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AACC addresses challenges facing clinical labs due to Medicare changes

July 31, 2017
By Diana Trinh, MLS(ASCP)CM
Clinical Analyst, MD Buyline

Scientists, professors, laboratory professionals, and vendors from a wide array of diagnostic specialties are gathering at the 69th American Association of Clinical Chemistry Annual Scientific Meeting & Clinical Lab Expo in San Diego this week.

They’ll be presenting topics relating to ways of tackling current issues and showcasing innovations in laboratory automation, data analytics, and diagnostics. Diana Trinh and Dennis Matricardi, clinical analysts from MD Buyline, will be filing reports exclusive to HCB News from the meetings and expo.

The Centers for Medicare and Medicaid Services (CMS) will begin its new Medicare reimbursement payouts for laboratory testing starting on January 1, 2018. This will bring about a sweeping change in the laboratory industry, because the current reimbursement policies have remained relatively unchanged since 1984.

Current policies have allowed laboratories to determine their own reimbursement rates based on the local fee for a geographic area or the national limit. The new reimbursement rates will be based on private payor rates collected from applicable Medicare-enrolled labs defined by CMS.

The data will be collected and updated every three years (or every year for molecular diagnostic testing) from a mixed bag of nationally known reference laboratories like Quest Diagnostics, along with smaller regional hospital laboratories, physician office laboratories, and independent laboratories whose total Medicare revenue makes up more than 50 percent of total, and exceeds $12,500 from lab services.

No longer will the rates be determined by geographical location and analytic costs. It will now be largely driven by the private payor rates of reference laboratories that can provide cheaper rates due to their massive testing volume.

It is expected that these new regulations will cause the reimbursement for laboratory testing to decrease by $390 million in the first year and by nearly $4 billion by the year 2025.

Clinical laboratories and vendors alike are now left with the challenges of what the future may hold. How will U.S. laboratories operate under heavy financial pressures and significant staffing shortage, but keep up with the quality and standards of modern health care? How can the industry prevent itself from becoming stagnant in clinical diagnostic innovations? What diagnostic tests will remain in-house and what tests will now have to be sent out to reference laboratories due to financial burdens? How can efficiency be improved to prevent waste and achieve better return on investments?

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