see reimbursement cuts, tests for adenoviruses will likely fare better. Some urine tests, including urine albumin and urine screening for bacteria, may be reimbursed more generously than in the past because of PAMA, he adds.
Poggi calls molecular testing “one of the greatest revolutions” he has seen in his 20-some years in the lab business. “Molecular testing is another area in which clinical outcomes and improving patient care are being tremendously enabled.” Already some of the big reference labs are trying to specialize in one area of molecular testing, in order to establish themselves as experts in that area.
“It’s not just the increase in the number of tests, but in their quality,” he adds. “We’ll see a continuing focus on molecular testing in every specialty group and disease state. We’ll also see it expand into oncology, companion medicine and disease susceptibility testing.
Cancer profile tests: More on the horizon
The U.S. Food and Drug Administration intends to speed up the availability of cancer profile tests, which help healthcare providers discover the genetic mutations present in a particular tumor. Such information may help inform how best to treat the cancer.
In November, the agency authorized Memorial Sloan Kettering Cancer Center’s IMPACT (Integrated Mutation Profiling of Actionable Cancer Targets) tumor profiling test (assay). IMPACT is an in vitro diagnostic test that uses next-generation sequencing (NGS) to rapidly identify the presence of mutations in 468 unique genes, as well as other molecular changes in the genomic makeup of a person’s tumor.
In addition, the FDA announced the accreditation of the New York State Department of Health (NYSDOH) as an FDA third-party reviewer of in vitro diagnostics, including tests similar to IMPACT. This means that laboratories whose NGS-based tumor profiling tests have been approved by NYSDOH do not need to submit a separate 510(k) application to the FDA. Other accredited, third-party FDA reviewers also may become eligible to conduct such reviews and make clearance recommendations to the agency.
Along with the its authorization of IMPACT, the FDA is establishing a Class II regulatory pathway for the review of other NGS-based tumor profiling tests for use in patients diagnosed with cancer. Class II designation allows these types of tests to be eligible to use the FDA’s 510(k) clearance process, either by submitting the application to the FDA directly or through an accredited third-party reviewer, like NYSDOH.
Approximately 38.5 percent of Americans will be diagnosed with a form of cancer at some point during their lifetime, according to the National Cancer Institute at the National Institutes of Health.