Physician office laboratory

A physician office laboratory (POL) is a physician-, partnership-, or group-maintained laboratory that performs diagnostic tests or examines specimens in order to diagnose, prevent, and/or treat a disease or impairment in a patient as part of the physician practice. The POL shows up in primary care physician offices as well as the offices of specialists like urologists, hematologists, gynecologists, and endocrinologists. In many countries like the United States, the physician office laboratory is considered a clinical laboratory and is thus regulated by federal, state, and/or local laws affecting such laboratories.

POLs in the United States

History

1900 to 1979

The first two decades of the 1900s saw the slow rise of the "commercial laboratory," a privately- or group-held clinical pathology, chemical, or radiological lab that processed laboratory tests or chemical compounds ordered by a referring physician. (Though the same idea, the term "referral lab" didn't begin to appear in medical literature regularly until the early 1950s.) While some physicians — especially those in thriving urban areas — had a large enough clientele to invest in laboratory equipment and supplies for their own office, others in rural areas were less likely to be able to afford such luxuries. In the latter case, physicians were not able to as effectively provide a clinical diagnosis to their patients. These physicians had to either hope for connections at community regional hospitals to utilize the hospital laboratory (if they were even in reasonable distance or had the testing tools) or find some other means of sample testing. Practitioners and businesspeople alike saw an opportunity for the commercial laboratory to fill those gaps.

However, around the early 1920s, the push for or against the increasingly popular commercial laboratory became more noticeably vocal. Some physicians, specialists, and dentists complained heavily of the lack of quality standards, regulations, and ethics inherent in for-profit clinical, chemical, and radiological laboratories. An alternative was at times proposed in the form of a state or local diagnostic lab or a referral-only "clinic" that could be well-equipped with professional tools, staff, and procedures, critical for rural areas and usable for more than just public health care diagnoses. However, other medical professionals, while recognizing the need for more professional laboratory environments and more ethical advertising, dismissed those declaring the commercial laboratory as "evil," content to state those types of labs were needed and then fully entrenched in the health care environment.

1980 to present

Between 1983 and 1984 physician office testing increased by an estimated 11 percent, while the volume of physician-referred diagnostic tests to third-party labs declined 2 percent, likely buoyed by relatively inexpensive in-office laboratory equipment and more efficient drug monitoring capabilities. The Deficit Reduction Act of 1984 further helped to increase the number of physician office laboratories by eliminating physicians' ability to mark up tests sent out to referral labs. Additional changes to Medicare reimbursement meant the laboratory that performed the tests got paid, while physicians were suddenly limited to a $3 payment per patient visit for collecting and distributing specimens. As physician laboratories were at that point still not regulated, physicians and equipment vendors alike saw an opportunity to expand physician office laboratory functions. By the end of 1985, 10 percent of group practices with one to five physicians and 40 percent of those with six to 25 physicians were operating POLs.

On January 1, 1987, the Health Care Financing Administration ruled physicians must accept assignment for performed in-office Medicare lab testing, significantly cutting physician revenues. This, combined with plans from third-party to reduce POL payments and increased pressure on Congress to regulate POLs like other clinical laboratories, led to suggestions of physicians banding together into limited partnerships to start their own reference labs. That pressure on Congress led to the signing into effect of the Clinical Laboratory Improvement Amendments (CLIA) on October 31, 1988. Regulations for implementing CLIA continued to be developed afterwards, with the Department of Health and Human Services considering thousands of comments to the proposed regulations. The final regulations were published February 28, 1992, set to be effective on September 1 of the same year. The new CLIA regulations put into place regulations concerning test complexity, certification, proficiency testing, patient test management, personnel requirements, quality assurance, and other processes in the clinical laboratory, including physician office laboratories. Additional controls were placed on POLs that year by the Stark Amendment, which sought to prohibit physician referrals of designated health services for Medicare and Medicaid patients if the physician or an immediate family member had a financial relationship with that entity.

By 1993, some physicians running POLs were already protesting CLIA, stating the legislation imposed too many rules, regulations, and fees on physicians who perform any kind of in-office testing. A mix of public commentary and internal consideration caused the effective date of CLIA for labs to be extended on several occasions afterwards: on December 6, 1994 in the Federal Register (59 FR 62606), May 12, 1997 in the Federal Register (62 FR 25855), October 14, 1998 in the Federal Register (63 FR 55031), and December 29, 2000 in the Federal Register (65 FR 82941).

"The extensions allowed previously unregulated laboratories time to understand and implement these requirements. The extensions also provided the Department of Health and Human Services (HHS) additional time to issue revised QC requirements, review board certification program requests for approval, and ensure that laboratory directors with a doctoral degree had sufficient time to successfully complete the requirements for board certification."

By 2000, some physicians were still espousing the benefits of the POL despite the implementation of CLIA, stating that CLIA fees, proficiency testing fees, inspection fees, and staff time account for only roughly about three to four percent of overall lab costs.

In early 2011, researchers estimated the worldwide market for in vitro diagnostic company sales from over 100 companies to POLs was valued at around $2.3 billion U.S.

In December 2013, the Centers for Medicare and Medicaid Services (CMS) reported nearly half of all CLIA-certified laboratories in the United States (120,399) were physician office laboratories. However, as of December 2010 POLs only processed about eight percent of all clinical laboratory tests.