INDUSTRY NEWS
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The provisions in the first part of the bill aim to do the following: improve current processes for obtaining adequate reimbursement for new clinical diagnostic lab tests; provide more transparency with respect to Medicare reimbursement decisions; and afford timely correction of historic payment errors that often lead to inadequate payment.
The other key component of the bill is the establishment of a demonstration project to evaluate a new Medicare payment system for molecular diagnostic tests. This project is designed to reflect more appropriately the value of molecular technologies to patient care management, and their potential to reduce long-term healthcare costs and improve overall healthcare efficiencies.
Many industry analysts believe that this legislation is long overdue. Until now, reimbursement for lab tests has been tied to the lab fee schedule, which has imposed national limitation amounts that have not kept current with economic indicators. With new diagnostic technologies providing greater accuracy and more information, such an antiquated schedule ensured that the value of new tests was not recognized by reimbursement, and effectively imposed a barrier to their use.
The bill’s provisions provide for a measured introduction of reforms. Some of the short-term provisions include reconsidering existing payment decisions and defining procedures for the gap-fill method. Such procedures and increased transparency, which has been under the direction of CMS, would provide useful means of correcting errors and standardizing payment decision processes for new tests.
In addition, while labs and IVD manufacturers want reform as soon as possible for all tests, the proposed demonstration project will initially only look at molecular tests that are more likely to be price sensitive. If the results of the project indicate that the new payment system is effective, then wider application is indicated by the bill.
Industry analysts are encouraged by this bill and feel that it is a good first step toward beginning to make changes in Medicare reimbursement for laboratory diagnostic testing.
“The bill is appropriate for the current fiscal and political climate,” said Jeff Bush, director, corporate reimbursement at BD (Franklin Lakes, NJ). “It offers needed reform to the current Medicare reimbursement system, and gives CMS and stakeholders a chance to evaluate a new payment system for our industry’s most sophisticated diagnostic tests, without disrupting the entire Clinical Laboratory Fee Schedule. The molecular diagnostics demonstration project may be limited in scope, but its progressive ideas, if successful, could become the platform for further reform.”
Some analysts indicated that one area the bill does not address is the reimbursement of laboratory-developed home-brew tests versus traditional tests developed by IVD companies.
“At the present time, both lab-developed tests and company-developed ones are reimbursed at the same rate, while IVD development and production costs are higher among IVD companies given the imposition of FDA regulatory requirements,” said Tom Tsakeris, president of Devices and Diagnostics Consulting Group Inc. (Rockville, MD). “Many in the IVD industry have advocated higher reimbursement rates for FDA-approved tests as a premium for the added quality that such tests offer in terms of analytical, clinical, and production validations that must be demonstrated for advanced diagnostic devices before they may be marketed. Unfortunately, this aspect has not been addressed in this bill.”
More information about this bill can be accessed via AdvaMed’s Web site at www.advamed.org/publicdocs/news_event_ald_act2006.shtml
