News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel

News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
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Physicians engaged with CMS in value-based care are asking clinical laboratories to help them close gaps in patient care through testing  

Clinical laboratories know that any change to how the federal Centers for Medicare and Medicaid Services (CMS) reimburses healthcare providers could also affect how labs are reimbursed for services they provide. Thus, lab leaders will want to take note of the latest value-based reimbursement model being tested by the Center for Medicare and Medicaid Innovation at CMS.

Called the Geographic Direct Contracting Model (GEO), CMS’ new “voluntary payment model” aims at giving providers of Medicare Part A and Part B services “a direct incentive to improve care across entire geographic regions,” according to a CMS press release.

“The Geographic Direct Contracting Model is part of the Innovation Center’s suite of Direct Contracting models and is one of the Center’s largest bets to date on value-based care,” Brad Smith, Deputy Administrator and Director of the Center for Medicare and Medicaid Innovation (CMMI), told RevCycleIntelligence. Smith is also the former CEO and co-founder of Aspire Health.

According to a CMS Fact Sheet, the GEO model “will test whether a geographic-based approach to value-based care can improve quality of care and reduce costs for Medicare beneficiaries across an entire geographic region.”

“This model allows participating entities to build integrated relationships with healthcare providers and invest in population health in a region to better coordinate care, improve quality, and lower the cost of care for Medicare beneficiaries in a community, said CMS Administrator Seema Verma in the CMS press release. Clinical laboratories may find opportunities as well, to collaborate with physicians in the clinical decision-making process. (Photo copyright: Business Insider.)

CMS Continues to Move Away from Fee-for-Service

Years ago in “CMS Seeks ‘New Direction’ for its Innovation Center as the Agency Evaluates Current Value-Based Payment Models for Medicare Services, including Medical Laboratory Testing,” Dark Daily alerted readers that CMS was planning to offer different models of value-based care and that medical laboratory revenues could be affected as the federal agency aims to move reimbursement for healthcare—including clinical laboratory testing—away from the fee-for-service payment model.

“Leveraging best practices and lessons learned from prior Innovation Center models, Geo will enable Direct Contracting Entities (DCEs) to build integrated relationships with healthcare providers and community organizations in a region to better coordinate care and address the clinical and social needs of Medicare beneficiaries,” the CMS Fact Sheet states.

“If we’re successful, we’ll move value-based care from something that might be 10 or 20% of somebody’s revenue to something that’s 80 or hopefully 100% of somebody’s revenue (in five to 10 years),” Smith told MedPage Today.

Healthcare providers and health plans that participate in the Geographic Direct Contracting model must be covered entities under the Health Insurance and Portability Accountability Act (HIPAA) and submit applications by April 2, 2021, the CMS fact sheet states.

 The first performance period starts Jan. 1, 2022, and participation is voluntary. Direct contracting entities take “100% shared savings and shared losses for Medicare Part A and B services for aligned Medicare fee for service beneficiaries in a defined region,” the CMS fact sheet explained.

CMS is considering implementing the GEO model in Atlanta, Dallas, Denver, Detroit, Houston, Los Angeles, Miami, Minneapolis, Orlando, Phoenix, Philadelphia, Pittsburgh, Riverside, San Diego, and Tampa.

“By initially testing the model in a small number of geographies, we will be able to thoughtfully learn how these flexibilities are able to impact quality and costs,” Smith told RevCycleIntelligence.

How Will Value-Based Care Programs Affect Clinical Laboratories?

Value-based payment arrangements require doctors to accept changes to how they are reimbursed for their services. In kind, doctors are examining how clinical laboratories can take on an enhanced role in clinical decision making.

“Physicians and hospitals in a value-based environment need a different level of service and professional consultation from the lab and pathology group because they are being incented to detect disease earlier and be active in managing patients with chronic conditions to keep them healthy and out of the hospital,” said Robert Michel, Publisher and Editor-in-Chief of Dark Daily and its sister publication The Dark Report.

Michel explained that value-based care providers are calling on labs to go beyond reporting accurate test results within allotted turnaround times. “They want collaboration in identifying at-risk patients and in finding and closing gaps in care by using laboratory test results.”

Medical laboratory leaders may want to reach out to healthcare providers participating in value-based care models to explore areas of interest relating to patient population, chronic conditions, and severity of illness. 

As Dark Daily reported in “Repositioning the Clinical Laboratory as a Strategic Pillar of the Value-Based Healthcare Organization, Consistent with Clinical Lab 2.0,” labs need to be effective and efficient performers in integrated delivery networks and play a critical role in coordinating care.

Clinical laboratories that offer testing and reporting and additionally collaborate with healthcare providers and health plans in ways that contribute to improved patient outcomes and lowered costs, may be in a position to earn any financial rewards from these and other new value-based arrangements.

—Donna Marie Pocius

Related Information:

CMS Announces New Model to Advance Regional Value-Based Care in Medicare

CMS Announces a New Value-Based Direct Contracting Model

CMMI Expanding Direct Contracting, Advancing Other New Models

Facts: Geographic Direct Contracting Model “Geo”

Changes Coming to Bundled Payments and Direct Contracting, CMMI Chief Says

CMS Seeks New Direction for Its Innovation Center as the Agency Evaluates Current Value-Based Payment Models for Medicare Services Including Medical Laboratory Testing

Repositioning the Clinical Laboratory as a Strategic Pillar of the Value-Based Healthcare Organization Consistent with Clinical Lab 2.0