Investigators may look into various angles, including drive-through testing sites for COVID-19 and whether uninsured patients were verified before free tests
Three healthcare compliance attorneys gave a clear and concise message to clinical laboratory managers and pathologists at the 2022 Executive War College Conference on Laboratory and Pathology and Management: Expect the government to scrutinize reimbursements it paid for COVID-19 testing, particularly for testing conducted at drive-through sites that popped up all over the country.
“The important question is: What is the fair market value of those specimens?” noted attorney Emily Johnson, JD, a Member at law firm McDonald Hopkins in Chicago. Johnson spoke during a legal panel on Wednesday at the Executive War College in New Orleans.
The panel spent 75 minutes discussing various legal concerns, many of them related to COVID-19 testing, before a crowd of about 80 attendees.
Attorney Emily Johnson, JD, of Chicago law firm McDonald Hopkins explained possible COVID-19 test fraud enforcement to attendees at the 2022 Executive War College. (Photo copyright: The Dark Intelligence Group.)
Audits May Be Coming of HRSA Reimbursements for COVID-19 Testing
Consumer Reports noted in a January article that COVID-19 testing prices varied wildly both in traditional healthcare settings and popup sites—in some cases, exceeding $1,400.
The average price for such a test within an insurance company’s network was $130.
Some people paid for those tests out of pocket or got them covered by insurance. For uninsured patients, the federal Health Resources and Services Administration (HRSA) established a pool of money to reimburse labs for free COVID-19 tests. That pool recently dried up and Congress has not approved more funding.
The U.S. Department of Justice may investigate the uninsured aspect of claims—specifically, whether there were attempts by laboratory staff members to verify whether a patient truly was not covered by health insurance, explained Karen Lovitch, JD, Chair of the Health Law and Healthcare Enforcement Defense Practice at law firm Mintz in Washington.
These issues bring up False Claims Act risks, especially if a clinical laboratory audits its own COVID-19 test claims. “If labs go back retroactively and determine a claim was paid that shouldn’t have been paid, those labs must absolutely be prepared to return that money,” Lovitch warned.
Clinical Laboratories Need a Business Plan for Post-COVID-19 Testing
Related to HRSA payments ending for COVID-19 testing of uninsured payments, clinical laboratories should be wary about outright ending such testing without a documented business plan demonstrating the rationale for doing so, Johnson noted. That advice is relevant for labs and pathology groups that received financial assistance from HRSA’s Provider Relief Fund during the pandemic.
Some have interpreted information about the fund to mean providers are obligated to treat uninsured patients, Johnson added.
“If I stop accepting uninsured patients for COVID testing, am I in violation of the Provider Relief Fund?” she asked. A clearly documented reason for doing so, such as a need to keep the business afloat through paid testing, would be a first step for concerned medical laboratories to take, she added.
Another point for labs to ponder: In March, the federal government named Kevin Chambers, JD—who is currently Associate Deputy Attorney General at the DOJ—as the first Director of COVID-19 Fraud Enforcement.
That appointment emphasizes the government’s commitment to undercovering SARS-CoV-2 wrongdoing, said attorney David Gee, JD, a Partner at law firm Davis Wright Tremaine in Seattle. Gee rounded out the panel at the Executive War College.
“I guarantee Chambers’ bosses want him to demonstrate the government is serious about COVID-19 fraud,” Gee commented.
EKRA Becomes New Tool against COVID-19 Fraud
Finally, as Dark Daily previously reported, the Eliminating Kickbacks in Recovery Act of 2018 (EKRA) is sometimes being used to prosecute cases of alleged COVID-19 testing fraud.
EKRA has generally been associated with rules against paying clinical laboratory sales reps a commission based on testing volumes they generate. However, Johnson predicted more EKRA cases will be filed related to alleged kickbacks paid in return for referrals for COVID-19 testing.
“Prosecutors seem willing to go after these cases aggressively,” she added.
And in The Dark Report’s upcoming Regulatory Update, “Dept. of Justice: EKRA Governs Lab Sales and Marketing Commissions,” Dark Daily’s sister publication covers how a recent ruling by a federal judge may weaken EKRA and “immunize conduct that drives up medical costs.”
Subscribers to The Dark Report will want to stay informed on critical changes taking place that affect how EKRA operates.
