Forces in play will directly impact the operations and financial stability of many of the nation’s clinical laboratories
With significant regulatory changes expected in the next 18 to 24 months, experts are predicting a “Perfect Storm” for managers of clinical laboratories and pathology practices.
Currently looming are changes to critical regulations in two regulatory areas that will affect hospitals and medical laboratories. One regulatory change is unfolding with the US Food and Drug Administration (FDA) and the other regulatory effort centers around efforts to update the Clinical Laboratory Improvement Amendments of 1988 (CLIA).
The major FDA changes involve the soon-to-be-published Final Rule on Laboratory Developed Tests (LDTs), which is currently causing its own individual storm within healthcare and will likely lead to lawsuits, according to the FDA Law Blog.
In a similar fashion—and being managed under the federal Centers for Medicare and Medicaid Services (CMS)—are the changes to CLIA rules that are expected to be the most significant since 2003.
The final element of the “Perfect Storm” of changes coming to the lab industry is the increased use by private payers of Z-Codes for genetic test claims.
In his general keynote, Robert L. Michel, Dark Daily’s Editor-in-Chief and creator of the 29th Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management, will set the stage by introducing a session titled, “Regulatory Trifecta Coming Soon to All Labs! Anticipating the Federal LDT Rule, Revisions to CLIA Regulations, and Private Payers’ Z-Code Policies for Genetic Claims.”
“There are an unprecedented set of regulatory challenges all smashing into each other and the time is now to start preparing for the coming storm,” says Robert L. Michel (above), Dark Daily’s Editor-in-Chief and creator of the 29th Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management, a national conference on lab management taking place April 30-May 1, 2024, at the Hyatt in New Orleans. (Photo copyright: The Dark Intelligence Group.)
Coming Trifecta of Disruptive Forces to Clinical Laboratory, Anatomic Pathology
The upcoming changes, Michel notes, have the potential to cause major disruptions at hospitals and clinical laboratories nationwide.
“Importantly, this perfect storm—which I like to describe as a Trifecta because these three disruptive forces that will affect how labs will conduct business—is not yet on the radar screen of most lab administrators, executives, and pathologists,” he says.
Because of that, several sessions at this year’s Executive War College conference, now in its 29th year, will offer information designed to give attendees a better understanding of how to manage what’s coming for their labs and anatomic pathology practices.
“This regulatory trifecta consists of three elements,” adds Michel, who is also Editor-in-Chief of Dark Daily’s sister publication The Dark Report, a business intelligence service for senior level executives in the clinical laboratory and pathology industry, as well in companies that offer solutions to labs and pathology groups.
According to Michel, that trifecta includes the following:
Element 1
FDA’s Draft LDT Rule
FDA’s LDT rule is currently the headline story in the lab industry. Speaking about this development and two other FDA initiatives involving diagnostics at the upcoming Executive War College will be pathologist Tim Stenzel, MD, PhD, former director of the FDA’s Office of In Vitro Diagnostics. It’s expected that the final rule on LDTs could be published by the end of April.
Stenzel will also discuss harmonization of ISO 13485 Medical Devices and the FDA’s recent memo on reclassifying most high-risk in vitro diagnostics to moderate-risk to ease the regulatory burden on companies seeking agency review of their diagnostic assays.
Salerno will also cover the CDC’s efforts to foster closer connections with clinical labs and their local public health laboratories, as well as the expanding menu of services for labs that his department now offers.
Element 3
Private Payer Use of Z-Codes for Test Claims
On the third development—increased use by private payers of Z-Codes for genetic test claims—the speaker will be pathologist Gabriel Bien-Willner, MD, PhD. He is the Medical Director of the MolDX program at Palmetto GBA, a Medicare Administrative Contractor (MAC). It is the MolDX program that oversees the issuance of Z-Codes for molecular and diagnostic tests.
UnitedHealthcare (UHC) was first to issue such a Z-Code policy last year, although it has delayed implementation several times. Other major payers are watching to see if UHC succeeds with this requirement, Michel says.
Other Critical Topics to be Covered at EWC
In addition to these need-to-know regulatory topics, Michel says that this year’s Executive War College will present almost 100 sessions and include 148 speakers. Some of the other topics on the agenda in New Orleans include the following and more:
Standardizing automation, analyzers, and tests across 25 lab sites.
