Negative margins, a shift to nontraditional care sites, and an increasingly complex logistics environment should prompt clinical labs and anatomic pathology groups to quickly evaluate shipping costs and data analysis
In September, American Hospital Association (AHA) leaders and Kaufman Hall healthcare analysts posted a particularly dismal status update for US hospitals, saying more than half are projected to operate in negative margins for the rest of the year.
As a result, hospital and healthcare leaders are likely facing difficult decisions around traditional operations while actively seeking new partnerships to increase reach and impact of their hospital services, including clinical lab and pathology testing.
Market pressures and revenue opportunities, including nontraditional clinical trial designs, hospital-at-home programs, and innovative care management for patient cohorts, are reshaping healthcare around the US. These and other ensuing shifts will add complexity on top of already burgeoning costs to the physical logistics of clinical laboratory testing and pathology services.
Traditional and Nontraditional: Conduct Assessments of Lab Shipping Costs and Logistics Management
Analyzing data of dynamic logistical inputs will support informed service line decision-making and can ultimately lead to cost savings for clinical labs and health systems, according to Jeff Ledbetter, regional consultant for Cardinal Health OptiFreight Logistics. Ledbetter monitors cost-per-shipment models and trends in service modes for a variety of healthcare providers, networks, and reference laboratories.
“What I’ve seen in the marketplace is that labs have historically built a reliance on physician offices across the country,” Ledbetter explained in an interview with Dark Daily. “What is changing is that labs have diversified their client base and who they now consider customers.” Some of the new inputs include individual consumers, corporations, and schools, in addition to integrated delivery networks (IDNs) and IDN-like entities.
For Dark Daily, regional consultant for Cardinal Health Jeff Ledbetter explained three data trends guiding cost-saving clinical laboratory logistics strategies and benchmarking. These will be important as labs diversify their client base and who they now consider customers. (Photo copyright: Jeff Ledbetter.)
The problem, Ledbetter said, is that lab executives are not able to see the profitability of their customer types and cannot achieve operational efficiencies because of the more complex and dynamic inbound and outbound shipment flow.
Ledbetter describes three ways to analyze lab costs:
1. Cost-per-pack benchmarking,
2. Ratio of test kit outflow to inflow, and
3. Visibility to shipments for workflow management and staffing availability.
With multiple transportation components for each test performed, “a hidden cost element is wasted test kits,” Ledbetter said. “We look at the ratio of specimens sent out but not returned to the lab. Each lab kit passes through multiple modes of transportation. Kits that are deployed but not returned to the lab become waste, resulting in sunken cost. When I talk to reference lab leaders, they understand this is an issue, but they don’t know how to manage it.” Ledbetter points to OptiFreight Logistics’ robust analytics as a critical element to help manage the waste. To increase profitability, the lab can adjust to whom and how it deploys kits to optimize the number of kits with specimens that return to the lab for testing.
A related issue is understanding the ratio of outflow to inflow for identifying profitability of customers. “Managing customers is now shaped by data points such as productive and profitable pickups,” Ledbetter said. For example, a returned shipment with five specimens is more profitable than a shipment with only one specimen.
“We also look at efficiencies that consider the number of lab employees needed to accession specimens, and how delivery timing can maximize efficiency of the testing operation,” Ledbetter said. “This is based on the mode of service and available delivery time.”
The starting point, Ledbetter said, is to gain continuous data-driven insights into the best possible service modes and specimen pack timing that will improve the lab’s operational efficiency, ease staffing constraints, and correlate with business-critical key performance indicators. Amid an ongoing shift to nontraditional care sites, this level of visibility is critical, he added.
Aggressive Adoption of Decentralized Clinical Trial Services Expected
Following a Clinical Operations Roundtable, global management consulting firm McKinsey and Company explored the acceleration of decentralized clinical trials post-pandemic. Experts there define that model as a clinical trial centered around patient needs that improves the patient experience. By design, decentralized clinical trials will use one or more “decentralization elements” based on suitability for their end points, patient populations, and treatments.
