Operations ended last week after reports suggested the end came as a result of misalignment of goals among investors in a lab company many considered to be successful
One contributing factor the surprise announcement that the owners of Claritas Genomics were closing the clinical laboratory company may have been the struggle to get payers to reimburse its genetics test claims. If true, it is the latest market sign of how health insurers are making it difficult for labs to get paid for proprietary molecular diagnostic assays and genetic tests.
With no official announcement, Claritas Genomics quietly ended operations effective on Friday, Jan. 19. That evening, a spokeswoman for Claritas Genomics’ majority owner, Boston Children’s Hospital (BCH), confirmed for Dark Daily that the lab was closed and said no reason was given for the closing. More details may be forthcoming this week, she added.
As of the close of business on Tuesday, there was still no word from the genetics testing company founded in 2013. GenomeWeb was the first to report that Claritas Genomic’s diagnostic laboratories no longer do any testing. According to GenomeWeb, Brian Quirbach, former Clinical Testing Coordinator at Claritas Genomics, and part of the lab’s client services team, confirmed that the last day of business was Friday, Jan. 19. The BCH spokeswoman said the GenomeWeb article was accurate.
Asked if there had been a precipitating event at Claritas, if the company had experienced any serious business trouble, if it had struggled to get paid, or if payers were slow in paying, the spokeswoman declined to comment. Instead, she referred to the GenomeWeb article, saying it was mostly accurate.
Claritas Genomics a Casualty of Clinical Laboratory Price Wars
According GenomeWeb, Claritas was like other genetic testing laboratories that have long struggled to get health insurers to pay for rare disease tests. Also, Claritas and other genetic and molecular testing labs suffer financially as a direct result of the ongoing price wars among competing genetic testing lab companies.
“As a small company, it also wasn’t able to offer testing that did not come with potential patient payment obligations, which larger laboratories with better resources or payer contracts can do,” the GenomeWeb article noted.
According to GenomeWeb’s sources, Claritas had a reputation for delivering highly-accurate test results. The reason for this level of performance, the article noted, was Claritas’ use of two sequencing platforms, which lowered false-positive rates. The testing lab combined low false-positive rates with interpretations from WuXi NextCode. The clinical expertise available at BCH gave Claritas the best diagnostic exome in the industry in terms of technical quality and diagnostic power, one source told GenomeWeb.
The decision to close the company, the source noted, was a result of misalignment between investors at WuXi NextCode and BCH. Other sources speculated that Claritas and WuXi NextCode were considering a merger, which did not happen, GenomeWeb reported.
Ultimately, the source stated, BCH held the controlling interest and made the business decision to close the clinical laboratory company. And that the decision was unrelated to the lab’s quality.
Claritas’ clients were told, according to GenomeWeb, to download all test results and data by Thursday, Jan. 18, and that the lab’s operations manager would be available for a few weeks to answer customers’ questions.
Genetic Tests Developer for Pediatrics and Hereditary Disorders
Claritas, which was headquartered in Cambridge, Mass., had about 30 employees. When it was founded as a partnership between BCH and Life Technologies, its goal was to develop genetic and genomics-based diagnostic tests, primarily for pediatric patients with hereditary disorders.
In 2014, Dark Daily’s sister print publication The Dark Report (TDR) reported on the development of Claritas Genomics as an in-hospital lab that became independent. For 15 years, the lab operated as the genetic diagnostic laboratory at 396-bed BCH, we reported. (See The Dark Report, “Claritas Is Example of New Lab Business Model,” June 13, 2014.)
“As one of the hospital’s CLIA-certified laboratories, it provided the advanced molecular diagnostic testing services used by the hospital,” said Patrice M. Milos, PhD, who was Claritas Genomic’s CEO at the time.
At the 2014 Executive War College in New Orleans, Patrice Milos, PhD, then President and CEO, Claritas Genomics, spoke with Adam Slone, CEO, Slone Partners, about her path to becoming CEO of Claritas Genomics, how to foster a strong company culture, and what traits she looks for in a leadership team. Click on the photo above to watch the video interview. (Video copyright: Sloan Partners.)
In the early days of Claritas Genomics, BCH was challenged to provide the capital and resources needed for the molecular lab to grow, Milos said. “This was due to the rapid pace of genetic discovery, ongoing advances in gene sequencing technologies, and the difficult financial environment in healthcare,” she recalled. “Thus, to make it easier for the lab to grow, the hospital spun out the lab and created Claritas Genomics in February 2013.”
