1. Spotlight on Washington - The Impact of Health Reform Legislation and Politics on Your Lab Presentation to Delaware Valley Chapter CLMA October 6, 2010 David Mongillo VP Policy and Medical Affairs American Clinical Laboratory Association

2. ACLA Not-for-profit organization created in 1971 which offers the benefits of representation, education, information and research. Advocate laws and regulations that benefit the laboratory industry and patients Promote public awareness about the value of laboratory services in preventing illness, diagnosing disease, and monitoring medical treatment.

3. ACLA’s Membership ACLA Membership – 44 members that represent diversity of laboratory industry –Independent Laboratories Esoteric/Biotech/Gen.-Mol. Regional Full Service ESRD National Full Service Pathology –Hospital Laboratories ACLA Associate Members (11)

4. State of the Union or What’s going on in DC? The Best of Times The Worst of Times

6. Spotlight on Health Reform

7. Source: CMS, CDC GDP: Gross Domestic Product NHE: National Health Expenditures Rising health costs in the U.S…

8. Major Spending, Taxing, Savings Provisions $938 Billion In Subsidies & Medicaid Expansion for Coverage (2010-2019) – 15-18 Million More Eligible for Medicaid –15 Million Eligible for New Subsidies & Access to “Network Exchange” $1.089 Trillion in New Taxes & Medicare Cuts to Finance –$523 Billion in Medicare Cuts –$569 Billion in New Taxes

9. HCR Provisions Impacting Labs Productivity Adjustment Additional 1.75% Adjustment (2011-2015) Prevention & Wellness TC Grandfather Clause Extension Date of Service Demonstration Others Device Tax Cost Control & Quality

10. How Productivity Adjustment (PA) Works Basis: DOL Annual Productivity Index (1.1- 1.4%) Most Part B Services Reduced 2011 & Beyond By PA Applied to CLFS Only (Not PFS) Protecting Labs from Negative Update from PA Existing.5% Reduction in CLFS Repealed for 2011-2013 Total Cut From Labs $5 Billion (2010-2019)

11. Additional Adjustment - CLFS -1.75% in each of 2011-2015 Taken from CPI Adjusted CLFS, But Can Reduce CLFS Below Zero Replaced Proposal For New Federal Fee/Tax on All Lab Revenue Total Over 2010-2011 Is $5 Billion

12. HCR Is Beginning of Process Lack of “Conference Report” Has Left Many Questions About Intent, Implementation Already Talk of “Correction Bills” 2700 Page HCR Law Will Require Complex Interpretation & Implementation –Thousands of Pages of Regulations –Interpretation by HHS, Treasury –Multiple Lawsuits Challenging Provisions

13. HCR Enactment Is Beginning of Process Medicare Has Been Evolving Program Over 45 Years HCR – Major Programs Implemented –201039 –201120 –20128 –201312 –201425

14. Cost Control and Quality Buzz Words and Key Terms PCORI ACO IPAB CMI

15. Health Care Reform – Prevention Services Reimburse for more preventive services Remove barriers – no co-pay Promote community wellness and strengthen public health Teach prevention to health care providers Encourage workplace wellness programs Create Federal level prevention and wellness strategies Incentives for healthy lifestyles – HBP, high cholesterol, tobacco use, obesity, diabetes for Medicare CBO should develop better scoring for prevention services

16. Chronic disease is key driver of health costs… Chronic Disease Source: CMS, CDC, Radiology, 2004 GDP: Gross Domestic Product NHE: National Health Expenditures

17. Why does this matter? 1.6% of Medicare 2.3% Total Healthcare 60%-70% of health care decisions

18. Lab Interest - Prevention Component Current Medicare lab screening tests –PSA –Glucose –FOBT –Lipids –Pap smear

19. Lab Interest – Positive Prevention Provisions Annual Wellness and Personalized Prevention Plan – beginning in 2011 Medicare will pay for comprehensive health risk assessment and personalized prevention plan by primary care provider. USPSTF Expansion - Recognized need to expand the criteria the USPSTF uses beyond A and B recommendations to consider professional medical societies, patient groups and relevant agencies.

20. Selected Examples of USPSTF Recommendations Inconsistencies with Professional Societies Fasting plasma glucose or oral glucose tolerance testing: diabetes –USPSTF - All adults with blood pressure > 135/80 –American Diabetic Association - All adults with BMI > 25 and one or more risk factors for diabetes. All adults without risk factors age > 45. Lipid profile: coronary heart disease –USPSTF - Fasting lipid profile every 5 years for men age > 35 yrs and women 45 yrs, and patients > 20 yrs with risk factors for coronary heart disease –National Cholesterol Education Program – Fasting lipid profile at least every 5 years for patient’s age > 20 yrs PSA (prostate specific antigen) –USPSTF – Evidence insufficient for recommendation in men <75 yrs –American Cancer Society and American Urological Association - Offered to men > 50 yrs with a life expectancy of at least 10 yrs

21. Looking Ahead Paralysis in Congress For Remainder of 2010 Impact of the 2010 Elections Next Year Physician Fee Schedule Must be Extended in 2010 Drive Toward Cost Control Will Intensify –Deficit & Debt, Medicare Solvency –Deficit Commission Reports 2010 Hope for Personalized Medicine Advanced Diagnostics? –FDA Oversight of LDTs –NIH Genetic Test Registry –Legislative Solution?

22. Thank You!