This is an excerpt of a 3,689-word article in the December 28, 2020 issue of THE DARK REPORT (TDR). The full article is available to members of The Dark Intelligence Group.
CEO SUMMARY: There are several surprises in The Dark Report’s list of the Top 10 Lab Stories for 2020. Despite the SARS-CoV-2 pandemic dominating every aspect of clinical care, social life, and economic activities since March, at least one major health insurer pushed ahead with two major policies governing how labs can submit claims. In another big story, for the first time in decades, the federal Anti-Kickback Statute and the Stark Law were revised with new final rules.
WITHOUT QUESTION, THE SINGLE BIGGEST CLINICAL LABORATORY STORY of 2020 is the COVID-19 pandemic. It is involved in five of The Dark Report’s Top 10 Lab Industry Stories for 2020. But lab administrators and pathologists would be well served to recognize the importance of the other five stories on this year’s list.
That’s because the non-COVID-19 lab stories on the list represent significant events that will influence how medical laboratories are organized, operated, and reimbursed for years to come. For example, federal officials finalized new rules that change the sales and marketing compliance risk for labs and pathology groups.
This is the 24th year that The Dark Report has used the last issue of the year to present its list of the top 10 lab stories for the year just passed. Much has happened during those 24 years—and the 26 years since The Dark Report begin publication in 1995. But in no single prior year did the clinical laboratory industry find itself disrupted in every aspect of diagnostics and lab testing as it has throughout 2020 because of the COVID-19 pandemic.
In presenting this year’s Top 10 Lab Industry stories, it is essential that the senior leadership of clinical labs, hospital/health network labs, and anatomic pathology groups understand the need to look beyond the COVID-19-related stories and pay attention to the non-COVID-19 stories. That is because the non-COVID-19 stories of 2020 will be shaping the clinical lab market for years into the future.
Of course, the number one story in this year’s list is the COVID-19 pandemic. Not only has it changed almost every aspect of healthcare, but federal, state, and local governments’ responses to the pandemic have been to constrain economic activity and restrict the movement and social interactions of people. (See story #1.)
The four other Top 10 Lab Stories in 2020 involving COVID-19 include:
• Actions and directives of federal, state, and local governments to the pandemic (story #2),
• The $6.8 billion in cash flow lost by clinical labs in the early months of the pandemic because of the collapse in physician referrals of routine lab test specimens (story #6),
• Disruptions to the clinical laboratory supply chain and new patterns in how labs select vendors, (story #7), and,
• Well-financed, new lab competitors are building lab facilities to do COVID-19 testing—facilities that can be shifted to routine, reference, and esoteric testing once the pandemic subsides. (See story #8.)
Top Non-COVID-19 Stories
There are other developments during 2020 that were significant for clinical laboratories and pathology groups, but probably did not get the attention they deserved because lab administrators and pathologists were engaged with the urgent demands to increase their labs’ daily production of SARS-CoV-2 tests.
One serious issue with immediate implications for the finances of clinical laboratories is story number five on the 2020 list. It is Medicare’s soaring spending on molecular and genetic tests. This story surfaced in September, after the federal Centers for Medicare and Medicaid Services (CMS) released Part B payment data for 2019. A nationally-known expert in genetic testing analyzed the data and discovered that, between 2017 and 2018, Medicare spending on molecular and genetic tests roughly doubled. Then, from 2018 to 2019, it doubled again.
More troubling for the lab industry, however, is that Medicare spending for one genetic test CPT code increased by 700% between 2017 and 2018 at just four Medicare Administrative Contractors (MACs). (See story #3.) This is relevant to labs and pathology groups for two reasons.
Focus on Genetic Test Claims
Firs, if Medicare’s spending on genetic test claims has doubled in each of the past two years, then the same thing is happening with private payers. It should be expected that government and private payers will take firm steps to reduce what they spend for genetic tests—whether by denying coverage or slashing the prices they pay for genetic tests.
Second, if one genetic test CPT code is being used by a handful of labs billing just four MACs and generating a 700% increase in monies paid for that CPT code, that is strong evidence of potential fraud and abuse.
Another managed care story in the 2020 Top 10 list involves two significant actions by UnitedHealthcare (UHC), the nation’s largest health insurer, to rein in how much it spends on lab tests. One new policy in 2020 is that a hospital lab cannot submit claims for outreach patients using its hospital’s inpatient fee schedule. The second new policy is a requirement that all UHC network labs submit every test and panel for which they bill to UHC’s new Laboratory Test Registry Protocol. After Jan. 1, 2022, UHC will not pay for claims of tests and panels that are unregistered. (See story #4.)
Strategic Planning at Labs
It is recommended that labs and pathology groups use The Dark Report’s list of the Top 10 Lab Stories as the basis for strategic planning. Such planning should acknowledge that COVID-19 will continue into 2021, creating the need to plan for appropriate contingencies. But strategic planning should also address how 2020’s other developments in 2020 will affect lab operations and finances in 2021 and beyond.
Coronavirus Strikes the World, Puts Clinical Lab Testing on Center Stage
FROM THE EARLIEST DAYS OF THE PANDEMIC, clinical laboratory testing has been a national news story. The SARS-CoV-2 outbreak created an opening for the entire clinical laboratory profession to gain widespread awareness and recognition for the essential role it plays in supporting diagnosis, treatment, and patient monitoring.