“Clinical-trial sponsors creating hybrid protocols are drawing from the menu of decentralization services and technology interventions, such as remote monitoring of vitals, mobile clinics, and home visits,” wrote Life Sciences Practice leader Gaurav Agrawal and others for the McKinsey and Company report, “No Place Like Home? Stepping Up the Decentralization of Clinical Trials.”
“Traditional site visits will still be needed for complex procedures and specialized assessments, such as screenings and magnetic resonance imaging. So smart, hybrid trial designs will make other touchpoints virtual or closer to the patients—for instance, through mobile clinics and primary-care physicians—whenever possible,” states the McKinsey report. The graphic below shows potential trends that will be of interest to hospital and IDN executives, clinical laboratory leaders, and anatomic pathology group administrators.
According to McKinsey and Company research, clinical trial investigators anticipate a threefold increase in remote patient interactions compared to before the pandemic, although that comfort level is lower than during the peak of the pandemic. (Source: McKinsey and Company and Nature Reviews Drug Discovery.)
Since specific laboratory tests mark key points within the care continuum, decentralization creates a more dynamic environment for specimen logistics, making visibility, data analytics, and predictive technology around lab deliveries essential for maximum profitability.
Hospital at Home and Moving Lab to Home
As the healthcare industry shifts to the home as a site of care, legacy patient-provider relationships and business will face disruption, executives at The Chartis Group wrote in a blog post published in September.
“Health systems would do well to consider how they are positioned to deliver care at home as an integrated part of their care models,” Chartis wrote in its blog. “This may include evaluating legacy home health assets and programs, while also rapidly evaluating the business case for launching a hospital-at-home program as part of their broader strategic and operational plans.”
Although outpatient services have taken to the flavor of innovation, hospital-at-home models may not be easy. “Simply extending the reach of hospitals into patients’ homes is unlikely to allow the promising scale or cost savings stakeholders hope for from home hospitalization programs,” according to a recent Health Affairs piece that simplifies many of the issues, such as top-down and bottom-up payment approaches and transformation challenges of which include diagnostics, monitoring, pharmaceuticals, and nursing services among many.
Regardless, changes to hospital operations in the coming year may be inevitable as a result of cost and payer pressures. In the meantime, patient cohorts appear to be a starting point for moving lab to home and potentially stopping the bleeding.
In Arizona, Sonora Quest Laboratories announced an “exclusive service” that is targeted to those living with chronic conditions and cognitive decline. Collaborating with remote healthcare service provider Getlabs in Los Angeles (for blood sample collection services) and Raleigh, NC-based uMETHOD (a precision medicine care plan provider), the service provides on-demand home lab collection, diagnostics, and individualized assessments to help slow early-stage progression of cognitive decline.
The Sonora Quest-Getlabs-uMethod triad is just one example of mobile and remote clinical laboratory services at work in various parts of the country, as The Dark Report recently explained. In a pilot trial of at-home phlebotomy services, laboratory order completion rates for patients jumped up 22.5%—this is significant because many factors can lead patients to discontinue lab orders, such a driving distances, time wasted sitting in a lab’s waiting room, or the inability to travel.
All of these moves describe strategic actions healthcare providers are taking to make existing and new services more accessible and possibly more efficient. Demand for shifting from traditional to nontraditional sites for care will continue to confront clinical labs and anatomic pathology groups with both opportunities and dilemmas. Forward-looking hospital, health system, and reference lab leaders will leverage logistics technologies.
Damages sought include reimbursement of costs for voided clinical laboratory tests as well as an injunction ‘to prevent Theranos and Walgreens from engaging in further misrepresentations and unfair conduct’
Theranos founder and ex-CEO Elizabeth Holmes and ex-COO/President Ramesh “Sunny” Balwani have been found guilty on multiple counts of fraud and now await sentencing in federal criminal court. But the pair’s legal entanglements are not yet over. A class-action lawsuit filed on behalf of patients who purchased Theranos clinical laboratory testing services between November 2013 and June 2016 is weaving its way through the legal system.
