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Clinical Laboratories and Pathology Groups

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Laboratory Leaders at 2024 Annual Executive War College Discuss Critical Challenges Facing Clinical Laboratory and Pathology Managers for 2024 and Beyond

Trifecta of forces at work that will affect the clinical laboratory and pathology industries have been described as a ‘perfect storm’ requiring lab and practice managers to be well informed

Digital pathology, artificial intelligence (AI) in healthcare, and the perfect storm of changing federal regulations, took centerstage at the 29th Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management in New Orleans this week, where more than 1,000 clinical laboratory and pathology leaders convened over three days.

This was the largest number of people ever onsite for what has become the world’s largest event focused exclusively on lab management topics and solutions. Perhaps the highlight of the week was the federal Food and Drug Administration’s (FDA’s) announcement of its final rule on Laboratory Developed Tests (LDTs). Overall, the conference featured more than 120 speakers, many of them national thought leaders on the topic of clinical lab and pathology management. More than 65% of the audience onsite were executive level lab managers.

 “The level of interest in the annual Executive War College is testimony to the ongoing need for dynamic, engaging, and highly relevant conference events,” said Robert Michel (above), Editor-in-Chief of Dark Daily and its sister publication The Dark Report, and founder of the Executive War College. “These in-person gatherings present great opportunities for clinical laboratory and pathology managers and leaders to network and speak with people they otherwise might not meet.” (Photo copyright: Dark Intelligence Group.)

Demonstrating Clinical Value

For those who missed the action onsite, the following is a synopsis of the highlights this week.

Lâle White, Executive Chair and CEO of XiFin, spoke about the future of clinical laboratory testing and the factors reshaping the industry. There are multiple dynamics impacting healthcare economics and outcomes—namely rising costs, decreasing reimbursements, and the move to a more consumer-focused healthcare. But it is up to labs, she said, to ensure their services are not simply viewed as a commodity.

“Laboratory diagnostics have the potential to change the economics of healthcare by really gaining efficiencies,” she noted. “And it’s up to labs to demonstrate clinical value by helping physicians manage two key diagnostic decision points—what tests to order, and what to do with the results.”

But even as labs find ways to increase the value offered to clinicians, there are other disruptive factors in play. Consumer-oriented tech companies such as Google, Apple, and Amazon are democratizing access to patient data in unforeseen ways, and Medicare Advantage plans are changing the way claims are processed and paid.

Redefining Human Data

Reynolds Salerno, PhD, Director of the Division of Laboratory Services for the federal Centers for Disease Control and Prevention (CDC) provided an update on the agency’s top priorities for 2024.

Clinical labs are fundamental components of the public health infrastructure. So, the CDC plans on focusing on delivering high-quality laboratory science, supported by reliable diagnostics and informatics for disease outbreaks and exposures, and engaging with public and private sector partners.

Salerno is an active member of the Clinical Laboratory Improvement Act Committee (CLIAC), which has been working on a number of initiatives, including revisions to the Clinical Laboratory Improvement Act (CLIA) that would change the definition of “materials derived from the human body” to include data derived from human specimens such as medical imaging, genetic sequences, etc.

New Molecular Testing Codes

The history of MolDX and Z-Codes were the topics discussed by Gabriel Bien-Willner, MD, PhD, Chief Medical Officer for healthcare claims and transaction processing company Palmetto GBA. Molecular testing is highly complex, and the lack of well-defined billing codes and standardization makes it difficult to know if a given test is reasonable and necessary.

Z-Codes were established to clarify what molecular testing was performed—and why—prompting payers to require both Z-Codes and Current Procedural Terminology (CPT) codes when processing molecular test claims. Medicare’s MolDX program further streamlines the claims process by utilizing expertise in the molecular diagnostics space to help payers develop coverage policies and reimbursement for these tests.

