Labcorp Completes Outreach Lab Deal With RWJBarnabas Health

by Jondavid Klipp | Sep 20, 2022 | Hospital Outreach Laboratory, Labcorp

Labcorp Completes Outreach Lab Deal With RWJBarnabas Health

Labcorp has completed its acquisition of RWJBarnabas Health’s outreach laboratory business and select related assets (see LE, August 2022). RWJBarnabas Health (West Orange, NJ), which has 12 acute-care hospitals with 4,357 staffed beds, is New Jersey’s largest academic health system. Financial terms of the transaction were not revealed.

Clinical lab outreach testing from RWJBarnabas Health will be shifted to Labcorp’s regional laboratory in Raritan, New Jersey. Some STAT and same-day testing will be performed at select RWJBarnabas Health hospitals. Anatomic pathology services are not part of the deal and will not be affected.

In addition, any potential future reference testing relationship with RWJBarnabas Health would be independent of this transaction, according to a Labcorp spokesperson.

“This strategic business decision will provide a high-performing, streamlined outreach network to support our community,” according to John Doll, Senior Executive Vice President and Chief Operations Officer of RWJBarnabas Health. The arrangement is also expected to reduce out-of-
pocket lab costs for RWJBarnabas patients.

RWJBarnabas Health’s decision to sell its clinical lab outreach business comes as it struggles with investment losses, rising labor costs and inflation. In the six months ended June 30, 2022, RWJBarnabas Health reported a net loss of $489 million vs. a net gain of $325 million in the same period a year earlier; total revenue was up 14% to $3.651 billion.

Investment losses at RWJBarnabas Health totaled $729 million in the six months ended June 30, 2022. In addition, salaries and employee benefits increased by $264,375 or 18%; physician fees and salaries increased by $79,207 or 22%; and supplies and other expenses increased by $191,781 or 17%.

RWJBarnabas Health collected total Medicare Part B CLFS revenue of $6.3 million in full-year 2021. Laboratory Economics estimates that Medicare Part B CLFS represents 25% of the overall revenue at RWJBarnabas Health’s clinical lab outreach business (total annual revenue estimated at
$25 million).

Monkeypox Cases May Be Vastly Undercounted

by Jondavid Klipp | Aug 16, 2022 | Mako Medical Laboratories, Monkeypox

Monkeypox Cases May Be Vastly Undercounted

Based on CDC case counts, the current monkeypox outbreak in the U.S. doesn’t look that bad. As of August 10, the CDC reports a total of 11,177 Monkeypox cases had been recorded since the initial case was identified in Massachusetts on May 18, 2022.

However, the official case count is misleading, according to Manoj Gandhi, MD, PhD, Senior Medical Director at Thermo Fisher Scientific. Gandhi thinks the number of unreported cases is bigger — probably much bigger — than the CDC case count suggests. “We’re just seeing the tip of the iceberg,” says Gandhi. The CDC is currently only reporting monkeypox cases on a weekly basis. The next case count will be announced on August 17.

Thermo Fisher is manufacturing reagents that labs can use to develop their own laboratory-developed Monkeypox tests to run on QuantStudio 12K Flex PCR systems. LDT testing will augment the Monkeypox testing that is being performed by labs with access to CDC-developed kits, which are in limited supply.

Currently, the CDC-developed kits for Monkeypox testing are being used by 78 public health labs and five chosen commercial labs, including Aegis Sciences, Labcorp, Mayo Clinic Labs, Quest Diagnostics and Sonic Healthcare. Total combined capacity for public health and the five commercial labs is more than 60,000 Monkeypox tests per week.

In late July, the American Medical Association (AMA) issued a CPT code (87593) for molecular diagnostic testing that detects the monkeypox virus. A Medicare reimbursement rate has not been established yet for CPT 87593 and it is currently in the MolDx program for pricing, according to Lale White, Executive Chairman and CEO at XIFIN Inc. “Labs need to know Monkeypox tests are reimbursable, so they are encouraged to test,” notes Thermo’s Gandhi.

Test samples for Monkeypox are collected by swab from a patient’s blister. People testing positive can be treated with the prescription drug tecovirimat, also called Tpoxx, which is in short supply. Most importantly, Gandhi says positive cases should isolate to prevent the spread. And family
members and close contacts should get tested.

Monkeypox is usually a self-limited disease with the symptoms lasting from 2 to 4 weeks, according to the World Health Organization. However, severe cases can occur. There have been no reported deaths from Monkeypox to date in the United States.

