FINAL THOUGHTS

Teresa Lee is the vice president of payment and healthcare delivery policy at AdvaMed (Washington, DC). She can be reached at tlee@advamed.org.

As partners in the laboratory sciences industry, IVD manufacturers are aware that while clinical laboratory tests account for less than 2% of Medicare spending, they influence up to 70% of healthcare decisions. The current Medicare reimbursement system focuses on the treatment of acute conditions rather than the prevention and management of chronic diseases. Medicare payment processes do not recognize that clinical laboratory tests provide physicians with better information to make smarter, customized healthcare decisions that help prevent deaths and adverse events, and reduce additional costs.

The potential advantages of personalized medicine include molecular diagnostic tests that improve the healthcare provider’s ability to anticipate and prevent diseases long before symptoms appear. Pharmacogenomic tests will also allow physicians to either select appropriate drugs to treat a particular condition or predict a patient’s reaction to a medication. Both tests reduce the time necessary to treat the patient. The promise of personalized medicine is enormous in advancing care and helping control the cost of providing quality care.

Stalling Innovation

In 2000, the Institute of Medicine (Washington, DC) found that the current fee schedule for the Medicare payment system is complex, inefficient, and lacks transparency. A 2005 study by the Lewin Group (Falls Church, VA) likewise concluded that Medicare payment policies for new diagnostic laboratory tests are “archaic, impractical, and severely flawed” and found that the Clinical Lab Fee Schedule (CLFS) does not account for the value of diagnostics. The Lewin study also found few incentives for new test development because a new test may receive a lower Medicare payment than an older test, despite offering greater benefits to patients.

Based on laboratory charges established in 1983, the CLFS has not been adjusted for inflation in 11 of the past 17 years and, pursuant to legislation, cannot be considered for another update until 2009. To make matters worse, the Centers for Medicare & Medicaid Services (Baltimore) plans to launch a demonstration project in the San Diego area to test the application of competitive bidding to clinical lab payments. Legislated by Congress, this demonstration is designed to lower payments for diagnostics, but does not seem to take into account the already low payments for diagnostic tests. The project can only further hinder the progress toward the use of molecular diagnostic tests specifically, and the advancement of personalized medicine in general.

To address these issues, AdvaMed (Washington, DC) is urging Congress to pass the Medicare Advanced Laboratory Diagnostics Act to reform many of the outdated Medicare policies that discourage the development and adoption of new clinical diagnostic laboratory tests. The bill would establish a demonstration project to test a new Medicare payment system for certain molecular diagnostics. The demonstration would reflect the value of diagnostics in patient care management, associated resource requirements, and long-term cost reduction. It also would allow for a process to adjust items still on the CLFS through reconsideration of inadequate reimbursement rates for diagnostic tests.

In addition to AdvaMed, the American Society for Clinical Laboratory Science (Bethesda, MD), the American Medical Technologists Association (Park Ridge, IL), and the Clinical Laboratory Management Association (Wayne, PA) support the bill. Manufacturers of molecular diagnostic tests and other products that will be vital to the advancement and success of initiatives in personalized medicine are strongly encouraged to contact their congressional representative about this legislation. Continued development of state-of-the-art diagnostics is crucial to improving patient outcomes. We cannot let outdated reimbursement policies stymie the innovation of molecular diagnostics and the full potential of personalized medicine.