Informatics Tools to Support Clinical Use of Genetic Data
As an independent lab, Claritas had early success winning a role to do testing for the Million Veteran Program (MVP), a $9-million project of the US Department of Veterans Affairs. In October 2013, the lab company reported that it would do exome sequencing of samples from veterans. At the time, it was one of the largest sequencing initiatives in the nation. (The VA has since reported in 2016 that the program was the largest genomic database in the world.)
Further, this MVP was significant because Claritas benefited by generating cash flow, which it could use to acquire the gene sequencing system and staff expertise in next-generation sequencing (NGS) technologies. And, it developed the informatics infrastructure needed to collect, store, and analyze large volumes of genetic data, TDR reported.
Two months later, in December 2013, Claritas entered into a partnership with Cerner Corp. of Kansas City, Mo., to build the tools and connectivity systems needed to integrate NGS-based diagnostic testing into healthcare data systems. Specifically, the companies said they would develop a system “for molecular diagnostics that is tailored to NGS workflows, which are more complex and generate much more data than traditional molecular diagnostic tests.”
At the time, Milos explained the role that Claritas would play in this partnership. “In terms of this collaboration, one barrier to the use of genomics in medicine is the challenge of integrating the complex information derived from large-scale genomic measurements into a patient’s medical record and clinical practice,” he said. “Our mutual goal is to develop the informatics tools that support clinical use of genetic data.”
Claritas also was working with other pediatric institutions, such as Cincinnati Children’s Hospital, to advance clinical knowledge in a number of ways. “For example, we are facilitating a research network by connecting patients with experts who can provide care and by licensing assays from the hospitals where the discoveries that lead to diagnostic tests are made,” Milos said. “Also, in this business model, we can receive investment from outside sources, such as we have from two of our Series A investors, Life Technologies and Cerner.”
The abrupt closure of Claritas Genomics makes this clinical laboratory company the latest to disappear from the marketplace. The mystery factor in this case is why a company viewed by many as establishing a credible reputation for itself came to such a sudden end.
Since then, however, new details from BuzzFeed and GenomeWeb indicate that Orig3n may not have the required certifications to market their genetic tests after all. On October 30, 2017, CMS served Orig3n with an out-of-compliance notice. According to BuzzFeed, the letter came from Karen Dyer, MT (ASCP) DLM, Director, Division of Laboratory Services and the CLIA program at CMS.
In a letter to Kate Blanchard, Chief Operating Officer at Orig3n, Dyer wrote, “To apply for CLIA certification, Orig3n must contact both the Massachusetts and California state agencies immediately for guidance. Orig3n’s various tests analyze 18 genes related to health, from ‘muscle power’ to ‘sugar sensitivity’ to ‘age-related metabolism’. It offers genetic testing that provides information for the assessment of health.” The letter gave Orig3n a November 13 deadline to update CMS on issues regarding their CLIA certification.
Robin Smith, CEO, Orig3n, told GenomeWeb the notice “was the first time that any clear guidance was given regarding specific genes and requirements for CLIA/non-CLIA.” He also noted efforts Orig3n undertook over the prior year to fully certify their laboratory.
The test shown above is one of 18 genetic tests Orig3n offers direct to consumers. According to Vice, Orig3n claims their tests do not require FDA-approval “because the tests are not diagnostic [and] they don’t require it.” The Baltimore Sun reported that “Orig3n is confident it can receive the proper approvals and plans to have a fan giveaway later this season at one of our games.” (Photo copyright: Orig3n.)
A Quick Resolution for Orig3n’s CLIA Woes?
Fortunately for Orig3n, meeting compliance and obtaining certification for their existing lab is no longer a requirement to resolve the issue. In a November press release, Orig3n announced the purchase of Interleukin Genetics. Orig3n plans to absorb Interleukin’s existing assets, including a CLIA-certified genetics laboratory in Waltham, Mass., capable of analyzing more than one million samples annually.
“Once we met with Interleukin Genetics, we saw a natural alignment between the two organizations regarding our shared commitment to a future of personalized health,” Smith noted. “With our trajectory of accelerated growth, we couldn’t imagine a better fit for acquisition. We are very pleased to be welcoming Interleukin Genetics to Orig3n.”
GenomeWeb asked Blanchard how the acquisition would impact Orig3n’s commercialization of the 18 tests in question by CMS, now that Orig3n owns a CLIA-certified lab, and through it, meets the requirements of CMS’ out-of-compliance notice. Blanchard declined to comment.
New Concerns Surrounding Interleukin Assets
Yet, in solving one set of problems, some experts believe Orig3n might have inherited a new set. In July 2016, GenomeWeb reported that Interleukin Genetics would be laying off 63% of its staff. Unable to secure a clinical services agreement, the company could not extend debt payment deferrals with its senior lenders. At the time of writing, debts totaled $5.6 million.
