Washington Post investigation outlines scientists’ frustrations in the early days of the pandemic, as they worked to deploy laboratory-developed tests for the novel coronavirus
In the wake of the failed rollout of the Centers for Disease Control and Prevention’s (CDC) COVID-19 diagnostic test last February, many CLIA-certified academic and public health laboratories were ready, and had the necessary resources, to develop their own coronavirus molecular diagnostic tests to help meet the nationwide demand for clinical laboratory testing. However, the response from the US Food and Drug Administration (FDA) was, in essence, “not so fast.”
In this second part of Dark Daily’s two-part e-briefing, we continue our coverage of the Washington Post (WP) investigation that detailed the regulatory hurdles which blocked private laboratories from deploying their own laboratory-developed tests (LDTs) for COVID-19. The report is based on previously unreported email messages and other documents reviewed by the WP, as well as the newspaper’s exclusive interviews with scientists and officials involved.
The CDC’s COVID-19 test kits began arriving at public health laboratories on February 8, just 18 days after the first case of the novel coronavirus was confirmed in the US. As the WP noted in an earlier analysis, titled, “What Went Wrong with Coronavirus Testing in the US,” the CDC’s decision to develop its own test was not surprising. “The CDC will develop [its] own test that is suited to an American healthcare context and the regulations that exist here,” explained Jeremy Konyndyk, Senior Policy Fellow at the Center for Global Development. “That’s how we normally would do things.”
But state and local public health laboratories quickly discovered that the CDC test kits were flawed due to problems with one of the reagents. While numerous academic, research, and commercial labs had the capability to produce their own COVID-19 PCR tests, FDA rules initially prevented them from doing so without a federal Emergency Use Authorization (EUA).
The bureaucratic hurdles arose due to Health and Human Services Secretary Alex Azar’s January 31 declaration that COVID-19 was a “health emergency” in the US. By doing so, HHS triggered a mandate that requires CLIA-certified labs at universities, research centers, and hospitals to seek an EUA from the FDA before deploying any laboratory-developed tests.
Scientists, Clinical Laboratories Frustrated by Bureaucratic Delays and Red Tape
To make matters worse, the EUA process was neither simple nor fast, which exasperated lab scientists and clinical laboratory administrators. “In their private communications, scientists at academic, hospital, and public health labs—one layer removed from federal agency operations—expressed dismay at the failure to move more quickly, and frustration at bureaucratic demands that delayed their attempts to develop alternatives to the CDC test,” wrote the WP investigators.
In a Feb. 27 email to other microbiologists, Marc Couturier, PhD, Medical Director at ARUP Laboratories, a national reference laboratory network located in Utah, voiced his irritation with the red tape that stymied private laboratory development of COVID-19 tests. He wrote, “We have the skills and resources as a community, but we are collectively paralyzed by a bloated bureaucratic/administrative process,” reported the WP.
Keith Jerome, MD, PhD (above), Head of the Virology Division at the Fred Hutchinson Cancer Research Center in Seattle, maintains federal regulations muted one of the nation’s greatest assets in the fight against COVID-19. “The great strength the US has always had, not just in virology, is that we’ve always had a wide variety of people and groups working on any given problem,” he told MIT Technology Review. “When we decided all coronavirus testing had to be done by a single entity, even one as outstanding as CDC, we basically gave away our greatest strength.” (Photo copyright: Jonathan Hamilton/NPR.)
‘FDA Should Not Treat Labs Like They Are Creating Commercial Products’
According to Kaiser Health News (KHN), Greninger was able to identify one of the nation’s first cases of community-acquired COVID-19 by taking “advantage of a regulatory loophole that allowed the lab to test samples obtained for research purposes from UW’s hospitals.”
But navigating the EUA process was a different story, Greninger told the WP. He spent more than 100 hours filling out forms and collecting information needed for the EUA application. After emailing the application to the FDA, Greninger received a reply containing eCopy Guidance telling him he needed to resubmit the information to the Document Control Center (DCC) at the Center for Devices and Radiological Health (CDRH), a federal agency Greninger knew nothing about. Another FDA rule required that the submission be copied to a hard disk and mailed to the DCC.
