Aug 2, 2017 | Instruments & Equipment, Laboratory Instruments & Laboratory Equipment, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Laboratory Testing, Management & Operations
Agreements to open PSCs in the nation’s largest retail grocery and pharmacy chain stores shows a willingness by clinical laboratories to attract customers through convenience
Greater use of retail stores as the location for patient services centers (PSCs) may be an important new trend for the clinical laboratory industry. That’s because, historically, medical laboratories placed most of their patient service centers in hospital campuses or near medical office buildings.
However, in recent months, both of the nation’s billion-dollar lab companies signed deals with national retailers to put patient service centers in their stores. Dark Daily believes that the motivation for a lab company to put a PSC into a grocery store or retail pharmacy is to make it easier and more convenient for a patient to get their specimen collected at a location that is closer to their home or office. In other words, it is faster for the patient to get to their nearest grocery store for a blood draw than to travel to the hospital campus in their community.
Various news reports indicate that Quest Diagnostics (Quest) may be more active than Laboratory Corporation of America (LabCorp) in opening PSCs in grocery stores and retail pharmacies. Over the last four months, Quest has announced plans to open patient services centers with several retailers, particularly in the states of Texas and Florida. Similarly, in the past four weeks, LabCorp disclosed an agreement with Walgreens Boots Alliance (Walgreens).
Ground zero for this current interest in putting PSCs into retail stories is Phoenix, Arizona. In 2014, to serve its direct-to-consumer lab testing business model, Theranos had PSCs in about 40 Walgreen’s pharmacies. Pathologists and clinical laboratories will recall that in November, 2015, Sonora Quest Laboratories of Phoenix opened a patient service center (PSC) in a Scottsdale, Ariz., supermarket owned by Safeway. It was the first PSC Sonora Quest had opened in collaboration with a grocery store chain, but it was not the last. Less than a year later, Sonora Quest and Safeway expanded their operations by opening additional PSCs in stores throughout the Grand Canyon State.
At the same time Sonora Quest was stepping into the retail blood-drawing business, Theranos of Palo Alto, Calif., was exiting it after opening 40 PSCs in Walgreens pharmacies, most of them in Arizona. However, before leaving the lab-testing business altogether, the embattled company put a lot of effort into educating consumers about the benefits of purchasing lab tests without a physician’s order. Theranos had even supported a bill (HB2645) the Arizona State Legislature passed that allowed patients to order tests without a physician’s requisition.
Now, in 2017, Quest Diagnostics (NYSE:DGX) appears interested in following a similar strategy as Theranos and Sonora Quest by developing Quest-branded PSCs in retail chain stores. On its website, Quest states that in the past several years it has opened 106 PSCs in Albertsons, Randalls, Safeway, Tom Thumb, and Vons retail stores in nine states.
Quest Moves to Open PSCs Across America
Quest has PSCs in the following states:
- California (12 stores);
- Colorado (27);
- Delaware (1);
- Maryland (9);
- Montana (4);
- Oregon (10);
- Texas (26);
- Virginia (7); and
- Washington State (10).
This Quest patient service center operates within a Safeway store location. (Photo copyright: Quest Diagnostics.)
In June 2017, Quest announced it would open 10 additional PSCs in Tom Thumb retail stores in North Texas by the end of the month. Thom Thumb is a division of Albertsons, a food and drug retailer with stores nationwide. In the same announcement, Quest said it plans to open PSCs in 200 Albertson’s-owned stores nationwide by the end of the year.
Give Blood Then Shop
Also in June, Quest and Walmart (NYSE:WMT) announced a deal in which the two companies would open co-branded PSCs in 15 Walmart stores in Florida and Texas by the end of 2017.
In these locations, Quest encourages patients to have their blood drawn and then shop. Such locations can accommodate collecting specimens for routine blood work, such as total cholesterol and white blood cell count, as well as complex gene-based and molecular testing. Even patients with such chronic conditions as cancer, diabetes, and hepatitis, are encouraged to use these PSCs, the lab-testing company stated in the announcement.
Not to be outdone, LabCorp also announced a deal with Walgreens in June. In Forbes, Bruce Japsen reported that Walgreens (NASDAQ:WBA) announced it would collaborate with LabCorp (NYSE:LH) to develop and operate PSCs in Walgreens drugstores in Colorado, Illinois, and North Carolina.
The deal is the first for Walgreens since its troubled relationship with Theranos ended last year. Walgreens’ collaboration with LabCorp will initially begin this summer with five patient service centers in Denver and one in Morrisville, N.C. A seventh location in Deerfield, Ill., will open by the end of the year. Financial terms of the partnership were not disclosed.
Lessons Clinical Laboratories Learned with PSCs in Retail Stores
For Quest, the speed with which it is opening new PSCs is significant, because it seems to have taken lessons that Theranos and Sonora Quest learned earlier in Ariz. and applied them to markets nationwide. It’s worth noting that Safeway and Albertsons were already two of the largest retail grocery chains in the nation before they merged in 2015.
So, while Sonora Quest was working with Safeway, its parent company, Quest, was working with Albertsons.