FDA Final Rule on LDT Regulation

Timothy Stenzel, MD, PhD, CEO of Grey Haven Consulting and former director of the FDA’s Office of In Vitro Diagnostics reviewed the latest updates from the FDA’s Final Rule on LDT (laboratory developed test) regulation. Prior to the FDA releasing its final rule, some experts suggested that the new regulations could result in up to 90% of labs discontinuing their LDT programs, impacting innovation, and patient care.

However, the final rule on LDTs is very different from the original proposed rule which created controversy. The final rule actually lowers the regulatory burden to the point that some labs may not have to submit their LDTs at all. The FDA is reviewing dozens of multi-cancer detection assays, some of which have launched clinically as LDTs. The agency is likely to approve those that accurately detect cancers for which there is no formal screening program.

Stenzel explained the FDA’s plan to down-classify most in vitro diagnostic tests, changing them from Class III to Class II, and exempting more than 1,000 assays from FDA review. He also discussed the highlights of the Quality Management System Regulation (QMSR). Launched in January, the QMSR bought FDA requirements in line with ISO 13485, making compliance easier for medical device manufacturers and test developers working internationally.

Looming Perfect Storm of Regulatory Changes

To close out Day 1, Michel took to the stage again with a warning to clinical laboratories about the looming “Perfect Storm” trifecta—the final FDA ruling on LDTs, Z-Code requirements for genetic testing, and updates to CLIA ’92 that could result in patient data being considered a specimen.

Laboratory leaders must think strategically if their labs are to survive the fallout, because the financial stress felt by labs in recent years will only be exacerbated by macroeconomic trends such as:

  • Staff shortages,
  • Rising costs,
  • Decreasing and delayed reimbursements, and
  • Tightening supply chains.

Lab administrators looking for ways to remain profitable and prosperous should look beyond the transactional Clinical Lab 1.0 fee-for-service model and adopt Clinical Lab 2.0, which embraces HEDIS (Healthcare Effectiveness Data and Information Set) scores and STAR ratings to offer more value to Medicare Advantage and other payers.

Wednesday’s General Session agenda was packed with information about the rise of artificial intelligence, big data, and precision medicine in healthcare. Taking centerstage on the program’s final day was Michael Simpson, President and CEO of Clinisys. Simpson gave a global perspective on healthcare data as the new driver of innovation in diagnostics and patient care.

Michel closed the conference on Wednesday by recapping many of these highlights, and then inviting his audience to the 30th annual Executive War College Diagnostics, Clinical Laboratory, and Pathology Management conference to be held on April 29-30, 2025, here at the Hyatt Regency New Orleans. Register now to attend this critical gathering.

—Leslie Williams

Related Information:

Executive War College: The Ultimate Event for Helping Solve Your Diagnostics, Clinical Lab and Pathology Management Challenges

Labs Should Prepare for Arrival of ‘Perfect Storm’

Executive War College 2025 Registration

Big Industry Changes in Focus at the Annual Executive War College

FDA announces final rule on Lab-Developed Tests LDTs) as Clinical Lab Leaders Meet in New Orleans

Regulatory changes were the talk of the 29th Annual Executive War College, with attendees buzzing about Monday’s  US Food and Drug Administration (FDA) announcement that it had finalized the rule on laboratory developed tests (LDTs). The timing was perfect at the first full day of the New Orleans event, which is focused on diagnostics, clinical laboratory, and pathology management, and featured a bevy of experts to walk the audience through the current state of the regulatory landscape.

“The timing of EWC with the release of this policy couldn’t be better,” CEO and founder of Momentum Consulting Valerie Palmieri told Dark Daily in an interview at Monday night’s opening reception. “It’s a great conference to not only catch up with colleagues but really hear and have those difficult discussions about where we are today, where we’re going, and where we need to be.”

Final LDT rule ‘radically’ different than draft

Tim Stenzel, MD, PhD, former director of the FDA’s Office of In Vitro Diagnostics called the finalized rule “radically different” from the proposed rule. In some ways it is less complex: “The bar is lower,” he said, noting that he was voicing his personal views and not those of the federal agency. “I was convinced that there would be lawsuits, but I’m now not sure if that’s advisable.”

