Healthcare Reform: One Year Later

Read this take on healthcare reform's effect on the clinical lab.

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American consumers and providers waited with bated breath and weighed in with very spirited opinions as healthcare reform was debated around this time last year. It seemed no constituent was happy with the final bill--some complained it had not gone far enough in providing coverage, some called it a government takeover, and others criticized the cost.

The clinical laboratory industry, like other healthcare providers, worried that reimbursement would be cut as Medicare has traditionally reduced payments almost annually.

It had long been common knowledge that an additional 33 million Americans would be insured under the plan, but no one was sure how many would access the system and what the actual total payment would be. Many in the industry predicted steep copay for patients seeking laboratory services.

However, at the end of the day, the Patient Protection and Affordable Care Act did not contain the massive tax increases and deep cuts to laboratory reimbursement that everyone feared.

In fact, there is reason for cautious optimism. Laboratory testing is included in the basic healthcare coverage. Any cuts to the laboratory fee schedule might be offset by the expected increase in testing from more patients accessing the system and more testing for covered preventive care.


The originally-proposed 20% copay for laboratory services was removed from the bill due to aggressive lobbying from laboratory groups joined by AARP which argued that its elderly members would be the ones most adversely affected.

Instead, the law will cut the Consumer Price Index (CPI) update to the laboratory fee schedule in two ways at least for the next 5 years--a 1.75% cut to the fee schedule as well as a productivity adjustment aimed at all Medicare Part B providers(including laboratories).

Together, these two adjustments account for a three point decrease in the CPI. This might not be great news, but the predictions from experts prior to passage of the bill were much worse.

It is both significant and heartening that under the new law, both Medicare and private insurance plans will cover the cost of preventive services, such as screening tests. More patients will require laboratory testing and hopefully illnesses will be diagnosed or diverted before patients develop serious, expensive sequelae.

The Agency for Healthcare Research and Quality (AHRQ) will determine which screening tests qualify for coverage. Generally that agency, through its U.S. Preventive Services Task Force (USPSTF), has determined and rated the effectiveness of tests based on solid empirical research.

Under the proposal, less definitive evidence from stakeholders, professional groups and the like could qualify. More casual studies from the Centers for Disease Control and Prevention (CDC), National Institutes of Health and the Institute of Medicine are likely to be adopted.

Comparative effectiveness research (CER) will also be considered. This means that treatment modalities and laboratory tests will be compared and weighted based on how effective they are in producing a desired outcome.

For example, HBA1C might well be recommended for screening patients at risk for developing diabetes and not just as a monitor of compliance with treatment. Patients at risk for developing metabolic syndrome might be screened earlier before they enter the vortex of developing diabetes or heart disease.

Many organizations like the American Diabetes Association and American Heart Association have long advocated earlier testing based on risk factors. Under the new mandate, USPSTF might well adopt more liberal testing guidelines.

Personalized Care

For the first time, the concept of personalized medicine has been codified in statute. If CER shows that individual variations exist, tests based on group characteristics or idiosyncrasies might be allowable.

Pharmacogenomics, for example, considers the influence of genetic variation on drug response in patients. Patients respond differently to particular drugs from antidepressants to anticoagulants based on their genetic expression.

Efficacy can be improved and toxicity minimized if treatment is tailor-made based on the patient's unique genetic makeup. This concept opens the door for increased molecular and genetic testing by more laboratories.

The preoccupation with cost of doing business or decreased reimbursement should not be minimized, however. Currently the statutory group Medicare Payment Advisory Commission (MedPAC) advises Congress annually on how to decrease Medicare spending.

Under the law, MedPAC will be replaced by the Independent Payment Advisory Board (IPAB) which will have more teeth as the board's recommendations (unlike those of MedPAC) will automatically become law.

The philosophy of IPAB and the impact of its decisions are unknown at this point. Again, it can only be hoped that any decrease in payment will be offset by the increased volume of testing anticipated.

An Exciting Challenge

There is no template available, so laboratories will have to develop their business model based on their particular market and patient demographics. To take full advantage of increased, more sophisticated, testing laboratories will need to become more technologically advanced.

This is an exciting challenge. At the same time there is likely to be expenditures on LIS systems to be in compliance with meaningful use of electronic health records, otherwise organizations will be penalized through less reimbursement.

Laboratorians have to weigh in as groups like AHRQ, USPSTF and IPAB make decisions affecting our business. They must insist that clinical laboratory organizations be part of the lobby.

Remind legislators of the long validated fact that laboratory services account for less than three percent of healthcare spending (and less than 2% of Medicare expenditures) while influencing more than 70% of medical decisions.

Laboratorians are no strangers to change, so while the verdict is still out as to the final impact of healthcare reform, we can start preparing to meet it. We can also be confident that we will find and take advantage of new opportunities in terms of revenue, job satisfaction and patient outcomes.

Glen McDaniel (glenmcdan@aol.com) is a healthcare executive, clinical lab scientist, speaker and freelance writer. His interests include mediation, leadership, change and ethics.

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