Supplychain shortages involving clinical laboratory products may not ease up any time soon, as China’s largest shipping province is once again in COVID-19 lockdown
Following two years of extremely high demand, pathology laboratories as well as non-medical labs in the United Kingdom (UK) and Europe are experiencing significant shortages of laboratory resources as well as rising costs. That’s according to a recently released survey by Starlab Group, a European supplier of lab products.
In its latest annual “mood barometer” survey of around 200 lab professionals in the UK, Germany, Austria, Italy, and France, Starlab Group received reports of “empty warehouses” and a current shortage of much needed lab equipment, reportedly as a result of rising costs, high demand, and stockpiling of critical materials needed by pathology laboratories during the COVID-19 pandemic, according to Laboratory News.
The survey respondents, who represented both medical laboratories and research labs, noted experiencing more pressure from staff shortages and insufficient supplies required to meet testing demands in 2021 as compared to 2020. For example, only 23% of respondents said they had enough liquid handling materials—such as protective gloves and pipettes—in 2021, down from 39% who responded to the same question in 2020.
“The entire laboratory industry has been in a vicious circle for two years. While more and more materials are needed, there’s a lack of supplies. At the same time, laboratories want to stockpile material, putting additional pressure on demand, suppliers, and prices,” Denise Fane de Salis, Starlab’s UK Managing Director and Area Head for Northern Europe, told Process Engineering. “Institutes that perform important basic work cannot keep up with the price competition triggered by COVID-19 and are particularly suffering from this situation,” she added.
“COVID-19 is the largest, but by no means the only challenge facing Europe’s laboratories,” Denise Fane de Salis (above), Starlab’s UK Managing Director and Area Head for Northern Europe, told Laboratory News. “The mood barometer we commissioned once again clearly shows that we need to look at the entire range of laboratory work. The laboratory sector is not only essential in medicine and research. Diagnostics have long since encompassed almost all areas of life and the economy.” Those in this country responsible for clinical laboratory supply chains should consider what Salis is advising. (Photo copyright: Starlab UK.)
Lab Supply Shortages Worsen in 2021
With a UK office in Milton Keynes, Starlab’s network of distributors specialize in liquid handling products including pipette tips, multi-channel pipettes, and cell culture tubes, as well as PCR test consumables and nitrile and latex gloves.
According to Laboratory News, Starlab’s 2021 annual survey, released in March 2022, found that:
64% cited late deliveries contributing to supply woes.
58% noted medical labs getting preference over research labs, up from 46% in 2020.
57% said demand for liquid handling products was the same as 2020.
30% of respondents said material requirements were up 50% in 2021, compared to 2020.
76% reported dealing with rising prices in lab operations.
29% expect their need for materials to increase by 25% in 2022, and 3% said the increase may go as high as 50%.
17% of respondents said they foresee challenges stemming from staff shortages, with 8% fearing employee burnout.
UK-European Medical Laboratories on Waiting Lists for Supplies
Could import of lab equipment and consumables from Asia and other areas outside UK have contributed to the shortages?
“A substantial portion of the world’s clinical laboratory automation, analyzers, instruments, and test kits are manufactured outside UK. Thus, UK labs may face a more acute shortage of lab equipment, tests, and consumables because governments in countries that manufacture these products are taking ‘first dibs’ on production, leaving less to ship to other countries,” said Robert Michel, Editor-in-Chief of Dark Daily and our sister publication The Dark Report.
Indeed, a statement on Starlab’s website describes challenges the company faces meeting customers’ requests for supplies.
“The pandemic also has an impact on our products that are manufactured in other countries. This particularly affects goods that we ship from the Asian region to Europe by sea freight. Due to the capacity restrictions on the ships, we expect additional costs for the transport of goods at any time. Unfortunately, the situation is not expected to ease for the time-being,” Starlab said.
Furthermore, economists are forecasting probable ongoing supply chain effects from a new SARS-CoV-2 outbreak in China.