High court decision in 2012 altered patent law and effectively blocked protections for certain clinical laboratory diagnostic tests and procedures
Clinical laboratory leaders and pathologists will be interested to learn that a US Supreme Court (SCOTUS) decision from 2012 may be partly to blame for the shortage of at-home COVID-19 rapid antigen tests while the SARS-CoV-2 Omicron variant surged this past winter.
During that time, consumer demand for all COVID-19 at-home tests quickly depleted the already dwindling supply. However, the 2012 SCOTUS ruling in Mayo Collaborative Services v. Prometheus—which rewrote patent law in the biotech industry—effectively blocked patent protections for many medical laboratory diagnostic tests and procedures, wrote Paul R. Michel in a column he penned for STAT.
Michel served on the United States Court of Appeals for the Federal Circuit from 1988 to his retirement in 2010, and formerly was its chief judge from 2004 to 2010.
Shortage of COVID-19 Home Tests Due to ‘Tsunami of Demand’
The diagnostic test shortage that continued throughout the second year of the pandemic has been blamed on a “tsunami of demand,” as vaccine and testing mandates went into effect, according to CNBC. Other causes of the shortages were linked to shortages of raw materials and the US Food and Drug Administration’s slow review process, The Wall Street Journal reported.
However, as Michel noted in STAT, Mayo v. Prometheus “was a legal bombshell that upended the prior law on patent eligibility. And it has had disastrous real-world consequences for Americans.”
San Diego-based Prometheus Laboratories had developed a diagnostic test that measured how well patients metabolized medicines to treat autoimmune diseases. When Mayo Collective Services, which does business as Mayo Clinic Laboratories, developed its own test based on the Prometheus design, Prometheus sued for patent infringement. But it lost when the case reached the Supreme Court.
Michel points out that developing new clinical laboratory diagnostic tests and methods is “slow and expensive” work that becomes financially unsustainable for biotech companies when patent protections are removed.
In the “wake of the Mayo decision,” he wrote, many small biotech companies that had been focused on developing new diagnostics went out of business. Simultaneously, some major research centers, such as the Cleveland Clinic, ended programs aimed at discovering new diagnostic methods.
Financial Repercussions of the SCOTUS Ruling
“In essence, in the four years following Mayo, investment in disease diagnostic technologies was nearly $9.3 billion dollars lower than it would have been absent Mayo,” wrote A. Sasha Hoyt, in her analysis of financial repercussions caused by the loss of venture capital investment in new medical laboratory diagnostics. Hoyt is an incoming associate and judicial extern at Finnegan, Henderson, Farabow, Garrett and Dunner, LLP in Washington DC.
“However,” she added, “it is important to note that the yearly investment totals for disease diagnostic technologies have generally increased in the years following Mayo—but it has increased at a lower rate compared to all other industries.”
Shahrokh Falati, PhD, JD, director of the Patent Law Clinic at New York Law School, maintains that the Supreme Court-created exceptions to existing patent law have damaged America’s standing as a leader in new technology development and commercialization.
“The US Supreme Court effectively redefined the scope of patent eligible subject matter when it decided Mayo. This decision focused on medical diagnostic technology and has had a profound effect on the biotechnology and personalized medicine industries in the United States …,” he wrote in the North Carolina Journal of Law and Technology.
“[The Supreme Court’s ruling] has caused havoc in the biopharmaceutical industry by not only making it a near impossibility to obtain a patent in certain fields, but also by vastly increasing the number of medical diagnostic patents being invalidated based on Section 101 of Title 35 of the US Code,” said Shahrokh Falati, PhD, JD (above), director of the Patent Law Clinic at New York Law School, in an article he wrote for the North Carolina Journal of Law and Technology. Funding for clinical laboratory diagnostics development also has curtailed since the SCOTUS ruling. (Photo copyright: Albany Law School.)
Precision Medicine at Risk without Intellectual Property Protection
Elizabeth O’Day, PhD, CEO and founder of Olaris, Inc., a precision medicine company, has advocated for reform of Section 101. In an Olaris blog post, she argues that reform should provide intellectual property protection for therapeutic companies that develop biomarkers and algorithms used in precision medicine.
“We have the omic technologies (genomic, proteomic, metabolomic, etc.) and analytical tools needed to uncover biomarkers that could dramatically enhance our ability to detect and treat disease,” O’Day wrote. “Let’s reform Section 101 so that these breakthrough products have the opportunity to reach the people that need them.”