Further complicating matters, a 2015 peer-reviewed analysis published in the Journal of the American Dental Association (JADA) questioned the clinical validity of an inflammation management program called “Ilustra” that Interleukin claimed, “identifies individuals with an increased risk for severe and progressive periodontitis, due to a life-long genetic predisposition to over-produce Interleukin-1 (IL-1), a key mediator of inflammation.”
Another GenomeWeb article reported on the turbulent road the Ilustra program followed until Orig3n eventually pulled it from the market. GenomeWeb noted critics’ concerns about the marketing of precision medicine, genetic testing, and regulatory issues facing medical laboratories as these technologies mature.
Clinical Laboratories Continue to Field Concerns Over DTC Testing
“This [genetic] test would have been laughed out of the room if it had been presented to oncologists, or to professionals in medical genetics,” declared Scott Diehl, PhD, co-author of the JAMA analysis, a genetics researcher at Rutgers School of Dental Medicine, and Professor and Principal Investigator at Rutgers Biomedical Health Sciences.
GenomeWeb notes in their latest coverage that with Orig3n’s purchase of Interleukin Genetics, Diehl is once again concerned that the genetic tests in question might find their way back to the market.
When GenomeWeb questioned Orig3n about the concerns surrounding Interleukin’s Ilustra product, a spokesperson stated, “that was simply before Orig3n’s time with the company and they do not have a part in it.” Blanchard added, “[We are] looking at the entire Interleukin portfolio and implementing the tests if and when we decide it is appropriate.”
Regardless of the decisions made by Orig3n on future genetic tests and genetic service offerings, coverage of this event highlights a myriad of concerns—from regulatory scrutiny to the pitfalls of acquiring existing diagnostic tests or laboratory assets—facing clinical laboratories, anatomic pathologists, and other medical professionals working in the ever-shifting landscape of the modern healthcare system.
Radboud University researchers fear oncology, molecular biology, pharmacology, and other cell-centric medical research efforts are at risk due to verification that at least 30,000 studies published in 33,000 scientific journals included data derived from misidentified or contaminated cell lines
Many research findings that underpin the science behind various diagnostic technologies used regularly by clinical laboratories and anatomic pathology groups may not be valid. This is because a large number of published studies may have used misidentified or contaminated cell lines.
Biomedical scientists have known for a long time that many research papers exist containing reports on the wrong cells due to cell line misidentification. And yet, few studies have measured the true scope of the problem. Until now. Researchers at Radboud University in the Netherlands have determined that this problem may have influenced the findings of thousands of published research studies and upon which many other research studies were conducted.
Because clinical laboratories and anatomic pathology groups use assays and diagnostic tests that are developed as a result of these research studies, identifying how many published papers have inaccurate findings that cannot be duplicated would affect how and when it is appropriate for physicians to order certain medical laboratory tests and rely on the results.
Additionally, cancer research is based on cell line studies as well. Thus, it may prove necessary to restudy existing published findings and revise them as appropriate. In turn, these new findings might change how and when some cancer tests are ordered and the results interpreted.
“We considered a reference to this original article as a good proxy for the usage of a cell line,” the researchers noted in their study published in the journal PLOS ONE. “Since typically the original papers are focused on reporting the establishment of the cell line only.”
They focused on misidentified cell lines that were caused by HeLa cells, also known as “immortalized cells.” HeLa cells have been used in scientific research for decades. They were the first mass-producible cells that could be used in vitro, making them highly desirable for biomedical research.
However, the process of creating immortalized cells involves mutation, during which contamination can be introduced by other cells. Immortalized cells can be identified as one type of cell when in fact they are actually another type of cell.
Research scientists have been aware of this problem for about as long as immortalized cells have been in use. They attempt to take it into account when completing their analyses, though not always successfully.
The Radboud researchers found 32,655 records of primary literature based on contaminated cell lines. They then cross-referenced the ICLAC Register of Misidentified Cell Lines with a range of databases to determine if articles were available for each of the 451 cell lines listed on Table One of the ICLAC Register.
With this information, they further researched published articles in the Web of Science database using cell line identifiers. They noted both primary literature and any citation report entries for each cell line.
The researchers noted in their published study, “As we only searched for cell lines known to be misidentified, this constitutes a conservative estimate of the scale of contamination in the primary literature. Moreover, to avoid false positives, we excluded several cell lines, such as the ones with non-unique identifiers or the cell lines for which verified stock is still in circulation.”
