In Massachusetts, a 1,000-physician group gets 70% of revenue from capitated payments, motivating the physicians to reduce unnecessary utilization of medical laboratory tests
Accumulating market evidence indicates that unnecessary utilization of medical laboratory tests—a problem bemoaned by pathologists for decades—may finally be addressed by an unlikely source: ordering physicians! Such a trend would have both positive and negative consequences for clinical laboratories throughout the United States.
What motivates physicians, on their own initiative, to reduce the unnecessary utilization of medical laboratory tests are changes in how they are paid. Many private health plans are reimbursing office-based physicians using global payment arrangements, such as capitation.
Global Payments Motivate Payers to Monitor Unnecessary Utilization
With fee-for-service reimbursement, providers make more money when they provide more services, but that financial incentive disappears under capitated payment arrangements. Suddenly, with a fixed payment, providers consider every service to be a cost. That creates the incentive for physicians to pay closer attention to eliminating clinical procedures that are unnecessary or inappropriate, including clinical laboratory tests.
Dark Daily’s sister publication, The Dark Report published a case study on how Atrius Health, a large medical group in Massachusetts, reduced lab testing costs by an estimated $1 million per year. The group accomplished this goal simply by improving how its physicians utilized clinical laboratory tests. (See The Dark Report, “Physician Group ACO Targets High-Volume Tests for Savings”, February 24, 2014; and “How Laboratory Serving a Large Physician Group Manages Utilization, Quality and Costs”, April 28, 2014.)
Atrius Health has accepted capitated payment since 2009. In recent years, a growing proportion of its patients are reimbursed via capitated payments. In response to this change, it instituted programs to identify and eliminate unnecessary use of services. The first efforts targeted unnecessary utilization of hospitalization and imaging services, followed by a program that targeted clinical laboratory testing.
Providing Care to One Million Patients
Atrius Health is a nonprofit alliance of six medical groups and home health care, private duty nursing, and hospice agencies. It provides care to some 1,044,000 patients in 58 clinics in Eastern and Central Massachusetts.
In 2009, the 1,138 multispecialty physicians in the group were among the first to sign the Alternative Quality Contract (AQC) with Blue Cross Blue Shield of Massachusetts. BCBS calls the AQC a global payment system in which it pays the group a flat capitated rate for each member and pays additional amounts if the group meets certain quality goals.
Atrius Health also is a pioneer accountable care organization (ACO). It was one of 32 original organizations nationwide designed an ACO by the federal Centers for Medicare & Medicaid Services. In addition, 37 of its physician practices have achieved Level 3 status as Patient-Centered Medical Homes from the National Committee for Quality Assurance.
50% of Patients Are Reimbursed Through a Managed Care Risk Contract
“About 50% of our patients are on some sort of risk contract—such as a budgeted or capitated amount per month—and about 70% of our revenue comes through risk-related contracts,” Richard J. Lopez, M.D., Chief Medical Officer, told The Dark Report.
Among a number of initiatives designed to improve quality and contain costs are three programs implemented by Atrius Health to ensure that physicians appropriately order clinical laboratory tests. Lopez estimated that savings from these three initiatives could total $1 million annually.
In one initiative, Atrius Health established guidelines for pre-visit medical laboratory tests when a patient is due for an annual physical. “There was a lot of variation in how many pre-visit tests a physician would order,” Lopez said. “The ordering of these tests was not always evidence-based, and not all of the tests were necessary.”
Medical Assistants Used Clinical Laboratory Test Guidelines
Medical assistants at Atrius were given guidelines to identify which clinical laboratory tests would be appropriate. These guidelines were based on: 1) the patient’s age; 2) which medications the patient was taking; and, 3) the patients’ past diagnoses. The result was fewer lab tests for routine physicals. Better utilization of clinical lab tests because of this program generated savings of about $500,000 per year.
Another initiative involved displaying the costs of specific clinical laboratory tests in electronic health records when physicians order tests. A study of this initiative showed a significant drop in ordering lab tests when costs were displayed. Savings were calculated to be about $45.45 per 1,000 visits per month. Given that Atrius Health has about 3.5 million patient visits per year, the overall savings just from the display of lab test costs at time of order could total $157,000 per year.
This study, Impact of Cost Displays on Primary Care Physician Laboratory Test Ordering, was published in the peer-reviewed Journal of General Internal Medicine in November 2013 [Horn, D.M. et al (2013), DOI 10.1007/s11606-013-2672-1.]
Based on the success of this program, Atrius Health is conducting another study. This time it is using the EHR to display the costs of a larger number of medical laboratory tests. The EHR also displays the costs of X-ray procedures, CT scans, cardiac testing, and emergency room visits.
Reducing Clinical Laboratory Test Utilization
In another initiative, Atrius Health reduced the number of medical laboratory tests ordered for liver function patients taking cholesterol medications. The use of lab tests for the routine monitoring of liver enzymes was once standard procedure for statin users. However, in February 2012, the FDA said that such testing is ineffective in preventing rare cases of serious liver injury.
“Again, that’s a low-cost [lab] test, but we were doing a lot of them. And when we promoted the most recent FDA guideline on liver function tests for these medications, we cut the number of tests ordered and saved several hundred thousands of dollars,” Lopez said.
Juliana Szakacs, M.D., is the Director of Pathology and Laboratory Medicine for Harvard Vanguard Medical Associates, which is an affiliate of Atrius Health. She explained that the lab often develops educational initiatives to help physicians standardize ordering for certain tests. “One of these programs was designed to improve ordering for vitamin D tests,” she told The Dark Report (see TDR, April 28, 2014). “Like most clinical laboratories, a few years back we saw big increases in vitamin D testing in response to media stories. “Our first step was to bring that lab test in-house to bring the cost down.
Reducing Number of Unnecessary Vitamin D Tests
Szakacs and her lab team invited endocrinologists and internal medicine physicians to make presentations to other physicians about appropriate testing. The clinical lab presented data showing the frequency with which different doctors ordered vitamin D tests.
“Among other things, we could also tell whether they were ordering [a vitamin D test] as part of well-visit screening or for a specific diagnosis,” noted Szakacs. “Having that data allowed us to be very specific in our training from one department to the next.
“The results were tremendous,” Szakacs explained. “In the first 24 months, utilization of vitamin D tests fell by 50%, to a more appropriate level. As a result of these changes, we now spend 80% less for vitamin D testing, compared to the start of our educational program.”
Two Insights from Atrius Health’s Efforts to Improve Lab Test Utilization
Pathologists, Ph.D.s, and clinical laboratory scientists should pay close attention to the actions taken by physicians at Atrius Health to reduce the unnecessary utilization of clinical laboratory tests. First, this case study shows how, as physicians see more of their reimbursement paid in the form of capitation, they will be motivated to control utilization of lab tests and other clinical services deemed to be unnecessary.
Second, and of equal significance, the specific actions taken by the physicians and the clinical laboratory team at Atrius Health to identify and improve how physicians utilized clinical laboratory tests demonstrate how much opportunity exists for improvement. As noted, three focused programs allowed Atrius Health to save an estimated $1 million per year by reducing clinical lab test ordering.
—by Joseph Burns