“The lawsuit claims, among other things, that these blood testing services were not capable of producing reliable results, that the defendants concealed the blood testing services’ unreliability, that Walgreens knew that the blood testing services were unreliable and not market-ready, that the defendants conspired to commit fraud on consumers, that Theranos’ ‘tiny’ blood testing technology (blood drawn with finger pricks) was still in development, and that the customers who were subject to ‘tiny’ Theranos blood draws by Walgreens employees gave their consent to those blood draws under false pretenses,” the news release notes.
If the defendants are found liable, plaintiffs, who could number in the hundreds of thousands, could receive money or benefits. The Mercury News reported that Arizona’s attorney general had identified 175,000 consumers who purchased tests from Theranos/Walgreens at an average cost of $60 per test.
A class-action lawsuit filed on behalf of patients who purchased Theranos blood testing services at a Walgreens or Theranos location includes as defendants company founder/CEO Elizabeth Holmes (left), ex-Theranos President/COO Ramesh “Sunny” Balwani (right), as well as Theranos, Inc., Walgreens Boots Alliance, and Walgreens Arizona Drug Company. The trial is expected to begin in 2023. It will no doubt draw the attention of clinical laboratory directors and pathologists who followed the Holmes/Balwani fraud cases very closely. (Photo copyright: The Wall Street Journal.)
Federal Court Upholds Class Certification
The Top Class Actions news site notes that in 2021 Walgreens and Balwani unsuccessfully appealed to get the class-action lawsuit against them decertified.
Class: All purchasers of Theranos testing services, including consumers who paid out-of-pocket, through health insurance, or through any other collateral source between November 2013 and June 2016.
Arizona Subclass: All purchasers of Theranos testing services in Arizona between November 2013 and June 2016.
California Subclass: All purchasers of Theranos testing services in California, between September 2013 and June 2016.
Walgreens Edison Subclass: All purchasers of Theranos testing services who were subjected to “tiny” blood draws (finger pricks) by a Walgreens employee between November 2013 and March 2015.
“The lawsuit seeks damages, including reimbursement of the amounts paid by consumers for the voided tests, as well as an injunction to prevent Theranos and Walgreens from engaging in further misrepresentations and unfair conduct,” the Lieff Cabraser website states.
In its notice to potential members of the class action, JND Legal Administration states the “defendants contend that they did not do anything wrong, and they are not liable for any harm alleged by the plaintiffs.” In addition, the notice points out, “There is no money available now, and there is no guarantee that there will be.”
Where could money come from to pay plaintiffs? Likely not from Theranos or Holmes. Though Theranos reached a peak valuation of $9 billion in 2014, it owed at least $60 million to unsecured creditors when the company was dissolved in 2018, USA Today reported. After turning over its assets and intellectual property, Theranos anticipated having only $5 million to distribute to creditors.
And Forbes reported that Holmes’ net worth dropped from $3.6 billion to $0 in 2016.
However, Balwani, who netted nearly $40 million in 2000 when he sold shares of software company Commerce One, has an estimated net worth of $90 million, according to Wealthypipo. As of 2022, Walgreens Boots Alliance is ranked number 18 on the Fortune 500 rankings of the largest United States corporations by total revenue.
The Arizona Theranos Litigation website points out that the suit does not seek damages or other relief for personal injury, emotional distress, retesting costs, or medical care costs. Any Theranos/Walgreens customer intent on pursuing such legal action would need to exclude themselves from the class action case and proceed with separate litigation. The deadline to opt out of the class-action lawsuit is September 12, 2022.
And so, though clinical laboratory directors and pathologists may have thought the saga of Theranos ended following Balwani’s conviction, it apparently continues. It is anyone’s guess what is to come.
Healthcare industry watchdog Group Leapfrog says that if CMS suppresses the data “all of us will be in the dark on which hospitals put us most at risk”
For some time, hospitals and clinical laboratories have struggled with transparency regulation when it comes to patient outcomes, test prices, and costs. So, it is perplexing that while that Centers for Medicare and Medicaid Services (CMS) pushes for more transparency in the cost of hospital care and quality, the federal agency also sought to limit public knowledge of 10 types of medical and surgical harm that occurred in hospitals during the COVID-19 pandemic.
