By Gary Tufel

A major concern for the clinical lab industry is federal funding for health care. The deficit, now over $400 billion, has made many recipients of governmental largess vulnerable to budget cuts, and the clinical lab community is fearful that further cuts will affect them.

Other concerns involve changes in the regulations that govern the industry. Will the thrust and direction of these regulations shift with the new Congress? And what changes will occur at the state level? Currently, 11 US states and Puerto Rico require lab personnel to be licensed, and according to Clinical Laboratory Improvement Amendments (CLIA) requirements, only a high school education and training is needed in the remaining states, says Elissa Passiment, EdM, CLS (NCA) executive vice president of the American Society for Clinical Laboratory Science (ASCLS). Although ASCLS is a national organization, its constituent state organizations are very interested in the issue, she says.

In states like Michigan, Ohio, and Missouri, state societies are making efforts to require state licensure for lab workers. “But the prospects are anybody’s guess,” Passiment says. Opposition to licensure comes from the American Medical Association and the College of American Pathologists, who feel current requirements guarantee the quality of the personnel they hire and additional regulation is not necessary. “It’s the same old story, and their argument has been disproved time and again,” Passiment says. “However, it is difficult to make the case to state legislators, most of whom are not medical professionals.”

Last January the Rhode Island Department of Health released a proposed rule to license molecular diagnostic technologists. Assuming the rule becomes law, Rhode Island would be one of the first states to establish licensure in the area of molecular diagnostics. California has a similar license for clinical genetic molecular biologists (technologists).

Jeff Jacobs

At the national level, Jeff Jacobs, vice president, American Society for Clinical Pathology (ASCP), is keeping his eye on a National Institute of Health (NIH) requirement for all grantees to provide electronic copies of manuscripts upon publication in peer journals. That could have a chilling effect on research, says Jacobs. Other issues of concern are a regulation that governs lab testing and its classifications, and competitive bidding for lab services.

Primary Issue: Funding
Although Jacobs says that Congress has passed an omnibus appropriations bill that President Bush will sign, to reduce the deficit, Congress in 2005 may have to make cuts in health care spending, which is growing by more than 9% annually. According to the December ASCP e-Policy News, on November 27, 2004, Congress finalized an omnibus spending measure for federal appropriations for the 2005 fiscal year (FY). “Assuming President Bush signs the bill into law, it will provide the Title VII Allied Health Programs with $299.6 million. The figure is a slight increase over the 2004 FY allocation of $294.2 million. Most of the increased funding went to primary care and dentistry education programs. Considering the tight budget climate and the administration’s original request that the programs essentially be eliminated, the slight increase in funding is welcome news. The program of greatest interest to laboratory professionals is the allied health and other disciplines program, which will receive $11.8 million. Jacobs believes that new health care provider cuts are imminent. For clinical laboratories, this means laboratory co-payment and fee schedule cuts could be on the table. It is unlikely that Congress will take up the laboratory consumer price index (CPI) update, since that is frozen through 2009, and a competitive bidding demonstration for laboratory services is already in the works.

For the laboratory community, appropriations for the Labor-Health and Human Services-Education bill is of great interest because it provides funding for the Title VII allied health education programs. The House approved its version of the bill on September 9. The Senate has not completed its work on the bill, although the Senate Appropriations Committee has approved its version of it.

Some believe the Senate bill offers the most promise. It provides $303 million for Title VII, a 12% increase over the House-approved funding and 3% more than approved for the current fiscal year (FY). Level funding for the Allied Health and Other Special Projects Grant is provided in both Senate and House versions of the bill, which provides funding to start or expand allied health training programs, such as laboratory training programs.

Impending regulatory changes affecting the laboratory community include 11 codes for new clinical lab tests, established by the Current Procedural Technology (CPT) panel, which was expected to become effective January 1, 2005. This new testing is for conditions such as chest pain, pancreatic function, ulcers, Down syndrome, and respiratory conditions.

Jacobs says that in 2005, ASCP will look carefully at how Congress and the administration approach issues that affect the lab. There may be further reductions in patient and provider payments, he says, and ASCP will work with the government to avert these kinds of reductions. On the positive side, Jacobs says, CMS fee schedules for 2005 will permit an increase of 6% to independent labs and 2% to pathologists. Still, Jacobs predicts that 2005 will be difficult because of funding issues.

