CEO SUMMARY: Long overlooked by most of the laboratory industry, ACLA may be in the process of revolutionary change. Since David Sundwall, M.D., became President, ACLA has taken a more assertive stance on a wide variety of issues which affect all laboratories, not just ACLA members.
LONG CONSIDERED by most laboratory executives as a tight clique for the large commercial laboratory organizations, the American Clinical Laboratory Association (ACLA) has a new look and a new direction.
Under the guidance of President David N. Sundwall, M.D., ACLA is undertaking a variety of projects which cut across all boundaries in the clinical laboratory industry.
“In the two years since my arrival at ACLA, the laboratory industry has experienced extraordinary financial and regulatory pressure,” said Sundwall. “Such pressures forced both ACLA and its members to address a variety of issues that were of little concern just a few years ago.”
ACLA was traditionally viewed as the trade association which represented interests of larger commercial laboratories. “At one time there were eleven members. Mergers and acquisitions reduced that number, but with new laboratories, membership now totals nine,” explained Sundwall.
“What we have discovered is that changes to healthcare caused ACLA to
address important issues which are of concern to all clinical laboratories. This includes hospital labs and small independent laboratories as well as the large commercial organizations which comprised our original membership.”
“I can’t imagine anything that ACLA’s done which doesn’t apply to most clinical laboratories and hospital laboratories.”
—David N. Sundwall, M.D.
Sundwall’s access to events in Washington, D.C., combined with his daily interaction with a significant cross section of influential laboratory executives, gives him a unique perspective on the problems troubling clinical laboratories throughout the United States. Sundwall’s observations and opinions provide thoughtful insights for laboratorians seeking to better understand today’s market environment.
“Obviously the one subject which dominates the agenda of large laboratories is the ongoing investigation into laboratory billing practices and its effect on how these laboratories perform testing and bill for services.
“After three and four years of investigations, most of the outstanding subpoenas will be resolved. However, one consequence is that the entire laboratory industry suffers from the impression that they have been ‘doing bad things,’” he continued.
“This perpetuates a vicious circle. The government now considers previous activities as inappropriate. Most labs cannot fight these claims. In settling, the government just augments their position. It isn’t fair, and both small labs and big labs are caught up in this mess.”
“This caused ACLA to identify a number of areas where proactive efforts would pay big dividends,” stated Dr. Sundwall. “For example, in addition to government relations, we realized that we needed to do a better job of public relations. Now we have an advisory group which looks for opportunities to present our position to physicians, patients and others who should understand more about laboratory testing and its value.”
ACLA advisory groups and members also invest considerable time in working with medicare carriers throughout the country. “Obviously the entire clinical laboratory industry is frustrated with the lack of clear direction and inconsistency of application from one carrier to another,” noted Dr. Sundwall.
“Our Billing and Reimbursement Advisory Group is meeting with carriers. This is the front line in the fight to gain clear understanding and agreement about what to code, how to code it and what documentation for medical necessity should be provided.
“We are discovering that personal interaction makes a difference. Medical directors of the carriers play an important role in making decisions about payment policies,” he continued. “They cherish their autonomy and the Health Care Financing Administration (HCFA) gives them a certain freedom to interpret regulations according to their local needs. By meeting with these people and their staff, we are able to help them better understand how their decisions impact clinical laboratories.
“For ACLA, this was a deliberate change. We moved our total focus away from Congress. Now we tailor our mes- sage to the Medicare carriers. In every instance where we have met key individuals at a carrier, we get clarity on what they expect. In turn, we are able to educate them on some of the logistical problems we’ve encountered.”
“After meeting with the carriers and developing clarity for the issues under discussion, ACLA takes that information and produces what we call a ‘Practice Advisory,’” he continued. “This provides background on the issue, an analysis of the relevant points, and an advisory of the appropriate action which a laboratory or physician should take to comply with this particular issue.”
Interaction With Carriers
ACLA’s interaction with the individual Medicare carriers is a direct consequence of early meetings between HCFA and ACLA. “When I first came aboard,” explained Dr. Sundwall, “we met with HCFA and requested that they become more active in educating both carriers and physicians about policies involving laboratory testing. HCFA’s response was ‘That is your job. We don’t have the budget for that.’
“When it was clear that HCFA was not going to mount an effective education campaign, we decided to take the initiative, meet with the carriers and provide our members and the laboratory industry with appropriate information. All our policy publications have been reviewed and approved by HCFA.”
Another important issue where ACLA is in the forefront is LOINC. “As an acronym, LOINC sounds strange,” said Sundwall. “It stands for Logical Observation Identifier Names & Codes database. This is an effort to standardize the coding and reporting of laboratory test results.
“We see this as a critical initiative for the laboratory industry. The electronic exchange of laboratory data across laboratories, hospitals, managed care organizations, physicians’ offices and government agencies is critical.
