Jul 9, 2018 | Instruments & Equipment, Laboratory Instruments & Laboratory Equipment, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Testing, News From Dark Daily
Could biometrics increase security and safety of clinical laboratory patient identification and specimen tracking processes as well?
Positive patient identification is a common problem for all healthcare providers, including medical laboratories. That is why there is strong interest in developing technologies that use biometric data to identify patients. The challenge has been to find a biometric solution that has acceptable accuracy and can make the positive identification in a speedy fashion, particularly when the patient presents for service or to provide a clinical laboratory specimen.
One Canadian company believes it has a biometrics-based solution almost ready to bring to market. AceAge, Inc., a Canadian healthcare technology company, recently added facial recognition software to their Karie at-home medication dispensing appliance, according to Biometric Update. The Ver-ID facial recognition authentication application they chose was developed by Ontario-based Applied Recognition, Inc.
Karie (above right) is designed to help patients accurately schedule, monitor, and take their medications. The companion facial recognition software—one of several security features—will enable homebound individuals who use mobile devices or the Internet to electronically sign-in and notify caregivers that medication was taken as ordered, an AceAge news release noted. “Now, our end users can dispense their prescriptions at a glance and without worry that, for example, a child might inadvertently get access. This will help bring security to medication in people’s homes,” Spencer Waugh, AceAge’s CEO (above), stated in the news release. (Image copyright: AceAge.)
The new Karie automated solution, is expected to launch later this year. Developers anticipate that the facial recognition feature also could be of value to researchers in late-stage clinical trials, where documentation of medication adherence is critical.
How Does Facial Recognition Software Work?
According to Applied Recognition, Ver-ID uses an algorithm that is more than 99% accurate in detecting and recognizing faces. Here’s how it works:
- A patient registers his or her face using the camera on a mobile device or camera-enabled computer;
- The patented Ver-ID algorithm matches 75 points and creates a “facial print” or “signature,” capturing unique features;
- Then, as the person uses their mobile device or computer, the facial signature is authenticated against the registered signature to control access to the app or device.
AceAge’s Karie device would authenticate the patient’s facial image against a stored facial signature in the same manner.
Fingerprint Readers Give People Identity, Care Access in Africa
Danny Thakkar, co-founder of Bayometric of San Jose, Calif., a global provider of fingerprint scanners and biometric software, says biometrics improves patient identification and is faster and more reliable than manual identification of patient records in a master patient index.
“The process of patient enrollment and admission becomes fast and hassle-free as a simple biometric scan is all it takes to identify and admit a patient,” Thakkar noted in a blog post.
In fact, biometrics technology has made it possible for residents of developing countries, without driver licenses or credit cards, to secure identity and access to healthcare services, according CNN.
COHESU, a Kenyan community health charity, is reportedly working with Simprints, a nonprofit technology company in the UK that makes fingerprint scanners for mobile platforms and charities worldwide, to implement biometrics for patient identification.
After having their fingerprints registered by the Simprints biometric scanner, Kenyan patients receive a unique identifier that can be matched to their healthcare records. Caregivers use mobile apps to access their patients’ health records and review or update them, CNN reported.
“Biometrics as a technology has completely changed our way of thinking. Without it, they would probably stay at home and accept their fate,” Nicholas Mwaura, a systems and database administrator with COHESU told CNN.
Hospitals Have Outdated Patient ID Methods, Says HealthsystemCIO Survey
Meanwhile, 42% of hospital CIOs acknowledged in an Imprivata/HealthsystemCIO.com survey that patient matching is a top priority at their organizations, according to a news release. Another 24% of CIOs surveyed said patient matching is not a priority, but it should be.
“Many hospitals still rely on methods that do not guarantee accurate patient identification, such as a person’s date of birth or a health insurance card. By implementing a registration solution—such as biometric identification technology—that accurately identifies patients and matches them with their correct EMPI (enterprise master patient index) and EHR (electronic health record) records, hospitals can reduce the very real risks highlighted in this survey,” Sean Kelly, MD, Imprivata’s Chief Medical Officer, told EHR Intelligence.
Clinical laboratory leaders already use processes and software to identify patients and match them with records and specimens. In the near future, biometric facial recognition might provide additional patient identification, safety, and medical laboratory security.