One other point that is significant about Quest’s efforts is that not many other clinical laboratories have a presence in retail stores. It’s unknown just how much specimen volume these retail operations generate for Quest, one of the largest clinical lab companies in America. And, it is unknown if these PSCs in retail settings are breaking even or making a profit.
One result, however, is clear. That Quest is being so aggressive in opening PSCs testifies to the company’s level of interest in serving consumers directly. In other words, these PSCs are not primarily a direct-to-consumer play, but are aimed at building market share by adding regular lab testing done for patients. In this way, the direct-to-consumer business that Quest generates is a bonus.
The deals by Quest and LabCorp also imply that both clinical laboratory companies are willing to bet on the fact that consumers may prefer the convenience of using PSCs located in retail stores they currently frequent, rather than going to patient service centers in hospitals and sitting in a waiting rooms.
—Joseph Burns
Related Information:
Quest Diagnostics and Walmart Team Up to Expand Access to Healthcare Services
Walgreens Partners with LabCorp in New Diagnostic Testing Deal
Walgreens to Roll Out Urine, Blood Testing at Some Stores
Walgreens Partners with LabCorp on In-Store Lab Testing Services
Walmart and Quest Team Up for Lab Services
Quest’s Lab Services in New, Convenient Locations
You Can Now Get Lab Tests Done at Safeway Stores – from Theranos’ Rival
Jul 28, 2017 | Digital Pathology, Instruments & Equipment, Laboratory Instruments & Laboratory Equipment, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology
Project should provide treasure-trove of molecular information on human protein and lead to development of new biomarkers for use in clinical laboratory tests and personalized medicine
Human proteins provide clinical laboratories and anatomic pathology groups with a rich source of biomarkers used in medical tests and personalized medicine. Pathologists, therefore, should take note of a major milestone achieved by researchers from the Technical University of Munich (TUM) that moves science closer to developing a way to understand the complete human proteome.
Scientists participating in the ProteomeTools project have announced the synthesis of a library of more than 330,000 peptides representing essentially all canonical proteins of the human proteome.
Translating Human Proteome into Molecular and Digital Tools
The ProteomeTools project is “a joint effort of TUM, JPT Peptide Technologies, SAP SE, and Thermo Fisher Scientific … dedicated to translating the human proteome into molecular and digital tools for drug discovery, personalized medicine, and life science research.” Over the course of the project, 1.4 million synthetic peptides covering essentially all human gene products will be synthesized and analyzed using multimodal liquid chromatography-tandem mass spectrometry (LC-MS/MS).
ProteomeTools published their first paper, “Building ProteomeTools Based on a Complete Synthetic Human Proteome,” which detailed their work in Nature Methods.
“ProteomeTools was started as a collaborative effort bringing together academic and industrial partners to make important contributions to the field of proteomics. It is gratifying to see that this work is now producing a wealth of significant results,” stated TUM researcher Bernhard Kuster, PhD, one of the leaders of the effort and senior author on the Nature Methods paper, in a TUM news release.
Thousands of New Biomarkers for Clinical Laboratories, and More!
Kuster discussed the significance of the consortium’s work in an article published in Genome Web, which described ProteomeTools as “a resource that provides the proteomics community with a set of established standards against which it can compare experimental data.”
“In proteomics today, we are doing everything by inference,” Kuster stated to Genome Web. “We have a tandem mass spectrum and we use a computer algorithm to match it to a peptide sequence that [is generated] in silico to simulate what their spectrum might look like without us actually knowing what it looks like. That is a very fundamental problem.”
Bernhard Kuster, PhD (above center), of the Technical University of Munich (TUM), led a team of researchers from the ProteomeTools project who completed a tandem mass spectrometry analysis of more than 330,000 synthetic tryptic peptides representing essentially all of the canonical human gene products. The resource eventually will cover all one million peptides. (Photo copyright: Andreas Heddergott/TUM.)
In the Genome Web article, Kuster provides an example of how researchers could use the information developed by ProteomeTools, noting it could be useful for confirming peptide identification in borderline cases. “Because the spectra for these synthetic peptides are available to everyone, you could look up a protein or peptide ID that you find exciting, but where the [experimental] data might not totally convince you as to whether it is true or not,” he explained.
Kuster also states that he believes the resource has the potential to allow “the field to move away from conventional database searching methods toward a spectral matching approach.”
The TUM news release notes that the ProteomeTools project “will generate a further one million peptides and corresponding spectra with a focus on splice variants, cancer mutations, and post-translational modifications, such as phosphorylation, acetylation, and ubiquitinylation.” The end result could be a treasure-trove of molecular information on the human proteome and development of thousands of new biomarkers for clinical use for therapeutic drugs, and more.
“Representing the human proteome by tandem mass spectra of synthetic peptides alleviates some of the current issues with protein identification and quantification. The libraries of peptides and spectra now allow us to develop new and improve upon existing hardware, software, workflows, and reagents for proteomics. Making all the data available to the public provides a wonderful opportunity to exploit this resource beyond what a single laboratory can do. We are now reaching out to the community to suggest interesting sets of peptides to make and measure as well as to create LC-MS/MS data on platforms not available to the ProteomeTools consortium,” Kuster stated in the TUM news release.