Lockdown of China’s Largest Shipping Province Threatens Supply Chains Worldwide
According to Bloomberg News, “Shenzhen’s 17.5 million residents [were] put into lockdown on [March 13] for at least a week. The city is located in Guangdong, the manufacturing powerhouse province, which has a gross domestic product of $1.96 trillion—around that of Spain and South Korea—and which accounts for 11% of China’s economy … Guangdong’s $795 billion worth of exports in 2021 accounted for 23% of China’s shipments that year, the most of any province.”
Bloomberg noted that “restrictions in Shenzhen could inflict the heaviest coronavirus-related blow to growth since a nationwide lockdown in 2020, with the additional threat of sending supply shocks rippling around the world.”
“Given that China is a major global manufacturing hub and one of the most important links in global supply chains, the country’s COVID policy can have notably spillovers to its trading partners’ activity and the global economy,” Tuuli McCully, Head of Asia-Pacific Economies, Scotiabank, told Bloomberg News.
Wise medical laboratory leaders will remain apprised of supply chain developments and possible lockdowns in Asia while also locating and possibly securing new sources for test materials and laboratory equipment in anticipation of future supply shortages.
Speakers at this week’s Executive War College in San Antonio explained that the way records are collected and stored plays a large part in the long-term usefulness of clinical laboratory data
Data structure as a term may not flow off the lips of clinical laboratory and pathology laboratory managers, but it should be top-of-mind. Well-structured data improves reimbursements and, in aggregated form, can be an enticing avenue to partnerships with outside parties.
Data structure refers to the makeup of digital records—in other words, how data is collected, stored, and accessed. Structured information offers consistency and is easier to analyze and share.
“You have to make sense of all that messy data, and that’s a heavy lift,” she said. “Results are not standardized.”
Appeals Payments Increase with More Clinical Data
Data quality can improve claim reimbursement appeals, Goede noted. When a more complete clinical record is provided to payors, they are more likely to reimburse for services.
According to information Goede covered along with Julie Ramage, Director of Precision Medicine Quality Initiatives and Partnerships at biopharmaceutical company AstraZeneca, when appealing a denied claim for a colon cancer molecular test, for example, the average appeal payment was $318 without cross-specialist clinical records.
Meanwhile, payment for a similar claim appeal which included that added data jumped to $612!
This information is often available, but may not be structured in a way that makes it easy to share with a payer. “You really have to be thinking about what elements you need,” Goede said.
Market for Structured, Anonymized Lab Data
Clinical laboratories that want to provide or sell anonymized, aggregated data to outside parties—such as research firms or pharmaceutical companies—also need to pursue efficient data structure. The re-use of existing, high-quality lab data can create a new business revenue stream.
“But it has to be more than that vanilla, male/female, date-of-birth stuff,” Ramage noted.
For example, she said, genetic testing builds up data registries, and that’s what pharma is looking for to find patients early on.
“If you don’t have a way to structure your data, you’re not going to be able to play in the sandbox,” she added.
Co-presenters Julie Ramage (left), Director of Precision Medicine Quality Initiatives and Partnerships at AstraZeneca Pharmaceuticals, and Patricia Goede, PhD (right), Vice President of Clinical Informatics at XIFIN, Inc., answer attendee questions about data structure during their presentation at this week’s Executive War College Conference on Laboratory and Pathology Management in San Antonio. To register for EWC 2022 and receive a special early-bird rate, click here by November 6.
How Clinical Laboratories Can Improve Clinical Data Structure
Here are some tips for clinical laboratory executives to consider as they tackle data structure:
Standardize how to enter patient information and test results. A common problem with data input is that the same information is entered differently over time. For example, various patient records might refer to dates in different ways: November 1, 2021, can also be entered as 11/1/21, 11/1/2021, or 11-01-21. Structured data uses a single way to list dates in records. This lesson applies to all similar clinical data.
Use dropdown menu choices instead of free-typing, open fields. An online box to enter a test result can create a variety of entries that affect data structure. While not perfect, drop-down options create a consistent set of entries, Goede said.