Still, laboratory teams will have to parse the more than 500-page document to determine how the final rule relates to their specific circumstances. After that, it won’t be as challenging, Stenzel said.

His advice: First, read the rule. Second, reach out to FDA for help—he’s sure, he said, that the office is geared up to respond to a “ton of questions” about the implications for individual labs and are standing by to answer emails from labs. And, he added in a discussion session, emailing the agency is free.

The final rule will be in force 60 days after it’s published. Stenzel provided a timeline for some of the milestones:

1 Year: Comply with MD(AE) reporting and reporting of corrections and removals.

2 Years: Comply with labeling, registration and listing, and investigational use requirements.

3 Years: QS records and, in some cases, design controls and purchasing controls.

3.5 Years: Comply with high risk (class III) premarket review requirements.

4 Years: Comply with moderate and low-risk premarket review requirements.

 Lâle White, Executive Chair and CEO of XiFin, Inc.

Big changes bring big opportunities

Executive Chair and CEO of XiFin, Inc. Lâle White welcomed the audience with a morning keynote entitled “Big Changes in Healthcare” on new regulations and diagnostics players poised to reshape lab testing.

The diagnostics business is in constant flux, she noted, from payer requirements to greater regulatory and compliance burdens on labs. Other factors include the growing senior population and increasingly complex health conditions, rising costs throughout the healthcare ecosystem, falling funding and reimbursement, and staffing shortages.

As for the economic challenges, consumers are increasingly making decisions based on cost, convenience and quality. The population is shifting to Medicare advantage, which is more cost effective. But changes to the star ratings system will mean lower pay for payer organizations. Those companies will, in turn, mitigate their losses by making changes to pre-authorizations and tightening denials, even for clean claims.

Still, White said, more money isn’t the answer.

White urged the audience to use technology, including artificial intelligence and advances in genetic testing, to manage these and other industry changes.

“We need to optimize the tests we order,” she said. “And if we did that, lab diagnostics really has the potential to change the economics of health and improve outcomes.”

The FDA, Stenzel added, is “very interested” in stimulating innovation, building on the laboratory industry’s success in responding swiftly to the COVID pandemic and outbreaks of Monkey Pox, for example.

CDC: Laboratories on the front line of readiness

The pre-lunch events also included an update on the Centers for Disease Control and Prevention’s Clinical Laboratory Improvement Amendments (CLIA) regulations for clinical laboratories, featuring Reynolds Salerno, director of the division of laboratory systems at the CDC.

He shared lessons learned from recent public health emergencies, talked about CDC’s efforts to engage with clinical labs to improve future public health readiness and response and provided an overview of the CDC’s first laboratory-specific center.

“Laboratories are fundamental to public health,” he said. The industry is on the “front lines” when it comes to identifying threats, responding to them, and preparing for future responses.

Robert Michel, Editor-in-Chief of The Dark Report wrapped up the day’s regulatory discussions with a general session on the “regulatory trifecta” that includes the LDT final rule, CLIA regulations, and private payers’ policies for genetic claims.

–Gienna Shaw

Former FDA Director to Speak at Executive War College on FDA’s Coming Regulation of Laboratory Developed Tests

Tim Stenzel, MD, PhD, will discuss what clinical laboratories need to know about the draft LDT rule, FDA memo on assay reclassification, and ISO-13485 harmonization

Many clinical laboratories anxiously await a final rule from the US Food and Drug Administration (FDA) that is expected to establish federal policies under which the agency will regulate laboratory developed tests (LDTs). The agency released a proposed rule on Oct. 3, 2023, setting a Dec. 4 deadline for submission of comments. The White House’s Office of Management and Budget received a draft of the final rule less than three months later on March 1, 2024.

“Given how fast it moved through HHS, the final [rule] is likely pretty close” to the draft version, wrote former FDA commissioner Scott Gottlieb, MD, in a post on LinkedIn. Gottlieb and other regulatory experts expect the White House to submit the final rule to Congress no later than May 22, and perhaps as soon as this month.