—Donna Marie Pocius
Related Information:
Medication Delivery Device Maker Adds Ver-ID for Biometric Patient Verification
AceAge Selects Applied Recognition to Provide Face Recognition Technology for Biometric Identity Authentication
Biometrics for Accurate Patient Identification
How Biometrics is Giving Identities to ‘Invisible Citizens’
Mismatched Patient Records: An Under-Recognized and Growing Problem at Most Hospitals, Imprivata CIO Survey Finds
42% of Healthcare CIOs List Patient Matching Issues a Top Priority
Jul 2, 2018 | Compliance, Legal, and Malpractice, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Management & Operations, News From Dark Daily
Growing interest in more transparency for the prices of prescription drugs is reflected in a study published in the Journal of the American Medical Association (JAMA) that highlights disparities in pharma prices for patients, pharmacies, and payers
Consumer demand for increased transparency in the prices patients, health insurers, and others pay for healthcare services continues. The Kaiser Family Foundation (KFF) reports that patients are facing higher deductibles, higher premiums, and increasingly complex—and opaque—pricing for everything from medical laboratory tests and routine checkups to prescriptions and out-of-network care. (See Dark Daily, “KFF Study Finds HDHPs and Increased Cost-Sharing Requirements for Medical Services are Making Healthcare Increasingly Inaccessible to Consumers,” April 20, 2018.)
However, while reference pricing and pricing databases help savvy patients compare prices across a range of procedures, much about pharmaceutical pricing remains shrouded in mystery. This is why calls for greater transparency in how prescription drugs are priced are increasing as well.
The Trump administration, state governments, and advocacy groups have each targeted drug costs as a problem in the current healthcare system. And a March 2018 study published in the Journal of the American Medical Association (JAMA) may further fuel the fires facing big pharma.
Overpayments and the Silence Behind Them
Analyzing 9.5 million claims from Optum’s Clinformatics Data Mart over the first half of 2013, researchers found that approximately 23% of all claims involved overpayments—situations in which the co-pay charged to the patient exceeded what the insurer paid the pharmacy to fill the prescription.
While data from 2013 might not reflect the current state of pharmaceutical pricing, the study brings exposure to trends in both politics and media coverage surrounding the industry.
The study authors found that overpayments totaled $135-million in 2013. Generic medications saw a higher portion of overpayments with more than one in four generic prescriptions costing patients more than what payers paid the pharmacy. However, in the 6% of claims involving branded medication, overpayments were nearly twice as high with an average overpayment of $13.46 per claim.
The researchers also cited data from a National Community Pharmacists Association (NCPA) survey of 628 pharmacies in which 49% claimed to have seen 10-50 occurrences of “clawback fees” in the past month. A further 35% reported seeing more than 50 clawback fees in the past month. These “fees” are part of contractual obligations that payers can use to recoup such overpayments to pharmacies.
Other contractual arrangements, such as “gag clauses” (AKA, non-disclosure agreements), wherein pharmacists cannot disclose to patients when their copay exceeds the cost of filling the prescription without coverage, have garnered coverage in the media.
The Hill recently outlined efforts from senators to stop this practice for both traditional insurance plans and Medicare Advantage and Part D participants. “Americans have the right to know which payment method—insurance or cash—would provide the most savings when purchasing prescription drugs,” Senator Susan Collins (R-Maine) told The Hill.
Rebates, Secretive Deals, and Red Tape in Government Crosshairs
Rebates are another contested aspect of current pricing models. Traditionally, pharmacy benefit managers (PBMs) serve as a middleman between pharmaceutical companies and pharmacies to negotiate prices and maintain markets. PBMs negotiate deals for insurers in the form of rebates. Insurers, however, are using these savings to offer lower premiums, rather than forwarding the savings directly to the customer.
UnitedHealthcare unveiled plans to pass these rebates directly to consumers in early March, The Hill reported.
In a press release, Department of Health and Human Services (HHS) Secretary Alex M. Azar II stated, “Today’s announcement by UnitedHealthcare is a prime example of the movement toward transparency and lower drug prices for millions of patients that the Trump Administration is championing. Empowering patients and providers with the information and control to put them in the driver’s seat is a key part of our strategy … to bring down the price of drugs and make healthcare more affordable.” (Photo copyright: Washington Post.)
The Trump Administration also recently outlined their new “American Patients First” plan for reducing drug prices and out-of-pocket costs for patients.
Key elements of their proposed approach include:
- Eliminating gaming of regulations, such as the Risk Evaluation and Mitigating Strategies (REMS) requirements manufacturers use to avoid sending samples to creators of generics;
- Promoting biosimilars;
- Allowing greater substitution in Medicare Part D;
- Including list prices in pharma advertising;
- Restricting rebates through Anti-Kickback Statue revisions; and,
- Eliminating gag clauses or clawback fees.
However, pharma industry coverage of the plan is mixed. MarketWatch sees little to worry about, predicting, “[the plan] isn’t expected to hurt drug makers or pharmacy-system middlemen.” Meanwhile, Forbes claims, “[the plan] represents a sea of change in pharmaceutical pricing policy, one that will have a significant effect on drug prices in the future.”