In, “CMS Cuts BRCA Price by 49% in Response to Competition,” Dark Daily’s sister publication, The Dark Report, highlighted the negative consequences the Mayo decision had on the clinical laboratory diagnostic testing industry.
“It is past time that Congress act to address this issue,” they wrote. “To assist us as we consider what legislative action should be taken to reform our eligibility laws, we ask that you publish a request for information on the current state of patent eligibility jurisprudence in the United States, evaluate the responses, and provide us with a detailed summary of your findings.” That letter went to Hirshfeld on March 5, 2021, with a request for findings no later than March 5, 2022.
For now, patent reform appears to be locked in uncertainty, which means SCOTUS’ decision that altered patent law affecting the biotech industry may continue to hamper development of new diagnostic tests as well as the current supply of at-home COVID-19 tests. Clinical laboratory leaders involved with diagnostic test developers will want to closely monitor for any changes to the Supreme Court’s ruling.
Though response was limited in Dark Daily’s poll, the message from respondents was overwhelmingly negative on LDT regulation by the FDA
Most respondents to a recent industry survey said that should Food and Drug Administration (FDA) approval be required in the future for laboratory developed tests (LDTs), innovation will suffer.
In the survey, which was conducted by Dark Daily, 91% of respondents said FDA pre-market approval of LDTs would decrease clinical laboratories’ ability to bring innovative tests to market. (See Figure 1.) The other 9% felt it would have no effect on innovation. Zero of the respondents said FDA involvement would increase innovative tests.
Figure 1: “How might a requirement of FDA pre-market approval impact the ability of your lab (or a lab you work for) to bring innovative tests to market?“
“Development of LDT tests has been the mission of most of the labs, and it meets the need for patient care,” noted one respondent in the survey. “Moving LDTs under FDA will create more obstacles for labs to offer the tests.”
To be fair, the survey had limited responses—34 in total. The poll went out to thousands of Dark Daily readers. We found that response rate surprising given how many labs will be affected if the VALID Act becomes law.
The VALID Act is a bipartisan bill that proposes FDA oversight of laboratory developed tests. The bill continues to make its way through the U.S. Senate and the House of Representatives.
A counterproposal called the Verified Innovative Testing in American Laboratories Act (VITAL Act) is also before Congress but has less momentum behind it. The VITAL Act seeks to keep LDTs under CLIA while also calling for reforms to account for modern lab tests.
Looking at survey results, 80% “strongly disagreed” or “disagreed” that new LDT requirements, such as those found in the VALID Act, are needed. (See Figure 2.)
Figure 2: “FDA pre-market approval of LDTs should be required, as proposed in the VALID Act.”
By comparison, 65% “strongly agreed” or “agreed” with modernizing CLIA requirements for LDTs, as called for in the VITAL Act.
Those numbers shifted somewhat depending on the lab setting of the respondent. For example, just looking at commercial labs, opposition to the VALID Act remained similar, but support for modernizing CLIA jumped up to 88%. When looking at just hospitals, independent labs, and academic labs, numbers for both topics remained consistent.
When filtering the answers, the number of lab employees in a setting had little effect on survey results.
Political Battle Continues Over Laboratory Developed Tests
Clinical laboratory industry groups and others have been amassing to oppose or support the VALID Act. For example, the Advanced Medical Technology Association and The Pew Charitable Trusts are behind the bill.
However, the American Association for Clinical Chemistry, Association for Molecular Pathology, and new Coalition for Innovative Laboratory Testing are against the VALID Act.
Like Holmes, Balwani faces 12 counts of fraud and conspiracy to commit wire fraud for allegedly misleading investors, patients, and others about blood-testing startup’s technology
Clinical laboratory managers and pathologists are buckling up as the next installment of the Theranos story gets underway, this time for the criminal fraud trial of ex-Theranos President and COO Ramesh “Sunny” Balwani.
In one text to Holmes, Balwani wrote, “I am responsible for everything at Theranos,” NBC Bay Area reported.
Partners in Everything, including Crime, Prosecutors Allege
According to the Wall Street Journal (WSJ), prosecutors are following the Holmes trial playbook. They focused their opening arguments on the personal and working relationships between the pair, tying Balwani to Holmes’ crimes at the Silicon Valley blood-testing startup.