Ask patient advocacy groups about common nomenclature. Clinical laboratory data should reflect how patients speak, Ramage said. For example, do patients refer to genomic and genetic testing as the same thing? Establishing more consistency improves data structure as records are updated.
Enlist your organization’s IT or research team for help. Tech workers and principal investigators can easily look at clinical laboratory data and tell what information is missing or inconsistent, said Cheryl Schleicher, Director of IT Strategy at Northwell Health Labs in Lake Success, NY. Schleicher attended this week’s Executive War College.
Look Further into Clinical Laboratory Data Structure
Data structure can help clinical laboratories and pathology laboratories grab more reimbursement dollars and potentially sell anonymized data to external partners.
It is an area many lab executives are not familiar with and need to investigate more, particularly following the accelerated move to digital lab services during the COVID-19 pandemic. Your organization’s IT department or Chief Information Officer can be a useful ally.
If you could not make it to this week’s Executive War College, then join us for our next Executive War College on April 27-28, 2022, in New Orleans. Click here to take advantage of special early-bird pricing for this critical event.
When people receive COVID-19 testing at an out-of-network facility, federal law requires insurers to pay that clinical laboratory’s posted ‘cash price’ when negotiated prices have not previously been established
In the latest example that some COVID-19 testing companies are charging significantly higher prices than others, The New York Times (NYT) recently reported that one COVID lab company with “more than a dozen testing sites” throughout the US was charging $380 for a COVID-19 rapid test that can be purchased at many drug stores for $20. Sadly, this practice, the NYT also noted, is protected by federal law.
Media reporters and the lay public are not fully aware of the long-established clinical laboratory test payment modalities that govern the daily performance of tests ordered as part of regular healthcare. Thus, when the COVID-19 pandemic hit—along with tens of billions of federal dollars to pay for SARS-CoV-2 tests—it triggered a gold rush of people wanting to get into the clinical laboratory testing business specifically to make money.
It is the bad actors in this group who are tainting the entire clinical laboratory industry with often outrageous business practices that, at best, cross ethical lines—such as overpricing tests to consumers—and at worst, represent fraudulent behavior, such as inducing medically-unnecessary tests, then submitting claims for these tests.
Even as the pandemic appears to be waning, news outlets are reporting instances of insurers being charged higher “cash prices” for tests performed by out-of-network testing laboratories. Worse yet, federal law requires insurers to pay these exorbitant prices and they are not happy about it.
In-Network versus Out-of-Network Pricing
In its report, the NYT noted that the CARES Act (H.R. 748) requires insurers to pay whatever “cash prices” out-of-network labs post online, and that this is leading to “expensive coronavirus tests” that could ultimately be reflected in future “higher insurance premiums” charged to healthcare consumers.
One company the NYT highlighted in its report is GS Labs in Omaha, Neb., a provider of COVID-19 testing throughout the US. The testing company’s COVID-19 Pricing Transparency webpage lists these prices for the following COVID-19 tests:
“Insurers are obligated to pay cash price, unless we come to a negotiated rate,” Christopher Erickson, a GS Labs Partner, told the NYT.
Negotiate or ‘Pay the Provider’s Cash Price’
In Missouri, Blue Cross and Blue Shield of Kansas City (Blue KC) has filed a lawsuit against GS Labs. “This action seeks a judgment declaring Blue KC and our members are not required to pay GS Labs’ unreasonable, inflated reimbursement demands,” according to a Blue KC news release.
However, section 3202 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act “specifies the process for private health insurance plan issuers to reimburse providers of COVID-19 diagnostic tests. Specifically, a reimbursement rate negotiated for such test prior to the public health emergency declared on January 31, 2020, continues to apply for the duration of the emergency. If a reimbursement rate was not negotiated prior to the emergency declaration, an issuer may either negotiate such rate or pay the provider’s cash price.”
In its own news release, GS Labs said it has “countersued Blue KC over the insurance company’s failure to pay $9.7 million for COVID tests covered by federal law.”