Effective ways to attract, hire, and retain top-performing pathologists.
Leveraging your lab’s managed care contracts to increase covered tests.
“Our agenda is filled with the topics that are critically important to senior managers when it comes to managing their labs and anatomic pathology practices,” Michel notes.
“Every laboratory in the United States should recognize these three powerful developments are all in play at the same time and each will have direct impact on the clinical and financial performance of our nation’s labs,” Michel says. “For that reason, every lab should have one or more of their leadership team present at this year’s Executive War College to understand the implications of these developments.”
Visit here to learn more about the 29th Executive War College conference taking place in New Orleans.
Some hospital organizations are pushing back, stating that the new regulations are ‘too rigid’ and interfere with doctors’ treatment of patients
In August, the Biden administration finalized provisions for hospitals to meet specific treatment metrics for all patients with suspected sepsis. Hospitals that fail to meet these requirements risk the potential loss of millions of dollars in Medicare reimbursements annually. This new federal rule did not go over well with some in the hospital industry.
Sepsis kills about 350,000 people every year. One in three people who contract the deadly blood infection in hospitals die, according to the Centers for Disease Control and Prevention (CDC). Thus, the federal government has once again implemented a final rule that requires hospitals, clinical laboratories, and medical providers to take immediate actions to diagnose and treat sepsis patients.
The effort has elicited pushback from several healthcare organizations that say the measure is “too rigid” and “does not allow clinicians flexibility to determine how recommendations should apply to their specific patients,” according to Becker’s Hospital Review.
Perform blood tests within a specific period of time to look for biomarkers in patients that may indicate sepsis, and to
Administer antibiotics within three hours after a possible case is identified.
It also mandates that certain other tests are performed, and intravenous fluids administered, to prevent blood pressure from dipping to dangerously low levels.
“These are core things that everyone should do every time they see a septic patient,” said Steven Simpson, MD, Professor of medicine at the University of Kansas told Fierce Healthcare. Simpson is also the chairman of the Sepsis Alliance, an advocacy group that works to battle sepsis.
Simpson believes there is enough evidence to prove that the SEP-1 guidelines result in improved patient care and outcomes and should be enforced.
“It is quite clear that this works better than what was present before, which was nothing,” he said. “If the current sepsis mortality rate could be cut by even 5%, we could save a lot of lives. Before, even if you were reporting 0% compliance, you didn’t lose your money. Now you actually have to do it,” Simpson noted.
“We are encouraged by the increased attention to sepsis and support CMS’ creation of a sepsis mortality measure that will encourage hospitals to pay more attention to the full breadth of sepsis care,” Chanu Rhee, MD (above), Infectious Disease/Critical Care Physician and Associate Hospital Epidemiologist at Brigham and Women’s Hospital told Healthcare Finance. The new rule, however, requires doctors and medical laboratories to conduct tests and administer antibiotic treatment sooner than many healthcare providers deem wise. (Photo copyright: Brigham and Women’s Hospital.)
Healthcare Organizations Pushback against Final Rule
“By encouraging the use of broad spectrum antibiotics when more targeted ones will suffice, this measure promotes the overuse of the antibiotics that are our last line of defense against drug-resistant bacteria,” the AHA’s letter states.
In its recent coverage of the healthcare organizations’ pushback to CMS’ final rule, Healthcare Finance News explained, “The SEP-1 measure requires clinicians to provide a bundle of care to all patients with possible sepsis within three hours of recognition. … But the SEP-1 measure doesn’t take into account that many serious conditions present in a similar fashion to sepsis … Pushing clinicians to treat all these patients as if they have sepsis … leads to overuse of broad-spectrum antibiotics, which can be harmful to patients who are not infected, those who are infected with viruses rather than bacteria, and those who could safely be treated with narrower-spectrum antibiotics.”
CMS’ latest rule follows the same evolutionary path as previous federal guidelines. In August 2007, CMS announced that Medicare would no longer pay for additional costs associated with preventable errors, including situations known as Never Events. These are “adverse events that are serious, largely preventable, and of concern to both the public and healthcare providers for the purpose of public accountability,” according to the Leapfrog Group.