As second in command at Theranos, Balwani helped run the company from 2009 to 2016. He also invested $5 million in Theranos stock, while also underwriting a $13 million corporate loan.
“They were partners in everything, including their crimes,” Assistant US Attorney Robert Leach told jurors, the Mercury News reported. “The defendant and Holmes knew the rosy falsehoods that they were telling investors were contrary to the reality within Theranos.”
Leach maintained that Balwani was responsible for the phony financial projections Theranos gave investors in 2015 predicting $990 million in revenue when the company had less than $2 million in sales.
Former Theranos President and COO Ramesh “Sunny” Balwani (above) is seen arriving at the federal court in San Jose, California, for the start of his federal fraud trial. Clinical laboratory leaders and pathologists who followed the trial of ex-Theranos founder and CEO Elizabeth Holmes will no doubt be interested in what can be learned from this trail as well. (Photo copyright: Jim Wilson/The New York Times.)
“This is a case about fraud. About lying and cheating to obtain money and property,” Leach added. Balwani “did this to get money from investors, and he did this to get money and business from paying patients who were counting on Theranos to deliver accurate and reliable blood tests so that they could make important medical decisions,” the WSJ reported.
Defense attorneys downplayed Balwani’s decision-making role within Theranos, pointing out that he did not join the start-up until six years after Holmes founded the company with the goal of revolutionizing blood testing by developing a device capable of performing blood tests using a finger-prick of blood.
“Sunny Balwani did not start Theranos. He did not control Theranos. Elizabeth Holmes, not Sunny, founded Theranos and built Theranos,” defense attorney Stephen Cazares, JD of San Francisco-based Orrick, said in his opening argument, the WSJ reported.
The trial was expected to begin in January but was delayed by the unexpected length of the Holmes trial. It was then pushed out to March when COVID-19 Omicron cases spiked in California during the winter.
Balwani’s trial is being held in the same San Jose courthouse where Holmes was convicted. Balwani, 56, is facing identical charges as Holmes, which include two counts of conspiracy to commit wire fraud and 10 counts of wire fraud. He has pleaded not guilty.
Holmes, who is currently free on a $500,000 bond, will be sentenced on Sept. 26, Dark Daily reported in January.
Judge Excludes Jurors for Watching Hulu’s ‘The Dropout’
During jury selection in March, some jurors acknowledged they were familiar with the case, causing delays in impaneling the 12-member jury and six alternates. US District Court Judge Edward Davila excluded two potential jurors because they had watched “The Dropout,” Hulu’s miniseries about Holmes and Theranos. Multiple other jurors were dropped because they had followed the Holmes trial in the news, Law360 reported.
When testimony began, prosecutors had a familiar name take the stand—whistleblower and former Theranos lab tech Erika Cheung, who provided key testimony in the Holmes trial. During her testimony, Cheung said she revealed to authorities what she saw at Theranos because “Theranos had gone to extreme lengths to [cover up] what was happening in the lab,” KRON4 in San Francisco reported.
“It was important to report the truth,” she added. “I felt that despite the risk—and I knew there could be consequences—people really need to see the truth of what was happening behind closed doors.”
Nevada State Public Health Laboratory (NSPHL) Director Mark Pandori, PhD, who served as Theranos’ lab director from December 2013 to May 2014, was the prosecution’s second witness. Pandori testified that receiving accurate results for some tests run through Theranos’ Edison blood testing machine was like “flipping a coin.”
“When you are working in a place like Theranos, you’re developing something new. And you want it to work. Quality control remained a problem for the duration of my time at the company. There was never a solution to poor performance,” Pandori testified, according to KRON4.
While the defense team has downplayed Balwani’s decision-making role—calling him a “shareholder”—Aron Solomon, JD, a legal analyst with Esquire Digital, maintains they may have a hard time convincing the jury that Balwani wasn’t a key player.
“There’s no way the defense is going to be successful in painting Sunny Balwani in the light simply as a shareholder,” he told NBC Bay Area. “We know that, literally, Sunny Balwani was intimately involved with Theranos, because he was intimately involved with Elizabeth Holmes,” Solomon added.