According to a legal expert who spoke with the NYT, GS Labs has grounds for its test charges due to the CARES Act. “Whatever price the lab puts on their public facing website, that is what has to be paid. I don’t read a whole lot of wiggle room in it,” said Sabrina Corlette, JD, Research Professor and Co-Director of the Center on Health Insurance Reforms at Georgetown University.
“Unfortunately,” noted Loren Adler (above), Associate Director of the USC-Brookings Schaeffer Initiative for Health Policy, in a blog post, “this ‘cash price’ is not a market-determined price—it is irrelevant to patients because all options have to be made free to them by law, so there is little constraint on how high this is set by testing entities. Nor is there any reason for out-of-network entities to accept any less than this amount (other than a desire to contract in the future with the insurer for fear of a public relations backlash). Moreover, in theory the patient can still be surprise balance billed if the provider’s charge is higher than this ‘cash price,’ though it is unclear why any provider would list a ‘cash price’ lower than their charge.” (Photo copyright: The Brookings Institution.)
In his analysis, Adler suggested the law be revised to require commercial insurers to pay for COVID-19 testing at Medicare prices.
Patient Receives a $54,000 ‘Surprise’ Bill for COVID-19 Out-of-Network Test
The patient, Travis Warner, reportedly has insurance from Molina Healthcare through the federal Health Insurance Marketplace. After an employee at his company tested positive for COVID-19, Warner drove 30 miles outside of Dallas in search of COVID-19 testing sites. He eventually visiting an out-of-network free-standing emergency room in Lewisville where he received PCR diagnostic and rapid antigen tests. The results of the tests were negative for COVID-19. But the bill was a shock.
The total bill came to $56,384. Molina Healthcare paid its negotiated rate of $16,915.20 for the testing and facility fee, leaving Warner responsible for the remaining $54,000!
In the end, Warner did not have to pay the bill. Molina resolved the charge with SignatureCare and, in a statement to KHN, wrote, “This matter was a provider billing error, which Molina identified and corrected.”
For its part, SignatureCare Emergency Centers, with freestanding centers throughout Texas, said it has a “robust audit process” to flag errors and processed “thousands of records a day” at the height of the pandemic, according to KHN, which reported the business showing a $175 price for a COVID-19 test on its website.
“If the insurance company is paying astronomical sums of money for your care, that means in turn that you are going to be paying higher (insurance) premiums,” Adler told KHN.
Insurance Group Finds Price Gouging
“Price gouging on COVID-19 tests by certain providers continues to be a widespread problem,” according to a statement by America’s Health Insurance Plans (AHIP), a national association representing insurers.
AHIP has studied COVID-19 test prices since April 2020. It released a survey earlier this year which found COVID-19 test prices were on average $130. However, AHIP also found that out-of-network providers charged “significantly higher” (more than $185) for more than half (54%) of COVID-19 tests (PCR, antigen, antibody) in March 2021—a 12% increase since 2020. More than 27% of COVID-19 tests in March 2021 were done out-of-network, a 6% increase since 2020.
However, in, “COVID-19 Lab Test Prices Give Some Health Plans ‘Indigestion’,” Dark Daily’s sister publication, The Dark Report, wrote, “Interestingly, [AHIP] researchers reported that the share of COVID-19 tests claims submitted from ‘high-cost locations’—identified as hospitals and emergency departments—declined from 18% in the first three months of the pandemic to only 5% during the first three months of 2021.”
Niall Brennan, President and CEO of the Health Care Cost Institute (HCCI), told KHN, “People are going to charge what they think they can get away with. Even a perfectly well-intentioned provision like [the CARES Act] can be hijacked by certain unscrupulous providers for nefarious purposes.”
Of course, most medical laboratories priced their tests fairly and have performed them in an efficient and professional manner during the pandemic. So, it is unfortunate to learn through AHIP’s survey findings and the media that some COVID-19 testing providers are posting prices that may confuse patients and affect their health insurance premiums.
