Clinical laboratories are advised to continue developing methods for making prices for procedures available to the general public
Even as an effective treatment for COVID-19 continues to elude federal healthcare agencies, Medicare officials are pressing ahead with efforts to bring about transparency in hospital healthcare pricing, including clinical laboratory procedures and prescription drugs costs.
In FY 2021 Proposed Rule CMS-1735-P, titled, “Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Proposed Policy Changes and Fiscal Year 2021 Rates; Quality Reporting and Medicare and Medicaid Promoting Interoperability Programs Requirements for Eligible Hospitals and Critical Access Hospitals,” the Centers for Medicare and Medicaid Services (CMS) proposes to “revise the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals to implement changes arising from our continuing experience with these systems for FY 2021 and to implement certain recent legislation.”
The proposed rule suggests a 1.6% increase (about $2 billion) in reimbursement for hospital inpatient services for 2021, but also eludes to the possibility of payer negotiated rates being used to determine future payment to hospitals.
In its analysis of the proposed rule, Modern Healthcare noted that CMS is “continuing its price transparency push, to the chagrin of some providers.”
However, the provisions in the proposed rule do, according to the CMS news release, advance several presidential executive orders, including:
Controversial Use of Payer Data for Future Medicare Rates
This latest CMS proposed rule (comments period ended July 10) moves forward “controversial price transparency” and has a new element of possible leverage of reported information for future Medicare payment rates, Healthcare Dive reported.
The 1,602-page proposed rule (CMS-1735-P) calls for these requirements in hospital Medicare cost reports:
Median payer-specific negotiated inpatient services;
Inclusion of rates for Medicare Advantage plans and other third party plans;
“In addition, the agency is requesting information regarding the potential use of these data to set relative Medicare payment rates for hospital procedures,” the CMS news release states.
Thus, under the proposed rule, the nation’s 3,200 acute care hospitals and 360 long-term care hospitals would need to start reporting requested data for discharges effective Oct. 1, 2020, a CMS fact sheet explained.
In the news release following the release of the proposed rule, CMS Administrator Seema Verma had a positive spin. “Today’s payment rate announcement focuses on what matters most to help hospitals conduct their business and receive stable and consistent payment.”
However, the American Hospital Association (AHA) articulated a different view, even calling the requirement for hospitals to report private terms “unlawful.”
“We are very disappointed that CMS continues down the unlawful path of requiring hospitals to disclose privately negotiated contract terms,” AHA Executive Vice President Tom Nickels (above) said in a statement, adding, “The disclosure of privately negotiated rates will not further CMS’ goal of paying market rates that reflect the cost of delivering care. These rates take into account any number of unique circumstances between a private payer and a hospital and simply are not relevant for fixing Fee-for-Service Medicare reimbursement.” (Photo copyright: American Hospital Association.)
AHA and other organizations attempted to block a price transparency final rule last year in a lawsuit filed against the U.S. Department of Health and Human Services (HHS), which oversees CMS, Dark Daily reported.
During in-court testimony, provider representatives declared that revealing rates they negotiate with payers violates First Amendment rights, Becker’s Hospital Review reported.
Officials for the federal government pushed back telling the federal judge that they can indeed require hospitals to publish negotiated rates. Hospital chargemasters, they added, don’t tell the full story, since consumers don’t pay those rates, Modern Healthcare reported.
In addition to the increase in inpatient payments and price transparency next steps, the recent CMS proposed rule also includes a new hospital payment category for chimeric antigen receptor (CAR) T-cell therapy. The technique uses a patient’s own genetically-modified immune cells to treat some cancers, as an alternative to chemotherapy and other treatment covered by IPPS, CMS said in the news release.
The agency also expressed intent to remove payment barriers to new antimicrobials approved by the FDA’s Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD pathway). “The LPAD pathway encourages the development of safe and effective drug products that address unmet needs of patients with serious bacterial and fungal infections,” the CMS fact sheet states.