Anatomic pathology groups, medical laboratories, and other diagnostics providers can view this as yet another example of healthcare providers trying to shore up financials and protect profits by protecting sensitive pricing information, as the industry faces increasing scrutiny. Nevertheless, regardless of the outcome, these latest trends emphasize the role that transparency is likely to play—and how clinical laboratories will be impacted—as healthcare reform progresses, both in terms of public relations and regulatory requirements.
—Jon Stone
Related Information:
Frequency and Magnitude of Co-payments Exceeding Prescription Drug Costs
Impact of Direct and Indirect Remuneration (DIR) Fees on Pharmacies and PBM-Imposed Copay Clawback Fees Affecting Patients
Copay Exceeds Drug Cost in 23% of Claims: JAMA Research
You’re Overpaying for Drugs and Your Pharmacist Can’t Tell You
Oregon, the Latest State to Tackle High Drug Prices, Pushes through Transparency Law
Governor Brown Signs HB 4005, Creating New Transparency in Drug Pricing
UnitedHealthcare Will Pass Drug Rebates Directly to Consumers
Senators Target ‘Gag Clauses’ That Hide Potential Savings on Prescriptions
FDA Commissioner Says ‘Rigged’ System Raises Drug Costs for Patients, Discourages Competition
FDA Puts Drug Supply Chain on Notice
The FDA Commissioner Just Laid Out How ‘Everybody Wins’ in the US Healthcare System except the Patients
Your Guide to the Trump Drug Price Plan: Who It Affects and How
The Trump Plan to Reduce Prescription Drug Prices Will Have a Major Impact
American Patients First: The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs
Secretary Azar Statement on UnitedHealthcare Drug Discount Announcement
Reference Pricing and Price Shopping Hold Potential Peril for Both Clinical Laboratories and Consumers
Consumers Now Use Medical Cost Websites to Price Shop for Clinical Pathology Laboratory Tests and Other Medical Procedures
KFF Study Finds HDHPs and Increased Cost-Sharing Requirements for Medical Services Are Making Healthcare Increasingly Inaccessible to Consumers
Jun 29, 2018 | Laboratory Hiring & Human Resources, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology
While consolidation is a common trend across many sectors—including anatomic pathology groups and hospital systems—UnitedHealth Group is the latest example of the payer-provider consolidation trend impacting medical laboratories nationwide
Pending the successful completion of a $4.9-billion acquisition of DaVita Medical Group, UnitedHealth Group (UNH) will be poised to become the largest single employer of doctors in the U.S., according to numbers reported by leading sources.
Clinical laboratories, anatomic pathology groups, and other service providers that service those doctors should already be taking a serious look at their revenue flows and efficiencies to maintain margins and weather the shift into a model of value-based reimbursement.
Controlling Costs with Direct Care
According to a press release, UnitedHealth Group’s (NYSE:UNH) direct-to-patient healthcare subsidiary, OptumCare, currently employs or is affiliated with 30,000 physicians. And, DaVita Medical Group, a subsidiary of DaVita Inc. (NYSA:DVA), lists 13,000 affiliated physicians on their website. Should acquisition of DaVita Medical Group go forward, OptumCare would have approximately 43,000 affiliated or employed physicians—roughly 5,000 more physicians than HCA Healthcare and nearly double Kaiser Permanente’s 22,080 physicians—thus, making OptumCare’s parent company UNH the largest individual employer of physicians in the U.S. The acquisition is reportedly to reinforce UNH’s ability to control costs and manage the care experience by acquiring office-based physicians to provide services.
OptumCare has seen significant growth over the past decade. OptumHealth, one of three segments of UNH’s overall Optum healthcare subsidiary, includes OptumCare medical groups and IPAs, MedExpress urgent care, Surgical Care Affiliates ambulatory surgery centers, HouseCalls home visits, behavioral health, care management, and Rally Health wellness and digital consumer engagement.
“We have been slowly, steadily, methodically aligning and partnering with phenomenal medical groups who choose to join us,” Andrew Hayek, CEO of OptumHealth (above), told Bloomberg. “The shift towards value-based care and enabling medical groups to make that transition to value-based care is an important trend.” (Photo copyright: Becker’s ASC Review.)
Acquisitions of Doctors on the Rise; Clinical Lab Revenues Threatened
Independent physicians and practices have been a hot commodity in recent years. A March 2018 study from Avalere Health in collaboration with the Physicians Advocacy Institute (PAI) showed that the number of physicians employed by hospitals rose from 26% in July 2012 to 42% in 2016—a rise of 16% over four years.
