Laboratory developed tests regulation survey highlights concerns for pediatric health

The Association for Diagnostics & Laboratory Medicine (ADLM, formerly AACC) conducted a survey of clinical laboratories to assess the potential impact of proposed Food and Drug Administration (FDA) regulations on laboratory developed tests (LDTs). The findings underscored significant concerns that these regulations could hinder patient care, particularly in pediatric settings.

LDTs play a pivotal role in timely diagnoses and treatment decisions in hospitals. However, an FDA rule aims to regulate LDTs in addition to existing oversight by the Centers for Medicare and Medicaid Services (CMS). ADLM opposes this dual regulatory framework, which the association believes may be beyond the FDA’s statutory authority.

The survey, which garnered responses from 140 U.S. laboratories, revealed several key insights, including onerous burdens on hospital labs and significant challenges to continuing quality patient care.

Children's hospitals in particular expressed apprehension. If the FDA imposes regulations on LDTs, many of these hospitals would face difficult choices — either outsourcing tests to commercial labs or transitioning tests to alternative FDA-approved kits that may be less accurate. Both scenarios could lead to life-altering delays in diagnosis and treatment for sick children, according to ADLM.

With the FDA final rule still pending, the survey shows labs face profound uncertainty. Some 87% of facilities that currently perform LDTs have not developed contingency plans to deal with potential FDA oversight. Reasons cited include the financial burden associated with FDA regulation and the relative unfamiliarity of FDA rules compared to existing CMS regulations.

“If laboratory developed tests become FDA-regulated, children’s hospitals could be forced to make exceedingly difficult tradeoffs at the expense of patient care,” said ADLM President Octavia Peck Palmer, PhD, in a statement. “While ADLM shares FDA’s goal of ensuring that laboratory developed tests are safe and effective, we need to balance that with preserving the accessibility of these tests — especially for the most vulnerable patient populations. ADLM’s survey findings underscore the fact that placing these tests under additional FDA oversight would undermine care for children across the U.S.”

ADLM-LED COALITION URGES ADDITIONAL FUNDING FOR CDC HARMONIZATION INITIATIVE

In a letter to Congressional leaders, an ADLM-led coalition has called for increased funding for the U.S. Centers for Disease Control and Prevention (CDC) to support the harmonization of clinical laboratory test results. Harmonization ensures that laboratory data can be shared and meaningfully utilized, benefiting both clinicians and patients, the letter noted.

As the healthcare delivery system moves toward greater integration, laboratory data becomes a key piece of health information shared among providers, patients, and payers, the letter emphasized. However, for most laboratory tests, a gold standard either does not exist or is not readily applied. This lack of harmonization means that different clinical test methods may yield varying numeric values for the same patient sample, even though each result is accurate within its own context.

Congress has supported ADLM’s advocacy for more CDC funding over several years, leading to significant achievements, the letter noted. Increased funding has allowed the CDC Clinical Standardization Programs to produce and distribute reference/harmonization materials for clinical standardization programs worldwide. The CDC also has substantially increased the number of harmonized biomarkers — from 10 in 2014 to 26 in 2022.

REPORT: CMS SHOULD BE MORE FLEXIBLE IN PAYING FOR TESTS DURING PUBLIC HEALTH EMERGENCIES

In response to the COVID-19 pandemic, the Centers for Medicare and Medicaid Services (CMS) had to quickly determine how much it would pay for clinical laboratory tests for SARS-CoV-2. Now a new report from the Department of Health and Human Services Office of Inspector General (OIG) has found that CMS did not pay enough for testing even as it pushed clinical laboratories to rapidly expand capacity. The report recommended that CMS establish a new procedure to ensure it adequately reimburses labs for tests during a public health emergency.

OIG noted that neither the CMS clinical laboratory fee schedule statute nor its implementing regulations deal with how officials can quickly set rates for new laboratory tests before the lengthy public consultation rate-setting process. In March 2020, CMS contractors (MACs) set rates for new SARS-CoV-2 viral tests through CMS’s interim rate-setting policy, but the agency had to take additional action beyond its standard rate-setting procedures to set and adjust rates.

For example, in March 2020, MACs set the payment rate for a SARS-CoV-2 test at $51, based on the assays being similar to preexisting tests for Zika virus. Just one month later, CMS decided to increase the rate to $100 with new codes, with the expectation that laboratories would have to acquire high-throughput instruments, train staff, and perform additional quality assurance procedures.

CMS changed payment again in January 2021, reducing payment to $75 but adding a special new $25 add-on code. Labs could only bill for the $25 code if they returned results within 2 days — and could show they completed most SARS-CoV-2 tests for all patients within 2 days during the prior month.

This plan didn’t allow contractors to set rates that fully covered the cost of SARS-CoV-2 tests for all laboratories. OIG also noted that “CMS may have missed opportunities to obtain important information that could have improved its response to the COVID-19 pandemic from laboratory associations and the MACs’ pricing coordinators when it made decisions about the new clinical diagnostic laboratory test rates.”

In the report, the OIG recommends that CMS work on communication among all stakeholders who are involved in setting new laboratory test rates during a public health emergency and potentially seek new regulatory authority to ensure it can act quickly and appropriately.

Agencies must respond to OIG reports. In written comments, “CMS did not explicitly state its concurrence or nonconcurrence with our recommendations but stated that it will take our findings and recommendations into consideration for future public health emergencies,” the OIG report said.