The NIH proposal to require all grantees to make available electronic copies of their manuscripts upon peer journal publication is an open access issue, and an attempt by NIH to provide information to the public on the use of NIH funds, Jacobs says. “But this rule would remove financial incentives to publish,” he says. “We’re concerned that research labs would have to close shop.”

NIH’s original request for input from the community on this issue was by invitation only, and Jacobs says the NIH needs to provide more time for work with and comments from the scientific community on rules that make sense and don’t adversely affect the research community and scientific journals.

The Centers for Medicare & Medicaid Services (CMS) hosted a public meeting regarding lab fees last July, and ASCP submitted comments. ASCP feels that most of the CMS determinations are consistent with ASCP’s recommendations. The new clinical laboratory fee schedule will be effective for services rendered January 1–December 31, 2005. The CMS was to provide instructions and fees to Medicare carriers and intermediaries for implementation of the new fee schedule around the last week of October 2004.

At a Clinical Laboratory Improvement Advisory Committee (CLIAC) meeting in September in Atlanta, ASCP opposed suggestions that the clinical laboratory fee schedule include new and revised codes for flow cytometry, in situ hybridization (ISH), and immunohistochemistry (IHC). It also offered payment recommendations for the 11 new clinical lab codes.

A discussion of waived testing labs and some of their problems opened the meeting. CMS representatives offered an overview of the findings of a CMS study of certificate of waiver (COW) labs. They concluded that serious quality problems do exist in COW facilities. The facilities suffer from high turnover, lack of formal education/training, and a lack of familiarity with good laboratory practice, according to CMS. They also found that only around 55% to 60% of COW facilities comply with manufacturers’ quality control instructions. (COW labs must register with Medicare, pay a $150 fee every 2 years, and agree to follow manufacturers’ instructions.) COW laboratories only perform tests that are determined by the Food and Drug Administration and the Centers for Disease Control and Prevention to be so simple that there is little risk of error. In 2002, 40 tests had been approved for COW status. To receive COW designation, laboratories must do three things: enroll in the CLIA program; pay applicable certificate fees biannually; and follow manufacturers’ test instructions. The number of COW laboratories has steadily increased. In 1992, about 20% of laboratories were COW labs. In 2002, 54% had that designation.

Vince Stine, director of governmental affairs for the American Association for Clinical Chemistry (AACC), says that the CLIA requirements, which were finalized in 1993 and govern all laboratory tests, place lab tests in three categories. Many companies would like to see new technology placed in the waiver category. Otherwise, new technology would be placed in one of the other two, stricter categories: moderate and high complexity. The waiver category means less regulation for certain tests, while providing manufacturers with a larger potential sales market. Stine expects new guidance early in 2005 that will be less stringent than that currently in effect. “This will get people’s attention because more and different types of tests will likely be included in the waiver category. We are likely to see more manufacturers trying to get their equipment into the waived environment,” Stine says.

He agrees that reining in the budget deficit will be the big issue. “New members of Congress are committed to that,” he says.

One proposal has to do with lab co-payments. Medicare beneficiaries don’t pay lab co-payments; Medicare pays 100% of the reduced fee, with no payment required from the beneficiary. But the proposal would have beneficiaries responsible for co-payments for lab work. The problem is that billing for the co-payments may be more costly than the actual fee. “Most labs feel that they’re not adequately reimbursed as it is, so they strongly oppose this measure,” Stine says.

There could also be fee-schedule cuts on the legislative table, Stine adds.

Elijah E. Cummings (D-Md)

Quality-Control Issues
At the CLIAC Atlanta meeting in September, CLIAC Chair David Sundwall, MD, addressed the need for CLIAC to discuss issues of quality due to revelations of testing problems at several Maryland laboratories. Sundwall noted that federal policymakers are studying whether current regulations governing quality assurance and control are sufficient. In October, a bill aimed at ensuring that labs perform medical tests that comply with federal standards was introduced by Rep Elijah E. Cummings (D-Md). The Clinical Laboratory Compliance Improvement Act of 2004 (HR 5311) also includes whistleblower protections for employees who alert appropriate authorities about medical lab safety violations.

Cummings calls medical laboratory testing “a fundamental pillar of our nation’s health care system. Virtually every American undergoes testing in the course of receiving medical care and relies on the accuracy of laboratory tests to receive appropriate medical care and treatment,” he says. He has addressed the issue of medical lab safety since reports that Maryland General Hospital (MGH) in Baltimore gave more than 450 patients questionable HIV and hepatitis-C test results. The reports prompted Cummings to call for two congressional hearings to examine the extent of safety violations at medical labs. During these May and July 2004 hearings, two former MGH employees testified that the fear of retaliation for reporting lab problems hindered immediate action on unsafe lab activities. It also was determined that miscommunication between various agencies involved in inspecting lab testing perpetuated unsafe lab operations, and that announcing inspections allowed the lab to cover up violations.