Little Media Buzz for Balwani, Unlike Holmes Trial
While the Holmes trial hogged the media spotlight and drew daily onlookers outside the courthouse, reporters covering Balwani’s court appearances describe a much different atmosphere.
“The sparse crowd and quiet atmosphere at US District Court in San Jose, Calif., felt nothing like the circus frenzy that engulfed the same sidewalk months earlier when his alleged co-conspirator and former girlfriend, Elizabeth Holmes, stood trial on the same charges,” The New York Times noted in its coverage of the Balwani trial.
The Balwani trial may not reach the same headline-producing fervor as the Holmes legal battle. However, clinical laboratory directors and pathologists who follow these proceedings will no doubt come away with important insights into how Theranos went so terribly wrong and how lab directors must act under the Clinical Laboratory Improvement Amendments of 1988 (CLIA).
Survey respondents can give their opinions about the proposed VALID and VITAL acts
Two bills are pending in Congress, and each is written to change the current regulatory scheme for laboratory-developed tests (LDTs) and in vitro clinical tests (IVCTs). The bills go by the acronyms of the VALID Act and VITAL Act. Many clinical laboratories offering LDTs today may be unaware of the details within each bill as currently written.
That existing regulatory arrangement will change if one of the two pending bills in Congress were to pass and be signed into law. That proposal is known as the Verifying Accurate Leading-Edge IVCT Development Act, or VALID Act. It is a bipartisan, 245-page bill that proposes FDA oversight of LDTs and is making its way through both the Senate and the House of Representatives.
A smaller, seven-page counterproposal is also before the Senate called the Verified Innovative Testing in American Laboratories Act, or VITAL Act. The VITAL Act would keep LDTs under CLIA but mandate updates to CLIA’s rules to account for modern tests.
Readers: Are you in favor of more or less regulation of LDTs? Take this quick survey and let us know what you think. Dark Daily wants to know your thoughts about LDT oversight. Click here to take our six-question survey. Results of this survey will be reported in a coming Dark Daily e-briefing.
Alert pathologists and clinical laboratory managers know that behind every bill proposed in Congress is a party with a vested interest that brought the issue to a senator or representative. Once enacted into law, a new bill changes the status quo, generally to the benefit of the private interests that requested that bill. This is true of both the VALID Act and the VITAL Act.
The table at the bottom of this briefing compares the provisions of each act and is current as of March 28.
Who Opposes VALID Act?
The VALID Act is garnering more attention than the VITAL Act.
On March 22, the American Association for Clinical Chemistry (AACC) sent out an email message urging its members to oppose the VALID Act.
“Let your legislators know that that if VALID becomes law, your institution and other hospitals and small commercial laboratories could be forced to stop providing LDTs,” wrote Patricia Jones, PhD, DABCC, FACB, Chair of AACC’s Policy and External Affairs Core Committee. The AACC has long criticized the VALID Act..
On the other side of the debate, Philadelphia-based The Pew Charitable Trusts, a nonprofit that in part analyzes publics policy, has come out in support of the VALID Act’s proposed requirements.
Two bills are pending in Congress about the future of LDT regulation.
“Although the [current] LDT regulatory process offers labs significant flexibility and enables a more rapid response to public health needs when no FDA-cleared or -approved test exists, the relative lack of oversight for LDTs puts the health of patients at risk,” Pew wrote in an October 2021 report on LDTs.
The Advanced Medical Technology Association also supports the VALID Act, as do many manufacturers of in vitro test kits and large commercial labs. Proponents also believe FDA regulation is needed for IVCTs because they are similar to medical devices and bring with them patient safety concerns.
The American Clinical Laboratory Association and the National Independent Laboratory Association (NILA) have not taken formal positions on the VALID Act.
Congress Could Roll VALID Act into MDUFA Vote to Win Passage
There may be an effort to attach the VALID Act to the authorization vote for the Medical Device User Fee Agreement V (MDUFA), according to a February health legislation alert from law firm Akin Gump Strauss Hauer & Feld based in Washington.
MDUFA funding provides resources to the FDA’s medical device review program. Congress is set to receive final MDUFA V recommendations in April.
Nineteen healthcare and lab industry groups, including the American Medical Association, AACC, AMP, and NILA, sent a joint letter to four Congress members on Feb. 23 requesting they deliberate the VALID Act separately and not as part of MDUFA.
