Medicare’s New Policy May Help Labs

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ONCE AGAIN, THE DARK REPORT IS FIRST TO ALERT YOU to a significant development in the laboratory testing marketplace. I am referring to a new and evolving Medicare policy which calls for the agency to reimburse for expensive new medical treatments and diagnostic tests.

As you will read on pages 14-15, this policy has two conditions. First, companies or organizations must do research studies to determine the clinical effectiveness of these new medical and diagnostic procedures. Second, patients receiving these treatments must agree to participate in the research studies.

I have two reasons to consider this to be an exciting development—one that is most auspicious for the laboratory testing industry. My first reason is the obvious link between an expensive new laboratory test, and the relatively small cost (when compared to new therapeutic drugs, for example), to demonstrate its clinical relevance. Medicare is creating an economic motive for companies which develop these tests to fund the research studies and demonstrate whether or not there is a clear clinical benefit.

It is my second reason which holds even greater promise. I believe this Medicare policy is the direct result of a different political philosophy which is infiltrating many government bureaucracies. That philosophy is to use market incentives to drive improvement and progress. Medicare is reversing a 38-year pattern of arbitrarily granting or denying reimbursement for new medical technologies. Instead of standing as gatekeeper and supporting the status quo, Medicare is now taking active steps to get companies, disease- specific associations, and medical specialty organizations to step forward— with their own dollars—to track Medicare patients and perform rigorous outcome studies on those who receive these new treatments and diagnostic tests.

For pathologists and lab administrators, this is an ideal situation. It means payment for new diagnostic tests ordered by clinicians, along with a role in supporting the research studies needed to validate the clinical performance of both new medical treatments and new diagnostic tests. For my part, I hope we see more such innovative policies by government healthcare policy-makers. It’s time to move away from the old Soviet Union-style command and control system and let doctors and their patients make choices driven by market realities.

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