Their estimate for secondary contaminated literature based off primary articles is larger still. “In total, we can conservatively estimate the citations to the primary contaminated primary literature at over 500,000, excluding self-citations,” the authors noted in their PLOS ONE article. “Thereby leaving traces in a substantial share of the biomedical literature.” They concluded, “… the amount of research potentially building on false grounds remains worrisome.”
Impact of Contaminated Cell Lines on Research, Clinical Laboratory Communities
Many of the assays and diagnostic tests performed by clinical laboratories and pathology groups were developed using cell line research. Should further scrutiny into the ability to duplicate and verify study findings fail to produce positive outcomes, it might call into question the validity and appropriate use of these tests.
For the research community, these findings represent yet another call to promote accountability and define standards for verifying authenticity of cell lines to further strengthen research findings.
The Radboud researchers ranked the number of contaminated articles they discovered by research area. Top affected areas include:
Oncology
Molecular Biology
Pharmacology
Cell Biology
Immunology
The distribution of contaminated primary literature over the research areas as defined by Web of Science. Only the 25 most affected research areas are included. (Graphic copyright: PLOS ONE.)
Addressing the Problem of Cell Line Contamination and Misidentification
Adapting the ever-growing body of published medical literature to reflect the known misidentifications, as well as the possibility of invalid results, will be a major undertaking. Ultimately, resolving this problem could require changes to practices and procedures currently used by research facilities and medical laboratories.
While the cost to authenticate cell lines adds to the bottom line of research projects, the money spent on research that becomes invalidated by misidentified cell lines is far greater.
In a 2015 Retraction Watch article, Leonard P. Freeman, PhD, President, Global Biological Standards Institute, notes, “An NIH RePORT search identified 9,000 active projects using cell lines, totaling $3.7 billion. Required use of authentication techniques would affect over $900 million in research dollars annually.”
Additionally, failure to adapt authentication as a part of standard operations brings other consequences. “A 2004 survey reported that just one-third of laboratories authenticate their cell lines,” Freeman noted. “10 years later, a Sigma-Aldrich survey found that only 37% of respondents ‘validate the purity and identity before first use’ of cell lines. Understanding the existing barriers that prevent implementation of universal cell authentication is central to changing this sad state of affairs.”
Mixed Recommendations for Fixing Inaccurate Published Studies
Of course, none of this will change the vast body of archived literature that might contain errors due to misidentification. Recommendations for addressing this aspect of the problem vary. The Radboud study authors suggest posting notes on any previously published articles stating that misidentified cell lines were used.
However, in a STAT article, Ivan Oransky, MD, and Adam Marcus, Managing Editor, Gastroenterology and Endoscopy News, co-founders of Retraction Watch, recommend more severe measures. “When we polled readers of Retraction Watch last December about the issue, 55% said journals should correct papers known to describe contaminated or misidentified cell lines, and more than 40% said retraction was the right choice.”
Thanks to the Radboud study, as cell lines continue to power the innovations of modern biomedical research, concerns will surely increase surrounding cell-line authentication and research findings. For pathology groups and medical laboratories, staying abreast of these developments will work to ensure data validity and reduce reputation and liability concerns.
New study published in the Annals of Family Medicine (AFM) indicates that despite efforts to improve EHR usability and efficiency, primary care physicians continue to spend more than 50% of their workdays on computerized physician order entry (CPOE) and other clerical tasks instead of engaging in direct patient care
Do electronic health record (EHR) systems improve or degrade the productivity of physicians? That question has been the subject of robust debate. Now comes a new study in a peer-reviewed journal with a surprising finding: physicians spend up to 50% or more of their workday on EHR-related tasks.
In theory, EHRs offer a wealth of benefits over traditional paper-based systems. In practice, however, between interoperability concerns and implementation costs, they have proven a daunting undertaking for even the largest healthcare systems.
While EHRs might offer easy access to patient data—including medical laboratory records and anatomic pathology reports—this information doesn’t enter itself into databases or make itself instantly accessible. That requires human interaction, which is time consuming and prone to errors.
Thus, research from the American Medical Association (AMA) and the University of Wisconsin revealing that the time it takes to enter data, address communications, and perform other clerical tasks adds up to more than 50% of a physician’s workday is of paramount importance. That’s because physician dissatisfaction and departures from medical practice have increased each year since the EHR revolution began, and reports are the situation is getting worse.
Researchers validated their data through direct observation of 14 nonresident family medicine physicians from May through June of 2016. This observation showed similar findings. During clinical hours, 60% of physician time related to non-EHR tasks, with 40% of time devoted to EHR tasks.