And even though the CMS announced in its August 1 final rule (CMS-1771-F) that it was “pausing” its plans to suppress data relating to 10 measures that make up the Patient Safety and Adverse Events Composite (PSI 90), a part of the Hospital-Acquired Condition (HAC) Reduction Program, it is valuable for hospital and medical laboratory leaders to understand what the federal agency was seeking to accomplish.
According to USA Today, medical complications at hospitals such as pressure ulcers and falls leading to fractures would be suppressed in reports starting next year. Additionally, CMS “also would halt a program to dock the pay of the worst performers on a list of safety measures, pausing a years-long effort that links hospitals’ skill in preventing such complications to reimbursement,” Kaiser Health News reported.
The proposed rule’s executive summary reads in part, “Due to the impact of the COVID-19 PHE on measure data used in our value-based purchasing (VBP) programs, we are proposing to suppress several measures in the Hospital VBP Program and HAC Reduction Program … If finalized as proposed, for the FY 2023 program year, hospitals participating in the HAC Reduction Program will not be given a measure score, a Total HAC score, nor will hospitals receive a payment penalty.”
In a fact sheet, CMS noted that its intent in proposing the rule was neither to reward nor penalize providers at a time when they were dealing with the SARS-CoV-2 outbreak, new safety protocols for staff and patients, and an unprecedented rise in inpatient cases.
“We want the public to have complete trust in the data and will only be providing data we have determined has a high confidence of credibility and accuracy,” said CMS Chief Medical Officer Lee Fleisher, MD (above), Director of the CMS Center for Clinical Standards and Quality in a statement, Axios reported. Clinical laboratory leaders would find it more difficult to compare the performance of their hospitals against peer hospitals, should this proposed rule take effect as written. (Photo copyright: Lee Fleisher.)
Groups Opposed to the CMS Proposal
Like healthcare costs, quality data need to be accessible to the public, according to a health insurance industry representative. “Cost data, in the absence of quality data, are at best meaningless, and at worst, harmful. We see this limitation on collection and publication of data about these very serious safety issues as a step backward,” Robert Andrews, JD, CEO, Health Transformation Alliance, told Fortune.
The Leapfrog Group, a Washington, DC-based non-profit watchdog organization focused on healthcare quality and safety, urged CMS to reverse the proposal. The organization said on its website that it had collected 270 signatures on letters to CMS.
“Dangerous complications, such as sepsis, kidney harm, deep bedsores, and lung collapse, are largely preventable yet kill 25,000 people a year and harm 94,000,” wrote the Leapfrog Group in a statement. “Data on these complications is not available to the public from any other source. If CMS suppresses this data, all of us will be in the dark on which hospitals put us most at risk.”
Leah Binder, Leapfrog President/CEO, told MedPage Today she is concerned the suppression of public reporting of safety data may continue “indefinitely” because CMS does not want “to make hospitals unhappy with them.”
AHA Voices Support
Meanwhile, the American Hospital Association noted that the CMS “has made this proposal to forgo calculating certain hospital bonuses and penalties due to the impact of the pandemic,” Healthcare Dive reported.
“We agree with CMS that it would be unfair to base hospital incentives and penalties on data that have been skewed by the unprecedented impacts of the pandemic,” said Akin Demehin, AHA Senior Director, Quality and Safety Policy, in a statement to Healthcare Dive.
Though CMS’ plans to limit public knowledge of medical and surgical complications have been put on hold, medical laboratory leaders will want to stay abreast of CMS’ next steps with this final rule. Suppression of hospital harm during a period of increased demand for hospital transparency could trigger a backlash with healthcare consumers.
No explanation for the delay was provided by court after nine weeks of testimony in the prosecution of the former clinical laboratory executive
Former Theranos president/chief operating officer Ramesh “Sunny” Balwani’s often-delayed fraud trial was scheduled to resume on May 27 with a full day of defense witness testimony. It will now be delayed until June 7.
