#207 Medicare Pays $18 for a Strep Test. Here Is What That Means for In-Office Lab

In-office lab is one of the most common ancillary additions practices consider, and one of the easiest to get expensively wrong. Part one of two: the framework that decides everything before you spend a dollar. 

What CLIA is. The Clinical Laboratory Improvement Amendments, passed in 1988 and administered by CMS, govern all lab testing on human specimens. Every test your practice runs on a patient sample requires a certificate. Which certificate you need depends on the complexity of the test, not on what you would like to do. 

The three categories. Waived tests are simple enough for FDA-approved over the counter use: strep, flu, COVID antigen, dipstick, glucose, pregnancy. A Certificate of Waiver runs about $150 every two years with no routine inspection, and the compliance standard is following the manufacturer's instructions exactly. Moderately complex covers CBC, CMP and UA with microscopy, and requires a designated lab director, documented competency, daily QC, proficiency testing and routine inspection. High complexity is hospital and reference lab territory. 

Getting certified. Confirm your exact analyzer model and test kit are on the CMS waived list, file Form CMS-116 with your state or MAC, expect two to four weeks and about $150, then build your policies and train your staff. Only then buy equipment. CLIA number first, equipment second. 

The four questions. What are you already referring out that you could run yourself? What does your patient population need at point of care? What is your payer mix for these test types? And do you have the staff capacity and the discipline for the compliance program? The strongest business case is for tests that change the same-day clinical decision. 

Three actions this week 

• Pull your reference lab orders for the last 90 days and group them by test type. That list is your candidate menu, and it is real demand rather than a projection. 
• Look up your exact analyzer model and test kit on the CMS waived test list at cms.gov before you take a single vendor call. 
• Name who would own the compliance program, and ask them honestly whether they have the bandwidth to do daily QC consistently. 

Episode breakdown 

• Segment 1: the CLIA framework and the three complexity categories 
• Segment 2: what certification actually takes, waived and moderately complex 
• Segment 3: the four questions that decide it for your practice 

Resources 

• RECOVER Diagnostic  eligibility.natrevmd.com/recover-quiz-lp 
• Practice Financial Health Dashboard for Physicians  eligibility.natrevmd.com/free-practice-financial-health-dashboard-for-physicians-natrevmd 
• CMS waived test list  cms.gov, searchable by test name and manufacturer 
• CMS Form CMS-116, the CLIA application 
• Trusted resources library  natrevmd.com/trusted-resources/ 
• Part 2: EP208, building the business case for in-office lab testing