Clinical laboratories are gateways to healthcare. For hospital lab leaders, the notion of making tests prices easily accessible to patients and consumers will soon no longer be a nice idea—but a legal requirement.
Therefore, clinical laboratory leaders are advised to stay abreast of price transparency regulations and continue to prepare for sharing test prices and information with patients and the general public in ways that fulfill federal requirements.
Since the pandemic began, federal investigators are specifically looking for patterns of fraud in Medicare claims data for COVID-19 clinical laboratory testing
Last month, the federal Department of Health and Human Services (HHS) Office of Inspector General (OIG) announced it had been investigating trends in Medicare claims data that could indicate patterns of fraud in the billing for COVID-19 clinical laboratory tests, Modern Healthcare reported.
Stretching back to at least March, fraudulent actors offering fake SARS-CoV-2 tests have preyed on vulnerable Americans in a wide variety of ways during the public health emergency, according to published reports. Some scam operators have gone into nursing homes and long-term care facilities to collect cash from unsuspecting elders in exchange for swab collections and phony testing, the New York Times reported.
Since the declaration of the public health emergency in the US, the federal Centers for Medicare and Medicaid Services (CMS) no longer requires a lab test requisition signed by a treating physician or other provider for COVID-19 testing. “The strong demand for and limited supply of SARS-CoV-2 tests, along with the move by CMS to relax rules for certain test orders during the pandemic, makes the situation a potentially ripe one for fraud,” Modern Healthcare stated.
Plus, a lack of clarity about the medical necessity of COVID-19 tests could raise the liability risk for law-abiding clinical laboratories. All of these factors make COVID-19 testing fraud a potential bombshell for clinical laboratories conducting coronavirus testing that may get caught up in federal investigations.
Feds Step Up Enforcement
Shortly after the pandemic arrived in the US, the FBI, the Better Business Bureau (BBB), the FDA, the federal Department of Health and Human Services (HHS), and other federal and local authorities have frequently warned doctors, hospitals, and healthcare consumers about the potential for fraud by unscrupulous companies purporting to offer legitimate clinical laboratory testing for COVID-19. A June 26 FBI press release stated, “Scammers are marketing fraudulent and/or unapproved COVID-19 antibody tests, potentially providing false results.”
Some of the fraudsters behind these scams have operated online and through social media and email. While others have conducted these scams in person or over the phone, noted the press release.
And yet, despite the warnings, the scams and news articles about them have continued to spread throughout the COVID-19 pandemic.
Various Forms of Fraud and Their Consequences
In many of these scams, fraudsters seek to collect consumers’ personal information, including names, dates of birth, and Social Security numbers, as well as other forms of personal health information, such as Medicare or private health insurance data, the FBI reported. Scammers can use that information in medical insurance fraud schemes or to commit identity theft, the agency added.
Additionally, any fake or inaccurate COVID-19 tests or assays that the FDA has not allowed for use could provide doctors with false results, potentially creating a dangerous situation for patients.
The New York Times (NYT) recently reported that the FBI had issued a warning “about scammers who advertise fraudulent COVID-19 antibody tests as a way to obtain personal information that can be used for identity theft or medical insurance fraud.”
Three days after the FBI issued its warning about the COVID-19 antibody testing scam, the BBB added an alert to its website: “BBB Scam Alert: Want a COVID-19 test? There’s a scam for that.” BBB also provided advice to consumers about how to avoid testing scams.
On June 17, the FDA reported that it issued warning letters to three companies for marketing adulterated and misbranded COVID-19 antibody tests, stated an FDA news release. The agency sent warning letters to:
In the FDA’s announcement, Jeff Shuren, MD, JD (above), Director of the FDA’s Center for Devices and Radiological Health, said “When tests are marketed inappropriately, with inaccurate or misleading claims—such as the ability to perform the test completely at home, or that the test is authorized, cleared, or approved when it is not—they put the health of Americans at risk. Such conduct will not be tolerated by the FDA, and we will continue to monitor tests marketed in the US, taking appropriate action as warranted.” (Photo copyright: The Food and Drug Administration.)
