By Kirell Lakhman
With FDA and the clinical lab community gripped in a scrum over the agency's impending new LDT regulatory scheme, a good portion of the debate has focused on the potential new costs labs will face.
But I was surprised and disappointed that nearly none of the participants of the agency's two-day public meeting this week mentioned that other critical cost component of running a clinical lab: reimbursement.
So my question is: If labs are suddenly regulated as medical device makers, and will be required to file 510(k) or PMA approval submissions, how can they expect a return on what will essentially be an unfunded mandate?
More to the point, what steps can clinical labs take to ensure that reimbursement policies keep pace with the expected burden of additional regulatory compliance costs? The short answer is not much, at least for now.
"This will be a real issue, and the question will be how widespread it will be," according to Jeffrey Kant, chair of AMP's Economic Affairs Committee. "But the whole breadth of the LDT [regulatory changes] is still up in the air. You're not going to get any response from payors until they see what the lay of the land is."
And he cautioned: "I don't know where [CMS] is going to get the money for more reimbursement."
However FDA's new LDT regs shake out, almost every clinical lab will be on the hook, and many will stop offering certain tests — almost certainly the most clinically important, and costly ones. This will hurt the community it serves, an unintended consequence that FDA presumably wishes to avoid.
"It is absolutely crucial that reimbursement moves in relationship to where the regulation is," said Alexis Borisy, CEO of Foundation Medicine, which is developing next-gen sequencing-based cancer diagnostics. "Regulation is not itself intrinsically good or bad," he stressed. Rather, "it's about a trade-off of relative risk and benefits. How [that trade-off] stands in relation to reimbursement is the critical feature."
There has been pitifully little discussion about this topic in the blogosphere or in the news pages of trade publications covering clinical diagnostics, and hardly a word of it was mentioned during the FDA's public meeting (Read my posts from the meeting here and here).
The absence of dialogue during the meeting was most striking from the clinical lab community itself, which has the most to lose financially from changes in federal regulation.
AMP came closest to uttering the 'R' word during the meeting, when, on day two, Elaine Lyon, chair of AMP's Professional Relations Committee, acknowledged that "a major hurdle for the laboratories is securing coverage and reimbursement for tests they provide."
In a statement released that day, AMP echoed Lyon by saying that "escalating costs for test development, performance, interpretation and reporting, compounded with additional costs to satisfy new regulatory requirements, could result in the elimination of important clinical tests.