In 2014, the CDC suggested that all US hospitals have an antibiotic stewardship program (ASP) to measure and improve how antibiotics are prescribed by clinicians and utilized by patients.
Research Does Not Show Federal Sepsis Programs Work
He points to analysis which showed that though use of broad-spectrum antibiotics increased after the original 2015 SEP-1 regulations were introduced, there has been little change to patient outcomes.
“Unfortunately, we do not have good evidence that implementation of the sepsis policy has led to an improvement in sepsis mortality rates,” Rhee told Fierce Healthcare.
Rhee believes that the latest regulations are a step in the right direction, but that more needs to be done for sepsis care. “Retiring past measures and refining future ones will help stimulate new innovations in diagnosis and treatment and ultimately improve outcomes for the many patients affected by sepsis,” he told Healthcare Finance.
Sepsis is very difficult to diagnose quickly and accurately. Delaying treatment could result in serious consequences. But clinical laboratory blood tests for blood infections can take up to three days to produce a result. During that time, a patient could be receiving the wrong antibiotic for the infection, which could lead to worse problems.
The new federal regulation is designed to ensure that patients receive the best care possible when dealing with sepsis and to lower mortality rates in those patients. It remains to be seen if it will have the desired effect.
HHS Office of Inspector General was the latest to examine the quality control problems that led to distribution of inaccurate test to clinical laboratories nationwide
Failure on the part of the Centers for Disease Control and Prevention (CDC) to produce accurate, dependable SARS-CoV-2 clinical laboratory test kits at the start of the COVID-19 pandemic continues to draw scrutiny and criticism of the actions taken by the federal agency.
In the early weeks of the COVID-19 pandemic, the CDC distributed faulty SARS-CoV-2 test kits to public health laboratories (PHLs), delaying the response to the outbreak at a critical juncture. That failure was widely publicized at the time. But within the past year, two reports have provided a more detailed look at the shortcomings that led to the snafu.
“We identified weaknesses in CDC’s COVID-19 test kit development processes and the agencywide laboratory quality processes that may have contributed to the failure of the initial COVID-19 test kits,” the OIG stated in its report.
Prior to the outbreak, the agency had internal documents that were supposed to provide guidance for how to respond to public health emergencies. However, “these documents do not address the development of a test kit,” the OIG stated.
“If the CDC can’t change, [its] importance in health in the nation will decline,” said microbiologist Jill Taylor, PhD (above), Senior Adviser for the Association of Public Health Laboratories in Washington, DC. “The coordination of public health emergency responses in the nation will be worse off.” Clinical laboratories that were blocked from developing their own SARS-CoV-2 test during the pandemic would certainly agree. (Photo copyright: Columbia University.)
Problems at the CDC’s RVD Lab
Much of the OIG’s report focused on the CDC’s Respiratory Virus Diagnostic (RVD) lab which was part of the CDC’s National Center for Immunization and Respiratory Diseases (NCIRD). The RVD lab had primary responsibility for developing, producing, and distributing the test kits. Because it was focused on research, it “was not set up to develop and manufacture test kits and therefore had no policies and procedures for developing and manufacturing test kits,” the report stated.
The RVD lab also lacked the staff and funding to handle test kit development in a public health emergency, the report stated. As a result, “the lead scientist not only managed but also participated in all test kit development processes,” the report stated. “In addition, when the initial test kit failed at some PHLs, the lead scientist was also responsible for troubleshooting and correcting the problem.”
To verify the test kit, the RVD lab needed samples of viral material from the agency’s Biotechnology Core Facility Branch (BCFB) CORE Lab, which also manufactured reagents for the kit.
“RVD Lab, which was under pressure to quickly create a test kit for the emerging health threat, insisted that CORE Lab deviate from its usual practices of segregating these two activities and fulfill orders for both reagents and viral material,” the report stated.
This increased the risk of contamination, the report said. An analysis by CDC scientists “did not determine whether a process error or contamination was at fault for the test kit failure; however, based on our interviews with CDC personnel, contamination could not be ruled out,” the report stated.
The report also cited the CDC’s lack of standardized systems for quality control and management of laboratory documents. Labs involved in test kit development used two different incompatible systems for tracking and managing documents, “resulting in staff being unable to distinguish between draft, obsolete, and current versions of laboratory procedures and forms.”