In an interview with ProPublica, Greninger stated that after he submitted his COVID-19 test—which copies the CDC protocol—an FDA reviewer told him he would need to prove the test would not show a positive result for someone infected with either a SARS or MERS coronavirus. The first SARS coronavirus disappeared in mid-2003 and the only two cases of MERS in the US were diagnosed in 2014. Greninger told ProPublica it took him two days to locate a clinical laboratory that could provide the materials he needed.
Greninger maintains the FDA should not treat all clinical laboratories as though they are making a commercial product. “I think it makes sense to have this regulation when you’re going to sell 100,000 widgets across the US. That’s not who we are,” he told ProPublica.
FDA Changes Course
Under pressure from clinical laboratory scientists and medical doctors, by the end of February the FDA had issued new policy that enabled CLIA-certified laboratories to immediately use their validated COVID-19 diagnostics while awaiting an EUA. “This policy change was an unprecedented action to expand access to testing,” said the FDA in a statement.
Since then, the FDA has continued to respond—albeit slowly—to scientists’ complaints about regulations that hampered the nation’s COVID-19 testing capacity.
Clinical laboratory leaders and pathologists involved in testing for the SARS-CoV-2 coronavirus should monitor the FDA’s actions and be aware of when and if certain temporary changes the agency implemented during the early days of the COVID-19 pandemic become permanent.
To read part one of our two-part coverage of the Washington Post’s investigation, click here.
Previously unreported email messages and documents paint vivid picture of public health laboratory officials’ dismay and frustration over testing delays
Between late January and early March, Clinical laboratory leaders watched with dismay as federal government missteps crippled the Centers for Disease Control and Prevention’s (CDC) rollout of its COVID-19 diagnostic testing in the early days of the pandemic. The resulting lack of testing capacity enabled the novel coronavirus’ spread across the United States.
This first part of Dark Daily’s two-part e-briefing covers how investigators at the Washington Post (WP) have produced a timeline describing the CDC initial failure to produce a reliable laboratory test for COVID-19 and the regulatory hurdles that blocked medical laboratories from developing their own tests for the virus. The WP’s report is based on previously unreleased email messages and other documents reviewed by the WP, as well as the newspaper’s exclusive interviews with medical laboratory scientists and officials involved.
A New York Times report on the federal government’s initial review of the testing kit failure pinned the blame on sloppy practices at CDC laboratories in Atlanta and a lack of expertise in commercial manufacturing. However, the WP reported that COVID-19 testing kits were delayed due to a “glaring scientific breakdown” at the central lab, created when the CDC facilities that assembled the kits “violated sound manufacturing practices” that resulted in cross contamination of testing compounds.
The US and other countries have criticized China for a lack of transparency about the virus’ emergence, which came to light on December 31, 2019, when China reported a cluster of pneumonia cases in Wuhan, according to a World Health Organization (WHO) timeline. A week later, Chinese authorities identified the pneumonia-like illness as being caused by a new novel coronavirus.
In the US, the first case of COVID-19 was found January 21 in a Washington State man who had traveled to Wuhan. But in the weeks that followed, the US government’s inability to establish a systematic testing policy became the catalyst for the virus’ ultimate spread to more than two million people, notes the CDC website.
ProPublica, which conducted its own investigation into the early stages of the government’s coronavirus response, blamed the failures on “chaos” at the CDC and “an antiquated public health system trying to adapt on the fly.”
The CDC’s first mistake may have been underestimating the danger COVID-19 posed to public health in this country. During a January 15 conference call, CDC scientists assured state and county public health officials that the agency was developing a COVID-19 diagnostic test which soon would be available, but which may not be needed “unless the scope gets much larger than we anticipate right now,” reported the WP.
A week later, an interview with CNBC, President Trump said, “We have it under control. It’s going to be just fine.”
CDC scientists designed their test in seven days, which, according to the WP investigators, is “a stunningly short period of time for a healthcare system built around the principles of medical quality and patient safety, not speed.” But when those initial CDC-made tests arrived at a New York City public health laboratory on February 8, lab technicians discovered the COVID-19 assays often indicated the presence of the coronavirus in samples that the lab’s scientists knew did not contain the virus.
When the scientists informed Lab Director Jennifer Rakeman, PhD, Assistant Commissioner, New York City Department of Health and Mental Hygiene, her response, according to the WP, was “Oh, s—. What are we going to do now?”
