How will healthcare reform impact clinical labs?

Dec. 1, 2009

very few decades, Congress takes up the issue of
comprehensive healthcare reform. In most instances, it fails due to the
complexity of the task, the costs associated with expanding coverage,
and opposition from affected interests. The one exception was in 1965
when Lyndon Johnson won overwhelming liberal Democratic majorities in
Congress and was able to enact the Medicare and Medicaid programs into
law. The last time the issue was taken up — in 1993 — congressional
discussions ended in disarray with many Democrats opposing reform.

For supporters of reform in 2009, a number of factors
play in their favor: Reform has the backing of a popular, charismatic
president who has made healthcare reform a top priority; strong
Democratic majorities in both the House and Senate along with support
from key congressional leaders; and the tacit support from key
interests, such as insurers, hospitals, and physicians, who all agree
that changes need to be made.

Opponents are not without certain strengths: Time is
on their side. The longer it takes to pass reform, the less likely
Congress is to enact it. Given time, affected constituencies can
mobilize public opposition to reform by shifting the tone of the debate
— from providing needed care to the costs and who pays for it. Current
opinion polls indicate a sharp reduction in public support for reform,
moderate “Blue Dog” Democrats are increasingly raising concerns, and
Republicans are becoming more unified and vocal in their opposition.

What does this for reform mean in 2009? To use a
football metaphor, we are nearing the end of the third quarter with one
quarter to play. Supporters for reform need to score to win. They either
have to throw a “Hail Mary”' pass in the hopes of winning everything on
a single play or throw a number of short, safe passes to gradually reach
the end zone. Although the former approach has its merits, the latter is
usually more successful. Reform proponents need to decide whether they
want to take an all-or-nothing approach or accept incremental change.
The most likely scenario is that the president and congressional leaders
will take limited reform over nothing.

In his September speech to a joint session of
Congress, President Obama identified a number of areas that seem to have
congressional support, including banning insurers from denying coverage
due to pre-existing conditions; limiting out-of-pocket expenses for
beneficiaries; creating insurance exchanges that allow small businesses
and individuals to obtain better prices; and providing subsidies to help
the near-poor purchase insurance. Items unlikely to be part of the
package include a government-initiated public option or any coverage for
illegal immigrants, and it is still unclear if small businesses will be
required to provide insurance to their employees or pay a tax.

The funding side of healthcare reform is certainly a concern for the clinical laboratory industry.

Some provisions of healthcare reform will clearly
benefit clinical laboratories if enacted, such as expanding the number
of people covered by insurance, including laboratory testing in a
minimum-benefits package and promoting preventive services. What is not
clear at this point is how many more individuals will be added to the
health-insurance rolls if Congress passes this legislation and how many
of those will need lab tests.

Any healthcare-reform package is likely to include
comparative effectiveness research (CER). Although the final House bill
keeps CER under the purview of the Agency for Health Care Research and
Quality (AHRQ), the Senate package would create a private, non-profit
institute to coordinate these research activities. AACC's preference is
that this activity remains within AHRQ.

A key benefit from CER is that it could help
healthcare professionals identify which tests or methods are most
appropriate for diagnosing certain conditions, particularly for
different subpopulations. Also, CER could illustrate the value of
laboratory testing, since it is likely to be used in studies that
measure the effectiveness of different treatment options. A further
benefit for clinical laboratories is the Senate's emphasis on
personalized medicine, which includes patient subgroups within the CER

The funding side of healthcare reform is certainly a
concern for the clinical laboratory industry. Increasingly, legislators
are looking toward providers to bear a significant cost of reform in the
form of reduced payments. Both the House the Senate are likely to
include a permanent reduction the annual consumer price index (CPI)
update that laboratories receive. This reduction will vary depending on
the “productivity adjustment” for a given year. Since 2000, this figure
has ranged from 0.2% to 2.6% annually.

The Senate bill also targets clinical laboratories
for an additional cut. Initially, the panel proposed instituting an
annual $750 million tax on all clinical labs — generating revenue in
excess of $500,000 a year — starting in 2010. The Committee replaced
this tax with an additional 1.75% cut in the laboratory CPI update. This
is a better deal for the laboratory community since this provision
expires after 2015. Labs can expect reductions in Medicare
reimbursements, however, of approximately $10 billion over the next 10
years to help pay for reform.

One way or the other, the debate over healthcare reform will soon be

Vince Stine, PhD, is the director of Government
Affairs for AACC, where he is responsible for legislative and regulatory affairs. Stine is also an adjunct professor of Political Science at The George Washington University.