July 7, 2021

Joseph Hilbert

Deputy Commissioner, Government & Regulatory Affairs

Virginia Department of Health

109 Governor Street

Richmond, Virginia 23219

RE:      Public Comment for Amendment to Regulations Governing Virginia Newborn Screening Services [12 VAC 5-71] to add SMA and X-ALD    

Dear Mr. Hilbert,

Thank you for the opportunity to comment on the Virginia Board of Health proposed amendments to the Regulations Governing Virginia Newborn Screening Services [12 VAC 5-71] to add Spinal Muscular Atrophy (SMA) and X-linked Adrenoleukodystrophy (X-ALD) to the newborn screening panel (the “Amended  Regulations”).  While the benefits of early detection and treatment for these conditions is acknowledged, as discussed in greater detail below, the Virginia Hospital & Healthcare Association (VHHA) has significant concerns regarding the economic impact of the Amended Regulations on hospitals, birthing centers, midwives, and infants and their families.

The Town Hall Agency Background Document for the Amended Regulations states that the “[p]rojected costs to add SMA and X-ALD to the newborn screening panel will be incurred by [the Division of Consolidated Laboratory Services (DCLS)]” and that “[t]he projected costs will be funded through the fee increase for the blood spot screening panel resulting from the addition of SMA and X-ALD to the core panel.”[1]  Since hospitals, birthing centers, and midwives are required by law and the Newborn Screening Regulations to screen for all conditions on the core panel and have no alternative but to utilize DCLS and purchase blood spot screening collection kits from DCLS, this effectively results in a pass-through of all costs associated with the addition of SMA and X-ALD to the core panel upon hospitals, birthing centers, midwives, and infants and their families.

The Virginia Department of Planning and Budget (DBP) Economic Impact Analysis for the Amended Regulations (the “EIA”) provides further detail on the magnitude of costs that are being passed-through.  The EIA expressly acknowledges the reality that “[t]he Virginia Newborn Screening Program is solely funded through enterprise funding, which is generated from the collection of fees from dried blood spot specimen kits sold to submitting birthing facilities and health care providers statewide.”  The EIA points to Board estimates of costs to DCLS related to capital equipment, staff, application development and education modules in the amount of approximately $1.491 million in start-up costs and $1.266 million in ongoing annual costs for SMA and X-ALD.  In order to begin tests for SMA and X-ALD in the 2020-21 fiscal year, DCLS increased the fee for the blood spot specimen kit from $101.20 to $138 effective October 1, 2019 – an increase of 36%.  A majority of this increase ($26-28 per test) is due to the addition of SMA and X-ALD.  DCLS will require the increase in fees twelve months prior to the implementation of SMA and X-ALD screening.  Assuming 99,000 births per year based on average test volumes, birthing facilities and health care providers are expected to pay anywhere from $2.574 million to $2.772 million in fees before SMA and X-ALD screening even begins. 

Hospitals perform the majority of newborn screening and so bear most of the costs of the program.  Cost increases are not reimbursed and generally must be absorbed by hospitals because deliveries covered by a commercial third-party payer usually are paid for on a negotiated per-delivery basis, and the reimbursement rate is not adjusted to account for these screening cost increases.  The same is true for Medicaid-covered deliveries, which are typically reimbursed at the rate lower than commercial third-party payers.  Hospitals absorb the entire cost of these tests for many charity care and self-paid deliveries. Hospitals currently pay over $11 million in fees annually, with this latest increase resulting in an additional $2.5 million in costs per year for hospitals. 

The initial cost of each dried-blood-spot screening specimen collection kit in 1992 was $10.  Recent discussions regarding the addition of Krabbe’s Disease would have resulted in an additional increase ranging from $18.59 to $20.07 per kit, producing an additional 13-15% increase in the fee.  In total, if all of these changes were fully implemented, the fee would have increased by over 50% in roughly three years.  The fee has steadily increased over the years with the addition of new conditions to the screening panel and the burden of these increased costs has ultimately been shifted on to on hospitals, birthing centers, midwives, and infants and their families.

As SMA, X-ALD and other new conditions are added to the core screening panel in Virginia, we are concerned that this approach to paying for what is a public health priority and societal benefit is unsustainable.  One possible option to address this in the Newborn Screening Regulations would be to limit DCLS authorization to establish fees or implement increases to fees to include only certain incremental variable costs incurred in performing tests.  For example, the costs required to purchase additional instruments or equipment needed to perform the test, additional space and related build-out costs, and software costs could not be included in the fee.  Such costs would either need to be absorbed by DCLS or funded through DCLS or Department appropriation requests to the General Assembly. 

Thank you again for this opportunity to comment.

Respectfully submitted,

R. Brent Rawlings

Senior Vice President & General Counsel