But what will the final rule look like? Tim Stenzel, MD, PhD, former director of the FDA’s Office of In Vitro Diagnostics, suggests that it is too soon to tell.

Stenzel, who retired from the FDA last year, emphasized that he was not speaking on behalf of the federal agency and that he adheres to all FDA confidentiality requirements. He formed a new company—Grey Haven LLC—through which he is accepting speaking engagements in what he describes as a public service.

“I’m taking a wait and see approach,” said Tim Stenzel, MD, PhD (above), former director of the FDA’s Office of In Vitro Diagnostics, in an interview with Dark Daily. “The rule is not finalized. The FDA received thousands of comments. It’s my impression that the FDA takes those comments seriously. Until the rule is published, we don’t know what it will say, so I don’t think it does any good to make assumptions.” Clinical laboratory leaders will have an opportunity to learn how to prepare for FDA regulation of LDTs directly from Stenzel at the upcoming Executive War College in May. (Photo copyright: LinkedIn.)

FDA’s History of LDT Regulation

Prior to his five-year stint at the agency, Stenzel held high-level positions at diagnostics manufacturers Invivoscribe, Quidel Corporation, Asuragen, and Abbott Laboratories. He also directed the clinical molecular diagnostics laboratory at Duke University Medical Center in North Carolina. In the latter role, during the late 1990s, he oversaw development of numerous LDTs, he said.

The FDA, he observed, has long taken the position that it has authority to regulate LDTs. However, since the 1970s, after Congress passed the Medical Device Amendments to the federal Food, Drug, and Cosmetic Act, the agency has generally exercised “enforcement discretion,” he said, in which it declined to regulate most of these tests.

At the time, “many LDTs were lower risk, small volume, and used for specialized needs of a local patient population,” the agency stated in a press release announcing the proposed rule. “Since then, due to changes in business practices and increasing ability to ship patient specimens across the country quickly, many LDTs are now used more widely, for a larger and more diverse population, with large laboratories accepting specimens from across the country.”

Clinical Labs Need a Plan for Submission of LDTs to FDA

The FDA proposed the new rule after Congress failed to vote on the VALID Act (Verifying Accurate Leading-edge IVCT Development Act of 2021), which would have established a statutory framework for FDA oversight of LDTs. Citing public comments from FDA officials, Stenzel believes the agency would have preferred the legislative approach. But when that failed, “they thought they needed to act, which left them with the rulemaking path,” he said.

The new rule, as proposed, would phase out enforcement discretion in five stages over four years, he noted. Labs would have to begin submitting high-risk tests for premarket review about three-and-a-half years from publication of the final rule, but not before Oct. 1, 2027. Premarket review requirements for moderate- or low-risk tests would follow about six months later.

While he suggested a “wait and see” approach to the final rule, he advises labs that might be affected to develop a plan for dealing with it.

Potential Lawsuits

Stenzel also noted the likelihood of litigation in which labs or other stakeholders will seek to block implementation of the rule. “It’s a fairly widespread belief that there will be a lawsuit or lawsuits that will take this issue through the courts,” he said. “That could take several years. There is no guarantee that the courts will ultimately side with the FDA.”

In “Perfect Storm of Clinical Lab and Pathology Practice Regulatory Changes to Be Featured in Discussions at 29th Annual Executive War College,” Dark Daily covers how the forces in play will directly impact the operations and financial stability of many of the nation’s clinical laboratories.

Stenzel is scheduled to speak about the LDT rule during three sessions at the upcoming Executive War College on Diagnostic, Clinical Laboratory, and Pathology Management conference taking place on April 30-May 1 in New Orleans.

He acknowledged that it is a controversial issue among clinical laboratories. Many labs have voiced opposition to the rule as well as the Valid Act.

Currently in retirement, Stenzel says he is making himself available as a resource through public speaking for laboratory professionals and other test developers who are seeking insights about the agency.