“The goal is to get a uniform standard not only in this country, but in
Canada and Europe as well,” he explained. “ACLA’s endorsement of LOINC means that up to 60% of the nation’s independent laboratory testing volume will eventually use this format. That commitment by ACLA members is already convincing other segments of the healthcare industry to adopt a uniform standard. We think we hit a home run with this, and we are promoting it as an international language with some success.”
Clearly Sundwall’s discussion of ACLA projects indicates that the association is expanding far beyond its historical watch on Washington, D.C. Part of this change is attributed to Sundwall’s unique background as an association president.
“It is important to understand that I am a practicing physician. I see patients every week on a voluntary basis. Because of that, I have an absolute appreciation of the value of laboratory data.”
Sundwall’s perspective as a physician intrigued ACLA. The organization recognized that a physician could communicate the industry’s unique role in healthcare with added credibility.
“One thing I’ve helped with is to strengthen communication with the physician community.” said Dr. Sundwall. “I have good relationships with the American Medical Association (AMA). I am also improving relationships between ACLA and the College of American Pathologists (CAP).
“Physicians now realize that laboratory issues are becoming a greater hassle. Because of this fact, they increasingly welcome a partnership with us to the extent we can get relief from regulatory burdens.
“Remember, the requirements for diagnosis coding originally applied just to physician claims,” he continued. “In fact, in the 1986 Medicare Catastrophic Coverage bill, Congress rejected a requirement that drug prescriptions include a diagnosis code. Congress thought it would be too burdensome. Of course, requiring a diagnosis code on a laboratory requisition raises precisely the same issues as requiring them on a prescription.
“How this was allowed to happen to laboratory orders is a mystery to me. As a physician, this is real interference in the practice of medicine. A patient is rarely a single diagnostic code. For this reason, the laboratory industry shares common ground with physicians on this issue. We hope improved communication between the laboratory industry and physicians can result in changes to this situation.
“Another busy advisory group involves Occupational and Environmental Health,” said Dr. Sundwall. “Their activity was triggered by new government regulations that would have affected the disposal of certain types of laboratory waste. In addition, when Congress was considering legislation that would have affected the availability of certain types of pathogens, I testified in Senate hearings and we got the Center For Disease Control (CDC) to acknowledge that independent laboratories should not be regulated in this area. Without those changes, clinical laboratories could have found themselves operating under restrictive and inappropriate regulations concerning the transportation of ‘lethal pathogens.’ ”
Managed care is another industry concern to which ACLA is responding. “Managed care has created financial problems for laboratories,” he said. “Some of our members have told me that, in their urgency to get managed care contracts, they negotiated prices which were unrealistic and did not yield what they expected. Pull-through business was not sufficient to offset the low rates of capitation.”
“Having learned some pointed lessons by the way of reduced revenues, there is now interest in improving the way laboratories contract for, and provide services to, managed care plans.
“This change in the concerns of ACLA’s members is reflected in our different priorities. When I started here, the top legislative priority was direct billing. That is no longer true because of the rapid decline in fee-for- service business. Other priorities are now ahead of direct billing.
“Such priorities include working with pathology groups on a variety of issues. For example, we are supporting the CAP to get a new code for computer-assisted Pap smear technologies. This would be a generic CPT code, and not linked to specific technologies such as NeoPath’s AutoPap or Neuromedical System’s PapNet. These instruments do cost money, and there should be payment for the improved accuracy that they deliver.”
In commenting on ACLA’s activities, Dr. Sundwall is proud of the comprehensive nature of association’s work. “Virtually everything that we have done applies to most clinical laboratories. Billing, reimbursement and environmental issues affect all laboratories.”
Is ACLA actively seeking to expand membership? “Although we have not gone out and marketed ourselves, I would like to see additional new members,” responded Dr. Sundwall. “ARUP Laboratories recently joined. Their relationship with hospital laboratories brings us valuable insight. Among laboratory associations we seem to have a fairly strong voice in Washington. Additional members would enhance our credibility.
“We have our annual meeting in February. Part of the meeting is open to the public. It is an opportunity to see the association in action. We are also making a point to participate in other association meetings, such as the American Association of Clinical Chemistry (AACC) and the Clinical Laboratory
Management Association (CLMA). Recently I spoke with the California Clinical Laboratory Association about some type of relationship with ACLA.”
“It is easy to see that ACLA’s activities are expanding,” he continued. “As the laboratory industry is transformed, it is critical for associations like ACLA to represent the laboratory industry’s interests with government and healthcare industry decision makers.”
Sundwall is correct on this point. The laboratory industry is vulnerable to unwitting legislative actions as well as new business practices instituted by managed care companies. Today’s ACLA represents a wider range of laboratory interests and activities than in the past. Laboratory executives would be well served to learn more about how ACLA can assist their laboratory organization.