COVID-19 Relief Bill Leaves Labs Out in the Cold

Labs who have answered the call to mobilize beyond capacity so that people can be tested for COVID-19 can be forgiven for thinking nobody in Washington “CARES” about them. What else are they supposed to feel when the new $2 trillion COVID-19 relief bill, CARES (Coronavirus Aid, Relief and Economic Security Act), doesn’t include the financial support they need to answer the public call. But while CARES is a massive disappointment, it does toss labs a few crumbs.

First, the Bad News

 The CARES Act requires private insurers to cover all COVID-19 testing, including tests still awaiting emergency use authorization from the FDA, without patient cost sharing.  While laudable, Congress’ desire to make COVID-19 tests available to Americans free of charge is devoid of reality. After all, making businesses give away their goods and services is hardly the formula for sustainable success, let alone survival. So, it’s hardly a surprise that American Clinical Laboratory Association (ACLA) President Julie Khani issued a statement noting that labs “remain in an untenable situation, absorbing growing, uncompensated costs for testing specimens with no assurance that they will be appropriately or fairly reimbursed for all the tests they are performing.”

But the lawmakers didn’t heed the warning. The ban on patient cost sharing remains and the offsetting CARES emergency funding relief for labs is well short of the $5 billion the ACLA requested, leaving labs to get what they can from:

• $11 billion for diagnostics, treatments and vaccines and $16 billion for the Strategic National Stockpile via the Public Health and Social Services Emergency Fund; and
• $80 million to the FDA for treatments, vaccines and diagnostics.

The other big pile of CARES relief money on the table is the $100 billion slated for hospitals. Presumably, at least some of that will go for testing.

Next, the Good News

 What the lab industry does get from CARES is a bit of relief on the PAMA front. In 2021, the reduction cap, i.e., maximum amount by which CMS could reimbursement for Medicare Part B lab tests was scheduled to rise to 15% in 2021. But CARES puts the cap rise and resulting reimbursement cuts on hold for one year. And given how the political tide had been turning in the lab industry’s favor before the COVID-19 crisis, that extra year may prove extremely valuable down the road.