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Why Congress Is Considering Deep Cuts to Medical Laboratory Test Fees

Nation’s clinical laboratories may see significant reductions in federal funding for medical laboratory tests in the 2012 federal budget

Unprecedented cuts in funding for clinical laboratory services are expected from Congress in coming months. That’s because federal legislators need deep cuts from many sources to cope with the current budget crisis. It is also why some Beltway insiders predict that fees for medical laboratory testing will be substantially reduced.

Although many lab industry associations have alerted their members to certain of these proposals—such as the proposed plan to reinstitute the patient co-pay/co-insurance requirement for Medicare Part B Medical Laboratory Tests—few clinical laboratory managers and pathologists know that there are at least three separate proposals to reduce funding for medical laboratory tests. Each proposal has a chance to make it through the legislative pipeline and become part of the final 2012 federal budget.

Dark Daily and The Dark Report are among the first lab industry intelligence sources to recognize why these three proposals to cut spending on clinical laboratory testing represent a serious threat to the entire medical laboratory testing industry. The “triple jeopardy” nature of these threats makes it imperative that the lab industry respond in a unified and determined manner.

Three Different Ways to Slash Funding for Clinical Laboratory Tests

At this time, the greatest threats to clinical laboratory test funding come from three separate proposals under consideration by federal legislators:

  • One, the recently-appointed Super Committee in Congress must identify savings of at least $1.2 trillion over 10 years. It is known that the list of possible Medicare funding cuts being considered by the Super Committee includes one proposal to trim Medicare Part B Laboratory Test spending by as much as $16 billion in 10 years.
  • Two, what is unknown to most clinical lab managers and pathologists is that, in September, the Medicare Payment Advisory Commission  (MedPAC)) recommended that clinical laboratory test fees be cut by up to $21 billion in the next 10 years. This money would be shifted away from lab test reimbursement in order to make up the shortfall in physician fees under the Medical Sustainable Growth Rate (SGR) formula.
  • Three, reinstituting the patient co-pay/co-insurance requirement for Medicare Part B Medical Laboratory Testing is back on the table. This proposal is projected to produce savings of $16 billion over the first 10 years of its implementation.

The MedPAC proposal would be financially devastating to clinical laboratories. At GenomeWeb.com, writer Kirell Lakhman used this headline “How Badly Will MedPAC Plan Hurt Clinical Labs? Badly!” Lakhman pointed out that the medical lab testing industry has seen a 40% decline in reimbursement—when adjusted for inflation—over the past 40 years.

By November 23, 2011, the Congressional Super Committee must deliver to both houses of Congress its recommendations to reduce federal spending by a minimum of $1.2 trillion over 10 years. Members of Congress must then vote to accept that package with a yes or no vote. (Caricatures of the 12 Super Committee members copyright www.honkeydonkey.com.)

By November 23, 2011, the Congressional Super Committee must deliver to both houses of Congress its recommendations to reduce federal spending by a minimum of $1.2 trillion over 10 years. Members of Congress must then vote to accept that package with a yes or no vote. (Caricatures of the 12 Super Committee members copyright www.honkeydonkey.com.)

Thus, the MedPAC proposal is, in Lakhman’s words “myopic, and this is why: Labs need competition to stay ahead of the technological advances that drive their efficiency and the quality of their results. Cuts to Medicare reimbursement would force many of them either to close shop or put themselves on the auction block.”

Each of these three proposals now winding their way through Congress would trigger major reductions in funding and reimbursement for medical laboratory tests. That means the lab testing industry faces triple jeopardy! Knowledgeable observers predict that at least two of these proposals to trim spending on clinical laboratory testing could become law when the 2012 federal budget is finalized.

Strategies to Forestall Deep Cuts in Funding for Clinical Lab Tests

For lab industry executives, senior lab administrators, and pathologists who want the full picture on threats to reimbursement for medical laboratory testing—along with effective strategies to combat these worrisome proposals—Dark Daily has organized a special 90-minute intelligence briefing and audio conference. It will take place on October 26 and is titled “Washington Puts Lab-Test Cost-Cutting on the Table for 2012: Devastating Fee Cuts plus Other Congressional Proposals and How Your Lab Can Prevent Them.”

This “must-attend” session will be a complete overview of unfolding events in Congress, particularly as they pertain to active efforts to cut back funding for clinical laboratory tests. The goal is to provide you with an understanding of current developments, along with an explanation of the major proposals to enact painful cuts in reimbursement for medical laboratory testing.

There will also be information about how the medical lab testing industry is responding to these proposals. You’ll learn about specific actions you and your lab team can take to inform and educate Congress about the negative consequences of enacting deep cuts in funding for clinical laboratory testing.

Speaking at this intelligence briefing and audio conference are Alan Mertz, President of the American Clinical Laboratory Association (ACLA) and Peter Kazon, Senior Counsel in the Washington, DC, office of Alston & Bird. Both Mertz and Kazon are in active conversations with federal legislators and will provide an insider’s view of developments.

Along with the three Congressional proposals that would impose the deepest cutbacks in funding for medical laboratory testing, Mertz and Kazon will also discuss regulatory initiatives underway at several agencies. Topics will include regulation of laboratory-developed tests (LDT) by the Food & Drug Administration (FDA) and the Medicare program’s unfolding review of new molecular CPT codes and how it may change coverage guidelines for code stacking of genetic and molecular tests.

Click on this link to get full details about this timely audio conference and to register.

Related Information:

How Badly Will MedPAC Plan Hurt Clinical Labs? Badly

Washington Puts Lab-Test Cost-Cutting on the Table for 2012: Devastating Fee Cuts plus Other Congressional Proposals and How Your Lab Can Prevent Them

MedPAC Suggests Specialists, Laboratories Pay for Sustainable Growth Rate Fix

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