Outside Experts Weigh In
The OIG report followed an earlier review by the CDC’s Laboratory Workgroup (LW), which consists of 12 outside experts, including academics, clinical laboratory directors, state public health laboratory directors, and a science advisor from the Association of Public Health Laboratories. Members were appointed by the CDC Advisory Committee to the Director.
This group cited four major issues:
Lack of adequate planning: For the “rapid development, validation, manufacture, and distribution of a test for a novel pathogen.”
Ineffective governance: Three labs—the RVD Lab, CORE Lab, and Reagent and Diagnostic Services Branch—were involved in test kit development and manufacturing. “At no point, however, were these three laboratories brought together under unified leadership to develop the SARS-CoV-2 test,” the report stated.
Poor quality control and oversight: “Essentially, at the start of the pandemic, infectious disease clinical laboratories at CDC were not held to the same quality and regulatory standards that equivalent high-complexity public health, clinical and commercial reference laboratories in the United States are held,” the report stated.
Poor test design processes: The report noted that the test kit had three probes designed to bind to different parts of the SARS-CoV-2 nucleocapsid gene. The first two—N1 (topology) and N2 (intracellular localization)—were designed to match SARS-CoV-2 specifically, whereas the third—N3 (functions of the protein)—was designed to match all Sarbecoviruses, the family that includes SARS-CoV-2 as well as the coronavirus responsible for the 2002-2004 SARS outbreak.
The N1 probe was found to be contaminated, the group’s report stated, while the N3 probe was poorly designed. The report questioned the decision to include the N3 probe, which was not included in European tests.
Also lacking were “clearly defined pass/fail threshold criteria for test validation,” the report stated.
Advice to the CDC
Both reports made recommendations for changes at the CDC, but the LW’s were more far-reaching. For example, it advised the agency to establish a senior leader position “with major responsibility and authority for laboratories at the agency.” This individual would oversee a new Center that would “focus on clinical laboratory quality, laboratory safety, workforce training, readiness and response, and manufacturing.”
In addition, the CDC should consolidate its clinical diagnostic laboratories, the report advised, and “laboratories that follow a clinical quality management system should have separate technical staff and space from those that do not follow such a system, such as certain research laboratories.”
The report also called for collaboration with “high functioning public health laboratories, hospital and academic laboratories, and commercial reference laboratories.” For example, collaborating on test design and development “should eliminate the risk of a single point of failure for test design and validation,” the LW suggested.
CBS News reported in August that the CDC had already begun implementing some of the group’s suggestions, including agencywide quality standards and better coordination with state labs.
However, “recommendations for the agency to physically separate its clinical laboratories from its research laboratories, or to train researchers to uphold new quality standards, will be heavy lifts because they require continuous funding,” CBS News reported, citing an interview with Jim Pirkle, MD, PhD, Director, Division of Laboratory Sciences, National Center for Environmental Health, at the CDC.
Newly-defined Cardiovascular-Kidney-Metabolic Syndrome (CKM) means physicians will be in close collaboration with clinical laboratories to make accurate diagnoses
In a presidential advisory, the AHA defines a newly described systemic health disorder called Cardiovascular-Kidney-Metabolic Syndrome (CKM). The syndrome “is a systemic disorder characterized by pathophysiological interactions among metabolic risk factors, CKD (chronic kidney disease), and the cardiovascular system leading to multi-organ failure and a high rate of adverse cardiovascular outcomes.”
A CKM diagnosis, which is meant to identify patients who are at high risk of dying from heart disease, is based on a combination of risk factors, including:
weight problems,
issues with blood pressure, cholesterol, and/or blood sugar,
reduced kidney function.
CKM is a new term and doctors will be ordering medical laboratory tests associated with diagnosing patients with multiple symptoms to see if they match this diagnosis. Thus, clinical laboratory managers and pathologists will want to follow the adoption/implementation of this new recommendation.
“The advisory addresses the connections among these conditions with a particular focus on identifying people at early stages of CKM syndrome,” said Chiadi Ndumele, MD, PhD (above), Associate Professor of Medicine at Johns Hopkins University and one of the authors of the AHA paper, in a news release. “Screening for kidney and metabolic disease will help us start protective therapies earlier to most effectively prevent heart disease and best manage existing heart disease.” Clinical laboratories will play a key role in those screenings and in diagnosis of the new syndrome. (Photo copyright: Johns Hopkins University.)