All data from the ProteomeTools project is available at the ProteomeXchange Consortium. Pathologists and clinical laboratory professionals working to develop new assays will find it to be a valuable resource.
—Andrea Downing Peck
Related Information:
Researchers Build Complete Synthetic Human Proteome
Building Proteome Tools Based on a Complete Synthetic Human Proteome
Milestone for the Analysis of Human Proteomes
Jul 26, 2017 | Compliance, Legal, and Malpractice, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology
Decline in hospital-acquired conditions (HACs) overall since 2010 attributed to increased attention to safety protocols and practices by hospital staff in cooperation with clinical laboratory services
It’s now been almost nine years since the Medicare Program stopped paying hospitals and other providers for certain hospital-acquired conditions (HACs). Included in this list are hospital-acquired infections (HAIs). The goal is to substantially reduce the number of HACs and HAIs, thus improving patient outcomes, while substantially reducing the healthcare costs associated with these conditions.
So, almost nine years into these programs, has there been progress on these goals? This is a question of key interest to Medical laboratories and pathology groups because they have a front-line role in working with clinicians to diagnose and treat HAIs, while also looking to identify the transmission of HAIs within the hospital.
A recent report by the Agency for Healthcare Research and Quality (AHRQ), a division of the US Department of Health and Human Service (HHS), indicates that there has been progress in the goal of reducing HACs. The AHRQ report noted a 21% decline in HACs between 2010 and 2015. Data collected during that time indicates a reduction of more than 3.1 million HACs and nearly 125,000 patient deaths due to HACs.
In 2015 alone, nearly one million fewer HAC incidents occurred. The reduction saved “approximately $28 billion in healthcare costs,” an outcome which, the AHRQ report notes, is the result of increased attention to safety protocols in hospitals and a “period of concerted effort by hospitals throughout the country to reduce adverse events.”
Clinical Pathologists/Laboratories Play Key Role in HAI Prevention
Though many reported incidents are associated with adverse drug events, HAIs have been significantly reduced in recent years due to focused efforts on infection prevention. The report notes that clinical pathologists have become vital players in infection prevention programs, and that increased coordination between hospital medical laboratories and clinicians played a crucial role in the reduction.
Eileen O’Rourke is an Infection Preventionist at the Lankenau Medical Center in Philadelphia. And she has served as a leader and consultant for hospital-based infection prevention programs in Pennsylvania since 1984. In an article on the Wolters Kluwer Pharmacy OneSource blog, O’Rourke noted that successful infection prevention and control requires development of “a highly visible and administratively supported infection prevention and control program with qualified and trained personnel.” Clinical pathologists are part of that support team, providing surveillance, testing, and interpretation of data essential for identifying epidemiological origins of infection and pathogen distribution. And the vital services that clinical laboratories provide to reduce HAIs center on surveillance, prevention, and control.
The chart above was calculated on US Dollars in 2012. Since then, thanks to contributions by medical laboratories and pathologists in collaboration with hospitals, those costs have decreased significantly. (Image copyright: MLive.com.)
In an article for Lab Testing Matters, John Daly MD, Chief Medical Officer at the Commission on Office Laboratory Accreditation, and former Director of Clinical Laboratories for the Duke University Health System, highlights the importance of surveillance. He states that it is “an essential element of an infection control program” providing “data to identify infected patients and determine the site of infection” as well as “factors that contributed to the infection.” Medical laboratories must, Daly stresses, provide “easy access to high-quality and timely data and give guidance and support on how to use its resources for epidemiologic purposes.”
Daly argues that medical laboratories function as liaisons to clinical services, working to “improve the quality of specimens sent to the laboratory and promoting appropriate use of cultures and other laboratory tests.” The laboratory should, according to Daly, be involved in all aspects of the infection control programs. This ensures:
- Proper specimen collection;
- Accurate and rapid testing; and
- Accurate reporting of laboratory data.
Laboratory Data Provide ‘Early Warning’ for HAI Surveillance Systems
Robert A. Weinstein, MD, wrote in his 1978 article, “The Role of the Microbiology Laboratory in Surveillance and Control of Nosocomial Infections,” that medical laboratories and pathologists are central to prevention and control of HAIs. Laboratory records, Weinstein remarked, serve as important data sources that can identify early spread of infection, thus becoming an “early warning system” for a potential outbreak of infections. The sampling that laboratories perform identifies not only the strain of infection, but the method by which infection is spread, and the best treatment options. Nearly 40 years later his statements ring truer than ever, as anatomic pathology laboratory data continues to reveal patterns of infection faster and more precisely than ever before.
Sarah Mahoney, PhD, is a research scientist at Navitor Pharmaceuticals in Cambridge, Mass. In an article published in the American Journal of Clinical Pathology, she states that in surveilling patterns of infection, pathologists also decipher the source of infection. Mahoney wrote that it is “necessary to identify the causative organism” for surveillance and management control of HAIs. She also noted that pathologists must strive to discriminate between “hospital- and community-acquired infection” in order to provide clinicians with guidance for treatment, and to map “infection transmission within a clinical setting.”
