Dive Brief:

• CMS is set to cut the payment rate to laboratories that take more than two days to process COVID-19 diagnostic tests, amid some reports of long wait times for results.

• In a statement issued Thursday, CMS said the 25% rate reduction will support faster testing, thereby enabling patients and physicians to quickly access the results they need to inform decisions about treatment, isolation and contact tracing.

• The American Clinical Laboratory Association, whose members include LabCorp and Quest, contends that the new policy fails to address the fluctuating demand and supply chain disruptions that are the root cause of test delay.

Dive Insight:

CMS in April raised the payment rate for COVID-19 tests that run on high-throughput systems from $51 to $100. At the time, CMS vowed to maintain the rate for the duration of the COVID-19 national emergency, reflecting a belief the $100 payment would support increased testing capacity and faster results.

The agency's belief in the power of the $100 rate to ensure timely diagnostic results was put to the test over the summer, when the average turnaround time at Quest for samples from people other than "priority 1 patients" hit seven days. Priority 1 patients were waiting more than two days to get results. Around the same time, LabCorp reported a four-day wait from specimen pick up to result.

Both companies have since reduced turnaround times. LabCorp now claims it takes less than one day, on average, to go from specimen pick-up to result. Quest is now averaging a two-day turnaround across all populations. The rise and fall in testing turnaround times reflects changes in the number of U.S. COVID-19 cases over the summer.

CMS sees scope for financial incentives to affect turnaround times. Starting in January, CMS will cut its base payment for high-throughput COVID-19 tests to $75. The agency will pay an additional $25, bringing the rate back up to $100, to laboratories that complete a test in under two calendar days and have a monthly average turnaround time of two calendar days or less for all patients, not just those on Medicare. 

According to CMS, the new $75 rate reflects "the resource costs laboratories face for completing COVID-19 diagnostic tests using high throughput technology in a timely fashion" and supports faster high-throughput testing. ACLA, however, has a different take.

"We're concerned this policy could create a domino effect where patient access to testing is severely reduced. Cutting laboratory reimbursement won't address the root causes of delayed turnaround times," ACLA president Julie Khani said in a statement. "As states across the country experience a surge in new cases, the global demand for testing supplies remains high."

Khani's position is supported by evidence that many laboratories were still facing supply shortages as U.S. COVID-19 cases fell from their summer peak in August. With confirmed diagnoses hitting new highs in Europe and on the rise again in the U.S., the supply chain may face further strains over the coming months.