Why Healthcare Reform Must Not Overlook Medicare’s Current Barriers to Timely Lab Testing

While the battle in Washington DC on healthcare reform continues, there is one lesser-known provision impacting Medicare patients that we believe is crucial to ensuring those beneficiaries have timely access to cutting-edge genomic and molecular diagnostic tests.

The Senate’s Health Reform bill H.R. 3590, The Patient Protection and Affordable Care Act, includes an important section that, if enacted, will reverse a current policy which can create a delay in medical decision-making and the initiation of treatment for millions of Medicare beneficiaries, simply because of an obstacle known as the Medicare “Date of Service” rule.

The Date of Service rule impacts all Medicare patients who undergo hospital procedures where blood or tissue samples are collected for testing, as often happens when a patient is being evaluated for a disease or condition.  Under current Medicare regulations, any laboratory which is independent from the hospital that initially collected the patient's blood or tissue, must bill that hospital for any testing that it subsequently performs on those samples.  This means that the hospital is expected to pay the lab and then turn around and bill Medicare for the lab's testing services, rather than allowing the lab to directly bill Medicare. 

Strangely, this regulation remains in effect even after the patient has left the hospital and gone home, and the labs must continue to bill the hospital for their testing services unless the test is ordered 14 or more days after the patient has been discharged.  Additionally, there is no medical basis for limiting labs from directly billing Medicare until 14 days after discharge.  No other service - such as an MRI or PET scan - is required to be billed back to the hospital after the patient has gone home.

The result of this regulation is that the hospital must take on the financial, administrative, and professional responsibility for a test that has been ordered and performed outside the hospital after the patient’s hospital stay has ended – frequently when the hospital has no relationship with the laboratory, and in some cases may not even have a relationship with the physician who ordered the test.  Often, the hospitals have responded to this situation by waiting at least 14 days after a patient’s discharge before releasing their blood or tissue sample to the lab, so that the test will be conducted outside the arbitrary Medicare timeframe.

This delay, in turn, can negatively impact timely patient access to laboratory services by creating barriers for the Medicare beneficiaries who need the critical information that comes from these tests.  The unnecessary delay caused by the Date of Service rule may also exacerbate patients’ anxiety while they wait an additional two – four weeks for their test results.

However, H.R. 3590 will allow laboratories that offer advanced diagnostic testing to bill Medicare directly, without forcing the already over-burdened hospital into a “middleman” role it does not wish to assume and for which there is no clinical policy rationale.  H.R. 3590 will also remove a disincentive that laboratories often face when developing new tests, because there is currently no assurance that they will receive payment from the hospital for medically-necessary tests performed for Medicare patients, if those tests fall within the 14 day window of a hospital admission or outpatient encounter. 

We believe the inclusion of this legislative fix to the Date of Service rule within the over-arching healthcare reform efforts will significantly help Medicare patients take advantage of advances in laboratory medicine.  Such advances are enabling healthcare providers to be far more effective in targeting treatment for individual patients, and in determining a patient’s predisposition to a specific disease or condition. Many of these diagnostic tests are helping to save lives, and some are also saving on the cost of delivery of care by helping to identify appropriate treatment for each patient, rather than treating them with a “one-size-fits-all” approach.

Genomic Health believes that a truly reformed healthcare system will ensure that Medicare beneficiaries – in many cases, patients who have limited financial resources – can more easily benefit from innovative, advanced diagnostics that have the potential to guide treatment planning and improve patient outcomes.