Overlooked by most lab executives and pathologists was a ruling made last month by the Internal Revenue Service (IRS). It was a significant ruling, but neither the media nor many people in the United States understood the significance. As a result, this ruling got little news coverage.

But for the laboratory industry and the entire healthcare system, this IRS ruling is a profound development. On June 26, the IRS ruled that money provided by employers for employees' out-of-pocket medical expenses will not be subject to tax. Moreover, it also ruled that the employee can roll over unspent funds from year-to-year and retain those monies if he/she switches jobs or retires. The IRS term for these programs is "Health Reimbursement Arrangements" (HRA). In making these decisions, the IRS is given HRAs equal treatment with existing employer-sponsored health benefit plans.

For lab directors and pathologists concerned about the corrosive effects that irrational Medicare and Medicaid policies are having on the private healthcare sector as well as the ever-looming threat of a nationalized health system, this IRS ruling is a major and positive development. It allows employers and insurers to develop health benefit plans which emphasize consumer choice in healthcare decisions. One such type of health plan is called "defined contributions." It gives the employee, say, $2,000 to pay for 100% of the first care provided in a year. The employee would then pay out-of-pocket, the next $1,000 of health expenses, after which the company-provided health policy would pay all health expenses for the year exceeding $3,000. (See TDR, January 28, 2002.)

Defined contribution-types of health plans encourage better consumer choice when spending healthcare dollars. After all, any of that first $2,000 unspent during the year can be rolled into the next year. Some HRA's, such as Medical Savings Account (MSA) plans, permit the employee to roll unspent monies into retirement accounts like IRAs.

Lab executives and pathologists should welcome this IRS decision. Anything that encourages consumer choice and takes arbitrary decisions affecting millions of patients out of the hands of Medicare bureaucrats or HMO officials has to be good for the clinical laboratory industry and the pathology profession. After all, a consumer-driven marketplace evolves in a much more rational way than a government-dictated marketplace.

Two New Public Labs Launch Operations in Florida

VitalLabs, Inc. to offer general lab testing; NeoGenomics, Inc. to serve OB/Gyn specialty

CEO SUMMARY: In 49 states, independent commercial laboratory companies are disappearing. But that's not the case in Florida. In recent months, two new public laboratory companies completed organizational steps and now offer diagnostics testing services. Both companies are starting small, but each is optimistic that the healthcare market will support steady growth in specimen volumes and revenues.

Specialty Progresses With CA Lab Regulators

Besieged laboratory company turns feisty in executing its turnaround strategies

CEO SUMMARY: Earlier this month California laboratory regulators found Specialty Laboratories, Inc. to be "in substantial compliance with California clinical laboratory law." This is an important milestone in restoring the lab company to full compliance with both state and federal laboratory regulations. Meanwhile, at the CLMA convention in New Orleans, Specialty Labs mounted a major educational effort.

Lab Management Update

Two Major Hospital Systems First to Join Leapfrog Group

United Kingdom Soon to Tackle Consolidation of Hospital Labs

Goal is Universal Medical Record for All Services & VA