Royal College of Pathologists of Australia says the pandemic is ‘suppressed’ to ‘intermittent’ outbreaks, thanks to the dedication of thousands of pathologists, medical scientists, and laboratory professionals
COVID-19 efforts in Australia have achieved a milestone. Pathology laboratories there have performed more than 12 million SARS-CoV-2 tests since the pandemic began. That is an impressive feat and is equal to about half the country’s population of 25.4 million people.
“It is an incredible feat,” they continued. “Australia’s current position of having effectively suppressed the virus to intermittent outbreaks owes much to the year-long dedication and ingenuity of 35,000 pathologists, medical scientists, lab technicians, couriers, phlebotomists, and ancillary personnel.”
Australia Pathology Society Recognizes Accomplishments
Furthermore, Graves and Bott wrote, pathology in Australia deserves recognition for these pandemic-related accomplishments, among others, as well:
Australia launched drive-through COVID-19 testing clinics even before the pandemic was declared by the World Health Organization (WHO).
An RCPA quality assurance program for lab COVID-19 testing was the first of its kind to start worldwide, and it became a model for other countries.
Australia’s pathology labs were fast to develop in-house test kits once they had the genome sequence for the SARS-CoV-2 coronavirus.
Quick Responses to COVID-19 in the Land Down Under
The Doherty Institute (a joint venture of the University of Melbourne and the Royal Melbourne Hospital) offers research, teaching, public health and reference lab services, diagnostics, and clinical care for infectious diseases and immunity.
After receiving the patient sample on Jan. 24, 2020, institute scientists were the first outside China to grow the coronavirus in cell culture, noted a University of Melbourne news release.
“We’ve planned for an incident like this for many, many years, and that’s really why we were able to get an answer so quickly,” Dr. Mike Catton (above), Co-Deputy Director, Doherty Institute and Director of the Victorian Infectious Diseases Reference Laboratory (VIDRL), said in the news release. (Photo copyright: ABC News.)
Doherty Institute researchers also were first to report on immune response to COVID-19, according to a second news release.
“When COVID-19 emerged, we already had ethics and protocols in place so we could rapidly start looking at the virus and immune system in great deal,” Dr. Irani Thevarajan, Infectious Disease Physician, Doherty Institute, Royal Melbourne Hospital, said in the second news release.
“Our study provides novel contributions to the understanding and kinetics of immune responses during a non-severe case of COVID-19. This patient did not experience complications of respiratory failure or acute respiratory distress syndrome, did not require supplemental oxygenation, and was discharged within a week of hospitalization, consistent with non-severe but symptomatic disease,” Thevarajan and co-authors wrote in Nature Medicine.
Drive-Through COVID-19 Testing Sites in Australia
Also impressive was Australia’s launch of drive-through COVID-19 testing on March 9, 2020, before the pandemic was declared by WHO on March 11.
The COVID-19 testing site in Adelaide, South Australia, was “believed to be a first for the country’s public health system,” ABC News reported.
Public Recognition for Medical Laboratories has Global Reach
The COVID-19 response and scientific contributions by pathology laboratory scientists and researchers in Australia are noteworthy. It is also significant that Australia’s pathology professional society sought recognition for medical laboratory workers by detailing their accomplishments during the pandemic and sharing them in media with national and global reach.
The No Surprises Act, passed as part of the COVID-19 relief package, ensures patients do not receive surprise bills after out-of-network care, including hospital-based physicians such as pathologists
Consumer demand for price transparency in healthcare has been gaining support in Congress after several high-profile cases involving surprise medical billing received widespread reporting. Dark Daily covered many of these cases over the years.
Now, after initial opposition and months of legislative wrangling, organizations representing medical laboratories and clinical pathologists have expressed support for new federal legislation that aims to protect patients from surprise medical bills, including for clinical pathology and anatomic pathology services.
The new law Congress passed is known as the No Surprises Act (H.R.3630) and is part of the $900 billion COVID relief and government funding package signed by President Trump on December 27.