Documentation Burden Leads to Physician Burnout, Dissatisfaction
“Our family medicine physicians spent 44% of their workday (157 minutes) in the EHR doing clerical and other administrative tasks,” study authors reported. “Computerized physician order entry accounted for 12.1% of their clinic hours (43 minutes) in the EHR. The burden related to order entry has been associated with clinician burnout, dissatisfaction, and intent to leave practice.”
Researchers tracked various tasks and assigned them to categories. Of the tasks tracked, only 32.1% fell under the heading of “medical care.” Reviewing chart notes, chart medications, and problem lists topped medical care tasks.
Review of clinical laboratory results in charts ranked near the bottom, with only 2.5% of the total time spent performing medical care tasks. These tasks, however, could offer opportunities for medical laboratories to help physicians identify opportunities to optimize reporting and test-ordering processes and improve productivity for clinicians who are responsible for most of the data entry burden associated with EHRs.
One potential solution to EHR burnout involves the use of medical scribes who work with physicians during and after a patient’s visit inputting encounter data. Alan Bank, MD, cardiologist at Allina Health, and medical scribe Jaeda Roth, are shown above during a patient visit. Bank told the StarTribune that he’s convinced scribes help doctors get more done and reduce billing errors. (Photo and caption copyright: Elizabeth Flores/StarTribune.)
Researchers also questioned the EHR’s role as a communication or telemedicine hub. “There is insufficient evidence that such asynchronous care improves health outcomes, cost, and overall healthcare use,” they noted.
However, even for intra-practice communications between healthcare professionals, EHRs may not be the most efficient approach. “Face-to-face communication is associated with increased efficiency,” the researchers noted. “Whereas more electronic communication among team members leads to greater clinician and staff dissatisfaction, as well as poorer clinical outcomes and increased healthcare use among patients with coronary artery disease.”
EHR Cost/Benefits Generate Debate
This latest study is not the first to suggest that EHRs are creating problems for clinicians. While there appear to be no trends between studies, multiple researchers have highlighted the workload created by EHR systems in recent years.
In a study published in the Annals of Internal Medicine (AIM), Christine A. Sinsky, MD, of the American Medical Association, et al, analyzed data from the observation of 57 US-based physicians in family medicine, internal medicine, cardiology, and orthopedics.
Comparing data across 430 hours of observation, researchers concluded, “For every hour physicians provide direct clinical face time to patients, nearly two additional hours are spent on EHR and desk work within the clinic day. Outside office hours, physicians spend another one to two hours of personal time each night doing additional computer and other clerical work.”
While medical laboratories and diagnostic specialists—such as anatomic pathologists—can work with physicians to streamline ordering and reporting processes relating to EHRs, much of the burden comes from how EHR systems are designed and used.
In a 2016 New England Journal of Medicine Catalyst Panel on EHRs, Tait Shanafelt, MD, Director of the Mayo Clinic Department Program on Physician Wellness, noted that one of the most contested features of EHR systems in the US, according to the AMA and Mayo Clinic, is computerized physician order entry (CPOE).
Later in the discussion, Sinsky discussed a recent trip to the UK, where she observed general practitioners (GPs) at the National Health Service (NHS). She noted that most GPs loved their EHRs. However, those EHRs were designed with GP input to best work with an NHS GP’s typical workflows and procedures. She also noted that overall usage is different in the UK, as EHRs there are not tied into billing systems.
As Dark Daily has reported, up to 70% of data stored in a patient’s electronic health record is clinical pathology laboratory related. As newer EHRs replace outdated models, it will remain critical for healthcare professionals—including clinical laboratory professionals who generate most of the data stored in EHRs—to assess, track, and report on what is working with various platforms and what is not.
Communicating this end-user data to EHR developers is essential to designing EHRs that reduce unneeded burden and clerical load on physicians, rather than increasing it.
Clinical laboratories tat wish to take proactive steps might contact physicians and other professionals in their workgroups to tailor data generation, reporting, and ordering processes to the EHRs in use at those practices.
In filing Monday, lawsuit seeks to force HHS to comply with PAMA’s statutory requirements and to withhold applying the new Clinical Laboratory Fee Schedule until HHS has revised the final rule appropriately
Many clinical laboratory executives will welcome the news that a lab industry trade association has filed a lawsuit in federal court in an effort to delay and fix the final rule for Protecting Access to Medicare Act of 2014 (PAMA) private payer lab test market price reporting that Medicare officials used to lower prices on the Medicare Part B Clinical Laboratory Fee Schedule (CLFS) that is scheduled to take effect on Jan. 1, 2018.
