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Put It on the Board, 7/16

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Michel: The good, bad, and ugly that labs need to know

FDA allows use of two more Zika tests

Structured illumination microscopy used to detect nephrotic kidney disease

CAP lands deeming authority as California lab accreditor

Michel: The good, bad, and ugly that labs need to know

Robert Michel’s opening remarks at the Executive War College, which can be seen as a kind of state of the union address for laboratory medicine, focused on the trends in the industry and the opportunities and dangers they create.

“Fraud and abuse. That’s the ugly,” Michel began. “Folks who are doing lab medicine the right way aren’t really aware of what’s been happening outside the walls of their laboratories.”

Michel said this baneful pattern started more than a decade ago amid the fast-growing demand for toxicology and pain management tests. He named some of the biggest offenders. There is the Ameritox whistleblower case settled in 2010 for $16.3 million, in which the company allegedly gave cash to physicians at pain management practices in exchange for their sending them toxicology testing orders. In 2015, Millennium Health, another lab company performing toxicology and pain management testing, settled a whistleblower case for $256 million, which came after it received $600 million in government payments between 2007 and 2014. The company allegedly charged as much as $450 to test for a single drug, compared with the usual $25 price.

These cases come in the context of a stunning rise in physician-office drug tests paid for by Medicare, from 101 in 2000 to 3.2 million in 2009, Michel said. The nation spends an estimated $2 billion each year for drug testing related to pain management.

“This is why it’s become a big issue on the radar screen of not just the Medicare program but all private health insurers, such as Aetna, Cigna, Humana, and United Healthcare,” said Michel, editor of The Dark Report.

Michel pointed to similar ugliness within the field of cardiology testing.

“The federal government has been slow to react to this decade-long wave of fraudulent marketing practices by certain lab companies. And if executives of these companies—and most of these people come from outside lab medicine and are funded by investors, by the way—believe they’re not going to face any criminal risk, then why not go ahead and do the scheme? Because oftentimes when the feds do investigate, they [the companies] can sign a civil settlement without admitting guilt,” Michel said. “They can pay a penalty that is often much less than the total money that was obtained by schemes. Meanwhile, the lab executives who ripped off Medicare and private payers are free to go out, start a new lab company, and create another inducement scheme that generates huge profits for them.”

One exception to that rule is Parsippany, NJ-based Biodiagnostics Laboratory Services, where at least three owners and employees were convicted on criminal charges. Another 39 physicians and health professionals were convicted for taking kickbacks from BDL.

Without more aggressive enforcement of anti-kickback law by federal officials, “you’re going to see a lot of these abuses continue in the lab testing marketplace,” Michel predicts.

In an interview with CAP TODAY, Michel said “hospital and health system lab managers and pathologists have no idea of the immense rip-offs of Medicare and private insurance that a certain class of labs and physicians have achieved over the last 10 years.

“Yet it is that level of multibillion-dollar fraud that causes Medicare and private payers to then drop reimbursement for all labs to control fraud, as well as to enact restrictive coverage guidelines,” he adds. “The illegal practices of these labs—ranging from paying doctors processing fees, consulting fees, and exorbitant lease fees for phlebotomy spaces to charging payers an inflated, high price per test and accepting any payment while telling the doctors and their patients that patients will never get a bill—have been underreported by the lab press, including The Dark Report.”

If all that was the ugly, then the merely bad news is that times are getting tougher for clinical laboratories and anatomic pathology groups. This is happening as Medicare cuts fees and private payers drop prices. “And we still have the PAMA [Protecting Access to Medicare Act of 2014] market-price reporting shoe to drop,” Michel noted.

Another market trend that might be considered “merely bad news” is the reduced access to patients that many clinical labs and pathology groups are experiencing.

“This happens as payers narrow their networks in order to exclude high-priced providers, including labs and pathology groups,” Michel said. “Also, the health plans sold on the ACA health exchanges are intentionally designed to have narrow networks in order to keep down premiums.” A second way that labs lose access to patients involves seniors who leave Medicare Part B and opt for Medicare Advantage plans. These plans are provided by private payers that typically have contracts with national laboratories and exclude local labs.