Mako Medical Labs (Raleigh, NC) is one of the first independent labs to offer an LDT for Monkeypox. Mako went live with Monkeypox testing on July 18 on Thermo’s QuantStudio, according to Matthew Tugwell, Director, Genomics at Mako.

Tugwell says Mako currently has the capacity to perform up to 30,000 Monkeypox tests per day. The majority of Mako’s samples for monkeypox testing are coming from STD clinics. Patients getting tested for sexually transmitted diseases like herpes and syphilis are also being tested for
Monkeypox. Positivity rates are currently averaging about 13%. So far, Tugwell says demand for Monkeypox testing has been low—probably because people are shying away from getting tested because of a perceived
stigma associated with the disease.

So far, nearly all Monkeypox cases in the United States have been among gay and bisexual men. However, Tugwell notes, “We don’t really know where this is going. It has the potential to infect anyone, regardless of gender, skin color or sexual preferences.”

AMA Announces New Add-On Digital Pathology Codes

by Jondavid Klipp | Jul 25, 2022 | AMA, College of American Pathologists, Digital Pathology

AMA Announces New Add-On Digital Pathology Codes

The American Medical Association (AMA) CPT Editorial Panel has
announced 13 new digital pathology add-on codes effective on January
1, 2023. The new digital pathology Category III CPT codes will be used
to report additional clinical staff work and service requirements associated
with digitizing glass slides for primary diagnosis.

Introduction of the codes will allow CMS to monitor the usage of digital
pathology. However, no relative value units (RVUs) or national payment
rates have been assigned to the new codes.

“It’s an important first step, but widespread use in clinical practice will
need to be demonstrated before the new codes are moved to Category I
and assigned RVUs,” notes Jonathan Myles, MD, Chair of the Council
on Government and Professional Affairs at the College of American
Pathologists (CAP).

The new digital pathology add-on codes are linked with 13 of the most commonly billed pathology procedures, including CPT 88305 (Level IV-Tissue Exam). CAP’s Myles says that the new add-on codes should only be reported when used for clinical diagnosis and not for things like archiving slides, training or validation of AI algorithms, or tumor board conferences. “It’s clear that digital pathology will be a part of the practice of pathology and lab medicine, but it has to be proven to be in widespread clinical use to gain Medicare reimbursement,” says Myles.

Assuming that digital pathology volumes prove to be significant, the very earliest that CMS could assign RVUs and establish national payment rates for the new add-on codes would be for an effective date of January 1, 2024, notes Laboratory Economics. However, the process is more likely to take at
least a few years. In the meantime, each individual Medicare Administrative Contractor (MAC), as well as private insurers, could establish their own payment rates, but are not required to do so.

Many pathology labs in the United States are experimenting, but very few have gone fully digital, according to Michael Rivers, Vice President and Lifecycle Leader for Digital Pathology, Roche Tissue Diagnostics (Santa Clara, CA). “Digitization is a means to an end. It will allow the application
of innovative AI solutions to pathology images and ultimately integrated multi-modal analysis of patient cases combining anatomic pathology, clinical lab and gene-sequencing data,” says Rivers.

“My prediction is that if the Category III codes are converted to Category I code status, in the future Medicare could potentially reimburse the new add-on codes at roughly 3% to 5% of the global rates for related existing codes,” says Erick Lin, MD, PhD, Senior Director, Medical Affairs, PathAI (Boston, MA). Thus, the add-on code for digitizing one unit of CPT 88305 (current global rate of $72) could be reimbursed at between $2 and $4. The key is for all pathology labs to be aware of the new add-on codes, prepare systems to report, and then begin reporting the new codes effective January 1, 2023. If all clinical utilization is appropriately reported on claims, it can help facilitate Medicare’s establishment of national reimbursement rates, explains Lin.

“Although digital pathology, including usage of AI algorithms, could improve pathologist efficiency, this should not be the sole focus of reimbursement calculations. Digital pathology helps labs and pathologists expand their network of brainpower through greater access to information,
second opinions and subspecialist expertise. This ultimately could lead to optimized diagnostic decision-making and inherently leads to better patient management,” according to Esther Abels, Chief Clinical and Regulatory Officer, Visiopharm Corp. (Westminster, CO) and President of the Digital Pathology Association (Carmel, IN).

California Lab Owners Indicted For $214 Million Medicare Test Fraud

by Jondavid Klipp | Jun 18, 2022 | COVID-19, Fraud

California Lab Owners Indicted For $214 Million Medicare Test Fraud

The U.S. Department of Justice has indicted Imran Shams and Lourdes Navarro, both 63 and owners of Matias Clinical Laboratory (Baldwin Park, CA), for their alleged roles in a $214 million Medicare billing fraud scheme.