By acquiring physicians of their own, insurance companies like UnitedHealth Group believe they can offset the cost and shifts in service of these prior trends. “We’re in an arms race with hospital systems,” John Gorman of Gorman Health Group told Bloomberg. “The goal is to better control the means of production in their key markets.”
According to Modern Healthcare, the acquisition of DaVita Medical Group is UnitedHealth’s third such acquisition in 2017. Other acquisitions include:
Along with Surgical Care Affiliates came a chain of surgery centers that, according to The New York Times (NYT), OptumCare plans to use to perform approximately one million surgeries and other outpatient procedures this year alone, while reducing expenses for outpatient surgeries by more than 50%.
NYT also noted that acquisition of DaVita Medical Group doesn’t bring just physicians under the OptumCare umbrella, but also nearly 250 MedExpress urgent care locations across the country.
By having physicians, clinical laboratories, outpatient surgery centers, and urgent care centers within their own networks, insurance providers then can steer patients toward the lowest-cost options within their networks and away from more expensive hospitals. This could mean less demand on independent clinical laboratories and hospitals and, with that, reduced cash flows.
According to NYT, Optum currently works with more than 80 health plans. However, mergers such these—including those between CVS Health (NYSE:CVS) and Aetna (NYSE:AET), and the proposed agreement between Humana (NYSE:HUM) and Walmart (NYSE:WMT) to deliver healthcare in the retailers’ stores—indicate that insurers are seeking ways to offer care in locations consumers find most accessible, while also working to exert influence on who patients seek out, to generate cost advantages for the insurers.
This consolidation should concern hospitals as payers increasingly draw physicians from them, potentially also taking away their patients. The impact, however, may also reach independent medical laboratories, medical imaging centers, anatomic pathology groups, and other healthcare service providers that provide diagnoses and treatments in today’s complex healthcare system.
Deep Payer Pockets Mean Fewer Patients for Clinical Labs and Medical Groups
As this trend continues, it could gain momentum and potentially funnel more patients toward similar setups. Major corporations have deeper pockets to advertise their physicians, medical laboratories, and other service providers—or to raise public awareness and improve reputations. Such support might be harder to justify for independent healthcare providers and medical facilities with shrinking budgets and margins in the face of healthcare reform.
Shawn Purifoy, MD, a family medicine practitioner in Malvern, Ark., expressed his concern succinctly in The New York Times. “I can’t advertise on NBC [but] CVS can,” he noted.
While further consolidation within independent clinical laboratories and hospitals might help to fend off this latest trend, it remains essential that medical laboratories and other service providers continue to optimize efficiency and educate both physicians and payers on the value of their services—particularly those services offered at higher margins or common to menus across a range of service providers.
—Jon Stone
Related Information:
With 8k More Physicians than Kaiser, Optum Is ‘Scaring the Crap Out of Hospitals’
30,000 Strong and Counting, UnitedHealth Gathers a Doctor Army
CVS’s Megadeal to Change U.S. Health Care Faces Stiff Challenges
Updated Physician Practice Acquisition Study: National and Regional Changes in Physician Employment 2012–2016
The Disappearing Doctor: How Mega-Mergers Are Changing the Business of Medical Care
UnitedHealth’s Optum to Buy DaVita Medical Group for $4.9B: 6 Things to Know
UnitedHealth Buys Large Doctors Group as Lines Blur in Healthcare
UnitedHealth’s Optum to Buy DaVita Medical Group for $4.9 Billion
UnitedHealth Is Buying a Major Doctor Group on the Heels of the CVS-Aetna Deal
DaVita Medical Group to Join Optum
Jun 27, 2018 | Digital Pathology, Instruments & Equipment, Laboratory Instruments & Laboratory Equipment, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Laboratory Testing, Management & Operations
Using GPIIb/IIIa inhibition, and ion chelation, researchers have developed a “universal” method for preserving blood up to 72 hours while keeping it viable for advanced rare-cell applications
Through microfluidics and automation, clinical laboratories and anatomic pathologists have been able to detect ever-smaller quantities of biomarkers and other indicators of chronic disease.
However, preserving sample quality is an essential part of analytical accuracy. This is particularly true in precision oncology and other specialties where isolating rare cells (aka, low abundance cells), such as circulating tumor cells (CTCs), is a key component to obtaining information and running diagnostics.
Publishing their finding in Nature, researchers at Massachusetts General Hospital Center for Engineering in Medicine (MGH-CEM) have developed a whole blood stabilization method that is ideal for rare-cell applications, and which preserves sample integrity for up to 72 hours.
Should further testing validate their findings and methodology, this change could allow greater use of central laboratories and other remote testing facilities that previously would not be available due to distance and sample travel time.