That night, Director Jill Taylor, PhD, Director of New York State’s Wadsworth Center public health reference laboratory, emailed state health officials, stating, “There is a technical problem in one of the reagents which invalidates the assay and will not allow us to perform the assay,” reported the WP. “I’m sorry not to have better news.”
Scott Becker (above), Executive Director of the Association of Public Health Laboratories (APHL), voiced his concerns about the CDC’s flawed COVID-19 test kits in an email to a CDC official, reported the WP. “The states and their governors are going to come unglued,” Becker wrote, adding, “If the CDC doesn’t get ahead of this, it will be a disaster.” (Photo copyright: Bill O’Leary/The Washington Post.)
‘The Silence from CDC is Deafening’
On February 10, Joanne Bartkus, PhD, then-Lab Director of the Minnesota Health of Department, wrote to APHL Executive Director Scott Becker: “The silence from CDC … is deafening. What is going on?” reported the WP.
By the end of February, the Associated Press (AP) reported that only 472 patients had been tested for COVID-19 nationwide. By comparison, South Korea, which identified its first case of COVID-19 on the same day as the US, was testing 1,000 people per day.
A WHO spokesperson told the WP that, “… no discussions occurred between WHO and CDC (or other US government agencies) about WHO providing COVID-19 tests to the US.” When the CDC’s original COVID-19 test kit failed, there may not have been a Plan B. This may explain why the opportunity to contain COVID-19 through surveillance testing was lost during the weeks it took to design a fix for the CDC test and loosen regulations so clinical laboratories could develop their own tests.
As medical laboratory scientists and clinical laboratory leaders know, the lack of early COVID-19 testing was a public health failure and painted a false picture of the virus’ spread. Nearly five months after the first case of the virus was confirmed in the US, testing capacity may only now be outpacing demand.
Click here to read part two of our coverage of the Washington Post’s investigation.
Lab leaders who adopt best practices in courier services will help ensure their lab’s supply chains remain secure
Hospital and health systems using courier services to transport patients’ biological specimens from doctors’ offices and other locations to clinical laboratories for testing and reporting are finding those services delayed or disrupted by the COVID-19 pandemic.
Limited office hours, closed physician practices, and the need for drivers to take time for symptom checking on healthcare campuses are among the growing challenges faced by couriers transporting medical laboratory specimens during this pandemic, experts told Dark Daily.
All these developments require courier operations and logistics companies to think outside the box for solutions that address the unique challenges triggered by the SARS-CoV-2 pandemic that have disrupted the normal operations of physicians’ offices, hospitals, and other healthcare providers. For example, many clinical labs struggle to obtain enough specimen collection and specimen transport supplies to sustain both their nascent COVID-19 testing programs and their routine testing operations.
One national logistics company recognized that it could help labs with the disruption in the supply chain for laboratory supplies caused by the coronavirus outbreak. In the early weeks of the pandemic, West Haven, Conn.-based Lab Logistics and its sister company Path-Tec, took the initiative to develop collaborations and strategic partnerships with several established manufacturers of medical laboratory supplies. Now it could not only be a source of much-needed supplies for its clients, but its network of couriers could supply the increase in services for all the locations where such supplies were needed.
Meanwhile, the coronavirus outbreak caused widespread disruption to the daily activities of hospitals, health systems, physician’s offices, and other providers. According to Susan Uihlein, Senior Vice President Business Development-Hospital Couriers at Lab Logistics—a company that creates, implements, and manages courier models customized to medical laboratory, hospitals, and health systems—in response to the pandemic, there was an immediate need by one of the largest multi-regional Health Systems in New York to align courier and logistics services to meet the new realities of how its facilities would respond to patient needs. It was also necessary that logistics solutions be complementary with the health systems’ COVID-19 policies.
“This health system requested that Lab Logistics’ drivers access the hospital’s personnel tracking application upon arrival,” explained Uihlein. “The health system’s new COVID-19 policy required everyone wishing to enter the health system campus to complete a coronavirus screening process—including having a temperature reading taken—and then receive a status confirmation on a smartphone screen. This obviously impacted the couriers’ progress on their routes.”
“We have 2,600 medical-specific couriers throughout the United States, and although all couriers undergo extensive orientation regarding known infectious transport, this current situation has spotlighted how important (COVID-19) is to our clients,” Brian McArdle, President and Chief Executive Officer of Lab Logistics, told Dark Daily.
