With government reimbursement cuts threatening their bottom line, clinical laboratories spent 2018 bulking up their lobbying muscle on Capitol Hill, nearly doubling spending from the prior year.

With CMS payment cuts kicking in at the start of 2018 under the Protecting Access to Medicare Act, lobbying spending by Quest Diagnostics, LabCorp and the American Clinical Laboratory Association jumped to $4.4 million last year, up from $2.5 million in 2017, according to lobbying disclosures. 

Labs are protesting how CMS collects data on private insurer rates for lab tests and calculates Medicare payments distributed under the Clinical Laboratory Fee Schedule (CLFS). Under the previous methodology, Medicare paid approximately $8.6 billion per year to labs, an amount lawmakers feared it did not reflect market rates.

Instead of adjusting historical data based on inflation, under PAMA the agency sets payment rates every three years based on data collected from applicable labs. From 2018 to 2020, reimbursement cuts are capped at a decrease of 10% per year, with 2021 to 2023 capped at 15% per year.

Labs say the rates set under PAMA do not collect enough data from smaller labs. And after boosting its lobbying spend, the trade group is not taking its foot off the gas in its attempt to influence lawmakers to reverse the cuts in 2019 either.

"We're planning to have a full court press on the range of laboratory policy issues, including PAMA, that have a major impact on patients' access to their lab tests," spokesperson Clare Krusing told MedTech Dive.

Quest attributed the $750,000 increase from 2017 to 2018 in spending to back-filling government affairs positions and new investments in state engagement efforts.

"As for PAMA, we continue to work along with our trade association, ACLA, to inform members of Congress of the possible impacts on access to the critical services our industry provides to Medicare and Medicaid beneficiaries," Quest spokesperson Denny Moynihan told MedTech Dive.

LabCorp declined an interview and gave no comment on its lobbying efforts, which grew from $640,000 in 2017 to $1,390,000 in 2018.

Legal fight continues

In December 2017, ACLA sued HHS over the implementation of PAMA, arguing CMS collected data from only a small sliver of the industry at odds with congressional intent, potentially leading to the financial demise of certain labs. While the suit was dismissed by U.S. District Judge Amy Berman Jackson in September 2018, ACLA is in the process of an appeal.

In parallel, ACLA and AdvaMedDx have been urging CMS to delay the payment cuts. In its most recent Medicare Physician Fee Schedule final rule, CMS said it would attempt to collect data from "the broadest possible representation of the national laboratory market on which to base CLFS payment amounts without imposing undue burden on those entities."

While the step may help clinical labs in the future, ACLA has pushed Congress to take action in the interim to "mitigate the severe damage" it says has been caused by the law.

Both LabCorp and Quest have cited PAMA during earnings calls as a headwind for the industry as volume and demand for diagnostic testing fall.

"Increasingly, smaller independent labs and hospital outreach labs are struggling financially, due to lower Medicare reimbursement, not only directly due to PAMA, but also under contracts with pricing indexed to Medicare. Some have begun to exit the business, citing PAMA as a factor," Quest CEO Steve Rusckowski said in October.

But despite industry's fear PAMA implementation will harm reimbursement, the Government Accountability Office published a report in December that implementation could result in billions in additional payments to labs.

Lawmakers meant to benchmark lab spending to private market rates rather than depend on historical program data when PAMA was signed into law in a hope to save taxpayer dollars.

The watchdog report warned that CMS' reliance on maximum payment rates as a baseline and the potential for certain bundled tests to be paid for individually could collectively cost CMS more than $10 billion.

While the lab industry has disputed the GAO methodology, James Cosgrove, the watchdog's healthcare director, told MedTech Dive he stands by the findings. Senate Finance Committee Chairman Chuck Grassley, R-Iowa, has taken interest in learning more, recently sending a letter to HHS inquiring about the potential cost to taxpayers.

Diagnostic, lab developed tests bill in development

In addition to the CLFS, another area of lobbying for the industry is legislation being developed on Capitol Hill that would overhaul how diagnostic and laboratory developed tests are regulated.

In December Reps. Larry Bucshon, R-Ind., and Diana DeGette, D-Colo., laid out their latest vision for what is now deemed the Leading-edge IVCT Development or VALID Act.

DeGette told reporters that the legislation is a top priority for her this Congress, but lobbyists tell MedTech Dive it is unlikely the bill will move in the first half of 2019.

Congress is in the midst of collecting a round of feedback on the act, asking stakeholders for comments on the draft legislation by Feb. 15, according to an aide.

Certain areas of the bill, such as proposal to implement an in vitro clinical test precertification program, with individual premarket review for 10% of all tests, are still up in the air. DeGette has said Democrats will need to specifically pay attention to the idea as they move forward in negotiations.

And clinical labs dependent on LDTs may yet be hesitant to allow them to be heavily regulated by FDA. In comments on an earlier discussion draft, the trade group raised concerns FDA will try to regulate LDTs as devices.

"ACLA has repeatedly asserted, and continues to assert now, that laboratory developed tests are not devices, and therefore FDA has no authority with respect to LDTs under current law that would be ‘retained' under any new framework," ACLA wrote in its August comment letter.

Medical device manufacturer lobbying stays flat

Medical device manufacturers also continued to throw down dollars to influence lawmakers on Capitol Hill, but spending remained relatively flat in 2018.

Spending by medical device trade group AdvaMed decreased by $579,614 from $3,600,000 in 2017 to $3,020,386 in 2018.

Still, a MedTech Dive analysis found that many of its member companies such as Boston Scientific, Edwards Lifesciences, Baxter International and Smith & Nephew each increased individual lobbying. On the other hand, Zimmer Biomet, Stryker, Medtronic and Johnson & Johnson all decreased their lobby spend.

While full repeal of the medical device tax remains at the top of the industry's list, pushing for speedy CMS coverage of breakthrough devices is a priority, according to Don May, AdvaMed EVP of payment and health care delivery.

"We've seen some positive direction with CMS indicating that they will be issuing a proposed rule to improve coverage of breakthrough technologies in March," May told MedTech Dive.