2010 CCLA Annual Conference Washington Update: What’s the Midterm Election Impact for Labs? Westgate Hotel San Diego, CA November 4, 2010 Dennis Weissman, President Dennis Weissman & Associates, LLC and Founder & Executive Editor Washington G-2 Reports

Presentation Outline 2010 Mid-term Election Update What the Election Outcome Means for Healthcare & Lab Sector Top Legislative Priorities for Lab Industry Regulatory Hotspots for Labs & Pathologists

Current Partisan Breakdown Senate: 57 Democrats 41 Republicans 2 Independents House: 255 Democrats 178 Republicans 2 Vacancies Governors: 26 Democrats 24 Republicans

Seats Up in Mid-Term Elections Senate: 37 seats (34 are 6 year seats) Delaware: through Jan. 2015 New York & West Virginia: Jan. 2013 --19 now held by Democrats --18 now held by Republicans House: all 435 seats are up for 2-yrs terms Governors: 37 state seats are up -- 19 Democrats -- 18 Republicans

Senate Election Results Senate Races: Republicans win or leading: Democrats win or leading: Too close to call: 2011 projected Senate lineup: Democrats: Republicans:

House Election Results House of Representatives Races: Republicans win or leading: Democrats win or leading: Too close to call: 2011 projected House lineup: Democrats: Republicans:

Gubernatorial Election Results Governors’ Races: Democrats win or leading: Republicans win or leading: Too close to call: 2010 projected gubernatorial lineup: Democrats: Republicans:

Top Issues in 2010 Elections State of U.S. economy Unemployment/jobs Dissatisfaction with government/politicians Federal budget deficit/federal debt Healthcare reform/high costs Immigration/illegal aliens Wars Education

Political Outlook in 2011 Post-election session may well deadlock with 2011 tax policy on the front burner Congressional gridlock like as severe partisan tensions divide Democrats & GOP Both parties focus on their political bases with possible moderating force coming from newly elected GOP moderates Budget deficit reduction & jobs are top issues 2012 presidential election politics colors all policy deliberations

Election Impact on Healthcare Implementation of healthcare reform law --repeal efforts on Capitol Hill & court challenges unlikely to overturn law --push to modify certain tax provisions --GOP to use budget to slow implementation Political stalemate surrounding Deficit Reduction Commission recommendations Additional Medicare provider cuts not likely Reform of physician SRG formula improbable

Top Legislative Priorities for Lab Industry Prevent additional Medicare cuts for labs Stop 21.5 cut in physician fee schedule under Medicare beginning Dec. 1 and a 27% cut on Jan. 1, 2011 Preserve pathology “grandfather” provision to allow labs to bill Part B directly for the TC for hospital inpatients & outpatients Block any new federal requirements for molecular and/or genetic testing

Policy Focus for 2011 FDA oversight of laboratory-developed tests Federal & state crack down on fraud & abuse Opposition to CMS proposal to require physician or NPP signature on all test requisitions under Part B lab fee schedule Federal response over growth in volume & increased Part B spending related to in-sourcing pathology services CLIA slowdown in revised cytology PT rules Court rulings on gene patents