The last few years have been challenging ones for the nursing home testing business, as downward pressures on reimbursement have trimmed test margins.
The coronavirus pandemic has added to the space's difficulties as labs focused on nursing home testing have seen the same declines in routine testing that have impacted the rest of the industry but have not, in many cases, benefited from rising SARS-CoV-2 test volumes.
At the same time, nursing homes themselves have struggled both to gain timely access to COVID-19 testing for patients and staff and to pay for it, with insurance coverage uncertain and testing backlogs growing once again as case numbers rise around the country.
Nursing homes have long been a relatively unattractive segment of the lab business, with large labs like Quest Diagnostics and LabCorp largely exiting the space years ago leaving it to smaller regional firms.
Nursing home testing is a labor intensive business as labs typically have to collect samples at these facilities. Additionally, most of the assays that are run are low margin routine tests. These factors have been exacerbated by the implementation of the Protecting Access to Medicare Act (PAMA), which had a particularly significant impact on nursing home testing given the customer base. PAMA, which was implemented in 2018, overhauled how clinical labs report private payer rates. CMS uses the data to calculate median charges. Since then, some labs have reported drops in payment as large as 20%.
As SARS-CoV-2 spread across the country, routine lab test volumes plummeted (though they have since recovered to a significant extent) and nursing homes likewise saw a decline. Nursing homes also emerged as one of the settings most severely affected by the virus and, as such, have been one of the main areas of focus for COVID-19 testing. Many of the smaller labs that serve the nursing home space were not equipped with the instrumentation needed to do molecular SARS-CoV-2 testing, however, and so have not been able to benefit from this demand.
"There are a handful of nursing home companies that are big enough that have been doing [SARS-CoV-2] testing," said healthcare consultant Dennis Weissman. "But absent that, I think labs that are providing services to nursing homes have actually had the worst of all worlds because not only are they not doing COVID-19 testing and not benefitting from the more robust reimbursement paid for that testing, but their normal testing volumes have gone down for several months now."
Indeed, large reference labs that have typically avoided the nursing home market have re-entered it to provide COVID-19 testing.
"We have not been doing nursing home testing for several years," said Jon Cohen, executive chairman of Opko Health subsidiary BioReference Laboratories. But during the pandemic, the firm found itself serving that market out of necessity.
"Most laboratories that service nursing homes aren't highly complex labs that do PCR and they don't have the analyzers and reagents and supplies to do it," he said. "So the majority of nursing homes are calling us to do it."
Opko was not doing any non-COVID-19 testing in nursing homes, he added.
Kyle Fetter, executive vice president and general manager of diagnostic services at revenue cycle management and lab informatics firm Xifin, said that he was seeing a large proportion of nursing home SARS-CoV-2 testing being done through local hospital outreach labs.
"A lot of times those hospitals have relationships with the nursing homes, and so while they may not have been performing the other more routine testing that was getting ordered for a lot of those patients because of the [low] margins, in this case they probably are taking a lot more nursing home orders than they typically would," Fetter said.
He noted that even if nursing home-focused labs without molecular testing capabilities wanted to add them, this would be difficult given the demand for instrumentation and supplies.
"If you had equipment before, you were more likely to be able to get more equipment and reagents," he said. "For labs that didn't already have molecular capabilities, it would have taken them longer to get access [to instrumentation] to set up that type of testing."
Weissman noted that Medicare was reimbursing the sample collection portion of SARS-CoV-2 testing at a substantially higher rate than it did normal phlebotomy but said that here, too, smaller nursing home labs were unlikely to benefit due to the fact that nurses, rather than phlebotomists, were required to do this sample collection.
"The phlebotomists that nursing home labs are sending to the nursing home aren't trained to collect nasal swabs," he said, noting that this typically means the nursing home itself will have its nursing staff do the collections.
To the extent there has been an upside for nursing home labs, it is the fact that routine test volumes didn't drop as precipitously in this setting as they did in others. While Xifin's data shows a decline in test volumes of more than 50 % for some segments of the lab industry, it shows a drop of around 20 to 30 % for nursing home testing.