Hospitals Rely on Medical Laboratories and Pathologists to Help Reduce HAIs
The concerted effort to reduce HACs and HAIs was inspired by incentives put forth by the US government. In 2008-2009, the Centers for Medicare and Medicaid Services (CMS) ceased paying for hospital-acquired conditions, including HAIs. Since that time, hospitals have worked to prevent and better manage HAIs. In the years since those incentives went into effect, hospitals have increasingly relied on medical laboratories and pathologists to provide necessary testing to prevent HAIs.
The CDC’s Antimicrobial Stewardship Programs create a further need for lab professionals to be involved in the identification, prevention, and treatment of HAIs. The core elements of the program state that the role of diagnostic laboratory testing—especially rapid diagnostic tests—is imperative in providing the necessary data needed to combat HAIs. The pressure is on for hospitals to reduce HAIs further to save lives and reduce costs. Thus, there is increased pressure on medical laboratories as well.
In an article in the College of American Pathologists’ online journal Cap Today,
Larry Massie, MD, Professor of Pathology at the University of New Mexico, and Chair of Pathology and Laboratory Medicine for the New Mexico VA Health Care System in Albuquerque, states that turn-around time is crucial for HAIs, but that laboratories often have difficulty keeping up with large volumes of samples. Massie suggests the use of new technologies could speed up turnaround time, particular for large healthcare providers.
The fight to reduce HAIs and HACs is showing significant progress, and clinical laboratories, working in tandem with clinicians and prevention programs, are a fundamental part of the success of HAI reduction. Clinical pathologists and laboratories often are the front line in prevention and management of HAIs, and the work they do in identifying infections is essential in the assessment and control of those infections.
— Amanda Warren
Related Information:
National Scorecard on Rates of Hospital-Acquired Conditions 2010 to 2015: Interim Data from National Efforts to Make Health Care Safer
How Hospitals Can Reduce Hospital-Acquired Infections
HAI Data and Statistics
Hospital Acquired Infection: Molecular Study and Infection Control Guidelines
Rapid Sequencing and Characterization of Pathogens in Hospital-Acquired Infections
The Role of the Microbiology Laboratory in Surveillance and Control of Nosocomial Infections
Core Elements of Hospital Antibiotic Stewardship Program
Pressure’s on to Halt Nosocomial Infections
Hospital Acquired Infections
Surveillance of Hospital-acquired Infections: A Model for Settings with Resource Constraints
The Laboratory and Infection Control
Role of the Microbiologist in Infection Control and Hospital Epidemiology
Study Finds Occupying Hospital Bed Previously Used by Patient Receiving Antibiotics Increases Odds of Developing C.diff Infection
Jul 21, 2017 | Instruments & Equipment, Laboratory Instruments & Laboratory Equipment, Laboratory Management and Operations, Laboratory Operations, Laboratory Pathology, Laboratory Testing
Pathologists should note that this agreement is not without controversy as the question over who owns patients’ DNA information sparks warnings from legal experts
Did you ever wonder which lab does all the genetic testing for Ancestry as it offers to help consumers learn more about their family histories? Also, were you ever curious about the actual number of genetic tests that Ancestry has generated? After all, its advertisements for these genetic tests are ubiquitous.
You won’t have to wonder any longer, because Dark Daily has the answers. To the first question, it is Quest Diagnostics, Incorporated (NYSE:DGX)—one of the world’s largest clinical laboratory companies—that does the genetic sequencing on the consumer samples provided to it by Ancestry.
To the second question, the number of individual samples in the Ancestry repository and database is now four million, according to information on its website.
AncestryDNA (Ancestry) and Quest Diagnostics (Quest) now collaborate to help consumers learn about their family histories and unlock secrets in their DNA. Since August of 2016, Quest has performed the genomic testing for home DNA kits ordered through Ancestrydna.com. What impact might this have on medical laboratories that perform DNA testing for health and medical reasons?
DNA Testing Reveals Who We Truly Are
“We are very excited to be partnering with Quest Diagnostics to offer our consumer DNA test to more consumers around the world,” stated Tim Sullivan, President and CEO at Ancestry in a news release that announced the genetic testing agreement between the two companies.
To utilize the AncestryDNA service, consumers must first order a DNA kit online through the Ancestry website. The cost of the kit is $99. This includes instructions, a saliva collection tube, and a pre-paid return mailer.
DNA collection kits like the one shown above let people at home do much of the work normally performed in clinical laboratory settings. Though it’s inexpensive compared to standard DNA testing, there is controversy over privacy and ownership of the DNA information. (Photo copyright: BBC/Getty Images.)
After collecting a saliva sample, the customer sends it in for processing. Once the test is completed, an e-mail notification informs the patient that the results can be viewed on AncestryDNA’s website. Typically, a test is completed within six to eight weeks.