As it turned out, the pandemic did elevate the nation’s awareness of the vital role that clinical lab testing plays in managing disease. From the earliest days of the SARS-CoV-2 outbreak, national and local news outlets produced detailed lab stories stories about every aspect of diagnostic testing for COVID-19 and how labs operate.
This was the opportunity of a lifetime for the House of Laboratory Medicine. It could take center stage and tell the story about state-of-the-art technologies and dedicated lab professionals that make the U.S. clinical laboratory profession the envy of the world.
Unfortunately, it did not work out that way. Yes, numerous positive lab stories were published or broadcast about the remarkable accomplishments of many clinical labs at developing and running COVID-19 tests in volumes unheard of in past epidemics. (See TDRs, Mar. 30 and Apr. 20, 2020.)
Negative Press Coverage
But more of the national and local press coverage was negative, focusing on the range of problems bedeviling federal regulators and clinical laboratories awaiting direction from the government. In the earliest months of the pandemic, national news outlets ran a non-stop stream of stories about how long it was taking to get molecular SARS-CoV-2 tests developed and into clinical use.
Then, once the FDA was dealing with a flood of emergency use applications (EUAs) for molecular COVID-19 assays, the press corps turned its focus to other aspects of COVID-19 lab testing. That started a steady stream of lab stories about inadequate volumes of SARS-CoV-2 tests and the lengthy delays in reporting these test results. Attention then shifted to the huge problem of inadequate supplies to collect, transport, and test SARS-CoV-2 specimens at the very moment when the need for unprecedented volumes of COVID-19 tests were required to respond to the pandemic.
Issues with Serological Tests
As spring arrived, attention next turned to serological testing for COVID-19. Journalists quickly learned the long-established fact that testing for antigens and antibodies is a complex diagnostic challenge, making the potential for false positives and false negatives much greater in this field of diagnostics than, for example, with basic chemistry tests.
For all the reasons above, few lab professionals would disagree with The Dark Report’s choice of the COVID-19 pandemic as the number one story of 2020’s Top 10 Lab Stories.
It is now nine months since the onset of the pandemic. The continuous news coverage about lab testing raises an interesting question: in what ways will the COVID-19 pandemic permanently alter the clinical laboratory industry?
At least there is good news on one front. What continues to be unquestioned in all the news coverage of clinical laboratories during the pandemic is the dedication of all clinical lab professionals to step up and do everything possible to respond to the nation’s needs for COVID-19 tests.
FDA, CDC, CMS: Fed Agencies Flunk Regulatory Responses to COVID-19
THIS IS THE YEAR THAT PRESIDENT RONALD REAGAN’S FAMOUS STATEMENT about government proved accurate as a description of the numerous ways that federal agencies and state officials often took steps that worked against the best intentions of the nation’s clinical laboratory scientists and pathologists.
Reagan said, “The most terrifying words in the English language are: ‘I’m from the government and I’m here to help.’ ”
Dealing with Bureaucrats
There are many clinical laboratory professionals who understand the intent of Reagan’s wordplay. They have first-hand experience with the bureaucratic mind so aptly described in many of the works of the German author, Franz Kafka (himself a minor bureaucrat during his life). Since the onset of the pandemic, laboratory leaders have been forced to interact with federal, state, county, and city officials.
Reports of inconsistent guidance, confusing directives, and outright obfustication by government officials at all levels have been common anecdotes since the first evidence of a novel coronavirus surfaced in news stories in this country.
Major government missteps started in the earliest days of the pandemic. Guidance from the federal government prohibited the large number of clinical laboratories with molecular testing capabilities from creating their own laboratory-developed test (LDT) for the novel coronavirus, now classified as SARS-CoV-2.
Contemporary with that, the federal Centers for Disease Control and Prevention (CDC) delivered a SARS-CoV-2 test kit to public health laboratories which proved to be flawed. That took weeks to sort out.
The federal Food and Drug Administration (FDA) has come under criticism for the series of decisions and directives it issued to address diagnostic test kits for the novel coronavirus. Its requirements for how companies were to file emergency use applications (EUAs) for molecular SARS-CoV-2 tests were changed multiple times.
In January and February, as the first news stories about the novel coronavirus were published, FDA actions restricted academic center labs and others from developing and validating laboratory-developed tests (LDTs). During that time, the CDC was the only source for a COVID-19 test. (See TDR, Mar. 30, 2020.)
In March, the rules the FDA issued for COVID-19 serological tests had minimal requirements. That triggered a flood of at least 200 serological tests applying for an EUA, and the accuracy of some of these tests was questionable. Thus, on May 4, the FDA issued a more rigorous set of rules for serological COVID-19 tests to obtain an EUA. (See TDR, May 11, 2020.)
EUA Requirement Dropped
Months later, on Aug. 19, the Department of Health and Human Services (HHS) issued a directive that said clinical labs would no longer be required to obtain EUAs from the FDA for their COVID-19 LDTs. (See TDR, Sept. 14, 2020.)
To these examples can be added government control of the supply chain for lab collection supplies, instruments, and COVID-19 test kits. This is an ongoing issue for all labs across the nation. (See story #7.)
These examples demonstrate how government decisions and control of the lab testing market is often counterproductive to what would be in the public interest.
Do you believe COVID-19 has changed the lab industry permanently? Please share your thoughts with us in the comments below.