After seeing a rise in the volume of clinical lab tests physicians order, managed care plans are develop a variety of strategies to manage utilization and costs

Health insurers are taking more aggressive actions to control the cost of clinical laboratory testing. For many years, clinical laboratories and pathology groups have been concerned about the strategies used by Medicare to control the utilization and costs of medical laboratory tests. Private health insurers usually follow the actions of Medicare, the nation’s largest health insurer. But today, managed care plans are developing their own lab-test-utilization strategies in addition to following those of Medicare.

Recently, Managed Care magazine explained many of the steps health insurers take to keep the costs of clinical laboratory tests under control. The cover story in the October issue of the magazine, “Health Plans Deploy New Systems To Control Use of Lab Tests,” outlined how health insurers Cigna, Group Health Cooperative, Priority Health, and UnitedHealthcare (UHC) are managing lab test utilization.

MedPAC Report Showed that Medicare Clinical Lab Test Costs Rose 9.1% in 2012

One reason for the concern about clinical laboratory tests is a rise in spending. In a report to Congress last year, the Medicare Payment Advisory Commission (MedPAC) showed that the costs of clinical lab tests for Medicare patients rose by 9.1% in 2012. The MedPAC report, “A Data Book: Health Care Spending and the Medicare Program,” also showed that spending on clinical laboratory testing rose by 5.6% annually, on average, from 2003 through 2012.

Managed Care magazine is published by MediMedia Inc

Managed Care magazine is published by MediMedia Inc. in Yardley, Pennsylvania, and has been covering the managed care industry for 20 years.

“This growth was primarily driven by rising volume since there were only three increases in lab payment rates during those years (1.1% in 2003, 4.5% in 2009, and 0.65% in 2012),” MedPAC reported. Although expenditures rose in those years, clinical lab test costs accounted for only 1.7% of total Medicare spending in 2012, MedPAC said.

Health plans also have noticed a rise in medical laboratory test utilization. They are concerned that the increase may indicate needless over testing, the article said. In 2013, one large U.S. health plan reported that clinical laboratory test utilization was the driving factor behind a rate of increase in lab testing costs that was twice that of overall medical costs. Unit costs were not a significant factor, the article said.

One Health Plan Saw Clinical Lab Costs Rise at Twice the Rate of Medical Costs

The health plan had increases of 4% to 5% annually in medical costs, but outpatient clinical lab spending was rising by 8% to 10% annually, about two thirds of it from increased utilization, the article said.

Group Health also reported higher test volume. In the article, Kim Riddell, M.D., a pathologist and section chief in the health plan’s clinical laboratory, reported that utilization was rising because physicians treating outpatients were ordering more medical laboratory tests than physicians outside of Group Health. “Even though these patients didn’t have any complaints, they were automatically getting a urinalysis, chemistry panels, a thyroid-stimulating hormone test, and a complete blood count,” Riddell said.

Kim Riddell, M.D.

Kim Riddell, M.D., Service Line Chief-Clinical Laboratory at Group Health Cooperative in Seattle, Washington, runs a comprehensive lab-test utilization management program, according to Managed Care magazine. For this initiative, she developed a report card for each family physician showing which ones order medical laboratory tests inappropriately. The report card addressed the most-ordered tests, such as chemistry panels, thyroid stimulating hormone test, and complete blood count. Since 2003, tests per 100 well visits dropped from 2.5 to 0.43 for the 14 chemistry panels; 1.7 to 0.3 for TSH; and 2.5 to 0.91 for CBCs, the magazine reported. (Photo copyright Group Health Cooperative.)

After analyzing lab test volume, Riddell started a lab-test utilization management effort that may be one of the longest running, most comprehensive laboratory UM programs among health plans in the nation, the article said.

To manage utilization, Riddell developed a report card for each family physician showing who orders medical laboratory tests inappropriately. The effort focused on the most-ordered tests, such as chemistry panels, the thyroid stimulating hormone test, and the complete blood count. “Then we did a deeper dive to see how many of these were ordered and by whom,” Riddell said. “Just by creating awareness about the overuse of testing, we saw a drop in utilization. Then when the report cards came out, we saw another drop in utilization because a lot of physicians quit ordering inappropriate tests entirely.”

From 2003 through last year, tests per 100 well visits dropped from 2.5 to 0.43 for the 14 chemistry tests; 2.5 to 0.91 for CBCs; and 1.7 to 0.3 for TSH, she reported.

UnitedHealthcare to Introduce Lab Test Management Program in Florida

UHC also is taking steps to manage utilization. In Florida, it is introducing an extensive laboratory benefit management program for its commercial HMO members. If this program is successful in Florida, UHC is likely to introduce it in other states.

The contractor for the program is Beacon Laboratory Benefit Solutions, a division of Laboratory Corporation of America. BeaconLBS is a decision-support system that physicians must use when ordering 82 clinical lab tests to give UHC advance notification. Two of those tests (BRCA1 and BRCA2) require pre-authorization. Dark Daily covered this program extensively in “UnitedHealthcare Pushes Back Start Date for Making Claims-Payment Decisions Based on its Florida Pilot Management Program for Medical Laboratory Tests” (January, 5, 2015) and “In Florida, UnitedHealthcare’s New Clinical Laboratory Benefit Management Program Triggers Objections from Physicians and Excludes Most Medical Laboratories” (December 8, 2014).

Health Plans Develop Programs to Ensure Appropriate Genetic Testing

While most of Group Health and UHC’s efforts target routine lab testing, in 2013 Cigna began a program to ensure that patients considering tests for certain genetic abnormalities would meet with genetic counselors. In the Managed Care article, Joy Larsen Haidle, MS, GC, President of the National Society of Genetic Counselors, said other health plans are likely to follow Cigna’s lead in part because about 30% of all genetic tests that physicians order are inappropriate or unnecessary. “When the average gene test costs about $2,000 per gene, that’s a lot of money,” she said.

The magazine quoted Larsen Haidle saying, “There is a trend toward using genetic counselors in the utilization management role either at the diagnostic laboratory or at the send-out laboratory at the referring institution.”

As a result of efforts by Priority Health in Grand Rapids, Michigan, to have genetic counselors work with patients and physicians to ensure that the proper genetic tests are were ordered, the health insurer estimated savings of $7.2 million in one year, Larsen Haidle said.

The article also explained how the University of Rochester Medical Center has been using a laboratory test formulary since 2009. As a result of this effort, lab test utilization and costs dropped by about 22% in two years.

And, finally, the article outlined the work done at Vanderbilt University Medical Center to formulate diagnostic management teams (DMTs) for patients with such complex conditions as coagulation disorders, blood cancers, infectious diseases, and endocrine-related hypertension.

The multiple initiatives to improve how physicians utilize clinical laboratory tests described above are early examples of what will be an important trend. In a healthcare system designed to encourage early detection, active intervention, and more precise patient care, all medical laboratories and anatomic pathology organizations will need to play an active role in helping physicians do a better job of ordering the right test at the right time.

Related Information:

Health Plans Deploy New Systems to Control Use of Lab Tests 

UnitedHealthcare Pushes Back Start Date for Making Claims-Payment Decisions Based on its Florida Pilot Management Program for Medical Laboratory Tests 

In Florida, UnitedHealthcare’s New Clinical Laboratory Benefit Management Program Triggers Objections from Physicians and Excludes Most Medical Laboratories

Cigna to Preauthorize Genetic Tests 

Pathologist Michael LaPosata, M.D., Delivers the Message About Diagnostic Management Teams and Clinical Laboratory Testing to Attendees at Arizona Meeting