The ACLA asked the US District Court for the District of Columbia to force HHS to comply with PAMA’s statutory requirements, to withhold applying the new CLFS until HHS has revised the final rule appropriately. The CLFS is due to take effect on Jan. 1.
Final Prices for the 2018 Part B Clinical Laboratory Fee Schedule
Last month, the federal Centers for Medicare and Medicaid Services (CMS) issued the final CLFS rates and said at the time that it did so in compliance with the 2016 final rule implementing changes to the Medicare clinical laboratory fee schedule under PAMA section 216.
“We have repeatedly advised CMS that there are significant, substantive deficiencies in the final rule, which fail to follow the specific commands of the PAMA statute,” said ACLA President Julie Khani in an ACLA press release. “Contrary to Congress’ intent, instead of reforming Medicare reimbursement rates to reflect the broad scope of the laboratory market, the Secretary’s final rule will disrupt the market and prevent beneficiaries from having access to the essential laboratory services they need.”
Shown above is Julie Khani, President of the American Clinical Laboratory Association (ACLA) speaking at the Executive War College on Laboratory and Pathology Management last May in New Orleans. In a press release announcing ACLA’s lawsuit against the Department of Health and Human Services, Khani emphasized that many clinical laboratories had advised officials at the federal Centers for Medicare and Medicaid Services (CMS) about the “significant, substantive deficiencies in the final rule” for private payer market price reported that CMS designed. (Photo copyright: The Dark Report.)
22 Healthcare Organizations Opposed Cuts to Clinical Laboratory Test Prices
The ACLA, the American Hospital Association (AHA), and more than 20 other organizations had urged CMS to suspend implementation of the new CLFS rates, which are scheduled to take effect Jan. 1. The organizations cited concerns over the data-collection process used to establish the rates, and the fact that the rates would cause clinical laboratories to struggle financially and possibly close. If the rates set under PAMA affect Medicare beneficiaries’ access to clinical lab testing, the law would have the opposite effect of its intent.
To bring the lawsuit, ACLA retained Mark D. Polston, JD, of the Washington, DC, law firm of King and Spaulding. A specialist in representing healthcare systems seeking to navigate Medicare regulations, Polston is the former Chief Litigation counsel for CMS and specializes in complicated Medicare reimbursement litigation. Recently, he successfully challenged Medicare’s so-called “two-midnight” rule that imposed a 0.2% rate cut on hospitals billing for some patients.
Medicare Program Prohibited Most Medical Laboratories from Reporting
Contrary to Congress’ directives, most laboratories were prohibited from reporting private payer data under CMS’ market-rate data-collection process, ACLA said in a prepared statement. “As a result, CMS failed to protect access to laboratory services for Medicare beneficiaries. This flawed process could cause serious financial harm to potentially thousands of hospitals, independent and physician office laboratories, and make it harder for Medicare beneficiaries to get access to medical testing, particularly in remote rural areas and in nursing homes that depend on laboratory testing services,” ACLA said.
In the lawsuit, ACLA alleged that more than 99.3% of hospitals were prohibited from reporting their market-rate data. It is believed that this is the first time this figure has been reported. In 2015, the lawsuit charged, more than 261,500 entities received Medicare payment for laboratory services but only 1,942 laboratories reported market-rate information in 2016 under the PAMA final rule. The 1,942 labs that reported market-rate data is about 0.7% of the total number of laboratories that serve Medicare beneficiaries, the lawsuit said.
Only 21 of 7,000 Hospital Laboratories Reported Data
“Moreover, contrary to Congress’ intent, the laboratories that did report information are not representative of the market as a whole,” the lawsuit added. “For example, although approximately 7,000 hospital laboratories billed Medicare for laboratory services in 2015—accounting for 24% of the Medicare payments made under the Clinical Laboratory Fee Schedule—no more than 21 hospital laboratories (and probably even fewer) reported information to the secretary, leaving hospital laboratories effectively unrepresented in the data collected by the secretary.
“Hospital laboratories are often the only laboratories available to patients in certain areas of the country, and the private payer rates they receive are often much higher than other laboratories, due to differences in competitive markets, volumes of services, and other factors,” the lawsuit charged.
The Dark Report, Dark Daily’s sister publication, provided a compelling example of the serious flaws in the market price study conducted by CMS. Writing about the state of Michigan, The Dark Report noted: “At Joint Venture Hospital Laboratory Network (JVHL), CEO John Kolozsvary said Michigan’s hospitals serve 70% of the office-based physicians in the state with outreach lab testing services. Included among these hospitals are the 120 JVHL member laboratory facilities.”