Keeping Blood Alive Is Not Easy
“At Mass. General, we have the luxury of being so integrated with the clinical team that we can process blood specimens in the lab typically within an hour or two after they are drawn,” stated lead author Keith Wong, PhD, former Research Fellow, MGH-CEM, and now Senior Scientist at Rubius Therapeutics, Boston, in a Mass General press release. “But to make these liquid biopsy technologies routine lab tests for the rest of the world, we need ways to keep blood alive for much longer than several hours, since these assays are best performed in central laboratories for reasons of cost-effectiveness and reproducibility.”
Study authors Wong and co-lead author Shannon Tessier, PhD, Investigator at MGH-CEM, noted that current FDA-approved blood stabilization methods for CTC assays use chemical fixation—a process that can result in degradation of sensitive biomolecules and kill the cells within the sample.
Without stabilization, however, breakdown of red cells, activation of leukocytes (white blood cells), and clot formation can render the results of analyzing a sample useless, or create issues with increasingly sensitive equipment used to run assays and diagnostics.
“We wanted to slow down the biological clock as much as possible by using hypothermia, but that is not as simple as it sounds,” says Tessier. “Low temperature is a powerful means to decrease metabolism, but a host of unwanted side effects occur at the same time.”
Researchers started by using hypothermic treatments to slow degradation and cell death. However, this created another obstacle—aggressive platelet coagulation. By introducing glycoprotein IIb/IIIa inhibitors, they found they could minimize this aggregation.
Keith Wong, PhD (left), a former Research Fellow, MGH-CEM, and now Senior Scientist at Rubius Therapeutics in Boston; and Shannon Tessier, PhD (right), Investigator at MGH-CEM, co-authored a study to develop a whole blood stabilization method that preserves sample integrity for up to 72 hours, making it possible to transport blood specimens further distances to central clinical laboratories for processing. (Photo copyrights: LinkedIn.)
Prior to microfluidic processing of their test samples, researchers applied a brief calcium chelation treatment. The result was efficient sorting of rare CTCs from blood drawn up to 72 hours prior, while keeping RNA intact and retaining cell viability.
“The critical achievement here,” says Tessier, “Is that the isolated tumor cells contain high-quality RNA that is suitable for demanding molecular assays, such as single-cell qPCR, droplet digital PCR, and RNA sequencing.”
Their testing involved 10 patients with metastatic prostate cancer. Sample integrity was verified by comparing CTC analysis results between fresh samples and preserved samples from the same patients using MGH-CEM’s own microfluidic CTC-iChip device.
Results showed a 92% agreement across 12 cancer-specific gene transcripts. For AR-V7, their preservation method achieved 100% agreement. “This is very exciting for clinicians,” declared David Miyamoto, MD, PhD, of Massachusetts General Hospital Cancer Center in the press release. “AR-V7 mRNA can only be detected using CTCs and not with circulating tumor DNA or other cell-free assays.”
Methodology Concerns and Future Confirmations
“Moving forward, an extremely exciting area in precision oncology is the establishment of patient-specific CTC cultures and xenograft models for drug susceptibility,” the study authors noted. “The lack of robust methods to preserve viable CTCs is a major roadblock towards this Holy Grail in liquid biopsy. In our preliminary experiments, we found that spiked tumor cells in blood remain highly viable (>80%) after 72 hours of hypothermic preservation.”
Despite this, they also acknowledge limitations on their current findings. The first is the need for larger-scale validation, as their testing involved a 10-patient sample group.
Second, they note that further studies will be needed to “more completely characterize whole-transcriptome alterations as a result of preservation, and to what extent they can be stabilized through other means, such as further cooling (e.g., non-freezing sub-zero temperatures) or metabolic depression.”
Researchers also note that their approach has multiple advantages for regulatory approval and further testing—GPIIb/IIIa inhibitors are both low-cost and already approved for clinical use, implementation requires no modification of existing isolation assays, and cold chain protocols are already in place allowing for easy adaptation to fit the needs of pathology groups, medical laboratories, and other diagnostics providers handling samples.
While still in its early stages, the methods introduced by the researchers at MGH-CEM show potential to allow both the facilities collecting samples and the clinical laboratories processing them greater flexibility and increased accuracy, as high-sensitivity assays and diagnostics continue to power the push toward personalized medicine and expand laboratory menus across the industry.