Another bad development has been payers’ tougher attitude toward new lab tests. When laboratories do the work to bring on a new molecular test to aid precision medicine, they “are finding it very difficult to win a favorable coverage decision,” Michel noted. On top of all this, fee-for-service will end and be replaced by accountable and integrated care payment models. That sea change, however, creates an opening for laboratories to exploit.

“The doctors you serve are going to need to be proactive in how they detect diseases, and detect diseases earlier and with more precision,” Michel said. “The way this is going to happen is by sophisticated use of health care data, which means you need a very robust informatics platform in your lab.” In addition, laboratories will face a new “quality imperative,” he said, that will require them to implement a quality-management system such as ISO 15189.

As payers’ guidelines on appropriate test use become more restrictive and more require preauthorization for pricey genetic tests, the mandate becomes one of cutting laboratory costs even as patient volume grows.

“So, how you do that without compromising quality is what will differentiate your lab as successful going forward,” Michel said.

The good buried beneath all the trouble is that laboratories are well positioned to help clinicians and health systems meet the mandate to improve population health, Michel said. “If 70 to 80 percent of the typical patient’s permanent health record is lab test data, then your labs have an opportunity to have a role in population health management and be paid for the value of the data that you originate,” he told the War College crowd.

Michel predicts that “a virtual tsunami of useful biomarkers is poised to overwhelm everything that we know about medicine and health care.” He said laboratories are “well positioned” to help clinicians and health systems take advantage of millions of potentially useful biomarkers.

“Number one, you have to have lab scientists who understand the assays and the technology that produces the results,” Michel said. “Number two, you have to have lab scientists who understand how these tests relate to the disease states they identify. And then number three, the lab’s got to have the information technology to assemble all of that data, store it, and analyze it, and then process it to have value in guiding the clinicians.” —Kevin B. O’Reilly [hr]

FDA allows use of two more Zika tests

The Food and Drug Administration has given permission for two additional Zika virus tests to be used in the U.S. The agency granted emergency use authorization to Hologic’s Aptima Zika virus assay for the qualitative detection of RNA from Zika virus in human serum and plasma specimens.

The Aptima Zika virus assay runs on the Hologic Panther system and will be available for use in all 50 states, Puerto Rico, and the U.S. territories. The assay can be used by CLIA-certified high-complexity laboratories for patients who meet CDC Zika virus clinical or epidemiological criteria.

The FDA also approved use of the Procleix Zika virus blood screening assay, made by Hologic and Grifols, on the Procleix Panther system under the agency’s investigational new drug study protocol. Prominent U.S. blood centers will use the Procleix Zika virus assay to screen donated blood collected in potential endemic areas of the southern U.S., and may expand testing to other areas of the U.S. if the virus continues to spread. The American Red Cross is taking part in the investigational study and will start blood-donor testing “in areas most likely to have local mosquito transmission of the virus,” said Susan Stramer, PhD, ARC vice president of scientific affairs.

The Procleix Panther system, which automates all aspects of NAT-based blood screening on a single, integrated platform, has received regulatory approvals in countries around the world and is in development for the U.S. market.
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Structured illumination microscopy used to detect nephrotic kidney disease

Structured illumination microscopy, or SIM, offers an alternative to electron microscopy in viewing details that are below the resolution limit of standard light microscopy. SIM was applied recently to analyze renal podocyte substructure in nephrotic kidney disease, and the findings corresponded with those obtained using electron microscopy (Pullman JM, et al. Biomed Opt Express. 2016;7[2]:302–311).

That is important, says lead author James Pullman, MD, PhD, because electron microscopy, or EM, techniques require specially trained technicians and a time-consuming process of preparing, imaging, and analyzing a single sample using EM. SIM also gives protein localization by immunofluorescence the high resolution of EM.

