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Q&A: Froedtert South's Glenn George on PAMA's Impact on Clinical Microbiology Labs


NEW YORK (360Dx) – Glenn George is a clinical associate professor at the University of Wisconsin-Milwaukee and director of laboratory services at Kenosha, Wisconsin's Froedtert South hospital, where, among other things, he has led an effort to update the hospital's infectious disease testing technologies.

With the new test pricing established by the Protecting Access for Medicare Act (PAMA) taking effect last year, clinical labs broadly are working to reassess their business models and offerings in light of significant cuts in test reimbursement from the Centers for Medicare & Medicaid Services.

Different parts of the lab will feel PAMA's effects in different ways, however, and one area that could see a distinct pattern of impact is microbiology. In an interview with 360Dx, George discussed the trends within this space that could set it apart from other portions of the clinical laboratory. Below is an edited transcript of the interview.

To what extent does PAMA affect the clinical microbiology space differently than it does clinical labs more generally?

There are lot of similarities, but what's unique about the clinical micro lab is that it has evolved a lot recently, and that is being led by a molecular revolution. Micro labs in particular are starting to be able to utilize upgrades in technology for identification and to provide more timely access to results.

What that does is twofold. One, the molecular testing that can be done has a much, much higher margin compared to traditional methodologies. A prime example of that is stool cultures. If you do a [traditional] stool culture, it will cost you a few dollars and you'll get reimbursed maybe $20. So it's a margin of $15.

You switch over to doing a molecular stool panel, which covers about 85 percent of the most common pathogens through molecular detection, and it has much greater sensitivity and faster turnaround time, so the quality is better. And because the quality is better, the reimbursement is much better. It will cost you maybe 25 bucks to get that panel for testing, but you're reimbursed at $125. So, your margin goes from around $15 dollars to $100 dollars.

That I think is the primary thing—the pressures of PAMA will cause that change to [molecular testing] to happen a little bit faster because the return on investment becomes more important if your margins are starting to get narrower on the low end.

Where does something like MALDI-TOF mass spec for bacterial ID fit in?

With MALDI-TOF the cost per identification of an organism drops extremely low. We're talking pennies to do an ID. So you have the same reimbursement that you have with traditional methods, they didn't add a different CPT code for it, but your margin goes from a dollar or so a test to three dollars or so a test.

And what you use MALDI for is your bread and butter, your highest volume tests, really, in a micro lab. Even though the margin is not hugely different — you know, a couple dollars here and there — if you spread that over 100,000 identifications a year, well, that becomes not chump change. The molecular testing is kind of on the back end, where you have a higher margin, and your costs go up, but your reimbursement goes way up. MALDI is kind of on the front end, where your costs go way down, even though your reimbursement stays the same.

I was under the impression that at least in the US and Europe, MALDI had essentially saturated the clinical microbiology lab market at this point. Is that true?

The Bruker and BioMérieux MALDI-TOF systems are a large capital outlay. And there's not really a reagent-rental type of arrangement to avoid the capital outlay with them. That's pretty significant for non-academic community hospitals, which, truthfully, are the majority of hospitals in the US. I would say that, yes, the bigger places, the larger places, the academic centers, are saturated. They have all switched over to MALDI, and that's becoming the standard of care.

But I think that PAMA is going to be putting more pressure on community and smaller hospitals to move toward MALDI, too, because it makes it a more viable mechanism to maintain some [microorganism ID] services that are high impact for their physicians.

So this could open up these markets to Bruker and BioMérieux where they really haven't penetrated before because it just didn't make sense for smaller labs to invest that much capital up front?

Exactly. Exactly. You know, everybody has a certain slice of the pie, and everybody is fighting for the biggest piece that they can get. When you're kind of happily going along and not losing money compared to what you were before, i.e. reimbursement is almost keeping up with inflation, it doesn't draw the same attention as when you are suddenly getting less margin on it, making less money for your cost. Then you have to think, what can I do to either make more money off the cost, or bring the cost lower? It catches your attention.

Have these technologies like molecular assays and MALDI-TOF penetrated microbiology to a larger extent than other fields in a way that might give microbiology labs more options than other parts of the clinical lab for adjusting to PAMA?

I would say yes. You don't really have many opportunities for molecular testing in the core lab these days. Microbiology, on the other hand, is kind of driving forward with molecular.

Molecular [testing] is also pretty well established for anatomic pathology services, but that isn't usually cost-effective to do in-house. Those you want to reference out.

But there are a lot of options out there for [US Food and Drug Administration]-cleared or soon-to-be-cleared molecular assays in the micro lab. And you have a high level of competition from different platforms offering different coverages in terms of, for instance, syndromic testing panels or individual testing capabilities. And for infectious disease micro there are [devices] the size of a toaster that will be given to your lab for [the cost of] a reagent rental. There are a lot of options there now.

I would say that compared to other areas of clinical laboratories, micro is in a much better place to be able to make changes to minimize the negative impacts of PAMA.

How well equipped are hospitals to identify and make use of microbiology lab tests that might actually raise lab costs but save overall system costs, like, for instance, testing to guide antibiotic stewardship?

I will say that by and large, I think it's still very, very siloed. There's not a lot of great communication between lab and pharmacy and ER in hospitals in general. But I do think that communication is improving, the ability to look beyond your silo is really improving all the way around. And I do think some of it is kind of a natural progression for the medical laboratory scientist in their role. I think as things become more automated, as it requires less skill and less knowledge to be able to just crank out the tests reliably, the role for medical laboratory professionals is going to become more consultative.

It's improving, but it still has a long way to go.