The law addresses the practice of “balance billing,” in which patients receive surprise bills for out-of-network medical services even when they use in-network providers. An ASCP policy statement noted that “a patient (consumer) may receive a bill for an episode of care or service they believed to be in-network and therefore covered by their insurance, but was in fact out-of-network.” This, according to the ASCP, “occurs most often in emergency situations, but specialties like pathology, radiology, and anesthesiology are affected as well.”
Most portions of the No Surprises Act take effect on January 1, 2022. The law prohibits balance billing for emergency care, air ambulance transport, or, in most cases, non-emergency care from in-network providers. Instead, if a patient unknowingly receives services from an out-of-network provider, they are liable only for co-pays and deductibles they would have paid for in-network care.
New Law Bars Pathologists from Balance Billing without Advance Patient Consent
The law permits balance billing under some circumstances, but only if the patient gives advance consent. And some specialties, including pathologists, are barred entirely from balance billing.
The law also establishes a process for determining how healthcare providers are reimbursed when a patient receives out-of-network care. The specifics of that process proved to be a major sticking point for providers. In states that have their own surprise-billing protections, payment will generally be determined by state law. Otherwise, payers and providers have 30 days to negotiate payment. If they can’t agree, payment is determined by an arbiter as part of an independent dispute resolution (IDR) process.
Early Proposal Drew Opposition
An early proposal to prohibit surprise billing drew opposition from a wide range of medical societies, including the ASCP, CAP, and the American Medical Association (AMA).
All were signatories to a July 29, 2020, letter sent to leaders of the US Senate and House of Representatives urging them to hold off from enacting surprise billing protections as part of COVID relief legislation. Though the groups agreed in principle with the need to protect patients from surprise billing, they contended that the proposed legislation leaned too heavily in favor of insurers, an ASCP news release noted.
“Legislative proposals that would dictate a set payment rate for unanticipated out-of-network care are neither market-based nor equitable, and do not account for the myriad inputs that factor into payment negotiations between insurers and providers,” the letter stated. “These proposals will only incentivize insurers to further narrow their provider networks and would also result in a massive financial windfall for insurers. As such, we oppose the setting of a payment rate in statute and are particularly concerned by proposals that would undermine hospitals and front-line caregivers during the COVID-19 pandemic.”
On December 11, leaders of key House and Senate committees announced agreement on a bipartisan draft of the bill that appeared to address these concerns, including establishment of the arbitration process for resolving payment disputes.
However, in a letter sent to the committee chairs and ranking members, the AHA asked for changes in the dispute-resolution provisions, including a prohibition on considering Medicare or Medicaid rates during arbitration. “We are concerned that the IDR process may be skewed if the arbiter is able to consider public payer reimbursement rates, which are well known to be below the cost of providing care,” the association stated. However, legislators agreed to the change after last-minute negotiations.
“The AHA is pleased that Congress rejected approaches that would impose arbitrary rates on providers, which could have significant consequences far beyond the scope of surprise medical bills and impact access to hospital care,” AHA President and CEO Rick Pollack (above) said in a statement. “We also applaud Congress for rejecting attempts to base rates on public payers.” (Photo copyright: American Hospital Association.)
Dispute Resolution for Pathologists
The CAP also expressed support for the final bill. In a statement, CAP noted that “As the legislation evolved during the 116th Congress, CAP members met with their federal lawmakers to discuss the CAP’s policy priorities.
“Through the CAP’s engagement and collaboration with other physician associations, the legislation improved drastically,” the CAP stated. “Specifically, the CAP lobbied Congress to hold patients harmless, establish a fair reimbursement formula for services provided, deny insurers the ability to dictate payment, create an independent dispute resolution (IDR) process that pathologists can participate in, and require network adequacy standards for health insurers.”
As laboratory testing was identified by thousands of respondents to the University of Chicago survey as the top surprise bill, it is likely that billing and transparency in charges for clinical pathologist and anatomic pathologist will continue to be scrutinized by law makers and healthcare associations.
