Industry Trends

Surging COVID-19 Cases Are Pushing Laboratories to the Breaking Point

Long lines for testing. Shortages of critical testing supplies. Case backlogs and long reporting delays.

Laboratories across the country and the patients they serve are reliving the nightmares of March and April as COVID-19 cases surge across the country. Things could get even worse this time around as holiday season get-togethers, winter weather and flu season all converge. The key question: Do laboratories have the capacity to keep up with testing demands?

The Bleak Outlook

Regrettably, the answer at this point seems to be no. U.S. laboratories are currently testing 1.5 million people per day, which is more than double the rate in July. But as case volume increases and patients rush to get tested before traveling to be with family for Thanksgiving, this is not nearly enough. A Nov. 12 statement by American Clinical Lab Association (ACLA) president Julie Khani warns that at this rate, some ACLA members are likely to reach or exceed their current testing capacities in the coming days.

The Continuing Supplies Shortage

Trump administration officials estimate that the U.S. has enough tests to screen between 4 million and 5 million per day in November. The problem with those numbers is that they are based on the premise that laboratories will have ample supplies to perform those tests. And that is simply not the case.

The supplies shortages that bedeviled testing efforts back in the spring have continued. Clinical laboratories are facing delays or cancellations on orders for critical supplies, such as pipette tips, Khani notes. Recent Food and Drug Administration authorization of specimen pooling, that is, testing a pool of samples rather than its constituent individuals, allows for more efficient use of testing supplies, provided that the pool tests negative. But if the pool comes back positive, all pool members must be tested individually, which necessitates utilization of supplies. Accordingly, pooling works best for use in populations at low risk, or with a low prevalence of infection. However, positivity rates across the country are currently on the rise, meaning that individual testing is becoming increasingly necessary.

Shrinking Reimbursement for Tests

Meanwhile, laboratories are finding it increasingly difficult to get reimbursed for the COVID-19 tests they do perform. When the public health emergency first began, Medicare paid laboratories $51 per test for high throughput COVID-19 diagnostic tests. Recognizing that the rate was inadequate, the Centers for Medicare and Medicaid Services (CMS) subsequently raised it to $100 per test. However, in October, CMS announced a new payment policy for 2021 under which laboratories will only qualify for the $100 payment rate if:

  • They complete the billed test in two calendar days or less; AND
  • They complete the majority of high throughput COVID-19 tests in two calendar days or less for all of their patients (not just their Medicare patients) in the previous month.

Laboratories that take longer than two days will receive only $75 per test. In essence, CMS is disguising a reimbursement cut as a reimbursement increase.

Laboratories are also facing reimbursement challenges from private payors. The Families First Coronavirus Response Act (FFCRA) and Coronavirus Aid, Relief, and Economic Security Act (CARES) require insurers to cover COVID-19 tests without seek copayments or other out-of-pocket costs. However, regulatory guidance issued by the U.S. Department of Health and Human Services (HHS) in June suggests that the rule does not apply to “testing conducted to screen for general workplace health and safety (such as employee “return to work” programs), for public surveillance or any other purpose not primarily intended for individualized diagnosis or treatment of COVID-19.”

The laboratory industry contends that health plans and insurers are exploiting this loophole to evade their FFCRA and CARES reimbursement obligations. Health insurance groups have responded by accusing laboratories of price gouging for COVID-19 tests. And, of course, patients are caught in the middle.

Takeaway

Even though more people are being tested than ever before, it is becoming increasingly clear that the U.S. has not resolved its COVID-19 testing problems. Supplies remain scarce. Case numbers continue to grow. And laboratories are being stretched to their breaking point. With the onset of the holidays and flu seasons, things are likely to get much worse before they get better.


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