The DOJ says that the married couple arranged for Matias to pay kickbacks to third-party marketers in exchange for specimens and test orders. Matias would then perform testing and pay the marketers a percentage of the reimbursements it received, including from the Medicare program.

Matias (dba Health Care Providers Lab) billed the Medicare program for $214 million of lab test claims between August 2018 and March 2022. This amount included $143 million of fraudulent claims for Covid-19 and respiratory pathogen tests that were submitted without regard to medical necessity, according to the DOJ. As a result of these alleged fraudulent claims, Matias received total Medicare payments of $29 million, including $18 million for Covid-19 and respiratory pathogen tests.

The DOJ alleges that Shams and Navarro used the Pandemic for their own financial gain by bundling Covid-19 tests with more expensive respiratory testing, irrespective of whether the testing was medically necessary.

DOJ says that Shams and Navarro transferred money from Matias to shell companies, Nurse Plus and Proworx, to launder money. The pair then withdrew this money to fund real estate transactions and to purchase luxury items and goods and services for their personal use.

Furthermore, the DOJ says that Shams fraudulently concealed his role at Matias and his prior criminal convictions. Shams had been excluded from all participation in Medicare since being convicted in 2000 for felony grand theft related to Medicare and Medi-Cal billing fraud.

Separately, Laboratory Economics notes that the HRSA uninsured program has paid Matias/Health Care Providers Lab $2 million for Covid-19 testing plus another $15.9 million for treating Covid-19 patients.

MT Salaries Skyrocket As Labs Struggle To Find MTs

by Jondavid Klipp | May 20, 2022 | Laboratory Market Research

MT Salaries Skyrocket As Labs Struggle To Find MTs

Today, laboratories are offering salaries and sign-on bonuses to medical technologists (MTs) that have never been seen before. In the San Francisco Bay Area and San Diego, lab clients are paying salaries as high as $150,000 and $180,000 to attract staff MTs with sign-on bonuses of more than $25,000, according to Ed Dooling, Chief Executive of Vanguard Healthcare Staffing (Sparta, NJ). He says MT salaries offered by independent labs in some markets have roughly doubled since the start of the pandemic.

PCR analyzers and Covid-19 test reagents were the bottleneck in the early months of the pandemic, but staffing shortages have proven to be a bigger and more persistent challenge. The pipeline of new MTs was disrupted as many labs temporarily shut down their clinical training rotations during the pandemic. In addition, older MTs retired to avoid exposure or got burned out due to extraordinary overtime demands. A huge increase in the number of new lab formations resulted in an intense competition for MTs, according to Dooling.

For example, independent labs in Toledo, Ohio are offering MT sign-on bonuses of $20,000 to $30,000 with salaries in the range of $80,000 to $90,000, according to Mason Shaw, Scientific Talent Recruiter at Vanguard. He notes that pre-pandemic salaries had ranged between $50,000 and $75,000 in this market.

Shaw notes that the length of time a new MT hire must stay before a sign-on bonus is paid varies by the lab company. “I have heard of a full year, 6 months, or 3 months, it depends on the offer and the negotiation.”

In addition, Shaw says that traveling MTs filling 3- to 12-month temporary positions are now being paid as much as $90 per hour. Pre-pandemic rates had averaged roughly $50-65 per hour for traveling MTs.

“Lab employees had always been treated like the red-headed stepchildren of healthcare. But the pandemic has raised their recognition and pay,” says Shaw.

Separately, Kevin Hunter, President of Colaborate (Tampa, FL), says his consulting firm helped set up 83 new Covid-19 PCR testing labs during the past two years. “We have seen $35,000 sign-on bonuses, significant relocation packages and starting salaries in the $125,000 range.”

For example, Hunter says that an independent lab in Dallas recently offered a salary of $125,000 plus a $25,000 sign-on bonus and six week’s paid vacation to hire an MT. “While some of this can be attributed to the retirement wave, the pandemic has put a tremendous burden on an
overworked staff, and with 50,000 new CLIA labs started since the beginning of Covid, there just aren’t enough workers to go around.”

Finally, Vanguard’s Dooling says that lab staff overtime hours have recently begun to decline as Covid test volumes have fallen. Nonetheless, he does not see the heightened MT salaries reverting to pre-pandemic levels. “It looks like this is the new normal.”