“The couriers represent us and our clients,” he continued. “They are out in the field, they are picking up, delivering, and rolling with the punches as far as what a healthcare system or a clinical laboratory needs from them—from photo IDs to wearing masks and gloves. The process keeps evolving. And we have evolved with it.”
“Our operations team makes sure that we work with each client to flexibly react to changes in that day’s pickups and deliveries, as appropriate. There has been much optimization and on-the-fly changes,” said Uihlein.
In fact, the coronavirus pandemic resulted in a 26% increase in requests for specimen delivery, PPE, and COVID-19 related supply chain movement, according to data on the California, Louisiana, and New York City healthcare markets provided by Lab Logistics.
“Every day there have been changes to what is open and closed. We had to manage that through our proprietary healthcare dispatch system and with the couriers,” Susan Uihlein (above), Senior Vice President Business Development-Hospital Couriers at Lab Logistics, told Dark Daily. Lab Logistics transports medical specimens, supplies, and pharma for more than 350 US hospitals, healthcare systems, and clinical laboratories. (Photo copyright: LinkedIn.)
Clinical Laboratories Should Review Specimen Transport Procedures
Clearly, the COVID-19 pandemic is putting unique stresses on the logistics and transportation services operated by hospital systems, medical labs and anatomic pathology groups. That why it would be timely and appropriate for lab leaders to review/update best practices and necessary requirements that ensure efficient management of clinical laboratory specimens.
Topics covered in this highly-informative white paper include:
Handling and tracking laboratory specimen samples;
Confirming medical security, chain of custody, and transit tracking;
Coordinating test kits, supplies, reagents, lab equipment, and instruments;
Approaching a medical courier service conversion.
“By utilizing a logistics system that includes a dedicated courier, medical laboratories and healthcare systems can manage all aspects of transportation specimen transport, including handling and tracking of specimens, medical security, chain of custody, tracking supply inventory, and delivery. Successfully executed, all of these functions can generate financial improvements,” notes the white paper.
Tracking Specimen Arrival and Predicting Which Tests Will Be Needed
One technology that lab and healthcare system leaders can use to control costs and staffing involves online real-time tracking of drivers to enhance test turnaround time and determine when tests will be performed.
Lab Logistics’ version of this technology uses barcode scanning, GPS (Global Positioning System) tracking, and an online portal that enables its clients to view the routes and stops a driver has made for the lab. Lab leaders can determine how many specimens are expected, and what type of tests will be required, before the specimens arrive.
“They can see the volume coming in and they can staff-up based on the information we are giving them and not over-staff. It’s really good information,” Uihlein said.
Lab Logistics’ platform also integrates with a hospital’s laboratory information system (LIS) through the lab’s barcode. “The integration makes it possible for labs to get faster information from the field into their systems and create accessioning,” Uihlein explained.
Specimen Management Improved through Route Tracking
“We found that some drivers were doing daily pickups and we were not getting any specimens. Some clients were on vacation, stopped using the laboratory altogether, or weren’t doing that type of laboratory work anymore,” Napolitano told the white paper researchers.
Driver tracking also enabled Ochsner Health System in Louisiana to avoid “hot shots”—one-time delivery pickups which could be 90 miles away from the lab, explained Lloyd Gravois, Assistant Vice President of Logistics-Supply Chain, in the white paper.
Medical laboratory leaders who wish to enhance their lab’s specimen management and solve logistics issues during and after the COVID-19 pandemic are encouraged to download a copy of the Free Special Edition white paper by clicking here, or by placing this URL in their web browsers: https://www.darkdaily.com/free-special-edition-white-paper-specimen-management-and-logistics-issues-to-evaluate-for-continuous-quality-improvement-3-high-risk-medical-courier-support-services/.
Though more payers are covering laboratory-developed genetic tests for conditions such as depression, the tests remain uncleared by the FDA
Clinical pathologists interested in pharmacogenetics tests for depression and other psychiatric disorders may be interested to learn that UnitedHealthcare (NYSE:UNH) announced in its Network Bulletin a change to its Molecular Pathology Policy and is now covering certain molecular diagnostics. That’s despite the federal Food and Drug Administration (FDA) warning “against the use of many genetic tests with unapproved claims to predict patient response to specific medications.”
