Laboratory Survival in the New World of Laws, Regulations and Court Decisions Alan Mertz President American Clinical Laboratory Association www.acla.com CCLA Annual Meeting, November 4, 2011

ACLA Advocacy Agenda, Fall 2011 Deficit “Super Committee” / cost-sharing and reimbursement cuts MedPAC also recommending fee cuts Physician fee schedule / fix the “SGR” New molecular coding issues Regulation of LDTs FDA “Modernizing Laboratory Test Standards for Patients Act” (HR 3207) In-house pathology / “IOAS” Proposed Rule on access to lab test results

“It doesn’t matter if it’s bad policy, we just need the money.” Political Environment “It doesn’t matter if it’s bad policy, we just need the money.” It’s a new era of cost-cutting in Washington Most intense pressure ever for cutting government spending Result of: Unprecedented national debt and annual deficits Recession, joblessness Political upheaval in House and Senate Presidency “up for grabs” All Medicare providers are facing more cuts!

Congressional “Super Committee” Emergence of Super Committee Composition, Process & Deadlines Process Presents Serious Threat to Lab Reimbursement “Sequestration”

Prospects for a Deal

It’s like the movie “Groundhog Day.” Lab-Cost Sharing It’s like the movie “Groundhog Day.” Leading proposal is 20% coinsurance for lab services Proposal is unworkable for several reasons Labs are the only provider without a routine face-to-face encounter with the patient Large volume of relatively small claims Collection costs will often exceed coinsurance amount

Cost of Collecting Coinsurance Would Often Exceed the Amount Owed

Processing / Collection Costs per Laboratory Claim, by Site of Service and Type of Claim (Paper vs. Electronic) Christopher Hogan, PhD, Direct Research LLC. Analysis of 2009 Medicare Clinical Laboratory Claims, September 1, 2011.

Clinical Labs Received Zero or Negative Updates to Fee Schedule Rates in 14 of the Last 22 Years Positive Updates Zero or Negative Updates $-- $--

Cumulative Effect of Current Law Over Next 5 Years: A Payment Cut of 11.3% $10 + CPI-U Difference of ($1.13) in 2015: -11.3% Medicare Payment for a Typical Clinical Lab Test $10 + (Clinical Lab Fee Schedule Update)

Other Federal Issues Physician fee schedule / fix the “SGR” New molecular coding issues Regulation of LDTs FDA “Modernizing Laboratory Test Standards for Patients Act” (HR 3207) In-house pathology / “IOAS” Proposed Rule on access to lab test results

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How You Can Help

Questions or More Information? www.acla.com amertz@acla.com Thank You!