Transcript

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SPEAKER_01 0:04

All right, Medicare pays about $15 for a rapid flu test. And that's $15 you didn't have to negotiate. It can be one of the easiest things to bring in, but can also be one of the easiest things to get expensively wrong, especially if you're just listening to vendors and the rosy story around reimbursement. Welcome to NatrevMD, a podcast where we share tips on optimizing medical billing and improving practice efficiency so you can have the business of your dreams. I'm your host, Dr. Heather Signorelli, founder of Nat RevMD. Let's get started. Today we're going to do part one of a two-part framework that decides really everything that you need to think about in regards to laboratory testing and whether or not it makes sense for your practice. So, as you guys know, I'm a pathologist by background. So I live and breathe the CLIA landscape. And today we're going to talk about the things you need to think about when it comes to CLIA certificates. And then also the second episode will be all about the business case around laboratory testing and whether or not it makes sense for your office. So first, let's talk about CLIA and why it basically decides everything in regards to the expense of the testing that you bring in. So obviously, CLIA stands for the Clinical Laboratory Improvement Amendment. And basically, it's the federal law governing lab testing. And it's passed in the 1980s. And it basically is what governs laboratory testing. And basically, every test your practice runs on a patient sample does require a CLIA certificate. And we'll talk through the different levels of CLIA certification and we'll talk about the different CLIA certificates that you can get depending on the type of testing that you bring in. And we'll go easiest to the most high complex CLIA certificate so that you understand which of these you may want to get for your laboratory and then how to think about bringing on testing for your office. So obviously, the certificate that you get or that you apply for is going to depend on the complexity of the test that you would like to do or that you would like to bring in. So CLIA waved is the bottom, the floor in terms of complexity. It is super simple. You do actually still need a CLIA certificate. So some people think, oh, it's CLIA waved. I don't need to do anything. No, you actually do still need to apply and get a certificate of waiver, is what it's called. And the simple enough tests, think of it as like the simplicity of tests that are over-the-counter. So low error risk, easy to interpret. So things like rapid strep, rapid flu, uh COVID antigen, even urine dipstick, urine pregnancy, some finger stick glucose. There's actually quite a large list of CLIO waved tests. An important characteristic, though, for you to think through is that if you modify anything within that IFU or that package insert, it no longer qualifies it to be a CLIO wave test. So very important that you follow the instructions for use that you get with those analyses. Otherwise, it no longer makes it waived. And then you get into moderate or even potentially high complex issues depending on what you've changed. So obviously, you need a certificate of waiver. Again, like I said, you do actually have to apply and get the actual certificate. It's not very expensive, a couple hundred dollars every two years, no routine inspection, but you do have to follow the manufacturer's instructions exactly every time. And that is basically the compliance standard. And honestly, anybody that you can train to follow the instructions can run these tests. There's not a real specific credential required, which is different than moderately complex. So moderately complex, you do have to have skill to perform and interpret. And there are characteristics of the testing personnel and what qualifications they have to do moderately complex tests. And examples of this can be eye stat tests, CBCs, metabolic panels. You can do like things on the piccolo, which is a really nice little instrument, and your analysis with microscopy. Some basic hematology panels, again, really depends on the system that you are purchasing from. So the vendor will know if it's waived or if it's moderately complex or if it's highly complex. They'll be able to tell you that when you're looking at certain point of care testing, which is typically what you are going to bring into an office setting. Now, for moderately complex, you do need a certificate of compliance or certificate of accreditation. It is more paperwork, it is more costs, you do have an inspection, which is typically done by a CMS or a state accrediting agency. Now, staff do have to meet certain qualifications. So you do have to have training and documentation and policies and procedures, and all of this is much more involved. The quality control, proficiency testing that you have to order and be able to show that you are doing the proficiency testing, which allows you to test your test process, especially if they are regulated analytes, you're going to have to order this. Now, don't let this scare you. There are very easy ways to do proficiency testing. There are very easy ways to comply for moderately complex testing environments, and they can be profitable for the right size office where you do have a lot of this volume. But most independent primary care practices oftentimes will just do waived because you do really need a compliance program. You need a laboratory director who oversees a moderately complex lab, and those do require specific qualifications. High complexity is typically what we see in the laboratory. It is like a molecular diagnostic platform, complex micro testing, pathology, specialized panels, and that can be FDA approved or even laboratory-developed tests. It requires a qualified lab director, medical director, and very specific personnel standards, specific training recommendations, policies, and procedures that are reviewed on a regular basis. And so I don't typically see highly complex labs in an office setting. Maybe if you have a large network and you have one centralized location where you can have laboratory testing that is coming into a centralized office location, maybe one of the larger of the office locations, you could potentially have this. But for most situations, this is in a hospital or a reference lab, even all hospitals will have highly complex laboratory testing. That's like your run-of-the-mill testing. So definitely just want to make sure that if you do have vendors that you're meeting with and they're thinking and they're talking to you about a highly complex test instrument or test menu for an outpatient office, you're going to want to ask a lot of questions. You probably could even use a consultant or somebody who sits and hears that and hears those claims, really do a thorough business case. We'll talk about that in the next episode. But you'll just want to make sure that you're really paying attention because you do need an independent medical director typically who has specific qualifications to run a highly complex lab. And that's very different than you being a physician overseeing a moderately complex laboratory, which is just, it's a different beast.