Again, please complete this survey and tell us what you think about FDA regulation of LDTs, as defined in the VALID Act, compared to continuing LDT oversight via a modernized CLIA in the VITAL Act.
—Scott Wallask
Comparison of VALID Act and VITAL Act
VALID Act
VITAL Act
Full act name
Verifying Accurate Leading-Edge IVCT Development Act
Verified Innovative Testing in American Laboratories Act
Bill numbers
House Bill H.R.4128 Senate Bill S.2209
Senate Bill S.1666
Sponsors
Sen. Michael Bennet (D-CO) , Sen. Mike Braun (R-IN), Rep. Larry Bucshon, MD (R-IN), Sen. Richard Burr (R-NC), and Rep. Diana DeGette (D-CO)
Sen. Rand Paul (R-KY)
Provisions
Developers shall apply for premarket approval of IVCTs if there is insufficient evidence of analytical validity or clinical validity or if it’s reasonably possible an IVCT will cause serious adverse health effects.
Applications shall include a summary of test data and scientific evidence to support analytical and clinical validity of the test.
Through a technology certification, developers can submit an IVCT to the FDA for review, and if granted, the certification allows them to develop similar tests without going back for review each time.
The FDA must establish a program for rapid review of breakthrough IVCTs that provide effective treatment of life-threatening diseases
The federal government should work to ensure that regulatory oversight of laboratory tests does not limit patient access, impede innovation, or limit a test’s sustainability as a result of being unduly burdensome or beyond the fiscal capacity of the laboratory to reasonably validate and perform.
No aspects of LTDs shall be regulated under the FDA.
No later than 180 days after enactment of the bill, the secretary of health and human services shall report to the Senate’s Committee on Health, Education, Labor, and Pensions about recommendations to update clinical lab regulations and provide an assessment of LDT use during the 2020 pandemic response.
Exemptions
IVCTs being marketed before the VALID Act goes into effect
Low-risk tests
IVCTs that are granted emergency use
No new exemptions
Review timelines
The FDA shall make a decision no later than 90 days after an application is submitted.
No new requirements noted.
Sources: VALID Act and VITAL Act bills. Information is current as of March 28, 2022.
Some lab experts advise that clinical laboratories and pathology practices should also plan on delayed payments for COVID-19 testing for uninsured patients
Regardless of whether infection rates for SARS-CoV-2 continue to wane or perhaps surge again, business changes are coming for staff at clinical laboratories and anatomic pathology groups. Forward-thinking lab administrators will want to evaluate post-pandemic strategies for labs to stay ahead of potential legal issues and keep their organizations financially healthy.
The public health emergency stemming from COVID-19 is set to expire April 16. That deadline could be extended. However, the U.S. Department of Health and Human Services (HHS) is under pressure from some circles to end the public health emergency, which would affect some health insurance provisions and potentially rein in relaxed rules for telemedicine.
“If you’re a laboratory, now is the time you need to start buttoning up [the above] concerns. You don’t want to be at the mercy of a quick cutoff,” said Jon Harol, president of Lighthouse Lab Services in Charlotte, N.C. The company hosted a webinar last week called “Preparing Your Clinical Lab or Pathology Practice for Post-COVID Success.”
Pathologists and clinical laboratory leaders should consider post-pandemic strategies for labs in the following areas:
COVID-19 testing for uninsured patients;
Preparations for government audits of SARS-CoV-2 tests performed during the pandemic; and,
Repurposing PCR equipment used for COVID-19 testing into other areas of clinical diagnostics.
These strategies will be explored further during the Executive War College Conference on Laboratory and Pathology Management, which takes place April 27-29 in New Orleans. Leaders of innovative clinical laboratories will share how their lab teams are helping to improve patient outcomes while encouraging health insurers to pay them for this value.
COVID-19 Testing for Uninsured Patients
On March 22, the U.S. Health Resources and Services Administration (HRSA) announced that its COVID-19 Uninsured Program stopped accepting claims for testing and treatment due to lack of sufficient funds. This development affects 8.6% of the nation’s population that doesn’t have medical insurance, according to the U.S. Census Bureau.
For clinical laboratories, the announcement could lead to delayed payments for COVID-19 tests performed on uninsured patients, said Mick Raich, President of Revenue Cycle Management Consulting at Lighthouse Lab Services, who also spoke during the webinar. Medical laboratories and pathology groups should anticipate reimbursement gaps and how that might affect revenues collected from payers.