The DNA test uses microarray-based autosomal DNA testing, analyzing as many as 700,000 changes in an individual’s genome. These changes (or variations) are called single-nucleotide polymorphisms, or SNPs for short. They are useful in identifying a person’s true ethnicity and can distinguish possible relatives from among people who have previously taken the AncestryDNA test.
“Our focus is on helping consumers around the world take advantage of the latest technology and science to help them learn more about themselves, their families, and their place in the world,” stated Sullivan in another news release.
Managing One’s Health with DNA Information
As noted earlier, AncestryDNA has collected more than four-million DNA samples. Remarkably, its genetic testing service is currently available in more than 30 countries around the globe, according to Ancestry’s website.
The two companies hope to expand their relationship to include the development of applications to explore valuable medical and health information for consumers.
“People are very interested in their family history, and knowing one’s family health history is very important in helping us manage our health,” noted Stephen Rusckowski, Chairman, President and Chief Executive Officer of Quest Diagnostics.
The actual genetic testing is being performed at Quest Diagnostics’ 200,000 square foot facility located in Marlborough, Mass. Quest Diagnostics was chosen for the collaboration after Ancestry requested proposals from several laboratory organizations.
“Adding a second diagnostic partner is a critical step forward as we work to continue to meet the consumer demand we’re seeing for our DNA tests in the US and markets around the world,” stated Ken Chahine, PhD, JD, Executive Vice President at Ancestry and professor at University of Utah S. J. Quinney College of Law in Salt Lake City, in a press release. “We’ll also now be able to move toward an East-West logistical approach, testing kits closer to where our consumers live and, ideally, reducing the time they need to wait to receive their results.”
Concerns Over Patient Privacy and DNA Ownership
Ancestry’s genetic testing program is not without its critics. There are concerns regarding privacy issues and DNA ownership for consumers who use AncestryDNA. Joel Winston, Esq. is a New York attorney who specializes in consumer protection law and commercial litigation. In an article, Winston claimed that Ancestry’s privacy policy and terms of service gave the company complete ownership and control of submitted DNA.
“There are three significant provisions in the AncestryDNA Privacy Policy and Terms of Service to consider on behalf of yourself and your genetic relatives: (1) the perpetual, royalty-free, world-wide license to use your DNA; (2) the warning that DNA information may be used against “you or a genetic relative”; (3) your waiver of legal rights,” Winston wrote.
He claims that Ancestry customers are relinquishing their genetic privacy when they agree to the terms online. Winston urged consumers to fully read, consider, and understand the terms before agreeing to them.
Ancestry responded to the claims by releasing updated terms and conditions for clarity regarding ownership of DNA and information sharing. The company maintains they do not claim ownership rights to DNA submitted to them for testing, and that they do not share DNA testing results with other entities and organizations without customer permission.
In an interview with BBC Radio 4, a spokesperson for Ancestry stated, “We do not share user data for research unless the user has voluntarily opted-in to that sharing.” Adding, “We always de-identify data before it’s shared with researchers, meaning the data is stripped of any information that could tie it back to its owner.”
Nevertheless, Ancestry also stated they would be removing the “perpetuity clause” in AncestryDNA’s online terms and agreements.
The controversy continues and has sparked much debate and reportage from outlets that follow trends in DNA testing and medical laboratories. One such report by the debunking site Snopes attempts to clarify the issues.
Regardless of the debate over ownership of a person’s DNA, this collaboration between Ancestry and Quest Diagnostics is an example of a company relying on diagnostic industry vendors and clinical laboratories to perform services for its customers. It illustrates the need for clinicians and laboratory professionals to remain current on industry trends in ways that might help their labs to increase profits and provide value-added services to consumers. Ancestry’s growing volume of consumer testing demonstrates that there is a potential market for medical laboratories that make themselves available to consumers to answer questions and concerns about DNA testing.
—JP Schlingman
Related Information:
Quest Diagnostics and AncestryDNA Collaborate to Expand Consumer DNA Testing
Ancestry Sets Ancestry DNA Sales Record Over Holiday Period and Fourth Quarter
Clustering of 770,000 Genomes Reveals Post-Colonial Population Structure of North America
Ancestry.com DNA Database Tops 3M, Sales Rise to $850M Ahead of Likely 2017 IPO
Ancestry.com Takes DNA Ownership Rights from Customers and Their Relatives
Setting the Record Straight: Ancestry and Your DNA
Can Ancestry.com Take Ownership of Your DNA Data?
Ancestry.com Denies Exploiting Users’ DNA
Coverage of Alexion Investigation Highlights the Risk to Clinical Laboratories That Sell Blinded Medical Data
Jul 19, 2017 | Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Laboratory Testing, Management & Operations
New value-based healthcare payment models could have far-reaching effects on medical laboratories and the testing they provide
Hospitals, physicians, and medical laboratories recognize the transition from “volume to value” that’s underway in the American healthcare system. Fee-for-service payments for clinical services (regardless of whether they are needed or effective) will soon cease and providers will be increasingly paid on how much value they deliver to patient care. This will fundamentally alter the complete care continuum, from hospital stays to pathology consults to clinical laboratory testing services.
