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ACLA CALLS FOR PAYMENT CAPS FOR LAB TESTS; REFORM PACKAGE WOULD SAVE HEALTH CARE CONSUMERS OVER $12 BILLION

 /ADVANCE/ WASHINGTON, Sept. 22 /PRNewswire/ -- In a move to dramatically restructure and simplify the delivery of laboratory testing services, the American Clinical Laboratory Association (ACLA) today reiterated its call for enactment of laws, as part of health care reform, that would:
 -- set uniform payment caps;
 -- establish clear, standardized rules to assure that everyone understands what tests are being ordered and performed;
 -- eliminate cost shifting and reduce the volume of testing through direct billing to patients and insurers;
 -- lower Medicare spending; and
 -- simplify payment systems.
 This reform package, enacted in its entirety, would save at least $12 billion over five years and would address recent criticisms leveled against the industry. A summary of the ACLA proposal, adopted in March of this year and shared with Congress and the administration's Health Care Task Force, follows:
 THE AMERICAN CLINICAL LABORATORY ASSOCIATION SUPPORTS
 HEALTH CARE REFORM
 Adopted March 1993
 The American Clinical Laboratory Association (ACLA) is an organization of federally regulated, independent clinical laboratories, which represents national, regional and local laboratories located throughout the United States. Over 60 percent of the services furnished by independent clinical laboratories are supplied by ACLA members. These laboratory services play a vital role in the health care delivery system and offer a cost-effective method of diagnosing and monitoring a variety of illnesses and conditions.
 ACLA recognizes that fundamental reform of the health care system is urgently needed and, therefore, is proposing a four-part plan to confront the problem of rising costs and increasing utilization of laboratory testing. The centerpiece of this plan is the enactment of a federal law requiring direct billing of laboratory services; i.e., a requirement that the laboratory bill the third-party payor or patient who is responsible for payment, rather than the physician requesting the tests. For the reasons discussed below, ACLA believes enactment of this simple provision would lower utilization, eliminate cost-shifting and reduce laboratory costs to patients and third-party payors. If ACLA's plan is enacted, ACLA estimates that it would result in a savings to the health care system of more than $16 billion over the next five years.
 THE CURRENT SYSTEM DISTORTS THE MARKET
 Under the present system, physicians can request that laboratories bill them for testing that they order for their non-Medicare patients. Because laboratories cannot order testing themselves, the physician is in the position where he or she can also request -- and receive -- discounts from the laboratory providing this testing. The physician can then mark-up these tests when third parties and patients are billed. This system gives the doctor a financial interest in the testing that is ordered and creates incentives that can lead to increased testing. Because of the obvious concerns arising from this arrangement, Medicare requires the laboratory performing the testing to bill the program directly.
 The current system also results in cost-shifting because it forces laboratories to increase prices to other payors: to Medicare, to the extent possible, to third-party payors and patients. Medicare has protected itself, to some extent, through the enactment of fee schedules and national limitation amounts. However, patients and third-party payors also end up paying increased prices, either because they bear the mark-up tacked on by the test orderer, or because laboratories, when they bill patients and third-party payors, must offset physician discounts and reductions in Medicare reimbursement.
 PART ONE: ENACT FEDERAL DIRECT BILLION LEGISLATION
 Enactment of a federal direct billing law is the single most important part of reforming the present system. It is the one provision that allows achievement of all other goals. It is a simple provision mandating that laboratories performing the testing only bill the person or insurer responsible for payment. Such a provision is already included in S.337, a bill introduced this year by Sens. Jeff Bingaman (D-N.M.) and Howard Metzenbaum (D-Ohio). It could also easily be included in a prohibition on self-referral, to which this issue is closely related. Independent studies sponsored by ACLA demonstrate that enactment of a direct billing provision standing alone would reduce health care costs between $2.4 and $3.2 billion a year, as a result of lower prices and decreased utilization. This is a savings of at least $12 billion over the next five years.
 PART TWO: ENACT SIGNIFICANT COST-CONTAINMENT MEASURES