In its Safety Communication, the FDA stated healthcare providers and clinical laboratories that “are using, or considering using, a genetic test to predict a patient’s response to specific medications, be aware that for most medications, the relationship between DNA variations and the medication’s effects has not been established.”
In its coverage of the FDA’s warning, The Dark Report, sister publication to Dark Daily, wrote, “Serious concerns are associated with some pharmacogenetic tests and whether physicians have the training and knowledge needed to use this genetic test data appropriately in patient care.”
Should the FDA Even Be Regulating Clinical Laboratory Tests?
Experts note that it is notoriously difficult in some cases for providers to identify which drug or group of drugs is most likely to help a patient with a psychiatric disorder such as depression. Pharmaceuticals that work well for one individual may actually worsen things for someone else.
Nevertheless, the idea that a genetic test could reveal how a psychiatric patient is likely to react to a particular drug is extremely appealing. It could save years of trial and error, which is often terribly disruptive for the patient.
Currently, there’s quite a debate about whether these tests should be available, who should take them, and whether they offer any kind of guidance for providers. There’s even a faction that maintains the FDA should not be regulating clinical laboratory tests at all.
In its coverage of the FDA’s warning, NPR reported that Victoria Pratt, PhD (above), a medical and clinical molecular geneticist who at the time was President of the Association for Molecular Pathology (AMP), said, “Tests conducted in a lab are a medical service, not a medical device that’s shipped like a product. As a medical service, clinical laboratories are already regulated by the Centers for Medicare and Medicaid Services. It would be redundant to have dual regulation by both the FDA and CMS.” (Photo copyright: AMP.)
Does Evidence of Pharmacogenomics Effectiveness Exist?
Studies regarding the effectiveness of genetic tests for psychiatric disorders have had, at best, mixed results. “Genes determine some of our risk for depression and some of our response to treatment,” wrote Bruce Cohen, MD, PhD, and George Zubenko, MD, PhD, in a Harvard Health Blog post, titled, “Gene Testing to Guide Antidepressant Treatment: Has Its Time Arrived?” The authors go on to say that although the genes that are tested in the panels can have an effect on the levels of the drugs in the patient’s blood, they “generally don’t predict clinical response.”
The authors then discussed the results of a dozen studies that looked into the genetic panels. “Most studies were completely unblinded,” they wrote. “Even with that bias, the use of gene results showed no evidence of effectiveness.”
Advocacy Groups, Payors, and Clinicians Support Pharmacogenomics
Nevertheless, even with the FDA’s warning—and tepid study results— pharmacogenetic testing has its supporters. In large part, that is because identifying the most appropriate medication for any given patient can be incredibly difficult.
“Right now, one of our greatest frustrations is that when [patients] comes in with depression, we have very little idea of what the right treatment for them is,” said Amit Etkin, MD, PhD, Founder and CEO of Alto Neuroscience. Etkin is a professor in the Department of Psychiatry and Behavioral Sciences at Stanford and a member of the Wu Tsai Neuroscience Institute. He authored a study published in Nature that investigated measuring patients’ brainwaves to identify the most appropriate treatment. “Essentially, the medications are chosen by trial and error.”
“You use the science that you currently have,” Reyna Taylor, Vice President of Public Policy and Advocacy, National Council for Behavioral Health, told NPR. She says that doctors should be able to use the tests to inform their choice of medication.
Daniel Mueller, MD, PhD, a psychiatrist and clinical scientist, agrees. Mueller is a professor at the University of Toronto and head of the Pharmacogenetic Research Clinic at the Center for Addiction and Mental Health (CAMH) in Toronto. He told NPR that the pharmacogenomic clinical laboratory tests “are not an alternative intervention. It’s additional information.” He suggests that anyone who can afford the test should take it, because it could help them avoid “the cost of depression and weeks of suffering.”
The decision by UnitedHealthcare to cover genetic tests for depression and other psychiatric disorders could be important. “We expect this to be a tipping point,” Shawn Patrick O’Brien, CEO of Genomind, told NPR, adding that he expects other insurance companies to begin covering the cost of the tests, as well, “because they don’t want to be uncompetitive in the marketplace.”
Historically, there have been few clinical laboratory tests for patients with psychiatric disorders, and while these tests may open a new market in the future, for now, caution is warranted. In addition to the warning from the FDA, there will likely be challenges regarding physician education and curbing fraud.