SPEAKER_00 7:14

And so very different qualifications regarding that.

SPEAKER_01 7:22

So for most independent practices, so primary care, urgent care, OBGYN, PEADs, the realistic entry point is a CLIA-waived test. It's it's very easy to do. And I would say if you have the volume and you have the ability to do it, it can not only be helpful clinically, right? Because you get rapid results, but it can be a small revenue generating machine for the office. Now, moderately complex tests is doable. If you have a higher volume practice, you're willing to build out a true compliance program. And typically high complexity, I would say you need to have multiple offices that are close together, that maybe you have one location that has a centralized, highly complex laboratory, which tends to be a harder to set up, but it's not impossible if the volume is there. So would highly recommend that if you're in this moderate to highly complex, trying to decide between those, get somebody who can answer those questions for you. I'm happy to answer quick questions for you guys. Info at netrevmd.com. Emails will get to me and uh happy to answer some of those questions for you. So, what certification actually takes? So, again, certificate of waiver, easy peasy, right? So you identify your tests, you confirm that they're on the waived list. Again, CMS maintains a waived test list. And also the vendors will be, you know, be able to provide you with, hey, this platform, this test is waived. You'll just want to confirm that that is truly the case and that you are truly following the manufacturer's instructions. This is where I see people get in trouble, is that they they bring on a waived test, but then they use a different, you know, sample or they they they change something about the instruction for use, the IFU, and then that no longer qualifies it to be waived. So really important that you follow the instructions exactly. Now you'd will want to apply with CMS and do the application for CLIA and get that certificate of waiver. And so you'll go through a CLIA application, you'll list the tests. You typically do this on a every two-year basis. It's a couple weeks once submitted and paid, then you'll get a CLIA number, and that number goes on the claims for your lab services. Of course, you will want to have simple law policies and procedures related to the test. So just because it's waived doesn't mean you won't have simple laboratory policies. A lot of these can come from the vendor, and you could even leverage the tools from the vendors to help set this up. So you'll will want to really understand the test. Um, if it is an analyzer versus a kit, make sure that they understand how to handle, you know, failed uh QC, how to document results, et cetera. You'll want to train the staff, make sure that they do understand and can keep simple records. Again, it's not hard, it's not overly complicated, but there are some minor steps that you need to take care of from a waived perspective. Then, and again, the vendor will help you with all of this, but highly recommend you get that CLIA number first before you buy anything. And then I think the biggest thing to recognize here is that if you have a low enough volume of testing, that reagents and supply costs can creep up. And if you're not using them fast enough from an expiration perspective, or if you over-order something, that reagents can expire and waste can be a real cost. So you'll just want to make sure that you are budgeting for all of the materials related to the test. Again, waived tend to be pretty simple. This tends to not be very complicated, but you just want to think about those things. Again, we'll talk about that more in the next episode. Now, moderately complex starts to get a little more complicated, not impossible. And I think if you have a high enough volume or if you have multiple locations, it's something worth looking through. So testing personnel do have to meet certain CLIA education and training requirements. The laboratory director must be designated, and typically it's going to be a physician, a PhD, or lab professional with specific qualifying credentials. And you can Google, you know, the CLIA lab testing personnel and laboratory directing director personnel uh qualifications by by CLIA status so that you can look at those. Again, DWAVED is super simple. Moderate starts to get a little bit more complicated in terms of their educational educational requirements. And then high complex, there's the most specific rules when it comes to who can test, who has to oversee the laboratory, et cetera. So many cases from a moderately complex, it's the physician owner serving as the lab director. And again, you're you are responsible for the compliance around this. There are competency assessments that you have to think through proficiency testing, and you do need to make sure that you're doing those appropriately. One thing to note about proficiency testing is you should not be referring a sample, the proficiency sample. So it's a quality specimen that you get. You can't send it out to someone else, even if that's part of your test process. So say you do a group of tests in office, say you get in an indeterminate result, and the the