Compared with EM, SIM has multiple advantages, in the view of Dr. Pullman, a clinical professor of pathology at Albert Einstein College of Medicine. “It has a much larger field of view, can image in three dimensions easily and quickly, also an advantage over conventional light microscopy. It better preserves native biological structure through its specimen preparation techniques, uses an illumination source—light versus electrons—that is less destructive of tissue, can more easily identify individual proteins by immunohistochemistry, and utilizes simple and rapid sample preparation techniques. SIM images are also computed, which facilitates image analysis and extraction of even more information.”

Dr. Pullman notes the negatives, too, of this type of super-resolution microscopy.

“The minuses are the high cost of current SIMs, their relative scarcity, and the limited, even if useful, types of specimen preparations they can handle.”

Other kinds of super-resolution microscopic techniques, such as stochastic optical reconstruction microscopy (STORM) and stimulated emission depletion (STED), have come on the scene, but Dr. Pullman says that “as of now, SIM is more useful with the static tissue preparations that are available to the diagnostic pathologist.”

“STORM and STED add an element of dynamic analysis, well suited for the study of living tissues and intracellular kinetics, things that are not usually done in pathology. This is not to say that a creative pathologist or cell biologist won’t come up with a diagnostic use for STORM or STED, but at the moment, in my opinion, SIM offers by far the most potential for use in diagnostic pathology.”

Dr. Pullman says he hopes that SIM can help simplify the workup of nephrotic and other kidney diseases.

“Identifying a particular nephrotic disease is usually accomplished with data in addition to foot process effacement, such as conventional light microscopic findings; the presence, type, and location of immune complex deposits; and other ultrastructural changes to the glomerulus,” he says. “The latter are also in the domain of electron microscopy, but could be studied by SIM. There may be ways to use SIM to accomplish these other tasks, which could then allow one technology rather than three—as is currently the case: light, immunofluorescence, and electron microscopy—to diagnose nephrotic and possibly other kidney diseases.”

Dr. Pullman says his team’s work on SIM “should be validated and expanded, both to other aspects of renal pathology and to other tissues and types of diagnosis.”

Other sample preparation and analytic techniques should be tried with SIM, such as simultaneous localization of more than one protein, he adds. “We only tried the simplest approach, tried-and-true single-label immunofluorescence staining of frozen tissue sections.” —Kevin B. O’Reilly
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CAP lands deeming authority as California lab accreditor

The California Department of Public Health has approved the CAP’s application as an accrediting organization with authority to deem California clinical laboratories to be in compliance with state laws for licensure or registration. State officials approved the application following a 2009 law enacted with support from the CAP and the California Society of Pathologists.

Under the statute, laboratories accredited by approved accreditation organizations such as the CAP are exempted from routine state inspections, provided the laboratory agrees to allow the state to have access to any accreditation record the department may require. The CDPH Laboratory Field Services will continue to have full authority to conduct complaint investigations, sample validation inspections, and require submission of laboratory proficiency testing results to ensure compliance with state standards.[hr]

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Quest acquires PhenoPath
November 2018—Quest Diagnostics has acquired PhenoPath Laboratories, which provides immunophenotyping, hematopathology, and molecular pathology services. The PhenoPath business, in Seattle, will operate as part of AmeriPath, a wholly owned business of Quest. Steve Rusckowski, Quest chairman, president, and CEO, said in a statement: “PhenoPath has a strong record of innovation and provides several capabilities that complement and extend our own, particularly in pathology and molecular oncology. It also deepens our presence in the Pacific Northwest.” PhenoPath founder Allen Gown, MD, tells CAP TODAY that continued consolidation in the laboratory industry and insurance reimbursement challenges have posed significant risks to PhenoPath’s future growth. “In Quest/AmeriPath,” he says, “we found an organization that realized not only the excellence of PhenoPath’s past and present but also the extraordinary future that, with their assistance, we can have.” Dr. Gown founded PhenoPath in 1998.

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