One such change involves value-based drug contracts with pharmaceutical manufacturers. According to an article in The Boston Globe, in an effort to reduce the ever-increasing cost of prescription drugs while still “giving patients access to costly treatments,” Harvard Pilgrim Health Care (Harvard Pilgrim)—one of Massachusetts’ largest health insurers with more than 1.3 million members—is negotiating value-based agreements with major pharmaceutical manufacturers. How much money Harvard Pilgrim pays for certain drugs will depend on how much the healthcare organization contributes to curing/improving their patients’ conditions.
Value-Based Pharmaceutical Agreements
Harvard Pilgrim first made news for their value-based drug contracts in 2015 when they contracted with three companies:
Harvard Pilgrim currently has 12 value-based pricing contracts with pharmaceutical companies. According to a news release, the contracts enable Harvard Pilgrim to monitor “specific criteria in patients following discharge” for the effectiveness of medication. “If the medicines fail to meet the agreed upon outcomes criteria in real patients, Harvard Pilgrim will be charged a lower amount,” the news release states.
The graph above is from an analysis by Avalere Health, a strategic advisory company in Washington, DC, that develops solutions for healthcare. It shows how, according to Avalere, “a majority of health plans are interested in forming outcomes-based contracts with biopharmaceutical manufacturers that tie product reimbursement to patient outcomes.” (Image copyright: Avalere Health.)
These contracts link a drug’s cost to its overall effectiveness in ways that make companies accountable for results in terms of real-world patient outcomes, rather than controlled trial results. Michael Sherman, MD, Harvard Pilgrim’s Chief Medical Officer and SVP of Health Services, stated in the news release that they put drug companies “at risk for delivering” on their promises.
According to Harvard Pilgrim Health Care President and CEO Eric Schultz, value-based agreements between insurance, hospitals, medical laboratories, and drug companies are becoming increasingly important. At the 2017 America’s Health Service Plans (AHIP) Institute and Expo, Schultz stated that in terms of value-based contracting, “right now, it’s all about clinical outcomes,” a FierceHealthcare article covering the event noted. Shultz believes this is a good thing for patients that could positively impact all areas of healthcare.
Harvard Pilgrim is not alone in shifting to value-based healthcare (AKA, value-based purchasing and Pay-for-Performance). According to a news release, the University of Pittsburgh Medical Center (UPMC) Health Plan recently created the Center for Value-Based Purchasing for Pharmaceuticals. According to William Shrank, MD, UPMC Health Plan’s Chief Medical Officer, the Center is determined to evaluate outcomes and effects of the new payment models, which have the potential to “rapidly influence pharmaceutical purchasing nationwide and promote greater value in medication use.”
Can Medical Laboratories Participate in Value-based Models?
The rise of value-based healthcare models affects more than just pharmaceutical companies; medical laboratories nationwide are considering how value-based systems might affect their work and mission as well. In an Orchard Software whitepaper titled, “The Value of the Laboratory in the New Healthcare Model,” Daniel J. Scully, CEO of New York’s Buffalo Medical Group, stated that the “50-million dollar” question for laboratories is “does the laboratory offer enough value in service and speed of results” for the new value-based healthcare models?
Clinical laboratories play such a vital role in healthcare quality—providing accurate diagnosing and crucial monitoring, as well as data collection and risk assessment—they may find themselves affected by value-based healthcare changes. Because of the high costs of equipment and testing, laboratories may also find themselves scrambling to eliminate costs and improve on efficiency, by monitoring resources and testing outcomes in connection to patient needs.
Clinical pathologists may also find themselves more frequently called upon to assist in guiding clinicians to more “effectively utilize lab services to achieve better care,” according to the Orchard Software white paper.
Clinical Associations Say Medical Laboratories Crucial to Success of Value-based Healthcare
The American Association for Clinical Chemistry (AACC) and the American Society for Clinical Pathologists (ASCP) have both addressed what the change to a value-based healthcare system may mean for clinical pathologists.
An ASCP white paper states that clinical pathology data has become increasingly important as “clinical laboratory data are now used to measure provider performance, both individual and organizational, as well as to inform value-based purchasing that optimizes healthcare resources and decreases costs.”
In a position statement, the AACC noted that laboratory testing was crucial to this new model, and that “laboratory professionals are uniquely positioned” to help increase value within healthcare by helping “clinicians identify the most effective testing protocol and interpret the results accurately. Clinical laboratorians can further reduce healthcare costs by developing new, more precise tests to personalize patient care and creating computerized clinical decision support interventions to aid test selection.” Some types of testing, however, particularly expensive molecular and genetic testing, may end up a target of similar value-based agreements between the labs that perform these tests and the provider organizations that use the tests.
Much of the focus on value-based healthcare is currently on value-based pharmaceutical contracts, such as those from Harvard Pilgrim. Nevertheless, clinical laboratories will likely play vital roles in providing care, guiding testing, and evaluating care outcomes under these new payment models. They also could find themselves part of a larger debate concerning overuse of testing or data collection.
Changes to healthcare from pay-for-service to pay-for-value will undoubtedly have far-reaching effects as healthcare fields attempt to cut costs while providing better services. Every clinical laboratory must be proactive in finding its place in these new models.