“Since our network, plus the outreach programs of another 25 or 30 hospitals, hold a significant share of outreach lab testing in Michigan, how can CMS conduct an accurate, representative market study of what private insurers pay for lab tests in Michigan if it doesn’t collect data on what private payers reimburse hospital lab outreach programs in Michigan?” stated Kolozsvary in his interview with The Dark Report.
Did CMS ‘Disregard and Violate’ PAMA Statute?
In the ACLA’s announcement of the lawsuit, Polston said, “CMS clearly disregarded and violated the statute’s specific, unambiguous directives requiring commercial rate information to be reported and collected from a broad, diverse group of market participants. Instead, information was collected from less than 1% of US laboratories.”
In the press announcement, ACLA Board Chair Curt Hanson, MD, Chief Medical Officer of Mayo Medical Laboratories said, “This lawsuit reflects our obligation to those who are providing critical testing services, and to those millions of Americans who rely on the services our industry provides.” Others supporting the lawsuit include Laboratory Corporation of America and Quest Diagnostics.
Compliance with PAMA Law’s Statutory Requirements
In the lawsuit, ACLA seeks to require HHS to comply with the statutory requirements and to set aside the provisions in the final rule, “that unlawfully exempts thousands of laboratories from the reporting obligations that Congress imposed” under PAMA. A central feature of PAMA Section 216 is that laboratories must report market rate data so that HHS can ensure that Medicare reimbursement rates closely reflect the rates laboratories receive from private payers, the lawsuit said.
“ACLA was a strong supporter of Congress’ market-based reforms, which resulted in the most extensive changes to the system for reimbursing clinical laboratories since 1984,” the lawsuit said.
In challenging the final regulations, the lawsuit said HHS disregarded and violated, “the statute’s specific, unambiguous directives requiring that all applicable laboratories report relevant data.”
Congress Specified Which Medical Laboratories Are Obligated to Report
“In imposing these requirements, Congress took care to specify which laboratories would be obligated to report market data to ensure that information would be collected from a broad, diverse group of market participants,” the lawsuit said. “Congress made clear that any ‘laboratory’ would be required to report data if, ‘with respect to its revenues under [the Medicare program], a majority of such revenues are from’ the Physician Fee Schedule or the Clinical Laboratory Fee Schedule,” the lawsuit charged.
In promulgating the regulations, however, HHS, disregarded Congress’ instructions and “unreasonably and arbitrarily exempted significant categories and large numbers of laboratories that meet the statutory definition from the reporting requirements that Congress imposed,” the lawsuit said.
“The secretary’s final rule fatally undermines one of PAMA’s purposes, which is to require a broad spectrum of Medicare-participating laboratories to report market information to the secretary. Instead, in ultra vires (Latin for “beyond the powers”) fashion, the secretary has carved out large categories of laboratories—ultimately resulting in the exclusion of some 99.3% of the laboratory market—from the statutory reporting requirements,” the lawsuit charged. Ultra vires acts fall outside the authority of the organization in question.
In the lawsuit, the ACLA claims under:
count 1: ultra vires agency action not in accordance with law, in excess of statutory authority;
count 4: violation of the Administrative Procedure Act, injunctive and declaratory relief.
Seeking an Injunction to Have HHS Secretary to Withhold or Suspend Final Rule
In its final section, “Prayer for Relief,” the lawsuit asks the court to vacate, “any agency action found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;” to require the Secretary of HHS to comply with the statutory requirements, “including faithfully implementing the statutory definition of ‘applicable laboratory;’” and enter an “injunction that (1) directs the Secretary to withdraw or suspend his final rule until such time as it can be brought into compliance with the statute, and (2) directs the Secretary to withhold applying the new Clinical Laboratory Fee Schedule until such time as the Secretary has made appropriate revisions to his final rule.” The lawsuit also asked the court to award to the ACLA “costs and disbursements of this action and reasonable attorneys’ fees.”
While proposals might change before the final CMS draft, lobbyists see potential for improving Medicare payment totals and structures in the upcoming 2018 outpatient rule and physician fee schedule
At this time, efforts by medical laboratories to lobby and educate Medicare officials and members of Congress about the flaws in the Medicare program’s market study of what private health insurers pay for clinical laboratory tests have failed to trigger positive action on this matter. But despite the bad news concerning that issue, there is a positive development with a proposed rule that would change which lab tests should be included in bundles paid under the Hospital Outpatient Prospective Payment System (OPPS).
The details of how the clinical laboratory industry worked to educate the right decision-makers within the federal Centers for Medicare and Medicaid Services (CMS) was part of a story published by Axios. The story described how several different healthcare specialties conducted educational and lobbying campaigns and succeeded in getting favorable decisions on the matters of concern.