According to NBC Bay Area, a court assistant announced the delay but did not provide a reason for the postponement. A copy of the clerk’s notice posted on Twitter by Law360 also provided no further details. Pathologists and clinical laboratory managers must now wait several more months to learn what may be next revealed in testimony during this trial.
It is also yet one more delay in Balwani’s trial. His original trial date was January 2022 before being rescheduled for February. The needs for COVID-19 pandemic protocols further delayed the start multiple times until opening arguments began March 22 in a federal court room in San Jose, Calif.
One part of the trial has concluded. On May 20, the government rested its case against Balwani, who faces 12 counts of wire fraud and conspiracy to commit wire fraud while serving as second in command at Theranos, the now defunct Silicon Valley medical laboratory startup.
Former Theranos president and COO Ramesh “Sunny” Balwani (above) faces 12 charges of wire fraud and conspiracy to commit wire fraud while serving as chief operating officer of Theranos, the company that boldly declared it would disrupt the clinical laboratory testing industry. His trial, which began in March in US District Court in San Jose, Calif., is now delayed until June 7, when his defense attorneys will begin their first full day of witness testimony. (Photo copyright: Stephen Lam/Reuters/The New York Times.)
According to The Wall Street Journal (WSJ), nine weeks of testimony in US District Court in San Jose, Calif., included testimony from 24 witnesses. Prosecutors aimed to convince jurors Balwani controlled much of the day-to-day decision-making at Theranos and was a full participant in the fraud scheme.
NBC Bay Area stated prosecutors worked to link Balwani to two key decisions:
The rollout of the failed Edison blood testing device in Walgreens, and
The company’s improper use of the Pfizer logo on a report to Walgreens executives that appeared to validate Theranos’ technology.
Before this latest postponement, Balwani’s attorneys had begun their client’s defense by putting a naturopathic physician from Arizona on the stand. The witness testified to sending more than 150 patients to Theranos and to using the company’s blood tests for herself, the WSJ reported.
Bloomberg reported that prosecutors followed the previous outline used to gain the conviction of Elizabeth Holmes, founder and former CEO of Theranos, with many of the same witnesses from her trial reappearing on the stand to testify in the Balwani trial.
Prosecutors primarily focused their case on the injury to investors, which has angered some former Theranos customers.
“I feel like I belong to a group of people who were on the receiving end of a crime,” said Erin Tompkins—a Theranos customer who testified against both Holmes and Balwani—outside the courthouse shortly after finishing her testimony in the Balwani case, Bloomberg reported.
According to CNBC, Tompkins testified she was misdiagnosed as having HIV after having her blood drawn from a Theranos device at a Walgreens in Arizona.
“Despite the dedication and support of prosecutors, patient witnesses have been treated as peripheral” compared to the investors, Tompkins told Bloomberg. “We were defrauded because we trusted them with our blood and however many dollars for the test. But we weren’t robbed of millions of dollars.”
Susanna Stefanek, editorial manager at Apple Inc. who served on the Holmes jury, told Bloomberg, “[The prosecution] didn’t really prove that these patients were persuaded to get these blood tests by something she said or did, or even the advertising. The connection between Elizabeth Holmes and the patients was not that strong to us.”
Proving Patient Fraud
Michael Weinstein, JD, a former federal prosecutor turned Chair of White-Collar Litigation and Government at Cole Schotz in New Jersey, told Bloomberg that to convict Balwani of patient fraud, prosecutors must prove Balwani knew what was going on inside Theranos and that his misrepresentations caused patients to suffer.
“The government wants to show there was an inconsistency between what he was learning internally versus what he was saying externally,” Weinstein said.
With the Balwani trial likely to conclude this month, clinical laboratory directors and pathologists who have closely followed Theranos’ rise and fall should prepare for the final chapter in the saga.
With Millennials soon to make up the majority of the medical laboratory workforce, it’s only natural that digital networking is gaining momentum at events like the Executive War College
At any hour during the in-person event in New Orleans, attendees scheduled meetups, participants asked questions to conference organizers, and users discussed important clinical laboratory and anatomic pathology topics. All of those interactions occurred within the Whova meeting application, which served as the Executive War College’s virtual guide.
