As MD+DI reported in August, laboratory-developed tests (LDTs) are no longer regulated by FDA, based on a statement from the Department of Health and Human Services (HHS). While HHS’s statement has implications well beyond COVID, the intent is to allow clinical labs to conduct and adjust their COVID testing without FDA oversight. Labs may still choose to seek and operate under an emergency use authorization (EUA) from FDA, they are not required to do so.
I share my thoughts on the matter a few weeks back during Medtech Unfiltered:
Some legal experts have since warned, however, that labs may leave themselves vulnerable to legal and reimbursement snags without a nod from FDA.
"Before throwing the FDA guidance away, clinical labs that are providing (or are considering providing) COVID-19 LDTs need to carefully consider both the reimbursement and liability implications of not seeking an EUA," urges a blog post published by Bass, Berry & Sims, a Tennessee-based law firm with more than 280 attorneys.
Both commercial payor and uninsured coverage and reimbursement for COVID testing and liability protections under recent legislation are tied to an active or pending EUA, the legal team wrote. The authors added that, "liability protections are certainly beneficial when developing and relying on new testing platforms."
While FDA regulation of LDTs has long been a complicated and controversial issue, the law firm pointed out that for public health emergencies specifically, FDA has historically exercised more authority over LDTs becaue of the implications for analyses of disease progression and public health decision-making.
Reimbursement implications of not seeking an EUA for a COVID LDT
"Not seeking an EUA is likely to have a cascading effect on clinical lab reimbursement for COVID-19 LDTs during the COVID-19 public health emergency," the legal professionals wrote. "Certain pieces of legislation have tied coverage expectations for COVID-19 tests to those that are provided pursuant to an FDA approval or an actual or pending EUA."
The authors further explain that the Family First Coronavirus Act as amended by the Coronavirus Aid, Relief, and Economic Security Act, requires most health insurance providers to cover medically appropriate COVID tests, without requiring cost sharing, prior authorization, or medical-management limitations. The legislation effectively requires payers to reimburse laboratories even if they are not in-network. But there's a catch. The only tests that qualify for these reimbursement protections are those that meet one of several criteria, most notably FDA clearance, approval, or EUA.
Without an EUA, clinical labs that use LDTs for COVID-19 detection have no guarantee that their services will be reimbursed, according to the law firm.
Legal implications of not seeking EUA of a LDT for COVID
According to Bass, Berry, & Sims, a clinical laboratory will not be able to qualify for federal protection from liability for personal injury or property damages arising from the use of unauthorized LDTs. The COVID-19 public health emergency covered countermeasures include the development and administration of unapproved items and services, such as LDTs; clinical labs are one of many types of providers eligible for protection. However, this protection does not apply to claims arising from the use of unapproved LDTs absent an active or pending EUA, the legal experts noted. Considering the potential for LDTs, by their very nature, to produce inaccurate results, such as false negatives, which could lead an infected individual to infect others, being ineligible for that federal liability protection could have costly ramifications, the law firm noted.
For more takeaways on this issue, you can read the full blog post here.