Scams Reported Just in April
On April 17, the New York Times reported that a special agent with the HHS OIG noted that impostors seeking Medicare or Medicaid information posed as doctors or laboratory technicians to offer fake tests in nursing homes and assisted living facilities.
Earlier in April, The Texas Tribune reported that the owner of a freestanding emergency room in Laredo, Texas, spent $500,000 to buy 20,000 rapid COVID-19 tests for patients suspected of having COVID-19. Health officials in Laredo planned to establish a drive-through testing site and then administer tests that came from a manufacturer in China to detect active infections. After trying to validate the tests, city health officials found they were unreliable and unusable.
An April 9 report from the news department of the AARP (American Association of Retired Persons) stated that federal officials have found fake coronavirus testing sites in many states, including Alabama, Arizona, Florida, Georgia, Kentucky, New York, and Washington state.
The FBI, according to AARP, investigated several fake test sites in Louisville, Ky., after a city official reported that people in personal protective equipment (PPE) were collecting biological specimens from residents. Those seeking tests were told to pay $240 in cash or give their Medicare, Medicaid, or Social Security cards to verify their identity.
Fake drive-up testing sites were reported at gas stations and other locations in Louisville over a four-day period, the AARP reported.
On April 2, WRGB TV in Albany, N.Y., reported that scammers pretending to be from the New York State Department of Health (NYSDOH) were taking money and insurance information from people in exchange for fake coronavirus tests. One woman told police she got a fake test at a drive-up site in a Little League parking lot.
North Greenbush police said the scammers identified themselves as being with NYSDOH and collected money and insurance information from multiple people. Police and state officials said the DOH had no connection to the collection site in the parking lot.
Lessons for Lab Directors
For clinical laboratory directors and all clinical lab scientists, the lesson from these stories is to be wary of strangers offering COVID-19 testing, while also making certain to post information for customers about the legitimacy of your lab’s COVID-19 rapid molecular and serological tests. Doing so might involve providing proof that the FDA has allowed your tests to be used for the coronavirus.
Also, medical laboratories should ensure that all employees collecting specimens in public places display proper identification.
Washington Post investigation outlines scientists’ frustrations in the early days of the pandemic, as they worked to deploy laboratory-developed tests for the novel coronavirus
In the wake of the failed rollout of the Centers for Disease Control and Prevention’s (CDC) COVID-19 diagnostic test last February, many CLIA-certified academic and public health laboratories were ready, and had the necessary resources, to develop their own coronavirus molecular diagnostic tests to help meet the nationwide demand for clinical laboratory testing. However, the response from the US Food and Drug Administration (FDA) was, in essence, “not so fast.”
In this second part of Dark Daily’s two-part e-briefing, we continue our coverage of the Washington Post (WP) investigation that detailed the regulatory hurdles which blocked private laboratories from deploying their own laboratory-developed tests (LDTs) for COVID-19. The report is based on previously unreported email messages and other documents reviewed by the WP, as well as the newspaper’s exclusive interviews with scientists and officials involved.
The CDC’s COVID-19 test kits began arriving at public health laboratories on February 8, just 18 days after the first case of the novel coronavirus was confirmed in the US. As the WP noted in an earlier analysis, titled, “What Went Wrong with Coronavirus Testing in the US,” the CDC’s decision to develop its own test was not surprising. “The CDC will develop [its] own test that is suited to an American healthcare context and the regulations that exist here,” explained Jeremy Konyndyk, Senior Policy Fellow at the Center for Global Development. “That’s how we normally would do things.”
But state and local public health laboratories quickly discovered that the CDC test kits were flawed due to problems with one of the reagents. While numerous academic, research, and commercial labs had the capability to produce their own COVID-19 PCR tests, FDA rules initially prevented them from doing so without a federal Emergency Use Authorization (EUA).
The bureaucratic hurdles arose due to Health and Human Services Secretary Alex Azar’s January 31 declaration that COVID-19 was a “health emergency” in the US. By doing so, HHS triggered a mandate that requires CLIA-certified labs at universities, research centers, and hospitals to seek an EUA from the FDA before deploying any laboratory-developed tests.
