1. Emil Salazar is the author of
The United States Market for
In Vitro Diagnostics from
Kalorama Information
4032: Assessing the Impact
of the “Doc Fix” on the
IVD IndustryBy Emil Salazar
The clinical lab and IVD industries continue to assess the “Doc
Fix” Bill or Protecting Access to Medicare Act of 2014 (H.R. 4032)
following its passage in April 2014. The law, to be implemented by
2017, has seen no shortage of reactions from stakeholders. Under its
provisions, the Act will allow CMS to systematically collect test
payment rate and volume data from “applicable” private labs, including
at least reference or commercial labs and likely hospital labs (or those
with outreach businesses). Medicare reimbursement rates under the
Clinical Laboratory Fee Schedule (CLFS) will then be adjusted to the
average rates charged to private payers. The market-based rate changes
to the CLFS will replace a number of convoluted and, at times, deep-
cutting adjustment mechanisms used to curb Medicare lab payments.
The Act will also implement standardized procedures for the coding of new tests (seeking to improve upon
the recent roll-out of new molecular codes), establish a new expert advisory panel for lab reimbursement, and ban
the multiple, layering annual updates, cuts, and adjustments applied previously to the CLFS. The Act also
eliminates once-planned “technological adjustments” from future test rates; reimbursement rates would have been
cut according to a formula to compensate for advances in the cost efficiency
of core lab tests through cutting-edge molecular-based diagnostics.
The fallout of market-based CLFS rate adjustments beginning in
2017 is widely expected to include boosted market shares for leading (Quest,
LabCorp) and larger private labs. Across from the winners, small private and
community labs will struggle under Medicare rates reflecting market
averages heavily influenced by the scales of larger labs. As is already the case, rate adjustments may not cover the
cost to perform certain tests. Small community labs will be especially sensitive to future market-based Medicare
adjustments, as many depend upon CMS as their largest payer and bulk of their business.
Between 2017 and 2019, CMS will be able to cut the price of an individual test by no more than 10% a
year, and no more than 15% a year between 2020 and 2022. Onlookers remain concerned test prices could enter a
downward spiral as market-based Medicare reimbursements reflect heavily discounted rates offered by large labs
under contract, and payers in turn negotiate under new contracts for rates below Medicare (which commonly serves
as a benchmark for private payers).

2. Specific to IVD markets, the Act will provide special treatment to single-source or proprietary tests,
whether offered as a product for labs or as a lab-developed test (LDT) service. Currently, multi-analyte algorithm-
based assays (MAAA) (near exclusively LDTs) are singled out under the Act for provisionary list prices without
market-based adjustment for the first 9 months of coverage. While additional tests are likely to be granted initial list
prices, the Act as of now will not provide the same benefit to other advanced tests such as those based on next-
generation sequencing (NGS). Most advanced tests will benefit from other helpful reform:
For new tests that don’t fit the special advanced diagnostics criteria [MAAA-like], the law promises to
speed payment and force CMS to make more deliberate decisions on initial rates. The law spells out how CMS must
assign codes and use the gapfill process for initial pricing of new tests. It also creates a new advisory board of
laboratory medicine experts who must be consulted.
On the other end of the spectrum, routine tests are likely to see the sharpest reductions in reimbursement
with the enactment of the Act’s market-based pricing reform. Routine tests performed at the point of care (POC) or
in a physician office laboratory (POL) are most vulnerable, as the cost of the test is often higher without the scale
and efficiencies of a core lab environment. Non-automated tests or routine, waived manual tests with a unique code
are unlikely to see price erosion on the scale of those largely performed on automated instruments in higher volume
private and hospital labs. Benchtop analyzers performing low volume automated POC testing in clinics and offices
could represent an increasingly poor proposition for physician offices and other POC testers as market-averaged
reimbursement rates slide towards the per-test costs achieved at large labs.
For more information regarding reimbursement and other market issues facing U.S. laboratories and IVD
market participants, please consult Kalorama Information’s The U.S. Market for In Vitro Diagnostic Tests.

3. N O W P U B L I S H E D !
The United States Market for
In Vitro Diagnostic Tests
http://www.kaloramainformation.com/United-States-Vitro-8079142/
The United States is the world’s largest in vitro diagnostics and nearly half of the global IVD market.
While companies seek emerging markets for growth,
most healthcare business is generated in the United
States and its volume is still a strong advantage of this
market. In this report, The United States Market for In
Vitro Diagnostic Tests, Kalorama Information analyst
Emil Salazar takes a considered look into these trends
and what they mean for diagnostic manufacturers and
investors.
Most recently, the U.S. IVD market weathered interrupted lab and healthcare sector investment in
anticipation of the Affordable Care Act and several regulatory and austerity measures on the part of
government payers that constricted payments for clinical testing. As the report notes, there are both
challenging developments and positive trends which make the United States a stable IVD market:
This report includes important tools for business planners, including market size estimates and
forecasts for the following IVD segments:
 Point of Care (Glucose, Professional, OTC)
 Histology and Cytology
 Clinical Chemistry
 Immunoassays (Infectious Disease, Non-Infectious Disease)
 Molecular Assays (Non-Infectious Disease)
 Hematology
 Urinalysis
 Flow Cytometry
 Coagulation
 Microbiology and Virology (ID/AST, Molecular)
 Blood Testing
Market sizes, forecasts and shares are provided, as well as a geographic breakdown of the segments,
where possible. Changes in technology development, regulatory and reimbursement issues, clinical
care, and business environments are discussed. Current market numbers are presented for 2013, with
projections given through 2016.
F O R M O R E I N F O R M A T I O N O R T O O R D E R
http://www.kaloramainformation.com/United-States-Vitro-8079142/