Stages of CKM Syndrome
In its presidential advisory, the AHA wrote, “Cardiovascular-Kidney-Metabolic (CKM) syndrome is defined as a health disorder attributable to connections among obesity, diabetes, chronic kidney disease (CKD), and cardiovascular disease (CVD), including heart failure, atrial fibrillation, coronary heart disease, stroke, and peripheral artery disease. CKM syndrome includes those at risk for CVD and those with existing CVD.”
The five stages of CKM syndrome, which the AHA provided to give a framework for patients to work towards regression of the syndrome, are:
Stage 0: No CKM risk factors. Individuals should be screened every three to five years for blood pressure, cholesterol, and blood sugar levels, and for maintaining a healthy body weight.
Stage 1: Excess body fat and/or an unhealthy distribution of body fat, such as abdominal obesity, and/or impaired glucose tolerance or prediabetes. Patients have risk factors such as weight problems or prediabetes and are encouraged to make healthy lifestyle changes and try to lose at least 5% of their body weight.
Stage 2: Metabolic risk factors and kidney disease. Includes people who already have Type 2 diabetes, high blood pressure, high triglyceride levels, and/or kidney disease. Medications that target kidney function, lower blood sugar, and which help with weight loss should be considered at this stage to prevent diseases of the heart and blood vessels or kidney failure.
Stage 3: Early cardiovascular disease without symptoms in people with metabolic risk factors or kidney disease or those at high predicted risk for cardiovascular disease. People show signs of disease in their arteries, or have heart function issues, or may have already had a stroke or heart attack or have kidney or heart failure. Medication may also be needed at this stage.
Stage 4: Symptomatic cardiovascular disease in people with excess body fat, metabolic risk factors or kidney disease. In this stage, people are categorized as with or without having kidney failure. May also have already had a heart attack, stroke or heart failure, or cardiovascular conditions such as peripheral artery disease or atrial fibrillation.
“We now have several therapies that prevent both worsening kidney disease and heart disease,” said Chiadi Ndumele, MD, PhD, Associate Professor of Medicine at Johns Hopkins University and one of the authors of the Circulation paper, in a news release. “The advisory provides guidance for healthcare professionals about how and when to use those therapies, and for the medical community and general public about the best ways to prevent and manage CKM syndrome.”
According to an AHA 2023 Statistical Update, one in three adults in the US have three or more risk factors that contribute to cardiovascular disease, metabolic disorders, or kidney disease. While CKM affects nearly every major organ in the body, it has the biggest impact on the cardiovascular system where it can affect the blood vessels, heart muscle function, the rate of fatty buildup in the arteries, electrical impulses in the heart and more.
“There is a need for fundamental changes in how we educate healthcare professionals and the public, how we organize care and how we reimburse care related to CKM syndrome,” Ndumele noted. “Key partnerships among stakeholders are needed to improve access to therapies, to support new care models, and to make it easier for people from diverse communities and circumstances to live healthier lifestyles and to achieve ideal cardiovascular health.”
New AHA Risk Calculator
In November, the AHA announced PREVENT (Predicting risk of cardiovascular disease EVENTs), a tool that doctors can use to assess a person’s risk for heart attack, stroke, and heart failure. The new risk calculator, which incorporates CKM, allows physicians to evaluate younger people as well, and examine their long-term risks for cardiovascular issues.
Doctors can use PREVENT to assess people ages 30 to 79 and predict risk for heart attack, stroke, or heart failure over 10 to 30 years.
“Longer-term estimates are important because short-term or 10-year risk in most young adults is still going to be low. We wanted to think more broadly and apply a life-course perspective,” Khan said. “Providing information on 30-year risk may reveal earlier opportunities for intervention and prevention efforts in younger people.”
According to CDC data, about 695,000 people died of heart disease in the US in 2021. That equates to one in every five deaths. Clinical pathologists will need to understand the AHA recommendations and how doctors will be ordering clinical laboratory tests to determine if a patient has CKM. Then, labs will play a role in helping doctors monitor patients to optimize health and prevent acute episodes that put patients in the hospital.