"It wasn't as much as it would have been for patients who actually had to get a doctor's appointment or something like that," Fetter said. "But there was still an impact."
Meanwhile, as the SARS-CoV-2 pandemic has heightened the challenges faced by many nursing home labs, nursing homes themselves have struggled to access timely testing for their staff and residents.
In an email, a spokesperson for the American Health Care Association/National Center for Assisted Living said that "for months" the organizations "were begging to make our residents and staff priority for testing, and long-term care providers were searching for labs or hospitals to perform the tests."
AHCA/NCAL said that the situation has improved since the early days of the pandemic, but that "long-term care providers are still at the mercy of the availability of tests kits, the doctors or hospitals who order the labs who prioritize and process them, and any state mandates to conduct testing on a regular basis."
Nursing homes have been among the areas hardest hit by the virus, which has led to a focus on improving testing in these facilities. New York state nursing homes have been among the most affected nationwide. According to testing performed by BioReference in the state in the first two weeks of May, 29% of nursing home staff tested positive for anti-SARS-CoV-2 antibodies, indicating they had been exposed to the virus. In New York City, 55% of nursing home staff tested positive. Almost 3% of staff in New York City tested positive by PCR for an active infection, and almost 5% of New York City nursing home staff tested positive for an active infection.
On May 10, the state ordered all nursing home staff be tested for active COVID-19 infections twice a week. That mandate has since been changed to once a week.
James Clyne, CEO of LeadingAge New York, a trade association representing government and non-profit, long-term care providers, said that "it was pretty helter-skelter for a while trying to get everybody lined up with labs to do the testing," but, he noted, "they basically got it done."
He said, however, that there remained the question of how facilities were going to pay for this testing. While diagnostic testing of residents would likely be covered by insurance, regular screening of staff falls outside the bounds of required coverage according to a recent HHS guidance.
Clyne said that in New York state, nursing homes have been covering the cost of the mandated staff testing.
"They are hoping to have the costs covered in some way by [the Federal Emergency Management Agency] or if there is some relief for states maybe through the state, but they are the ones who have to pay for it right now," he said.
According to an analysis by AHCA, one-time testing of all 4.4 million staff and residents of assisted living facilities and nursing homes across the country would cost roughly $672 million.
There is also the ongoing challenge of "flare-ups where labs stop testing and people have to scramble to find a replacement," Clyne said.
He noted that labs often didn't provide a reason why they stopped testing but said it could be due to increased demand elsewhere that led them to shift their capacity.
"Obviously, lots of other states are ramping up their testing now because of the expanded outbreaks in the south and the west," he said.
While New York made a concerted effort to provide COVID-19 testing to nursing homes, including connecting facilities without testing to labs able to provide it, access to timely testing remains a major issue nationally. According to a survey conducted by AHCA and NCAL of 1,385 member facilities at the end of June, 14% said finding a company to do testing is a key barrier, 22% said a lack of testing kits is a key barrier, and 56% said turnaround time is a key barrier.
The survey found that 13% of tests results are returned the same or next day, while 63% are returned within two to four days, and 25% are returned no sooner than five days.
Rising case numbers in much of the country will likely exacerbate the situation, due to both more SARS-CoV-2 infections within nursing homes and longer test turnaround times. A recent study from researchers at Harvard University found that nursing home deaths from COVID-19 tracked with infection rates in the surrounding community. Additionally, as infection rates rise and demand for testing increases, turnaround times are going up. For instance, this week Quest issued a statement noting that as a result of dramatic increases in demand, average SARS-CoV-2 test turnaround time for high priority patients is now more than one day and is seven days or more for all other patients.
HHS announced this week that it is launching an effort to help with nursing home testing by shipping instrumentation and tests for rapid point-of-care testing to nursing homes in areas with high levels of SARS-CoV-2 infection.
After the initial shipment, nursing homes will need to obtain additional tests directly from the manufacturers. HHS will begin sending out the instruments and tests next week.
This story first appeared in our sister publication 360Dx, which provides in-depth coverage of in vitro diagnostics and the clinical lab market.