“The potential value that I bring is recent experience with the FDA and with stakeholders both inside and outside the FDA,” he said, adding that during his presentations he likes “to leave plenty of time for open-ended questions.”

In the case of his talks at the Executive War College, Stenzel said he anticipates “a robust conversation.”

He also expects to address other FDA-related issues, including:

  • A recent memo in which the agency said it would begin reclassifying most high-risk In Vitro Diagnostic (IVD) tests—those in class III (high risk)—into class II (moderate to high risk).
  • The emergence of multi-cancer detection (MCD) tests, which he described as a “hot topic in the LDT world.” The FDA has not yet approved any MCD tests, but some are available as LDTs.
  • A new voluntary pilot program in which the FDA will evaluate LDTs in situations where the agency has approved a treatment but has not authorized a corresponding companion diagnostic.
  • An FDA effort to harmonize ISO 13485—a set of international standards governing development of medical devices and diagnostics—with the agency’s own quality system regulations. Compliance with the ISO standards is necessary to market products in many countries outside the US, particularly in Europe, Stenzel noted. Harmonization will simplify product development, he said, because manufacturers won’t have to follow two or more sets of rules.

To learn how to prepare for the FDA’s future regulation of LDTs, clinical laboratory and pathology group managers would be wise to attend Stenzel’s presentations at this year’s Executive War College. Visit here to learn more and to secure your seat in New Orleans.

—Stephen Beale

Related Information:

FDA Proposes Rule Aimed at Helping to Ensure Safety and Effectiveness of Laboratory Developed Tests

Proposed Rule Webinar: Medical Devices; Laboratory Developed Tests (webinar transcript)

Proposed Rule Webinar: Medical Devices; Laboratory Developed Tests (slides)

FDA Proposed Rule on Medical Devices; Laboratory Developed Tests

CDRH Announces Intent to Initiate the Reclassification Process for Most High Risk IVDs

Questions and Answers about Multi-Cancer Detection Tests Oncology Drug Products Used with Certain In Vitro Diagnostics Pilot Program

Perfect Storm of Clinical Lab and Pathology Practice Regulatory Changes to Be Featured in Discussions at 29th Annual Executive War College

Forces in play will directly impact the operations and financial stability of many of the nation’s clinical laboratories

With significant regulatory changes expected in the next 18 to 24 months, experts are predicting a “Perfect Storm” for managers of clinical laboratories and pathology practices.

Currently looming are changes to critical regulations in two regulatory areas that will affect hospitals and medical laboratories. One regulatory change is unfolding with the US Food and Drug Administration (FDA) and the other regulatory effort centers around efforts to update the Clinical Laboratory Improvement Amendments of 1988 (CLIA).

The major FDA changes involve the soon-to-be-published Final Rule on Laboratory Developed Tests (LDTs), which is currently causing its own individual storm within healthcare and will likely lead to lawsuits, according to the FDA Law Blog.

In a similar fashion—and being managed under the federal Centers for Medicare and Medicaid Services (CMS)—are the changes to CLIA rules that are expected to be the most significant since 2003.

The final element of the “Perfect Storm” of changes coming to the lab industry is the increased use by private payers of Z-Codes for genetic test claims.

In his general keynote, Robert L. Michel, Dark Daily’s Editor-in-Chief and creator of the 29th Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management, will set the stage by introducing a session titled, “Regulatory Trifecta Coming Soon to All Labs! Anticipating the Federal LDT Rule, Revisions to CLIA Regulations, and Private Payers’ Z-Code Policies for Genetic Claims.”

“There are an unprecedented set of regulatory challenges all smashing into each other and the time is now to start preparing for the coming storm,” says Robert L. Michel (above), Dark Daily’s Editor-in-Chief and creator of the 29th Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management, a national conference on lab management taking place April 30-May 1, 2024, at the Hyatt in New Orleans. (Photo copyright: The Dark Intelligence Group.)