part of your process is to then send that sample out. Again, I'm talking about patient samples. You send that out to a reference laboratory. You cannot do that with a proficiency testing sample. So proficiency testing samples have to be run in your lab and only in your lab and can never be referred. And so in those cases, you just want to be careful that you're ordering the right proficiency testing kit so that you're not in a situation where you are unable to give a result or you do have to refer out a proficiency testing sample, which you would never ever want to do. And obviously, you don't want to fail this, right? This is a little bit more costly, closer to $1,000, depending on your test menu. There are routine inspections every two years. Um sometimes can be more often. And again, you could be accredited by CAP, COLA, Joint Commission. There's a lot of different options around this. And typically inspectors are going to be reviewing things like quality control, proficiency testing, personnel files, SOPs, and those sorts of things. So not a huge or complex inspection, but non-compliance findings can really close the lab. So gotta at least make sure that you are following the rules around this, not super complicated once you've done it a few times, but just important to make sure that you're doing it correctly. I'm not going to talk a ton about highly complex labs because that gets a lot more into laboratories that are probably above what most of you guys are doing. However, if you have questions about that and you are running or have run a highly complex lab and you do have questions, send me an email, info at natrevmd.com, and happy to answer those questions. Now it is important to recognize that a that laboratory testing as an ancillary service is not just a startup investment. It is an ongoing compliance function, especially with those moderately complex labs in terms of quality control, proficiency testing, those competency assessments, and just inspection prep. Again, not hard, but you just want to make sure that you have the volume to justify the profitability of doing this and that you do have a dedicated lab staff member who really knows these requirements and takes the time to manage the paperwork because you just want to make sure that you're prepared to do this appropriately. It can just be a pain to be, you know, have to do patient lookbacks and issues if you have inspection failures. Now, obviously, the first part of this is really just understanding CLIA, understanding the requirements. Really important for you to answer these four questions before you kind of go down this rabbit hole. And then the next episode we'll talk through the numbers to run and how to work through the business case to understand if you want to bring in laboratory testing, whether that's waived or moderately complex. So, questions that you want to think through are what are you already referring out that you could run in in-house? So you could pull the list of tests that you send out to a send out laboratory and just understand by test the volume. And that can be, you know, something you do looking at the last 90 days. And you could group these by test type. So how many strep tests, flu tests, complete metabolic panels, et cetera. And then really it's understanding the tests that you order frequently and that are waived. So that is where I would start. I would not build a menu around what would be nice, build it about what you already order and what you have the capabilities of doing. Now, if you've captured the wave tests in your office already, that's running great. And you're now, you know, expanded. Maybe you have two or three locations, you have a huge send out test menu or a subspecialty that maybe uses those for decision making within office, and you want to think about doing an expanded test menu that's moderately complex, again, pick those top three or four high volume tests and uh focus on those next. I do really encourage folks to ask the question, what does your patient population actually need from a point of care perspective? Because I do think that this, in order for this to really make sense, because the margins are not that high, that I do want to encourage this to be clinically focused. Highly recommend getting the vendor information and then sitting down with the consultant. Obviously, waived testing pays off best when the result changes the visit. So obviously, strep positive means that you know you're managing antibiotics. So real clinical value, real patient satisfaction. Same with flu, changes the treatment for most cases, not always. And a CMP that comes back from a reference lab in two days typically is a lower urgency, so lower point of care necessity or value to the office. So the strongest business case is typically for those tests that change the same-day clinical decision making. Now, that doesn't mean that you couldn't bring in a CMP, but you just want to think about what is the problem you're trying to solve. Or is it is it a revenue issue? Is it I've got a huge practice, we've got a lot of volume, we can capture that revenue, plus we can handle the compliance? Great.

SPEAKER_00 17:25

You just really want to think through that specifically.