— Amanda Warren
Related Information:
Harvard Pilgrim Expands Use of Novel Drug Purchasing Deals
Value for Consumer Drugs—Harvard Pilgrim Leads the Way
Harvard Pilgrim Signs Outcomes-Based Contracts with AstraZeneca for Brilinta and Bydureon
UPMC Health Plan Establishes Unprecedented Center for Value-Based Purchasing for Pharmaceuticals
Harvard Pilgrim Signs Second Groundbreaking Contract with Amgen for Repatha
Lilly’s Trulicity Joins Pay-for-performance Trend with Harvard Pilgrim Deal
Advancing Value-Based Healthcare: Laboratory Medicine’s Essential Role
The Value of the Laboratory in the New Healthcare Model
AHIP 2017: Harvard Pilgrim, Eli Lilly CEOs Talk Drug Prices and Paying for Value
Health Insurers Go All in on Value-based Drug Pricing
Health Plans Are Interested in Tying Drug Payments to Patient Outcomes
Harvard Pilgrim Bets on Value-based Drug Payments with New Deals
Harvard Pilgrim to Pay for 2 Autoimmune Drugs Based on Outcomes, Value
Value-based Contracts Key to Solving U.S. Drug Pricing ‘Crisis’
Nearly One-Third of Traditional Medicare Payments Now Based on Value-Based Reimbursement and Alternative Payment Models
Ongoing Growth in Volume of Clinical Laboratory Tests That Support Precision Medicine Due to Physician Acceptance; Payers Still Have Concerns
Pathologists and Clinical Lab Executives Take Note: Medicare Has New Goals and Deadlines for Transitioning from Fee-For-Service Healthcare Models to Value-Based Reimbursement
Up to 50% of Aetna, UnitedHealth Group, and Anthem Reimbursements Go to Value-Based Contracts; Clinical Laboratories Must Implement Value-Based Strategies to Remain Competitive
Jul 17, 2017 | Compliance, Legal, and Malpractice, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Uncategorized
Another big question is whether the lobbying of medical laboratory and pathology societies can educate and convince members of Congress to delay and reform the PAMA Final Rule that uses the market price study of what private payers pay for lab tests
Coming in just five months are the deepest, most painful clinical laboratory test price cuts ever implemented by Medicare officials. During calendar 2018 alone, both the Centers for Medicare and Medicaid Services (CMS) and the Office of Inspector General US Department of Health and Human Services (OIG) expect the price cuts to the Medicare Part B Clinical Laboratory Fee Schedule (CLFS) to lower spending on lab tests by $400 million!
The bad news doesn’t stop there. Lab industry observers say that significant numbers of hospital laboratories and independent lab companies are unprepared for the drop in revenue they will experience once the Medicare price cuts take effect. And, with only 157 days remaining before Jan. 1, 2018, medical laboratory executives and pathologists have precious little time to prepare their labs to operate on significantly less Medicare revenue.
PAMA Market Study of What Private Payers Pay for Clinical Laboratory Tests
Blame it on the Protecting Access to Medicare Act (PAMA) of 2014! PAMA directed CMS to conduct a market study of the lab test prices paid by private health insurers, and then use this data to set the prices of the CLFS. As many lab professionals know, CMS spent the last 24 months publishing a final price reporting rule that defined which medical laboratories must report the prices they are paid by private payers, and then collecting that data.
The data reporting period ended on May 31. In coming months, CMS will publish the new CLFS test prices and allow time for public comment.
Recognizing the need to help lab executives and pathologists understand the scale and scope of the Medicare lab test price cuts coming their way, Dark Daily and its sister publication, The Dark Report, have asked two experts with unique knowledge about this issue to give interested lab managers an up-to-the-minute intelligence briefing during an important webinar. It’s titled, “Deep Medicare Fee Cuts Are Coming to Your Clinical Laboratory in 157 Days: What You Must Do Now, Why Congress Might Intervene, and Action Steps to Protect Your Lab’s Financial Integrity,” and it happens later this week on Thursday, July 20, at 1 PM Eastern.
First Opportunity to See What Private Payers Pay for Medical Laboratory Tests
The first expert to speak is Lâle White, Executive Chairman and CEO of XIFIN, Inc., a health information technology (HIT) company headquartered in San Diego. Annually, White and her colleagues handle as many as 300 million lab test claims for hundreds of their clinical laboratory clients. Also, XIFIN is electronically interfaced with every health insurance plan in the US. These two facts mean that White has essentially the same data their lab clients reported to CMS.
During her presentation, White will show you how her company analyzed the real information from hundreds of millions of medical lab test claims that were reimbursed by thousands of private payers. You are in for a big surprise!
Learn Why Medicare Lab Test Fee Cuts Will Be Deep and Painful
XIFIN’s conclusions are based on real-world data. They demonstrate how the CMS final rule was written to direct the way federal officials calculate and set the 2018 Part B clinical laboratory test prices, and reveal why the fee cuts will be deep and painful for the lab industry’s highest-volume tests. You’ll hear facts about XIFIN’s analysis and learn to use that knowledge to model and predict precisely how deep Medicare’s revenue cuts to your lab will be when the new price schedule becomes effective on Jan. 1.