Coming Trifecta of Disruptive Forces to Clinical Laboratory, Anatomic Pathology

The upcoming changes, Michel notes, have the potential to cause major disruptions at hospitals and clinical laboratories nationwide.

“Importantly, this perfect storm—which I like to describe as a Trifecta because these three disruptive forces that will affect how labs will conduct business—is not yet on the radar screen of most lab administrators, executives, and pathologists,” he says.

Because of that, several sessions at this year’s Executive War College conference, now in its 29th year, will offer information designed to give attendees a better understanding of how to manage what’s coming for their labs and anatomic pathology practices.

“This regulatory trifecta consists of three elements,” adds Michel, who is also Editor-in-Chief of Dark Daily’s sister publication The Dark Report, a business intelligence service for senior level executives in the clinical laboratory and pathology industry, as well in companies that offer solutions to labs and pathology groups.

According to Michel, that trifecta includes the following:

Element 1

FDA’s Draft LDT Rule

FDA’s LDT rule is currently the headline story in the lab industry. Speaking about this development and two other FDA initiatives involving diagnostics at the upcoming Executive War College will be pathologist Tim Stenzel, MD, PhD, former director of the FDA’s Office of In Vitro Diagnostics. It’s expected that the final rule on LDTs could be published by the end of April.

Stenzel will also discuss harmonization of ISO 13485 Medical Devices and the FDA’s recent memo on reclassifying most high-risk in vitro diagnostics to moderate-risk to ease the regulatory burden on companies seeking agency review of their diagnostic assays.

Element 2

CLIA Reforms and Updates

The second element is coming reforms and updates to the CLIA regulations, which Michel says will be the “most-significant changes to CLIA in more than two decades.” Speaking on this will be Reynolds Salerno, PhD, Acting Director, Center for Laboratory Systems and Response at the federal Centers for Disease Control and Prevention (CDC).

Salerno will also cover the CDC’s efforts to foster closer connections with clinical labs and their local public health laboratories, as well as the expanding menu of services for labs that his department now offers.

Element 3

Private Payer Use of Z-Codes for Test Claims

On the third development—increased use by private payers of Z-Codes for genetic test claims—the speaker will be pathologist Gabriel Bien-Willner, MD, PhD. He is the Medical Director of the MolDX program at Palmetto GBA, a Medicare Administrative Contractor (MAC). It is the MolDX program that oversees the issuance of Z-Codes for molecular and diagnostic tests.

UnitedHealthcare (UHC) was first to issue such a Z-Code policy last year, although it has delayed implementation several times. Other major payers are watching to see if UHC succeeds with this requirement, Michel says.

Other Critical Topics to be Covered at EWC

In addition to these need-to-know regulatory topics, Michel says that this year’s Executive War College will present almost 100 sessions and include 148 speakers. Some of the other topics on the agenda in New Orleans include the following and more:

  • Standardizing automation, analyzers, and tests across 25 lab sites.
  • Effective ways to attract, hire, and retain top-performing pathologists.
  • Leveraging your lab’s managed care contracts to increase covered tests.
  • Legal and compliance risks of artificial intelligence (AI) in clinical care.

“Our agenda is filled with the topics that are critically important to senior managers when it comes to managing their labs and anatomic pathology practices,” Michel notes.

“Every laboratory in the United States should recognize these three powerful developments are all in play at the same time and each will have direct impact on the clinical and financial performance of our nation’s labs,” Michel says. “For that reason, every lab should have one or more of their leadership team present at this year’s Executive War College to understand the implications of these developments.”

Visit here to learn more about the 29th Executive War College conference taking place in New Orleans.

—Bob Croce

Related Information:

One Step Closer to Final: The LDT Rule Arrives at OMB, Making a Lawsuit More Likely

FDA: CDRH Announces Intent to Initiate the Reclassification Process for Most High Risk IVDs

FDA Proposes Down-Classifying Most High-Risk IVDs

Z-codes Requirements for Molecular Diagnostic Testing

2024 Executive War College Agenda

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