Healthcare Reform and Laboratory Testing

WE ARE ONLY 120 DAYS FROM IMPLEMENTING another round of programs mandated by the Patient Protection and Affordable Care Act (PPACA) of 2010 and associated legislation. Certain programs become effective on January 1, 2012.

On that date, the transition to HIPAA form 5010 takes effect. All clinical laboratories and pathology groups should be prepared for this step. Use of this form by providers and payers is a necessary step if the scheduled implementation of ICD-10 codes in 2013 is to prove successful.

Effective on January 1, 2012, the Centers for Medicare and Medicaid Services (CMS) can begin contracting with accountable care organizations (ACO). CMS issued a draft of the rules for this program earlier this year. National associations for hospitals and physicians responded with plenty of criticism about the proposed language of these rules. Nonetheless, CMS will be taking forward steps to begin contracting with ACOs after the New Year.

Another significant program that launches during 2012 is Medicare’s value-based purchasing (VBP) program for hospitals. It becomes effective on October 1, 2012. This is an important reform because it represents a major effort to begin evolving the existing fee-for-service system towards a reimbursement model that rewards providers for improving outcomes across an identified population of patients that meet or exceed pre-established targets.

Of course, I don’t need to tell you that, at the same time that major efforts to reform healthcare like those described above are happening, the marketplace for clinical laboratory and pathology testing continues to evolve at its own rapid pace. New buyers are flooding into the market looking for lab companies they can buy, for example. Of course, specialist physicians continue to open their own in-clinic pathology laboratories, thus reducing the access to specimens for many community hospital-based pathology groups. (See pages 3-8.)

Taken collectively, these events cannot be ignored by pathologists and lab administrators tasked with developing the strategies their lab organizations need to deliver state-of-the-art lab testing services in a financially- sustainable manner. The lab testing profession is about to enter a new cycle of accelerated health reform initiatives. That makes it imperative that every lab organization remain nimble and open to smart changes in response to these developments.