NEW YORK — German laboratory and diagnostic companies are pushing back on cuts to test reimbursement rates planned to go into effect next year.
Under the cuts — which are meant to free up funds for increased spending in other parts of the country's healthcare system, including boosting physician salaries — some laboratory tests could see their reimbursement chopped by more than 70 percent.
According to Torsten Kiesner, head of press and communications for the Association of the Diagnostics Industry in Germany (the Verband der Diagnostica-Industrie, or VDGH), the cuts are projected to affect a total of 509 tests with an average cut of 9 percent and a median cut of 8 percent. The cuts apply to testing covered by public health insurance, which roughly 90 percent of German residents have.
The cuts to test reimbursement are part of a larger budget-neutral pricing reform program. Under the program, additional money is not being made available, but, instead, roughly €250 million ($270.1 million) will be reallocated within the healthcare system.
Payment rates for German medical services, including laboratory testing, are determined through negotiations between the country's payors, represented by the Association of Statutory Health Insurance Funds, and its providers, represented by the National Association of Statutory Health Insurance Physicians. In cases where the parties are not able to reach an agreement, an "extended evaluation committee is convened as an arbitration body," Kiesner said.
Reimbursement rates for medical services in Germany are published in the EBM catalog (Uniform Assessment Standard, or Einheitlicher Bewertungsmaßstab), which is updated quarterly. Following publication of the new EBM rates in April, the VDGH, which represents more than 100 in vitro diagnostic firms doing business in German, issued a statement opposing the rate cuts, with Martin Walger, the organization's managing director, contending that the reductions were overly broad and could threaten the viability of some firms in Germany's in vitro diagnostic industry.
The German lab organization, Accredited Laboratories in Medicine (the Akkreditierte Labore in der Medizin, or ALM), likewise issued a statement opposing the rate cuts and demanding a repeal of the decision.
Dirk Schick, head of market development at Roche Diagnostics Deutschland, which is a member of the VDGH, said that the cuts come on top of previous payment reductions affecting the lab and diagnostics industries. He noted that payments for sample transport were reduced in 2008 and payment rates for laboratory specialists were reduced in 2018.
Schick added that "from a healthcare perspective," Roche is "particularly critical of the reduction in reimbursement for early detection services."
"Together with the VDGH, we are in favor of revoking the decisions of the evaluation committee and are calling for sustainable financing of the laboratory reform," he said.
Kiesner also specifically called out the reduction in reimbursement for early detection testing and criticized what he said is the "arbitrary" nature of the cuts, noting that "there is no medical plausibility to be seen."
According to Kiesner, routine tests are slated to receive the largest cuts. Leading the way is lactate testing, which will see a 71 percent price cut. Tests including hemoglobin A1c and C-reactive protein will see price cuts of more than 30 percent.
He said that the proposed reductions "represent a significant change" from the stability in pricing that the lab and diagnostics industries have seen in recent years. While certain "targeted adjustments have been made" due to specific circumstances, such as a reduction in payments for COVID-19 molecular testing as the pandemic waned, broadly speaking, reimbursement rates have been steady, he noted.
The price cuts come in the wake of the rollout of the European Commission's In Vitro Diagnostic Medical Devices Regulation, which has placed new regulatory requirements on diagnostics manufacturers. Kiesner said that the IVDR requirements have raised the costs of developing and marketing new tests considerably.
"With the planned reductions in test reimbursements, revenues are now also coming under pressure," he said, adding that he expects laboratories facing pressure from the reimbursement cuts will attempt to renegotiate test prices with IVD manufacturers.
"The VDGH does not rule out the possibility of products being withdrawn from supply in individual cases because the new reimbursements no longer cover costs," Kiesner said.
According to the VDGH's recently published annual review in 2023, IVD sales were down by roughly a third year over year to €2.3 billion ($2.1 billion). This was largely driven by a drop in SARS-CoV-2 testing.
The review also provided insight into industry expectations for 2024, with 58 percent of IVD firms surveyed predicting sales growth during the year, 27 percent predicting flat sales, and 16 percent predicting a decline in sales.
In its statement, ALM cited rising IVD prices as a source of pressure on clinical labs in Germany. It also noted that rising wages as well as energy and sample transport costs were challenges for the industry.
While the VDGH and ALM as well as certain of their members have called for the cuts to be reversed, Kiesner did not sound optimistic about this possibility. He noted that there is no direct procedure for industry to appeal these reimbursement reductions.
Additionally, he said that as the cuts were arrived at through the consensus of the relevant decision-makers, "it can be assumed that the decision will be implemented as such."