FDA says the move will make it easier to gain authorization for other clinical laboratory tests to utilize at-home collection kits
In another sign of how diagnostic testing is responding to changing consumer preferences, the US Food and Drug Administration (FDA) granted marketing authorization to LetsGetChecked for the company’s Simple 2 test for chlamydia and gonorrhea, which includes at-home collection of samples sent to the test developer’s clinical laboratories in the US and in Ireland.
This marks the first time the FDA has cleared a diagnostic test for either condition in which samples are collected at home. It’s also the first test with at-home sample collection to be authorized for any sexually transmitted infection (STI) other than HIV, the FDA said in a new release.
Samples are collected through a vaginal swab or urine sample. “Results are delivered online in approximately 2-5 days with follow-up virtual consultations and treatment available if needed,” the company press release states.
Previously authorized tests for the conditions required sample collection at the point of care. The company also offers telehealth and online pharmacy services.
“This authorization marks an important public health milestone, giving patients more information about their health from the privacy of their own home,” said Jeff Shuren, MD, JD (above), Director of the FDA’s Center for Devices and Radiological Health. “We are eager to continue supporting greater consumer access to diagnostic tests, which helps further our goal of bringing more healthcare into the home.” With this emphasis on at-home testing from the FDA, clinical laboratories in the US and Ireland will likely be processing more at-home collected samples. (Photo copyright: FDA.)
Simple 2 Process and Costs
Prior to collecting the sample, the user goes online to complete a questionnaire and activate the kit, the FDA news release notes.
LetsGetChecked, headquartered in New York City and Dublin, Ireland, says its US labs are CLIA– and CAP-certified. The company currently offers more than 30 at-home tests covering STIs, men’s health, women’s health, and COVID-19, at prices ranging from $89 to $249 per test.
The Simple 2 test costs $99, and is not covered by insurance, Verywell Health reported. Consumers can get discounts by subscribing to quarterly, semiannual, or annual tests.
New Regulatory Pathway
The FDA said it reviewed the test under its De Novo regulatory pathway, which is intended for “low- to moderate-risk devices of a new type,” according to the news release.
“Along with this De Novo authorization, the FDA is establishing special controls that define the requirements related to labeling and performance testing,” the agency stated. “When met, the special controls, in combination with general controls, provide a reasonable assurance of safety and effectiveness for tests of this type.”
This creates a new regulatory classification, the agency said, that will make it easier for similar devices to obtain marketing authorization.
Citing data from the federal Centers for Disease Control and Prevention (CDC), the FDA news release states that chlamydia and gonorrhea are the most common bacterial STIs in the US. The CDC estimates that there were 1.6 million cases of chlamydia and more than 700,000 cases of gonorrhea in 2021.
“Typically, both infections can be easily treated, but if left untreated, both infections can cause serious health complications for patients, including infertility,” the news release states. “Expanding the availability of STI testing can help patients get quicker results and access to the most appropriate treatment, ultimately helping to curb the rising rates of STIs.”
Experts Praise the FDA’s Authorization of the Lab Test
STI experts contacted by STAT said they welcomed the FDA’s move.
“There are many people who would like to be tested for STIs who may not know where to go or who have barriers to accessing medical care,” said Jodie Dionne, MD, Associate Professor of Medicine in the University of Alabama at Birmingham (UAB) Division of Infectious Diseases. “If we are going to do a better job of reaching more sexually active people for STIs … we need to be creative about how to get them tested and treated in a way that is highly effective and works for them.”
Family physician Alan Katz, MD, a professor at the University of Hawaii John A Burns School of Medicine, told STAT that the Hologic assay is also used by clinicians who treat people in remote locations to diagnose STIs and is regarded as being highly accurate.
“This option is exceptionally useful for individuals who live in rural areas or are geographically distanced from a clinic where STI testing can be done and there is no telehealth option available,” he told STAT.
With this latest move, the FDA is recognizing that it is time to give consumers more control over their healthcare. This is a signal to clinical laboratories that they should be developing their own strategies and offerings that serve consumers who want to order their own tests. Of course, many states still require a physician’s signature on lab test orders, but that is likely to change over time.
