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Point-of-Care Testing Hit Hard by PAMA Cuts

NEW YORK – During the American Association for Clinical Chemistry annual meeting last month, panelists from industry organizations including AdvaMedDx and the American Clinical Laboratory Association (ACLA) highlighted the impact of reimbursement cuts driven by the Protecting Access to Medicare Act (PAMA) on point-of-care (POC) testing.

While PAMA has impacted the lab testing industry writ large, the panelists suggested that POC testing has been particularly hard hit, with some POC vendors reporting that providers had returned their POC testing systems because the economics of using them no longer made sense.

Susan Van Meter, executive director of AdvaMedDx and one of the participants on the AACC panel, confirmed in a recent interview that the organization has received reports of providers returning POC systems due to reimbursement cuts.

"We are certainly hearing from some members of AdvaMedDx that are in the point-of-care space that, particularly in the physician lab office market, there are cases where devices are being returned to the manufacturer, with the physician office lab indicating that because of the PAMA reduction they are simply no longer able to offer point-of-care testing to their patients," she said.

Van Meter did not say which companies had had their devices returned but said that multiple POC firms had raised the issue with AdvaMedDx. She added that infectious disease testing was a particular area of concern.

AdvaMedDx is currently surveying its member companies about PAMA's impact on their POC businesses to better assess the scope of the problem, Van Meter added.

That POC testing would be particularly impacted by PAMA's reimbursement cuts is not surprising, said Charles Root, CEO of lab coding and reimbursement consulting firm CodeMap. He pointed out that many of the most common POC tests are also among the highest volume lab tests, and those high volume tests tend to have low margins.

"Those are the ones that are most heavily discounted by the large labs," like Quest Diagnostics and Laboratory Corporation of America, he said, and these heavy discounts are reflected in reimbursement under PAMA, which in setting rates has relied heavily on payment data from large national labs.

But while a large reference lab can run high-volume tests at very low margins and still make money on volume, this is less practical for POC, Root noted.

"For a point-of-care test, there is no advantage to volume, because each test is individual," he said. "Each kit costs the same amount whether you run 10 tests a day or 100, because they are done individually as needed."

Adding to the challenge is the fact that the technology involved in packaging tests as POC assays typically adds to the test cost.

Kyle Fetter, executive vice president and general manager of diagnostic services at Xifin, echoed Root's comments, noting that while lab-based testing typically features a mix of routine tests that have seen substantial cuts under PAMA and esoteric and molecular tests that have maintained or even increased pricing, "point-of-care tests, because they are more routine in nature, have gotten cut more."

Root said that one way to address the issue would be to give POC versions of a test a different billing code, though he said that he and others had previously raised that idea with the Centers for Medicare and Medicaid Services without result.

He noted that Abbott's i-STAT POC system provided an example of how such an approach might boost POC prices relative to conventional versions of the same test. While conventional metabolic panels include total calcium, the i-STAT device measures ionized calcium, which meant that it needed a separate CPT code for the i-STAT version of a basic metabolic panel.

"So, that is an example of a point-of-care test being recognized separately [from the conventional version of the test]," Root said. And, because POC testing is typically more expensive, the i-STAT metabolic panel actually saw an increase in price under PAMA, from $11.60 to $13.73. Had the test had the same CPT code as the standard metabolic panel, it likely would have seen a decrease in reimbursement, as Medicare reimbursed the standard metabolic panel at $10.44 in 2018.

Broadly speaking, reimbursement rates indicate payors recognize that POC tests are worth their higher prices, Root said, citing a 2016 survey his company did of commercial payors that found that, on average, commercial payors were reimbursing POC tests at 130 percent of Medicare reimbursement rates.

"Commercial payors pay more for point-of-care tests," he said, but because POC makes up a small percent of total testing, these higher rates have only a small influence on the overall median test price used to calculate payment rates under PAMA.

"Until there is some way to identify and survey point-of-care tests separately, they are going to be beaten down," Root said.