Lâle White (above left), CEO of XIFIN, Inc., spoke at the Executive War College on Laboratory and Pathology Management last May, where she shared insights about the coming price cuts to the Medicare Part B Clinical Laboratory Fee Schedule (CLFS). Julie Scott Allen (above right) is Senior Vice President of the District Policy Group, Drinker Biddle, and represents the National Independent Laboratory Association (NILA) in Washington, DC. White and Allen will be speaking at a special Dark Daily webinar later this week on the current status of the Medicare fee cuts and how lab executives should respond to protect the financial integrity of their labs. (White photo copyright: The Dark Report. White photo by Linda Reineke. Allen photo copyright: Drinker Biddle.)
Because it is generally agreed that CMS officials will target the top 20 lab tests by volume for the deepest price cuts, the actual revenue drop will depend on your mix of tests and the volume of Medicare patients associated with each test. CMS says it will use the weighted median of the private payer lab test price data to determine its new Part B fees.
However, that is a flawed approach and the source of much criticism.
White will show why the weighted median generates a lower price than the use of a weighted average calculation. You’ll see the direct impact that CMS’ use of the weighted median will have on your lab’s Medicare revenue, beginning on Jan. 1.
Understanding Current Developments at CMS and Within Congress
Julie Scott Allen will be the second speaker on the July 20 webinar. She is Senior Vice President, District Policy Group, Drinker Biddle, and represents the National Independent Laboratory Association (NILA) in Washington, DC. In this role, Allen works with officials at CMS, the Department of Health and Human Services (HHS), and with members of Congress on issues relevant to the clinical laboratory members of NILA. She regularly participates as part of the Clinical Laboratory Coalition on these matters.
Allen will give you an up-to-the minute perspective on efforts by the clinical laboratory industry to educate officials within Congress, HHS, and CMS about the consequences of allowing the PAMA final rule price cuts to become effective on January 1, 2018. This is important information you can use to craft strategies to protect your lab’s financial stability. You’ll also recognize opportunities to contact your elected officials in Congress at the time when your input can make an important difference.
The message of many in the Clinical Laboratory Coalition to members of Congress is that, if the PAMA Medicare fee cuts happen as planned, many hospital lab outreach programs and community lab companies in the states and districts of the various Senators and Representatives will probably end up going out of business, filing bankruptcy, or selling to a national lab company.
Behind the Scenes on PAMA Fee Cuts, ACA Repeal-and-Replace
Allen will take you behind the scenes of the inside-the-beltway developments that relate to the coming Medicare Part B clinical laboratory fee cuts. Different players from the clinical laboratory community are in discussions with CMS officials about the need to delay and reform the implementation of these price cuts.
Meanwhile, there are several developments unfolding within Congress that affect clinical laboratories. Yes, one of them is the PAMA final rule on lab price cuts. However, congressional efforts to repeal and replace the Affordable Care Act (ACA) are creating opportunities for different medical specialties—including the profession of laboratory medicine—to advocate for needed reforms in their areas of clinical services.
When clinical laboratory and anatomic pathology leaders are informed, they are more effective in two roles:
- Protecting the clinical excellence and financial sustainability of their respective laboratories;
- Advocating with government officials and lawmakers on the issues that are important to keeping the nation’s laboratories financially viable and key contributors to improving the quality of patient care.
Full details about this important webinar are at this link. Or copy and paste this URL into your browser: https://ddaily.wpengine.com/webinar/deep-medicare-fee-cuts-are-coming-to-your-clinical-laboratory-in-157-days-what-you-must-do-now-why-congress-might-intervene-and-action-steps-to-protect-your-labs-financial-integrity to register.
—Michael McBride
Related Information:
NILA and Other Stakeholders Ask HHS to Delay the Medicare Laboratory Payment Reform Rule
Nation’s Most Vulnerable Clinical Laboratories Fear Financial Failure If Medicare Officials Cut Part B Lab Fees Using PAMA Market Price Data Final Rule
Overview of CMS-1621-F Medicare Clinical Diagnostic Laboratory Test Payment System Final Rule
Dark Report Cracks the Mystery on PAMA Pricing; Genetic Coverage Still Tough Going
XIFIN Analysis of Its Real Price Data Shows Hospital Lab Price Effect: Study Based on Hundreds of Millions of Lab Test Claims
10% PAMA Fee Cut Would Lower Medicare Pay to Laboratories by $400 Million: New OIG Report Provides Clues as to How Cuts to CLFS Prices Will Reduce Payments to Clinical Labs
CMS Issues PAMA Final Rule That Aims to Cut Medicare’s Clinical Laboratory Test Price Schedule Sharply Beginning in 2018
Deep Medicare Fee Cuts Are Coming to Your Clinical Laboratory in 157 Days: What You Must Do Now, Why Congress Might Intervene, and Action Steps to Protect Your Lab’s Financial Integrity
