3 Urgent Issues Facing The Diagnostic Market
By Doug Roe, Chief Editor
The great thing about driving away from an event in Philadelphia is that you have lots of time to think. Visiting from the Pittsburgh area, the six-hour trip to the City of Brotherly Love was uneventful. However, the hour-and-a-half slog through Philly traffic before even beginning the return trip was mind-numbing, leaving me with two options: I could people-watch, wide-eyed at the hysteria of Pokémon GO players, or I could reflect on the issues everyone was discussing at the American Association of Clinical Chemistry’s (AACC) Annual Scientific Meeting and Lab Expo. It was not a tough decision.
This was the AACC event’s 68th installment, and it was packed with an estimated 10,000 attendees. All of the industry’s top medical diagnostic manufacturers were displaying their new solutions — Roche, Siemens, and Abbott had what seemed like acres of booth space. I dove in to learn what I could about the latest industry trends, new product launches, and retooled service offerings from medical diagnostics’ “big three.”
As I continued my journey, weaving through the 750-booth show floor, each company was seemingly displaying and discussing something different from its neighbor. The variety of offerings included advances in technology and materials (“Cleaner! "Safer!" "Faster!”), connected health, quality systems, lean automation, and smaller footprint presentations. Still, there were three consistent themes that resonated throughout:
- Bringing healthcare closer to the patient
- Harmonization
- Changes in reimbursement
When president Obama rolled out the Precision Medicine Initiative (PMI) in early 2015, the diagnostic industry applauded loudly. Finally, a unified approach to personalized patient research, and the potential funding plans to make it happen. “Doctors have always recognized that every patient is unique, and have always tried to tailor treatment as best they can,” said Obama at the time.
PMI is a departure from the soon-to-be outdated standard mode of care — the one-size-fits-all approach — and strives for better patient outcomes through an understanding of each patient’s genes, environment, and lifestyle. Not only does PMI attempt to represent the individuality of each patient, it also aims to provide an accessible warehouse of that data, to be shared by all healthcare stakeholders.
The various arms of the diagnostics industry will be at the forefront of this effort. Recent advances in molecular diagnostics are creating the ability to analyze a patient’s genetic code. Understanding of individuals’ DNA has led to successful testing and treatment for infectious diseases, and soon could conquer cancer.
Bringing these therapies closer to the patient will be point-of-care diagnostics. Home monitoring devices, bedside diagnostics, and bench top systems — each will play a part in making the patient the center of the healthcare continuum. Companion diagnostics, too, will play a role in the next step of treatment. Working hand-in-hand with a therapeutic drug, these tools will uncover the specificity of each patient’s tolerance and response to treatment. Opportunities abound for diagnostics manufacturers to share in the future of PMI.
However, one of the challenges presented by PMI is the lack of harmonization in diagnostic test results. Clinical laboratory testing is used for screening, diagnosis, prevention, disease management, and side-effect safety. No matter where a patient engages the healthcare system, some sort of clinical testing usually is required. Doctors rely on this information to make treatment decisions. The problem is that no reference standards exist for the majority of tests, meaning that results from different labs, hospitals, or clinics can be (and often are) different.
In the value-based healthcare ecosystem, this inconsistency creates obvious issues. First, higher healthcare expenses, due to false-negative or false-positive test results, force unnecessary treatments or additional follow-up visits. Inconsistent test findings also contribute to increased medical errors by physicians who depend on the accuracy of that information to follow predefined medical care guidelines.
The effect on PMI is similarly negative, as the data currently being gathered and stored is not consistent. Not only are the test results potentially different, the ways in which they are recorded and reported are diverse. Global clinical testing harmonization can achieve both improved patient outcomes and lower overall healthcare costs.
…Which brings us to reimbursement, a topic that came up whenever and wherever the diagnostic manufacturers were discussing the cost of healthcare during the AACC. The main point of discussion was the recent final rule released by the Centers for Medicare and Medicaid Services (CMS). In June, via the Protecting Access to Medicare Act of 2014 (PAMA), the clinical laboratory fee schedule (also dubbed the Laboratory Test Payment System by CMS) was finalized. As with most government documents, the language designating the who, what, when, and why of the new regulation is complex. But with Medicare’s portion of the clinical laboratory testing industry representing $7 billion per year in reimbursements, AACC attendees’ urgency to understand and comply was palpable.
CMS hosted a late afternoon session on the topic on Wednesday and, while it may be a slight overstatement to say the mood in the audience was heated, no one was checking email or surfing the internet on their devices. All eyes and ears were forward-focused, and feverous notetaking could be seen at every seat in the expansive amphitheater.
“As part of the final rule, labs designated as reporting entities will be required to report private payor (insurers) payment rates for laboratory tests, corresponding test codes, and the volumes of those tests performed during the data collection period,” stated CMS. The Centers will use the combination of all reported data to calculate a median that will define future Medicare payment rates, effective Jan. 1, 2018.
So, what is an industry professional — inching along in Philadelphia traffic toward the Pennsylvania Turnpike — to take away from the attention granted these three issues at the AACC conference? In short, patient empowerment, laboratory standards harmonization, and reimbursement changes can either be the wave that diagnostics makers ride to success, or the current that pulls them under.
Consider that the PMI, a source of great opportunity for manufacturers in the space, is a President Obama-led initiative. His term ends in January. Along with the Affordable Care Act, many of Obama’s mandates will be reviewed, revised, or potentially replaced, based on the agenda of the incoming officials.
Harmonization carries along with it the “fix” cost of standardization, the conversion cost for manufacturers and labs, and the long-term, largely unknown cost to patients’ lives, as well as the overall cost to the healthcare system if industry stakeholders continue to move slowly.
The PAMA revision of Medicare’s testing rates is projected to cut $5 billion in payments to laboratories over the next 10 years. Additionally, implementing the required reporting systems will add more costs to laboratories’ ledgers, reducing funding for purchases of equipment and supplies from diagnostics manufacturers.
Are you starting to feel some of the urgency I witnessed on the show floor? Time to get moving on solutions.