Fetters said he believed more POC test manufacturers might begin applying for separate codes for their assays as a way of addressing the reimbursement problem. Root, though, questioned how eager diagnostic companies actually are to do this.

By and large, these firms "have been unwilling to seek separate codes for their point-of-care tests even though they could do so," he said. "I think it goes back to the idea that you're better off with the devil you know. Because, you take strep tests, flu tests, and so on, these are high volume and high revenue products, and you don't want to mess with them. You don't want to mess with a good revenue stream by potentially getting into some unforeseen circumstances in trying to separate out point-of-care."

"Eventually, though, I think they will [seek to separate POC coding]," he said. "Some action will be taken. The other alternative is it gets more and more difficult to sell a point-of-care test to your customers because they are getting paid less and less. And you can only compensate by reducing your price so much, because there isn't that much margin in a point-of-care test when you come down to it."

Van Meter said the reported POC device returns were largely coming from physician office labs. Root suggested that this was likely because while a hospital system, even if it loses money on the POC test itself, might see broader cost savings from, for instance, reduced patient admittances or faster and more effective treatment.

Doctors  on the other hand, "look at what Medicare, for example, pays for a point-of-care test, and if it is less than what the test costs, they won't use it," he said. "Simple as that."

Robert Colgrove, an assistant professor at Harvard Medical School and an infectious disease doctor at Mount Auburn Hospital, said, however, that even within the hospital setting reimbursement challenges have affected the availability of potentially useful POC tests.

While in theory POC testing can lead to broader, system-wide savings, hospitals have not always done a good job of recognizing those savings.

"Historically, in a lot of hospitals, decisions about what tests are offered are made by pathologists or lab medicine people," he said. "And they have their own stresses because they have their lab budgets, and every test that gets run comes out of their budget. So, there are a lot of roadblocks put in the way of what should be effective testing."

He cited as an example the marker procalcitonin, which has been shown to be useful in identifying serious bacterial infections and sepsis.

"If a person is rolling into the emergency room and your question is does this person need to be on empiric antibiotics before we get culture data, it's a pretty good marker to have," Colgrove said. "It's not a perfect marker. It's neither perfect in sensitivity or specificity, and it's not really necessary in every case, but in cases that are complicated, a procalcitonin, if it is very high or very low, can be very helpful in deciding whether to start a person on antibiotics."

The marker is offered as a POC test, but Colgrove noted that his hospital sends out its procalcitonin testing due to cost concerns.

"As a consequence, if I order a procalcitonin, it gets sent out … and then it comes back several days later when it's really not useful," he said. "So, that's a case where the pressure on costs and the reimbursement we get for various tests has caused potentially useful tests not to be available."

Colgrove argued that this was particularly a problem within infectious disease, where he noted that rapid diagnosis and treatment was a high priority, compared to, for instance, management of chronic medical conditions where immediate test results might not add as much to patient care.

He said that "there is a lot of unnecessary testing done for infectious diseases that shouldn't be done," as well.

"For instance, the increased routine use of inflammatory markers like c-reactive protein (CRP), I don't think really adds anything to clinical judgment for most patients and really should be used only for patients where there is complexity or confusion or uncertainty," he said. "On the whole, I'd actually be pushing for less testing but more targeted testing. In a better world, we could strike a bargain with the people at Medicare to say, look, give us flexibility with, say, point-of-care hepatitis C testing and don't squeeze us so much, and we can help you decrease all these routine [complete blood counts], CRPs, and all these other things, and it will be a net savings for you."  

In terms of their strategy for tackling POC challenges, industry groups don't appear to be approaching the issue as separate from the larger campaign against PAMA. Asked how his organization thought the issue might best be addressed, John Daly, chief medical officer at COLA, said he believed the best options were the recently introduced Laboratory Access for Beneficiaries (LAB) Act and the American Clinical Laboratory Association’s ongoing lawsuit against CMS.

Van Meter likewise cited passage of the LAB Act as one of AdvaMedDx's top priorities in terms of addressing the impact of PAMA on POC testing and the lab business generally.