—Jon Stone
Related Information:
Whole Blood Stabilization for the Microfluidic Isolation and Molecular Characterization of Circulating Tumor Cells
Improved Blood Stabilization Should Expand Use of Circulating Tumor Cell Profiling
Genentech Scientists Zero In on “Liquid Biopsies” as a Way to Replace Tissue Biopsies in Breast Cancer
University of Michigan Researchers Use “Labyrinth” Chip Design in Clinical Trial to Capture Circulating Tumor Cells of Different Cancer Types
Super-Fast Microscope Captures Circulating Tumor Cells with High Sensitivity and Resolution in Real Time
Jun 25, 2018 | Compliance, Legal, and Malpractice, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Laboratory Testing, Management & Operations, Webinars
Operational efficiencies, strong management teams, and successful outreach business are key clinical laboratory success in today’s era of mergers and acquisitions
Fierce economic headwinds are taking aim at the entire pathology industry, as shrinking Medicare reimbursement rates, shifting federal regulations and compliance requirements, and changing care models squeeze profit margins and threaten valuations of most clinical laboratories and anatomic pathology groups.
The reimbursement rate changes mandated by the Protecting Access to Medicare Act of 2014 (PAMA), which took place January 1, 2018, loom as the most immediate danger to the long-term financial health and viability of medical diagnostic laboratories.
“Medicare reimbursement rates to labs providing essential testing services are estimated to drop by $670 million this year, and additional reductions scheduled for 2019 and 2020 will cut payments by nearly 30% for many tests critical to caring for Medicare beneficiaries,” noted Julie Khani, President of the American Clinical Laboratory Association (ACLA), in “Patient Care Is Put to the Test as Clinical Laboratory Services Are Hit With a One-Two Punch in Rate Cuts,” an article she penned for the ACLA website.
“For some labs, such as rural hospitals and labs serving patients in skilled nursing facilities—which already have significantly higher operating costs—this could be a death knell that would precede a devastating loss of patient access to necessary testing services,” she concluded.
Assessing Financial Solvency to Survive Impending Mergers and Acquisitions
The ACLA has filed a lawsuit against the U.S. Department of Health and Human Services (HHS) for what it called a “flawed and misguided” implementation of the law. For now, however, the roll out of reimbursement rates cuts will continue, an ACLA blog post reports.
As a result, post-PAMA pressures combined with other factors are forcing clinical laboratory leaders to consider their strategic options, including:
- Reorganizing;
- Restructuring;
- Merging/consolidating with another laboratory; and,
- Selling.
As GenomeWeb pointed out prior to PAMA’s implementation, “All clinical labs in the U.S.—from the largest reference labs to in-hospital labs to physician-practice labs—will be touched by the changes to varying degrees.” The future, GenomeWeb predicts, “may be a market with fewer independently operated small and regional labs, as well as fewer outreach labs owned by hospitals. Instead, such operations could become part of [Quest Diagnostics’] and LabCorp’s networks.”
This changing landscape means laboratories need to be assessing their financial solvency and maximizing their valuation even if they are not currently candidates for either side of the merger and acquisition equation. Failing to anticipate and respond to unfolding changes could leave laboratory executives courting a financial reckoning.
Pathway to Driving Valuation for Your Laboratory
To help clinical laboratory owners, CEOs, administrators, and pathologists understand the forces driving today’s mergers, acquisitions, and joint ventures—and to guide their future decision-making—Dark Daily is presenting a new webinar at 1:30 p.m. EASTERN on Thursday, June 28, 2018, titled, “The Pathway to Driving Valuation for Your Laboratory: Your Roadmap to Achieving Success, and How to Sustain Growth Despite a Changing Lab Environment.”
One speaker is Vicki DiFrancesco, Chief Strategy Officer, XIFIN, San Diego. DiFrancesco has an insider’s understanding of mergers and acquisitions and 25 years of executive leadership experience. Prior to joining XIFIN, DiFrancesco served as President and CEO of Pathology Inc., the West Coast’s premier women’s health laboratory, which was acquired by LabCorp in March 2016.
The other speaker is David Nichols, Founder and President at Nichols Management Group (NMG) in York Harbor, Maine. NMG provides laboratory consulting services for healthcare organizations. Since its founding in 1988, NMG has provided expertise in improving overall effectiveness and in implementing such strategies as sales force development, market planning, compliance/financial auditing, and in selected cases, hands-on management responsibilities by working onsite with senior personnel in each area of need.
During their 90-minute presentation, you will learn:
- Market factors creating financial challenges for your laboratory;
- How revenue compression and compliance issues are driving merger and acquisition activity;
- Steps to optimizing your lab’s reimbursements, a key to improving financial performance;
- Revenue cycle management’s importance as a valuation driver;
- Strategies to significantly improve your market position;
- Components of an effective compliance program and why compliance is so important to laboratory valuation;
- Value drivers that attract buyers, such as profitable growth, a strong compliance program, competent management teams, EBITDA, cash flow and gross margins; and,
- Specific challenges that should be addressed in any merger or consolidation plan.
