ot all laws live up to their names. As a case in point, consider the Protecting Access to Medicare Act that Congress passed in 2014. Among other things, it sought to fix an outdated Medicare payment system for laboratory tests by establishing a new model that was based on competitive rates paid to labs in the private market. That’s a worthwhile goal, but one the Department of Health and Human Services has done everything possible to undermine. Its actions could make it more difficult to access Medicare’s services.
To help implement the act, Congress directed the HHS secretary to gather private market payment information from the broad spectrum of labs participating in the Medicare program — independent labs, hospital labs, and labs in physicians’ offices. That seems like a simple directive. But HHS chose to exempt a vast number of labs from reporting payment information, including the overwhelming majority of physician labs and virtually all hospital labs. Those tend to be more costly to operate than, for example, an independent lab in an urban setting.
Not only does this unfairly burden the minority of laboratories that are required to report their payment information to HHS, it also cherry-picks data from less than 1 percent of all laboratories, ignoring the other 99 percent.
By excluding the overwhelming majority of labs, HHS derived market data that in no way actually reflects the market — contrary to the directive from Congress. Instead of implementing the improvements that Congress intended, the agency’s selective data collection has resulted in dramatic payment cuts to laboratories that will reduce access to critical lab services and make it more difficult to keep labs open in many areas of the country. The consequences are severe, particularly for vulnerable patients, who will find it increasingly difficult to obtain the essential laboratory services they need.
The failure of HHS to comply with what Congress asked it to do is already apparent. Take, for example, the impact of the cuts on labs that serve long-term care facilities, like New Jersey’s Aculabs, a family-owned-and-operated laboratory that has served patients for more than four decades. Aculabs, like many of its counterparts, provides rapid results daily, as many older patients require close, routine monitoring. This same-day turnaround helps identify critical problems at an early stage, keeping patients healthier and preventing more costly interventions.
The president of Aculabs said that HHS’s decision to exclude important sectors of the clinical diagnostic laboratory market from reporting requirement “means Armageddon for laboratories serving elderly patients in skilled nursing facilities, nursing homes, and other long-term care facilities.” Cuts in payments due to the skewed reporting will force some labs to close and reduce or delay services for seniors, particularly those in rural communities.
Additional cuts in payments to labs for the services they provide are scheduled over the next two years, and these cuts will make it even harder for Medicare beneficiaries living with diabetes, heart disease, liver disease, kidney disease, prostate and colon cancers, anemia, infections, opioid dependency, and countless other common diseases and conditions to access the lab services they need. By making it more difficult to access these tests, HHS is being penny wise and pound foolish. Reducing access to clinical lab services will ultimately drive up the cost of care for beneficiaries and taxpayers.
In addition to the harms facing Medicare beneficiaries, there are two other reasons why policymakers should be concerned about HHS’s actions. First, they demonstrate a blatant disregard for congressional intent. HHS’s decision to exempt many physician and most hospital labs from the requirement to report market data is an unlawful exercise of authority. My organization, the American Clinical Laboratory Association, has sued HHS in federal court to compel it to follow the statute.
Second, the actions of HHS undermine its credibility and that of its subsidiary agency, the Centers for Medicare and Medicaid Services, in implementing market-based payment reforms across the board. If Congress can’t rely on HHS and CMS to implement legislation in good faith, how can it count on them to properly implement other health care reforms? Market-based reforms are good policy, but only if HHS can be trusted to be an honest broker.
Of course, Congress can fix this mess by stepping in with a temporary bridge in payments while HHS gathers the appropriate data and by more explicitly directing HHS to do what it should have done in the first place: gather representative data from a broad spectrum of laboratories. All that my organization seeks on behalf of our members is a fair and transparent process and for HHS to follow the law rather than telling Congress — and America’s seniors — to take a hike.
Julie Khani is president of the American Clinical Laboratory Association.