Scientists, Clinical Laboratories Frustrated by Bureaucratic Delays and Red Tape
To make matters worse, the EUA process was neither simple nor fast, which exasperated lab scientists and clinical laboratory administrators. “In their private communications, scientists at academic, hospital, and public health labs—one layer removed from federal agency operations—expressed dismay at the failure to move more quickly, and frustration at bureaucratic demands that delayed their attempts to develop alternatives to the CDC test,” wrote the WP investigators.
In a Feb. 27 email to other microbiologists, Marc Couturier, PhD, Medical Director at ARUP Laboratories, a national reference laboratory network located in Utah, voiced his irritation with the red tape that stymied private laboratory development of COVID-19 tests. He wrote, “We have the skills and resources as a community, but we are collectively paralyzed by a bloated bureaucratic/administrative process,” reported the WP.
Keith Jerome, MD, PhD (above), Head of the Virology Division at the Fred Hutchinson Cancer Research Center in Seattle, maintains federal regulations muted one of the nation’s greatest assets in the fight against COVID-19. “The great strength the US has always had, not just in virology, is that we’ve always had a wide variety of people and groups working on any given problem,” he told MIT Technology Review. “When we decided all coronavirus testing had to be done by a single entity, even one as outstanding as CDC, we basically gave away our greatest strength.” (Photo copyright: Jonathan Hamilton/NPR.)
‘FDA Should Not Treat Labs Like They Are Creating Commercial Products’
According to Kaiser Health News (KHN), Greninger was able to identify one of the nation’s first cases of community-acquired COVID-19 by taking “advantage of a regulatory loophole that allowed the lab to test samples obtained for research purposes from UW’s hospitals.”
But navigating the EUA process was a different story, Greninger told the WP. He spent more than 100 hours filling out forms and collecting information needed for the EUA application. After emailing the application to the FDA, Greninger received a reply containing eCopy Guidance telling him he needed to resubmit the information to the Document Control Center (DCC) at the Center for Devices and Radiological Health (CDRH), a federal agency Greninger knew nothing about. Another FDA rule required that the submission be copied to a hard disk and mailed to the DCC.
In an interview with ProPublica, Greninger stated that after he submitted his COVID-19 test—which copies the CDC protocol—an FDA reviewer told him he would need to prove the test would not show a positive result for someone infected with either a SARS or MERS coronavirus. The first SARS coronavirus disappeared in mid-2003 and the only two cases of MERS in the US were diagnosed in 2014. Greninger told ProPublica it took him two days to locate a clinical laboratory that could provide the materials he needed.
Greninger maintains the FDA should not treat all clinical laboratories as though they are making a commercial product. “I think it makes sense to have this regulation when you’re going to sell 100,000 widgets across the US. That’s not who we are,” he told ProPublica.
FDA Changes Course
Under pressure from clinical laboratory scientists and medical doctors, by the end of February the FDA had issued new policy that enabled CLIA-certified laboratories to immediately use their validated COVID-19 diagnostics while awaiting an EUA. “This policy change was an unprecedented action to expand access to testing,” said the FDA in a statement.
Since then, the FDA has continued to respond—albeit slowly—to scientists’ complaints about regulations that hampered the nation’s COVID-19 testing capacity.
Clinical laboratory leaders and pathologists involved in testing for the SARS-CoV-2 coronavirus should monitor the FDA’s actions and be aware of when and if certain temporary changes the agency implemented during the early days of the COVID-19 pandemic become permanent.
To read part one of our two-part coverage of the Washington Post’s investigation, click here.
In their letter, the Representatives wrote, “As you are aware, the recently enacted Paycheck Protection Program and Health Care Enhancement Act (PPPHCE Act) invests $25 billion in the [Public Health and Social Services Emergency Fund (PHSSEF)], including $11 billion for states, localities, territories, and tribes, to enhance all aspects of COVID-19 testing capacity. This funding is in addition to the funds already appropriated to the PHSSEF under the CARES Act.
