By Kirell Lakhman

ANAHEIM, Calif. — Just when you thought it was safe to put health-care reform out of mind comes a fresh batch of dreary predictions for clinical labs.

Opinions of the plan, signed into law in March, are like X chromosomes: Most people have at least one. But I sat up and listened when Gail Wilensky began peeling back some of its lesser-known layers during a plenary session today at this year's AACC annual conference, held here this week.

In general Wilensky, who has been a Quest Diagnostics director for more than 10 years and chaired the Medicare Payment Advisory Commission and oversaw Medicare policy in the 1990s, exuded cautious optimism about the law.

But she is also strikingly critical of many of its parts, and has no trouble characterizing it not as health-care reform but as a complex expansion of health insurance — in and of itself not a bad thing for clinical labs.

"Is this health-care reform?" Wilensky, an economist by training, said during her talk. "Not very much."

One expectation is certain of the law, which will go live in stages over the next few years: Among its signature totems are reduced reimbursement rates for clinical labs and a paucity of payment reforms.

"If you provide services for Medicare, you will be impacted in some way, primarily by either frozen or reduced payments," she cautioned.

Add to this the costs to comply with FDA's plan to regulate LDTs and clinical labs nationwide will soon be sampling a particularly bitter brew.

"For me, when you look at the [law], there really isn't a lot that looks like health-care reform in terms of reforming the delivery system," said Wilensky. This is a shame because a streamlined, cost-effective delivery system would have helped the understaffed and under-reimbursed clinical lab community.

"No one should be confused between payment reductions to the old, dysfunctional system, and payment reform," she added. "What we have now on the books is payment reduction under the old system, and what we have as a promise … is maybe finding a better way to reimburse [providers like clinical labs] and reward the kind of outcomes we'd like to see."

This from the person who served as deputy assistant to President George H. W. Bush for health and welfare issues, and chaired MedPac's Physician Payment Review Commission.

'Fundamentally Dysfunctional'

According to Wilensky, an economist by training, "it is especially hard to imagine that we can reform the health-care delivery system without reforming how [health-care service providers, including clinical labs] are paid."

She was referring to the ageing resource-based relative value scale system that Medicare relies on to make provider-reimbursement decisions.

Put in place in the late-1980s, the system, which Wilensky calls "fundamentally dysfunctional" and "perverse," "rewards physicians for doing more and more complex [procedures]" — including ordering costly and oftentimes superfluous diagnostics tests — "while doing nothing to reward or encourage physicians who are providing good-quality care with good outcomes."

Few can argue that this system has for decades force-fed the nation's health-care costs, which, according to Wilensky, grow more that 2 percent faster than the entire US economy each year.

Obama's health-care reform package will kill the system in December, and some in the clinical lab community believe the impending rise in the newly insured, together with a sturdy investment in preventive care — including greater use of diagnostic screening — will make up for that lost revenue.

Wilensky also criticized FDA's plan to regulate LDTs as medical devices, noting that "the question will be, 'If it occurs, how limited can it be made, and can there be a real consideration as to the chilling effect that it will likely have on innovation?'"

After her talk, I asked Wilensky to plumb her experience as a former Medicare chief to envision whether CMS can counteract the potential for increased regulatory costs of turning LDTs into IVDs — a task made more difficult because it isn't part of the health-care reform package and therefore does not have a financial backstop.

Shaking her head, Wilensky said "the probability of CMS changing its reimbursement policy [in response to the regulatory reform] is not high." She also urged the audience to be "proactive" with legislators and policy makers.

'Many Opportunities'

But let's not pull out the bottle just yet; health-care reform has "many opportunities," according to Wilensky. One of these, which I wrote about in March, would delay by two years a tax on all Class II and III medical devices," including certain diagnostic tests.

Another bright spot is the ageing US population and its impending effect on health-care demand. "We have a lot of chronic disease, which is a major cost burden for Medicare that pretty much guarantees ongoing care," she said. This demand will originate in clinical labs, which already play a major role in managing such illnesses, which include diabetes and heart disease.

Another "opportunity" is something called the CMS Innovation Center. Funded with $10 billion from the reform law's $1 trillion purse, the Center, which is in the early stages of development, will be designed to search for new ways Medicare can pay for the myriad services it supports. It will also seek simultaneously to cut CMS costs and improve health-care quality.

"This is very promising because we don't actually know how to make some of the changes" the law requires, Wilensky said of the Innovation Center. "We talk a lot about rewarding good outcomes and good patient care, but we don't know how to make that happen."

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