Changing the Medicare 14-day Medical Lab Test Billing Schedule Regulation
Though the complete Axios article covers several categories of healthcare lobbying, “The Win for Clinical Labs” section lists lobbying activities in 2017 on behalf of the medical laboratory industry. It covers:
· “Who met with the feds: Lobbyists with lab testing companies Myriad Genetics and Veracyte, pharmaceutical company Boehringer Ingelheim, and lobbying firm Todd Strategy, federal meeting records show.
· “What they wanted: An open comment period on the ‘14-day’ regulation, likely with the goal of adjusting or eliminating it, according to a lobbying presentation.
· “The 14-day regulation stipulates that if lab tests are ordered within 14 days of a patient’s discharge from a hospital, the hospital must bill Medicare for the tests. The lab then seeks payment from the hospital. Anything after 14 days, the lab can bill Medicare directly.
· “The companies argued in the presentation that the rule limits access to lab tests because hospitals may be reluctant to bill Medicare for labs after patients leave.
· “What they got: An open comment period, and a modification to the policy that would allow labs to bill Medicare directly for some tests.”
One success slated to enter the OPPS relates to the 14-day rule/Date of Service (DOS) determinations, which set strict billing requirements for diagnostic tests based on when the tests are ordered. Medical laboratories, pharmaceutical companies, and lobbying strategists teamed up to streamline the current regulations and improve how billing works for a range of Advanced Diagnostic Laboratory Tests (ADLTs).
Lobbying participants included:
· Biodesix of Boulder, Colo.;
· Boehringer-Ingelheim of Ridgefield, Conn.;
· Guardant Health Inc. of Redwood City, Cali.;
· LUNGevity Foundation of Chicago;
· Myriad Genetics of Salt Lake City, Utah;
· Veracyte of South San Francisco.
The graphic above was taken from a May 2017 presentation to policymakers at HHS and CMS, which focused on delays created by the 14-day rule. It described existing determinations as “developed for the old world of hospital and reference laboratories.”
Presentation speakers also cited concerns that current payment requirements might limit access to testing and delay diagnosis. As precision medicine often involves major illnesses—such as cancer—swift testing, diagnosis, and treatment are essential parts of improving patient outcomes.
Results of the Lobbying Effort Could Bring Relief for Hospitals and Clinical Laboratories
CMS posted their proposed OPPS rules for 2018 in July and created an open comment period, which closed in September.
In analysis of the current proposed rules at Health Law and Policy Matters noted, “The proliferation of molecular pathology testing technology, coupled with the implementation of the packaging policy a few years ago, has strained relationships between many hospitals and laboratories.”
The analysis outlined three currently proposed approaches from CMS:
· The first crates exceptions to current DOS rules for molecular pathology tests and ADLTs under certain conditions.
· The second only applies exemptions to ADLTs citing a lack of “access to care” concerns for molecular pathology tests.
· The third adds an exception for molecular pathology tests and ADLTs excluded from OPPS packaging, but applicable to “under arrangements” rules.
Other Lobbying ‘Wins’
Axios noted two other potential wins related to this year’s lobbying efforts.
1. Fresenius Medical Care, owner of National Cardiovascular Partners, opened public debate regarding pay rates for heart procedures in outpatient heart labs and ambulatory surgery centers.
2. CMS and HHS awarded Photocure, manufacturer of Cysview (FDA-approved technology for the detection of bladder cancer), a proposal for add-on billing codes to increase pay for bladder cancer procedures using their drug solutions.
However, these are just proposals. There is no guarantee they will reach the final draft for 2018—if at all.
Lobbying Expensive but Gets Results
While lobbying is an important way to shape the regulatory landscape surrounding healthcare, it is time- and money-intensive. In the presentation from Todd Strategy, LLC, regarding the 14-day rule, the speakers established a timeline spanning two years of administration and congressional outreach. They also pointed out that similar requests were made in 2016 for the calendar year 2017 OPPS rules that were never implemented.
As healthcare continues to shift toward personalized approaches, and diagnostic testing becomes an increasingly important aspect of diagnosing and treating disease, laboratories and healthcare groups must continue to identify opportunities to both increase revenue and streamline operations to continue growing.
With innovative medical laboratory tests and new diagnostic technologies emerging at a rapid pace, the opportunity to use lobbying to educate lawmakers and government regulators continues to be a viable tool for clinical laboratories interested in speeding change and protecting the ability of clinical laboratories to serve physicians and their practices—particularly because the system is known for its complex requirements and slow-moving bureaucracy.