“While laboratories are eligible, along with other providers, for these funds,” they continued, “there have been no federal funds specifically designated for the laboratories that have stepped up in this public health crisis and have made significant investments to expand access to COVID-19 testing despite 40-60 percent reductions in regular commercial volume due to the economic lockdowns.
“As laboratories work to maintain their investments in critical resources for testing platforms, reagents, swabs, and PPE, as well as hiring, training, and overtime pay for the laboratory workforce, we urge HHS to direct a portion of funding that has not already been allocated towards these efforts. These funds will ensure that labs can continue to rapidly scale up diagnostic and antibody testing, particularly for healthcare workers, first responders, and other Americans on the frontlines of this pandemic,” concluded the Representatives.
ACLA President Made Similar Plea for Direct Funding to Clinical Laboratories
“In order to deliver accurate, reliable results for patients at a national scale, we must allocate funding to support [clinical laboratories’] expanded efforts,” she said in a statement following an April 27 meeting at the White House.
In her letter, Khani wrote, “It is essential that HHS allocate $10 billion from the fund to support labs’ further expansion of testing capacity to fulfill the testing needs of all of the states and to protect the lives and livelihood of all Americans.
“Further,” she continued, “HHS should note that investing in the nation’s laboratories will not only enhance testing capacity in the short-term, but it also will allow the country to benefit from a robust testing infrastructure for the duration of the COVID-19 pandemic and beyond.”
President Trump signed H.R.266 into law on April 24. It includes $25 billion earmarked for research, development, validation, manufacturing, purchasing, administering, and expanding capacity for COVID-19 testing. According to the language of H.R.266, that includes, “tests for both active infection and prior exposure, including molecular, antigen, and serological tests, the manufacturing, procurement and distribution of tests, testing equipment and testing supplies, including personal protective equipment needed for administering tests, the development and validation of rapid, molecular point-of-care tests, and other tests, support for workforce, epidemiology, to scale up academic, commercial, public health, and hospital laboratories, to conduct surveillance and contact tracing, support development of COVID-19 testing plans, and other related activities related to COVID-19 testing.”
“As the demand for testing continues to grow, clinical laboratories need dedicated funding to plan for challenges that lie ahead. Strong federal coordination and leadership is essential, and we’re looking forward to working with HHS to ensure that laboratories have the resources necessary to continue to expand our role at the forefront of the nation’s response,” said Julie Khani (above), President of the American Clinical Laboratory Association (ACLA), in a press release following the June 8 letter sent to HHS by 30 members of Congress requesting funds from H.R.266 be sent directly to clinical laboratories. Khani will be speaking on federal policies now impacting clinical laboratories at the upcoming 25th annual Executive War College on Laboratory and Pathology Management in New Orleans on July 14-15. (Photo copyright: ACLA.)
Financial Struggles for Hospitals and Clinical Laboratories
This new round of stimulus funding comes at a time when many providers and clinical laboratories are struggling financially, despite the influx of COVID-19 patients.
“Across the country, laboratories have made significant investments to expand capacity, including purchasing new platforms, retraining staff, and managing the skyrocketing cost of supplies. To continue to make these investments and expand patient access to high-quality testing in every community, laboratories will need designated resources. Without sustainable funding, we cannot achieve sustainable testing,” said Khani in an ACLA statement.
As the COVID-19 coronavirus pandemic evolves, federal regulations, as well as emergency funding for COVID-19 testing that is provided by federal legislation, will evolve in unexpected ways. For that reason, clinical laboratory leaders will want to closely track announcements by such federal agencies as the Department of Health and Human Services, the Centers for Medicare and Medicaid Services, the Food and Drug Administration, the Centers for Disease Control and Prevention, and the Federal Emergency Management Administration as decisions are made about how to assign the $25 billion authorized in H.R.266 for “testing.”