Questions remain, however, over how much of the funding will actually reach hospital and health system clinical laboratories
For many cash-strapped clinical laboratories in America, the second round of stimulus funds cannot come soon enough. Thus, lab leaders are encouraged by news that Congress’ $484-billion Paycheck Protection Program and Healthcare Enhancement Act (H.R.266) includes almost $11 billion that will go to states for COVID-19 testing. But how much of that funding will reach the nation’s hospital and health system clinical laboratories?
The Department of Health and Human Services (HHS) announced the new influx of money to the states on May 18. In a news release outlining the initiative, the HHS said the Centers for Disease Control and Prevention (CDC) will deliver $10.25 billion to states, territories, and local jurisdictions to expand testing capacity and testing-related activities.
To qualify for the additional funding, governors or “designee of each State, locality, territory, tribe, or tribal organization receiving funds” must submit to HHS its plan for COVID-19 testing, including goals for the remainder of calendar year 2020, to include:
“Number of tests needed, month-by-month to include diagnostic, serological, and other tests, as appropriate;
“Month-by-month estimates of laboratory and testing capacity, including related to workforce, equipment and supplies, and available tests;
“Description of how the resources will be used for testing, including easing any COVID-19 community mitigation policies.”
“As the nation cautiously begins the phased approach to reopening, this considerable investment in expanding both testing and contact tracing capacity for states, localities, territories, and tribal communities is essential,” said CDC Director Robert R. Redfield, MD, in the HHS statement. “Readily accessible testing is a critical component of a four-pronged public health strategy—including rigorous contact tracing, isolation of confirmed cases, and quarantine.” (Photo copyright: Center for Disease Control and Prevention.)
Funding Should Go Directly to Clinical Laboratories, Says ACLA
The American Clinical Laboratory Association (ACLA), argues the funding needs to go directly to clinical laboratories to help offset the “significant investments” labs have made to ramp up testing capacity during the pandemic.
“Direct federal funding for laboratories performing COVID-19 testing is critical to meet the continued demand for testing,” ACLA President Julie Khani, MPA, said in a statement. “Across the country, laboratories have made significant investments to expand capacity, including purchasing new platforms, retraining staff, and managing the skyrocketing cost of supplies. To continue to make these investments and expand patient access to high-quality testing in every community, laboratories will need designated resources. Without sustainable funding, we cannot achieve sustainable testing.”
Some States Are Increasing Testing, While Others Are Not
Since the first cases of COVID-19 were reported in January, the United States has slowly but significantly ramped up testing capacity. As reported in the Washington Post, states such as Georgia, Oklahoma, and Utah are encouraging residents to get tested even if they are not experiencing coronavirus symptoms. But other states have maintained more restrictive testing policies, even as their testing capacity has increased.
“A lot of states put in very, very restrictive testing policies … because they didn’t have any tests. And they’ve either not relaxed those or the word is not getting out,” Ashish Jha, MD, MPA, Director of the Harvard Global Health Institute, told the Washington Post. “We want to be at a point where everybody who has mild symptoms is tested. That is critical. That is still not happening in a lot of places.”
Meanwhile, Quest Diagnostics and LabCorp continue to expand their diagnostic and antibody testing capabilities.
On May 18, Quest announced it had performed approximately 2.15 million COVID-19 molecular diagnostic tests since March 9 and had a diagnostic capability of 70,000 test each day. The company said it expected to have the capacity to perform 100,000 tests a day in June.
LabCorp’s website lists its molecular test capacity at more than 75,000 tests per day as of May 22, with a capacity for conducting at least 200,000 antibody tests per day. Unlike molecular testing that detects the presence of the SARS-CoV-2 coronavirus, antibody tests detect proteins produced by the body in response to a COVID-19 infection.
As states reopen, and hospitals and healthcare systems resume elective surgeries and routine office visits, clinical laboratories and anatomic pathology groups should begin to see a return to normal specimen flow. Nonetheless, the federal government should continue to compensate laboratories performing COVID-19 testing for the added costs associated with meeting the ongoing and growing demand.
Insurance industry claims new federal price transparency regulations cost each payer as much as $13.6 million in set up and maintenance costs
Price transparency in hospital, clinical laboratory, and other service provider costs marches ever closer to reality for America’s healthcare consumers. Meanwhile, some insurers and hospital groups are working to block implementation of federal rules they argue will confuse consumers and potentially lead to higher costs.
