Clinical Molecular Dxs Shine in Revised Senate Bill; Clinical Labs ‘Potential Winners’

By Kirell Lakhman

Clinical labs have emerged as “potential winners” in the latest version of a health-care overhaul bill by the Senate Finance Committee, according to a report in Bloomberg today.

The revised proposal, released Friday, also includes changes in the so-called "date of service" policy that could increase revenue for labs that perform certain clinical molecular diagnostic tests — a potential boon both for test vendors and clinical labs.

After convincing the committee to shed a new $750 million annual tax, clinical labs could “benefit” from the new proposal by Committee Chairman Max Baucus, which now adds provisions seeking to “encourage greater use of disease screening,” which may in turn “boost [clinical labs] as a whole,” Bloomberg says.

The Bloomberg report singles out Quest, LabCorp, and Celera as “potential winners,” though the entire industry could benefit — a dramatic shift from late September, when the clinical lab community was staring down the barrel of a new $750 million annual tax. (Shares of all three companies were up slightly in mid-morning trade today.)

The committee seeks to spend $900 billion to overhaul the US health-care system, the principal goal of which is to provide health insurance to everyone in the US — a goal that would create armies of new patients “hungry for health care” that “in the medium- and long-term this will be a win for the entire industry,” John Sullivan, director of research and a health-care strategist at Leerink Swann, told Bloomberg.

Baucus’ revised bill would force health insurance companies to shell out the $750 million originally slated for clinical labs.

What’s next for the bill? Baucus has asked the Congressional Budget Office and the Joint Committee on Taxation for cost estimates of the package, and will vote on the legislation after it receives them later this week.

Baucus’ bill, as it currently stands, could also result in greater revenue for labs performing outpatient lab-developed clinical molecular diagnostic tests as part of the so-called "date of service" policy.

As written, the legislation “would provide that for a two-year period, in cases when a laboratory test is ordered less than 14 days after a beneficiary leaves a hospital, the laboratory furnishing the test could bill for tests that meet the following criteria:

• The test is an analysis of DNA, RNA, chromosomes, proteins, or metabolites that detects, identifies, or quantitates genotypes, mutations, chromosomal changes, biochemical changes, cell response, protein expression, or gene expression or similar method or is a cancer chemotherapy sensitivity assay or similar method, but does not include methods principally comprising routine chemistry or routine immunology;

• The test is developed and performed by a laboratory that is independent of the hospital where the sample was collected;

• The test is not furnished by the hospital where the sample was collected directly or under arrangements; and

• The sample was collected during a hospital encounter or stay, and is performed after the beneficiary leaves a hospital.”

The molecular test language appears on page 145 of the legislation.