The hearing offered little assurance that what was occurring at MGB was an isolated incident, Cummings says. “Therefore, strong legislation is needed to ensure a high standard of health care for all Americans. The bill is about patient safety,” he says.

Cummings says that since the reports of long-standing, serious laboratory deficiencies at MGB were publicized in February, the hospital has made necessary corrections and is now in compliance with federal lab standards. Therefore, HR 5311 would help to deter further deliberate noncompliance by medical lab facilities and ease the reporting of serious deficiencies if and when they do occur.

The bill does the following:

  • establishes whistleblower protections for employees of medical laboratories
  • requires medical laboratories to post a conspicuous notice informing employees how and to whom to report problems and what whistleblower protections apply to them under federal law
  • requires the CMS, state health agencies, and private laboratory accrediting organizations to share information about reports of deficiencies and investigative activity undertaken pursuant to such reports
  • requires that standard accreditation surveys be conducted without prior notice to the medical laboratory facility to be surveyed
  • requires the US Secretary of Health and Human Services to submit an annual report to Congress describing how CMS, private accrediting organizations, and state health agencies responded to reports of deficiencies during the preceding year.

According to ASCLS’s Passiment, while theCummings’ bill doesn’t ask for state licensure, ASCLS will discuss the bill with him after they’ve studied it. “While regulating equipment is important, anything that doesn’t address personnel is ineffective,” she says. Jacobs notes that whether the bill will move forward is unclear, and that the industry is in favor of accreditation and increased quality controls. Although internal reforms already exist, the bill would increase the pressure to do more, he says.

The New Congress
What effect will the new Congress have on clinical laboratory regulation? Not much, according to Stine. He thinks the new Congress will make little shift in the current direction of legislation affecting clinical labs.

Jacobs sees the new Congress as composed of clinical lab champions in both parties. “The dynamic that is different is that Congress recognizes it has a large problem–namely, the federal deficit. That’s a reality no matter who won the election. The question is whether they’ll be targeting our programs to cut deficits,” Jacobs says.

“While Democrats are more likely to favor mandatory regulations and not cutting budgets and Republicans favor voluntary compliance, the process is issue by issue and not an ideological divide when it comes to lab issues,” Stine says.

Other Issues
Other issues on the horizon include the new provision for competitive bidding for lab products under the new Medicare bill. This is being administered by CMS in two model projects. The entire lab community opposes competitive bidding, Jacobs says, “We believe it could adversely affect patients’ health. What will happen to labs that only administer certain types of tests? Will it affect turnaround times? It’s a complicated issue.”

Florida will try competitive bidding for Medicaid services, and the industry will be watching closely, Jacobs says.

“Competitive bidding doesn’t work well for lab services,” says Stine. “They’re not a product. For services and tests, costs vary by site.” Volume affects whether or not a lab makes money, so payments for tests might be profitable for big labs, but smaller labs may be forced to drop out of the market,” he says. A status report on competitive bidding is due to Congress on December 31, 2005.

Other issues of interest to clinical laboratories that may reach Congress include patient safety/medical errors legislation and efforts to create a health information technology (HIT) network. Both the House and the Senate passed their versions of patient safety legislation to create a voluntary medical errors reporting system. Now, both may combine their measures into one. If not, the issue is likely to be reintroduced and enacted in the next session. The creation of a health technology information network is a priority of the Bush administration. HHS has already created an internal national coordinator position to guide federal efforts. Also, the department is working to expand the use of HIT by setting aside federal grants to assist local health care providers, and is offering funds to state governments to create state and regional networks. Rep Nancy Johnson (R-Conn) and Sen Judd Gregg (R-NH), chairs of two of the key health panels in Congress, both introduced legislation during the 108th Congress to foster the expansion of HIT. These are HR 2915, the National Health Information Infrastructure Act, and S2710, the National Health Information Technology Adoption Act. They are likely to reintroduce their measures once more in the 109th session. Information on these health measures is available on the congressional Web site at http://rs9.loc.gov/home/thomas.html.   

Gary Tufel is a contributing writer for Clinical Lab Products.