David Nichols (left), Founder and President at Nichols Management Group (NMG); and Vicki DiFrancesco, Chief Strategy Officer, XIFIN, will share vital insights and share critical strategies that clinical laboratories can immediately use to drive valuations and prepare for current and future financial challenges. (Photo copyright: Dark Daily.)
To register for this critical webinar, use this link (or copy and paste this URL into your browser: https://www.darkdaily.com/product/the-pathway-to-driving-valuation-for-your-laboratory-your-roadmap-to-achieving-success-and-how-to-sustain-growth-despite-a-changing-lab-environment/.)
Despite the financial pressure on many existing laboratories, the medical laboratory industry continues to play a vital role in the healthcare system, with clinical laboratory tests guiding more than 70% of all medical decisions made by healthcare providers, according an ACLA fact sheet.
The industry also contributes more than $100 billion in annual economic impact and produces more than 622,400 jobs. While the role of diagnostic laboratories will continue to grow in an era of personalized medicine, only laboratories that optimize their strategic position in response to the changes taking place may be left standing when the predicted industry consolidation is complete.
—Andrea Downing Peck
Related Information:
The Pathway to Driving Valuation for Your Laboratory: Your Roadmap to Achieving Success, and How to Sustain Growth Despite a Changing Lab Environment
Patient Care Is Put to the Test as Clinical Laboratory Services Are Hit with a One-Two Punch in Rate Cuts
ACLA PAMA Lawsuit Complaint Against CMS
Recent NILA Report Highlights Harmful Impacts of Misguided PAMA Implementation on Labs and Seniors
The PAMA Effect: Consolidation of Clinical Labs Expected as Legislation Set to Take Effect
Conference Ends with Optimistic Outlook for Laboratories
Clinical Laboratory Testing: Life Saving Medicine Starts Here
Jun 22, 2018 | Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Laboratory Testing, Managed Care Contracts & Payer Reimbursement, Management & Operations, Webinars
As PAMA brings estimated Medicare reimbursement cuts of up to 30% over the next three years to a range of typically high-volume tests and diagnostics, medical laboratories that wish to stay competitive must understand the needs of managed care payers and learn how to optimize collections, reduce denials, and communicate value effectively or risk their financial health
In what experts have called the biggest financial upheaval for the healthcare industry in three decades, the onset of new Medicare Part B Clinical Laboratory Fee Schedule (CLFS) reductions based on the Protecting Access to Medicare Act (PAMA)—and their continued decrease over coming years—places the financial integrity of clinical laboratories and anatomic pathology groups of all sizes in peril.
Recent years have seen major shifts in consolidation, automation, and efficiency analysis to help streamline both workflows and cashflows. However, the threat from the current and coming cuts to Medicare lab test prices will be particularly acute for smaller independent laboratories and hospital/health system lab outreach programs. These labs will continue to feel added strain due to reduced reimbursement across 25 of the most common tests billed to Medicare.
The Centers for Medicare and Medicaid Services (CMS) and the Office of the Inspector General (OIG) predict that the cuts enacted on January 1, 2018, alone will result in Medicare payments to labs falling by a total of $670 million just in 2018. This amount is almost 70% greater than the $400 million in fee cuts the federal agency had predicted in statements it published last year. (See Dark Daily, “For Top 20 Tests, CMS to Cut Payment by 28% in 2018-2020,” October 9, 2017.)
And, that doesn’t account for subsequent cuts, which are estimated to reach nearly 30% over the next three years.
Cost of Service Disparities/In-Network Status Further Impact Clinical Labs
If the CLFS reductions weren’t enough, labs face another threat—managed care and commercial payers aligning with big national laboratories and narrowing networks in an attempt to lower costs and provide maximum return for both patients and shareholders. For smaller and independent laboratories, this represents a double threat.
In the first situation, larger laboratories can offer services at lower costs due to increased automation, batch processing, and other scale advantages. This means that while the lower CLFS rates will impact the financial integrity of larger labs, the actual margin lost is less than that of smaller laboratories and facilities that face higher costs to perform tests and provide services.
Compounding the situation, commercial and managed care payers searching out the best value for their patients and shareholders tend to narrow their networks by excluding many independent clinical lab companies and hospital lab outreach programs, amplifying this inherent disparity and skewing the advantage away from independent providers yet again.
Higher cost providers without a clear understanding of promoting their value to payers could have trouble obtaining in-network status. Yet, failing to obtain in-network status may reduce overall test quantities, further raise prices, and make smaller labs less competitive with larger national laboratories—a dangerous cycle with today’s competitive laboratory landscape.
Shifting Focus and Optimizing Managed Care Reimbursements
As the financial stability of Medicare reimbursements wanes, it is imperative that laboratories look to new methods to further increase efficiency and stabilize cashflows. Once a smaller portion of laboratory revenue, managed care organizations and commercial payers will be of increased importance as overall reimbursement rates continue to shrink in the face of healthcare reform and value-based care.
