Comments related to NIPT and CMS/ACA reimbursement thereof
Quest Diagnostics earnings call 1/30/14:
- First, it is clear to us that health care utilization declined broadly in 2013. And it is conceivable that this trend could continue through 2014 based on the acceleration of employer to employee cost shifting and benefit plan design. Second, in terms of the expected market growth from the Affordable Care Act, it is now clear that the benefits will take longer to realize based upon the slower rollout.
- During the quarter, we did not see a material change in reimbursement or denial rates on molecular diagnostic codes from what we had been seeing earlier in the year.
- Related to the Affordable Care Act, we have signaled for the past few quarters that we are expecting a muted impact from the Affordable Care Act in 2014 due to the delay of the employer mandate, a reduction in the number of states that have decided to expand their Medicaid programs and initial challenges related to the implementation of the insurance exchanges. Additionally, we continue to see an increase in the amount of cost sharing deployed through benefit design changes, which will put pressure on utilization and bad debt. As a result, we believe the Affordable Care Act will be neutral to slightly positive in 2014, but we still expect to see a bigger benefit over the long run, beyond 2014.
- Darren P. Lehrich - Deutsche Bank AG, Research Division
Okay. And just one last guidance question, if I could. With regard to the molecular pathology nonpayment issue, how does that get factored into your outlook and have you been able to resolve, at this point, any of that issue with some of the key states?
Mark J. Guinan - Chief Financial Officer and Senior Vice PresidentYes. Absolutely. So first off, how does it gets factored in? Obviously, we've learned a lot since some of these changes have taken place over the last year. We have had a number of successes in getting reimbursement where initially there was some confusion or some issues with getting that. Some of it was just the time it took to some of the states to figure out the process for gaining reimbursements. Some of it was just a new requirement for more supporting data. As we've partnered with the various payers, we've learned a lot, and I would say we're making progress. And in fact, in the fourth quarter, we actually had some success in one particular molecular reimbursement code with a state Medicaid program that we've been working on all year. So absolutely making progress.
....there's always going to be pricing pressure. But certainly, the utilization issue that we've talked about, at some point, benefit plan redesign kind of gets done and it gets to kind of its equilibrium and its impact on utilization. Obviously, if there's some aspect of deferral where people are consuming less health care because they're deferring it versus they're just avoiding it, then that deferral catches up. So we can't predict the future any more than you can. But the expectation is that some of things that we're pointing to most specifically are going to either be reduced somewhat or are going to go away, and we're still trying to figure this out. But ultimately, the biggest thing is that the tailwinds, and it's not just the Affordable Care Act, but our belief that it's in the best interest of health care and society to do more diagnostics. Because if you want early detection or prevention, the way you do that is through more diagnostics. And we really believe that we are going to have the innovation and we're going to have the technology to help drive better decisions and, ultimately, better outcomes and lower costs. So that's our reason for optimism, not that we think that pricing pressures and some of the typical challenges are going to go away. It's really more that the tailwinds and the attractiveness of this space is a reason to believe.
Disclosure: I am long SQNM.
Additional disclosure: Blog focused on commentary related to SQNM or NIPT only