 If a direct billing law is enacted, laboratories would be able to accept cuts in reimbursement from Medicare and private payors, and all payors will end up paying fairer prices. If direct billing is enacted, laboratories could accept lower reimbursement from Medicare. President Clinton has proposed lowering the national limitation amounts, which act to cap Medicare reimbursement for laboratories, from their current levels of 88 percent to 76 percent of the fee schedule medians. ACLA could accept this cut if it is accompanied by direct billing. This reduction is estimated to save approximately $4.4 billion over five years(A). When these savings are added to the savings resulting from direct billing, the total package would reduce health care costs by at least $16.4 billion over the next five years, and probably more.
 Direct billing would also make it possible for ACLA members to absorb lower prices from private payors, as well. Along with direct billing, ACLA proposes a cap on laboratory payments, set at the actual median of the current Medicare laboratory fee schedules, as defined in Section 1833(h) of the Social Security Act. Enactment of such a provision would have the effect of substantially lowering laboratory reimbursement in the private sector. While it is impossible to calculate precisely how much such a provision would save, as competition could ultimately drive prices below this cap, ACLA believes the savings would be substantial and would be in addition to the savings already discussed. Further, the combination of direct billing and fee caps will transfer the benefits of price and service competition from the physician to the ultimate payor, either the patient or the third-party payor.
 ACLA wishes to emphasize, however, that it is the enactment of direct billing that allows laboratories to propose these cost containment measures. Because of the additional costs that are being imposed on laboratories due to new regulatory and quality control requirements, these additional payment reductions, in the absence of direct billing, will likely be offset by decreases in services and the closing of some facilities, resulting in reduced access to care.
 PART THREE: ENCOURAGE MORE APPROPRIATE USE OF PROFILES
 One factor that may have led to the increased utilization of testing services is the use of "test profiles." Profiles are a group of related tests that are packaged together. For example, a physician ordering tests for a patient with liver disease may order a "hepatic profile," a group of related tests used for patients known or suspected to have this condition. While profiles are a necessary and valuable tool, it has also been suggested that they may lead to increased testing. For example, in some instances, physicians may order the profile without understanding which tests are included in the package. ACLA believes a process should be established to develop standardized profiles and their components and to modify them, as necessary, in the future. ACLA would be pleased to work with the Department of Health and Human Services and the various medical societies n developing a limited list of accepted profiles. ACLA also believes that laboratories should disclose to physicians the component tests included in each profile and their prices to third-parties.
 PART FOUR: PROMOTE ADMINISTRATIVE EFFICIENCY
 First, a system of administrative simplification should be enacted so that it is clear to all health care providers what medical and insurance information must be obtained from a patient. This is especially important for laboratories, which do not usually have direct contact with the patient and must rely on the physician to obtain this information. Second, the number of Medicare carriers processing laboratory claims should be reduced, preferably, to a single, centralized carrier. Today, laboratories deal with over 50 different Medicare carriers, all of which have their own procedures and policies. Because laboratories often have testing facilities in many different states, several carriers usually have jurisdiction over each laboratory and sometimes even over a single claim. This system results in unnecessary duplication of effort and a waste of time and money.
 (A) On Aug. 10, 1993, President Clinton signed the Omnibus Budget Reconciliation Act of 1993, which includes a provision that reduces the laboratory fee schedule medians to 76 percent over the next three years.
 The American Clinical Laboratory Association (ACLA) is an organization of federally-regulated, independent clinical laboratories, which represents national, regional and local laboratories located throughout the United States.
 -0- 9/22/93/1700
 /CONTACT: Linda M. Fuselier for the American Clinical Laboratory Association, 202-638-1400/


CO: American Clinical Laboratory Association ST: District of Columbia IN: HEA SU: EXE LEG

KD-DC -- DC038 -- 3903 09/20/93 18:41 EDT
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