Unfortunately, many laboratories assume that by simply providing requested services they are due reimbursement from commercial payers. In the age of value-based care this is no longer the case and considered an outdated mindset—one that can lead to endless audits, increased recoupment costs, and which could drastically impact successful collection from managed care and commercial payers. (See Dark Daily, “Payers Hit Medical Laboratories with More and Tougher Audits: Why Even Highly-Compliant Clinical Labs and Pathology Groups Are at Risk of Unexpected Recoupment Demands,” October 16, 2015.)
Special June 26 Webinar: Improving Managed Care Reimbursement Efficiency
Understanding not just what these payers are attempting to achieve for their organization—but also how they structure requirements and processes to support their goals—is an essential element of succeeding in this previously smaller share of the marketplace.
For those interested in learning more about critical concerns regarding managed care payers in the post-2018 CLFS landscape, Pathology Webinars is hosting a 90-minute webinar on Tuesday, June 26, 2018, at 2:00 PM Eastern.
The webinar will include presentations from two experts on a range of topics including:
- Actionable steps to absorb the loss of Medicare revenue due to the impact of the 2018 CLFS reductions;
- How managed care payers process network status and payments;
- Who in the managed care chain of command should receive your value proposition;
- How to better align your value propositions, policies, and workflows with the requirements of managed care and commercial payers; and,
- Understanding the roles managed care payers expect clinical laboratories and anatomic pathologists to play in managing and reducing unnecessary testing.
The first speaker, Frank Dookie, MBA, will provide an inside look at:
- How managed care payers function;
- Their requirements and workflows; and,
- What they look for when considering network status for a laboratory.
Dookie is a laboratory professional who has worked on the payer side for 28 years. He is passionate about the role that diagnostics play or can play in healthcare, and has spent his career working for instrumentation providers, clinical laboratories, the intermediary space between laboratories and managed care companies, and managed care companies.
The second speaker, Michael Snyder, will bring the entire payment process into sharp focus. He will cover:
- Optimizing the collection process;
- Identifying the purpose of each step, each review, and each team member involved; and,
- Critical points laboratories must address to ensure payment.
Snyder is the Senior Vice President of Network Operations for Avalon Healthcare Solutions, LLC, a firm that provides comprehensive benefit management services to the health plan industry and has more than 30 years’ experience in clinical laboratory management.
Frank R. Dookie, MBA (left), Contracting Executive with a major managed care company in Woodbridge, N.J.; and Michael Snyder (right), Senior Vice President with Avalon Healthcare Solutions in Flemington, N.J., will provide critical insights and actionable details for clinical laboratory and anatomic pathology group leaders who want to ensure future revenues.
An Essential Opportunity to Improve Your Reimbursements
This critical webinar offers anatomic pathology groups and medical laboratory managers essential information and actionable next steps to immediately leverage the potential of managed care payers. Additionally, it provides insider insight to laboratories straining to retain financial integrity as reduced reimbursements and increased regulatory burdens strain budgets and cashflows.
To register for the webinar and see further details about discussion topics, use this link (or copy and paste the URL into your browser: https://pathologywebinars.com/current/managed-care-an-insiders-guide-to-improving-your-reimbursement-efficiency-with-strategies-that-work-626/).
As further Medicare payment reductions over the next three years drive reimbursements even lower, understanding how to capture the positive attention of payers—while working within the rules and policies driving their reimbursement decisions—will be an essential element of successful laboratory management and growth. Register now!
—Jon Stone
Related Information:
Continued ‘Aggressive Audit Tactics’ by Private Payers and Government Regulators Following 2018 Medicare Part B Price Cuts Will Strain Profitability of Clinical Laboratories, Pathology Groups
Payers Hit Medical Laboratories with More and Tougher Audits: Why Even Highly-Compliant Clinical Labs and Pathology Groups Are at Risk of Unexpected Recoupment Demands
Tougher Lab Regulations and New Legal Issues in 2018: More Frequent Payer Audits, Problems with Contract Sales Reps, Increased Liability for CLIA Lab Directors, Proficiency Testing Violations, and More
Coming PAMA Price Cuts to Medicare Clinical Lab Fees Expected to Be Heavy Financial Blow to Hospital Laboratory Outreach Programs
What Every Lab Needs to Know about the Medicare Part B Clinical Laboratory Price Cuts That Take Effect in Just 157 Days, on Jan. 1, 2018
Medicare Clinical Laboratory Price Cuts and Cost-cutting Predicted to be 2018’s Two Biggest Trends for Medical Laboratories in the United States