“The patient relationship is going to be the most important thing. That puts labs at the head of the table,” says Jon Harol, president at Lighthouse Lab Services.
“Labs are going to do the testing and are going to bill for it, and there will probably be some retroactive payment,” Raich explained.
With midterm elections happening this year, don’t be surprised to see HRSA funding reinstated for COVID-19 testing for uninsured people, commented Robert Michel, Editor-in-Chief of The Dark Report and Founder of the Executive War College.
“We’ll have to wait and see. After all, it is an election year, so the representatives and senators in Congress would like to be re-elected,” added Michel, who also presented during the webinar.
“It is reasonable to assume that members of Congress don’t want to disappoint the clinical laboratories that stepped up to the table in the earliest days of the pandemic and have done huge volumes of COVID-19 testing.”
Preparations for Government Audits of Pandemic Testing
Another post-pandemic strategy for labs: Prepare for audits of COVID-19 test claims from the HHS Office of Inspector General (OIG).
Ahead of any OIG action, labs should consider performing self-audits to determine whether they complied with HRSA requirements. “The best thing you can do is go back and look at the first two months of your billing. Do an audit to ask: Did we bill anybody with insurance by accident?” Raich suggested. “Take a hundred of those claims and audit them.”
If a medical lab finds problems with uninsured COVID-19 billing, it may be prudent to self-report those discrepancies to the government rather than ignore them. “That looks a lot better to the OIG than tucking the stuff in a desk drawer and waiting for someone to knock on your door,” Raich noted.
Harol predicted the OIG will also review another aspect of how COVID-19 test claims were coded. Auditors will want to see if PCR test claims coded for higher reimbursement if the results were reported within 48 hours actually met that requirement.
“I expect that we’ll see auditing of the coding that was used. Under COVID, you got paid more if you were running tests on a high-throughput platform. It was almost an honor system there. I don’t know that I’ve seen much outside verification of that,” Harol explained. “I’m curious to see if there will be OIG pushback and more documentation required to prove the code was correct.”
Repurposing PCR Equipment Used for COVID-19 Testing
When the pandemic finally winds down, there will be less demand for COVID-19 testing, which could leave PCR equipment collecting dust unless labs make plans now on how to repurpose those systems.
“If you have a PCR instrument that can be revalidated, you want to start thinking about putting in a panel that tests for UTIs, sexually transmitted diseases, respiratory diseases, or women’s health,” Harol explained. “Those types of tests can be done on the equipment that a lot of COVID testing was being performed on, and it can be performed by the same scientists with that same skillset. That’s the low-hanging fruit.”
The next step is more complicated: Moving into the future, clinical laboratories need to determine what menu of tests will meet the needs of patients who previously submitted COVID-19 specimens for testing.
“The patient relationship is going to be the most important thing. That puts labs at the head of the table,” Harol continued. “How can you market your laboratory services directly to patients who might be interested?”
Watch for Developments in Telemedicine
Any post-pandemic strategies for labs will be influenced by how state governments and federal health officials regulate telemedicine in the future.
Pathologists and clinical laboratory directors should keep their eyes on whether telemedicine rules revert to more onerous requirements once the public health emergency lifts. Before the pandemic, rules for physicians licensed in one state generally limited when they could practice over state lines through telemedicine.
“In response to the pandemic, both the federal government and the states relaxed many prohibitions on the practice of medicine across state lines. This is significant for pathologists,” Michel said. “There is speculation that once government officials let this genie out of the bottle regulatory-wise, they won’t be able to put it back in. Thus, there are many predictions that officials at the state and federal level will be under pressure to retain the newer telemedicine rules after the pandemic has ended.”
Telemedicine proved to be a big benefit for Medicare patients during the pandemic. A report from HHS in December indicated telehealth visits in 2020 for Medicare beneficiaries increased 63 times, from approximately 840,000 in 2019 to 52.7 million. That fact should catch the attention of clinical lab managers and pathologists who want to keep their labs at the front edge of clinical services. For Medicare beneficiaries who see their physicians virtually, labs need the capability to access that patient so as to collect the samples needed to perform those tests ordered by the physician during the telehealth consultation.