Questions remain, however, over how much of the funding will actually reach hospital and health system clinical laboratories
For many cash-strapped clinical laboratories in America, the second round of stimulus funds cannot come soon enough. Thus, lab leaders are encouraged by news that Congress’ $484-billion Paycheck Protection Program and Healthcare Enhancement Act (H.R.266) includes almost $11 billion that will go to states for COVID-19 testing. But how much of that funding will reach the nation’s hospital and health system clinical laboratories?
The Department of Health and Human Services (HHS) announced the new influx of money to the states on May 18. In a news release outlining the initiative, the HHS said the Centers for Disease Control and Prevention (CDC) will deliver $10.25 billion to states, territories, and local jurisdictions to expand testing capacity and testing-related activities.
To qualify for the additional funding, governors or “designee of each State, locality, territory, tribe, or tribal organization receiving funds” must submit to HHS its plan for COVID-19 testing, including goals for the remainder of calendar year 2020, to include:
“Number of tests needed, month-by-month to include diagnostic, serological, and other tests, as appropriate;
“Month-by-month estimates of laboratory and testing capacity, including related to workforce, equipment and supplies, and available tests;
“Description of how the resources will be used for testing, including easing any COVID-19 community mitigation policies.”
“As the nation cautiously begins the phased approach to reopening, this considerable investment in expanding both testing and contact tracing capacity for states, localities, territories, and tribal communities is essential,” said CDC Director Robert R. Redfield, MD, in the HHS statement. “Readily accessible testing is a critical component of a four-pronged public health strategy—including rigorous contact tracing, isolation of confirmed cases, and quarantine.” (Photo copyright: Center for Disease Control and Prevention.)
Funding Should Go Directly to Clinical Laboratories, Says ACLA
The American Clinical Laboratory Association (ACLA), argues the funding needs to go directly to clinical laboratories to help offset the “significant investments” labs have made to ramp up testing capacity during the pandemic.
“Direct federal funding for laboratories performing COVID-19 testing is critical to meet the continued demand for testing,” ACLA President Julie Khani, MPA, said in a statement. “Across the country, laboratories have made significant investments to expand capacity, including purchasing new platforms, retraining staff, and managing the skyrocketing cost of supplies. To continue to make these investments and expand patient access to high-quality testing in every community, laboratories will need designated resources. Without sustainable funding, we cannot achieve sustainable testing.”
Some States Are Increasing Testing, While Others Are Not
Since the first cases of COVID-19 were reported in January, the United States has slowly but significantly ramped up testing capacity. As reported in the Washington Post, states such as Georgia, Oklahoma, and Utah are encouraging residents to get tested even if they are not experiencing coronavirus symptoms. But other states have maintained more restrictive testing policies, even as their testing capacity has increased.
“A lot of states put in very, very restrictive testing policies … because they didn’t have any tests. And they’ve either not relaxed those or the word is not getting out,” Ashish Jha, MD, MPA, Director of the Harvard Global Health Institute, told the Washington Post. “We want to be at a point where everybody who has mild symptoms is tested. That is critical. That is still not happening in a lot of places.”
Meanwhile, Quest Diagnostics and LabCorp continue to expand their diagnostic and antibody testing capabilities.
On May 18, Quest announced it had performed approximately 2.15 million COVID-19 molecular diagnostic tests since March 9 and had a diagnostic capability of 70,000 test each day. The company said it expected to have the capacity to perform 100,000 tests a day in June.
LabCorp’s website lists its molecular test capacity at more than 75,000 tests per day as of May 22, with a capacity for conducting at least 200,000 antibody tests per day. Unlike molecular testing that detects the presence of the SARS-CoV-2 coronavirus, antibody tests detect proteins produced by the body in response to a COVID-19 infection.
As states reopen, and hospitals and healthcare systems resume elective surgeries and routine office visits, clinical laboratories and anatomic pathology groups should begin to see a return to normal specimen flow. Nonetheless, the federal government should continue to compensate laboratories performing COVID-19 testing for the added costs associated with meeting the ongoing and growing demand.