SPEAKER_01 17:40

Now, one thing to think about is if you don't already offer certain testing and you're now having to call back patients in order to order the antibiotics or or change the clinical care, that may be a time where it may make sense to evaluate whether bringing that test in-house makes sense or not. Because calling a patient back, getting a prescription two days later, and just dealing with that back and forth is is, you know, time consuming. So just something to think about. Other thing to think through is what is your payer mix for these types of tests. So Medicare pays the clinical laboratory fee schedule rate for lab and PAMA rates are set by CMS, and they are often lower than commercial. Now, Medicaid is going to vary by state and typically, you know, sets its fees, oftentimes low, unfortunately. You just want to think through who your payer mix is. We talked about that in the last episode, really understanding your payer mix. And commercial values of fee schedules for this do vary. So some pay very well for in-office labs, some do not. Some tests get bundled, say, for example, in the global period for OB care. So you just really want to understand, again, what's the problem you're trying to solve. In OB, it may make sense to have your analysis in the office, even if you're just breaking even from a laboratory perspective. So you just got to think through clinically what is a problem I'm trying to solve. And then profitability-wise, is this gonna break even? Is this gonna be a profit, you know, maker for us? And then what are the compliance things that we have to do in play in in the labor or in the in the office? You can tell I live in a laboratory space, so I keep saying in the lab, but a Medicare heavy practice doing in-office CBCs needs to get the PAMA rate before building out any projections so that you know exactly what you could be paid. Now, we are going to spend some time next episode going through all of the different calculations you need and thinking through how to build out this business case so you can really truly understand if this makes sense. Now, the other piece, obviously, do you have the staff capacity and discipline to manage even wave testing? You don't need, you know, a laboratory tech to do this, but you can have one trained person or two trained people, but they do have to document a QC, they have to follow the manufacture protocols. And so it is manageable. You just have to make sure that you have the process to do that. Moderately complex gets a little bit more complicated. You do need someone who actually owns this, not just a side task of an MA. And so if the front desk is already stretched, adding, you know, even waived test may not make sense. And maybe may not even be your front desk who is going to be doing that. It could be your MA or clinical staff or a nurse, but you just want to understand what they have the cape capabilities of doing today. All right, so in summary, Clio waved testing is generally accessible and often actually very valuable for the right practice. The entry point is typically low, compliance is easy, and the patient experience that they get from having those test results before they leave the office can actually be a real benefit, both from the physician standpoint as well as a patient. Now, moderately complex starts to get, you know, starts to create a real commitment. And it should not be decided just on a gut feeling. You do really need to spend the time to actually pull the numbers and go through that business case, which is why we're doing a whole episode just on this. So obviously, you guys know I love pathology. I love laboratory testing. So this is near and dear to my heart. I do think that having the right approach to evaluating whether or not you should bring this stuff in is really important. I see vendors reaching out to practices all the time saying, look at this cool test. You need this test. And then they paint this rosy picture of what reimbursement could be. And maybe that's if your practice is, you know, 70% commercial. But if your practice is 70% Medicaid, that story may not be the same. So I really, really encourage you to do the business case. I know it's not the fun, sexy part of owning a practice, but it is really, really important. Now, in the show notes, we do have the recover diagnostics. It's just a few minutes, but it does allow you to really understand could I be leaking revenue? Where am I leaking revenue? And then thinking through how to manage that. And as always, if you are struggling with trying to figure out where things are, where things are going from a billing metric perspective, we would love to spend some time with you, especially if your practice is making, you know, over 100,000. That's typically where that makes sense to sit down and go over those metrics together. We can even pull them ahead of time, make it a 20-minute conversation, easy peasy. If you are interested in doing that, you can contact us at our netrevmd.com, or there is a link at the top right hand corner that says free metric audit. So easy to pull these resources together either on your own through that recover diagnostics or through setting up a call with us. I hope you guys have a great rest of your day. And again, next week we'll talk through the business case around adding laboratory insular services. Talk to you soon, okay.