The first is a Proposed Rule, titled, “Transparency in Coverage Proposed Rule” (CMS-9915-P) that would require payers to make public on their websites negotiated rates for in-network providers and allowed amounts paid for out-of-network providers. Insurers also would be required to make an online “tool” available to members that would provide consumers with out-of-pocket cost estimates for “all covered healthcare items and services.” The 60-day public comment period for this rule went into effect November 15, 2019.
Medical laboratories and anatomic pathology groups may want to closely monitor ongoing efforts by payers and hospital groups to block these rules, since any changes will extend to their services, as well as extend price transparency to most employer-based group health plans and health insurance issuers offering group and individual coverage.
Will Transparency Lead to Higher Healthcare Costs?
In its story on insurer claims, FierceHealthcare reported that the rule would require payers to disclose a “staggering” amount of data, leading to implementation costs 26 times more than the Trump administration’s $510,000 estimate. To comply with the federal rule, an insurer will spend as much as $13.63 million on setup and maintenance. That prediction is based on an economic analysis from economic consulting firm Bates White, which conducted the survey on behalf of The Blue Cross Blue Shield Association (BCBSA).
“Some plans have indicated they would be forced to run two sets of tools—one designed to meet member shopping needs and another implemented only to meet the requirements of the proposed rule,” the BCBSA told FierceHealthcare.
Meanwhile, the Association for Community Affiliated Plans (ACAP) argued in a letter to Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma that cost-sharing liability estimates—which are not a price quote for care—could “lead to consumer confusion and frustration.” The ACAP also asserts the transparency plan could inadvertently lead to higher healthcare cost increases.
“In the absence of quality data, consumers may determine that high cost equates to higher value, select the higher-cost providers, and ultimately drive up medical expenses, especially in circumstances where the consumer’s out-of-pocket costs have been met,” wrote ACAP Chief Executive Officer Margaret A. Murray.
“We have long supported efforts to make quality and pricing information more accessible, understandable, and actionable for consumers,” the ACHP wrote. “But they need real-time, patient-specific information tied to individual coverage benefits, not a massive published list of prices that may only frustrate consumers and likely increase costs over time.”
Hospital Associations and Healthcare Systems Bring Lawsuit Against HHS
In December 2019, several hospital associations and healthcare groups filed a lawsuit to block next year’s implementation of the hospital price transparency rule. The plaintiffs included the:
These healthcare organizations and providers joined together to argue that HHS lacks the statutory authority to require and enforce public disclosure of individually negotiated rates between commercial health insurers and hospitals. They also say consumers are likely to be confused by the information they receive.
“America’s hospitals and health systems stand with patients and are dedicated to ensuring they have the information needed to make informed healthcare decisions, including what their expected out-of-pocket costs will be,” said Rick Pollack (above), President and CEO, American Hospital Association, in a news release. “Instead of giving patients relevant information about costs, this rule will lead to widespread confusion and even more consolidation in the commercial health insurance industry.” (Photo copyright: American Hospital Association.)
In its legal response, HHS contends that hospitals are adding to consumers’ confusion by failing to provide transparency.
“They do not dispute that consumers are casting about for accurate information about prices in a complex healthcare system, yet they rely on that same complexity as an affirmative reason to deprive patients of pricing information they need to figure out their out-of-pocket expenses,” HHS said in its brief.
DePaul University Professor Anthony LoSasso, PhD, who specializes in healthcare economics, admits to being “on the fence” regarding the pros and cons of transparency plans.
“I want to think that people can benefit from price transparency. But for a variety of reasons, people don’t look at pricing info even when it’s available,” LoSasso told WTTW News in Chicago.
Nevertheless, HHS vows to continue its push for price transparency.
“Hospitals should be ashamed that they aren’t willing to provide American patients the cost of a service before they purchase it,” HHS Deputy Assistant Secretary and National Spokesperson Caitlin Oakley told Reuters in a response to the hospital groups’ lawsuit.
In light of the government’s push to make healthcare pricing more transparent, clinical laboratory and anatomic pathology leaders in hospitals and health systems would be wise to prepare for a future that includes price shopping by consumers.