In many ways, widespread use of the meeting app reflects a younger crowd that lives life on mobile phones. It’s not all that different than the changing face of the clinical lab industry as laboratory veterans retire and new faces come in, said Robert Michel, Founder of the Executive War College (EWC) and Editor-in-Chief of Dark Daily’s sister publication The Dark Report.
“It’s clear from the soaring use of our conference’s meeting app at the Executive War College that a younger generation is changing how business is conducted during and after a lab industry conference,” he observed. “Generation X and Millennials are steadily influencing how people network at live events.”
“It is remarkable that, among the 900 attendees at this year’s event, there were more than 750,000 impressions involving the sponsors and companies supporting this year’s conference,” said Robert Michel (above), Editor-in-Chief of Dark Daily and Founder of the Executive War College. “It shows that these attendees are serious about identifying solutions and vendors who can help them solve the various pain points in their laboratories.” (Photo copyright: Dark Intelligence Group.)
88% of Attendees at Executive War College Used the Event App
Usage numbers aggregated during the EWC conference of people who downloaded and used the meeting app speak for themselves:
A large majority of attendees (88%) downloaded the app.
Users sent 11,398 messages in the app.
There were 136 community board discussions posted.
Users created 80 meetups, with 677 people attending those gatherings.
There were 764,745 sponsor impressions in the app (in other words, clicks on a sponsor link or attendees navigating to sponsor material).
What the numbers don’t convey is that the conference’s meeting app was also fun to use!
Butterworth spoke during a special session at the Executive War College. She also took the No. 1 spot on the meeting app’s leaderboard for the event, collecting an impressive 225,900 points. Users gained points for the leaderboard based on activities they completed in the app.
Spirited competition ensued among the leaderboard’s top users, who jockeyed for position as the conference progressed. Plenty of off-topic conversations took place in the app as well, as attendees helped each other navigate New Orleans with tips about restaurants, local cemetery tours, or where to work out.
The leaderboard on the Whova meeting application (above) at the conclusion of this year’s Executive War College on Laboratory and Pathology Management showed the top point gainers. (Photo copyright: Dark Intelligence Group.)
Clinical Laboratory Sponsors Reached Out to Attendees in New Ways
For sponsors and other vendors visiting the conference, the meeting app provided a different avenue to approach attendees beyond the typical networking that takes place during breaks, cocktail receptions, luncheons, and off-site parties.
For example, some sponsors shared white papers or YouTube videos via the app’s community boards or asked questions about topics of interest. Additionally, sponsors could respond directly to queries from attendees.
“At the Executive War College, there was clearly a sustained exchange between vendors looking to engage business development opportunities and participants who have pain points that need to be addressed and are looking for solutions,” Michel said.
The next Executive War College will return to New Orleans on April 25-26, 2023. Click on this link to access early registration discounts.
Potentially increasing the revenue write-off burden for clinical laboratories, HRSA changes, insurance contracting, policy and coverage questions for genetic and genomic testing, and patient relationship disconnects will expose cracks in lab test claim generation and billing processes
Last year it was estimated that collection agencies held $140 billion in unpaid medical bills, in addition to the amount of unpaid bills in pre-collection status, according to a New York Times report. More recently, the American Hospital Association showed that hospitals have provided upwards of $700 billion in uncompensated care since 2000, with over $40 billion in 2019 alone.
Because strategies to collect the unpaid can be complicated and time-consuming, many healthcare organizations, including clinical laboratories, choose to write off these uncollectible bills. Dark Daily and The Dark Report have covered clinical laboratory revenue challenges for many years. In considering the paths forward, software-as-a-service (SaaS) provider FrontRunner Healthcare (FrontRunnerHC) recently provided snapshots into the how and where of improved collections.
Fixing Data Issues that Lead to Forfeited Clinical Laboratory Revenue
The underpinnings of unpaid lab tests are many. In a recent interview with Dark Daily, FrontRunnerHC CEO and Founder John (JD) Donnelly estimated that about one-third of claims (prior to submission) include incorrect or missing patient information, such as insurance policy identification or demographics. These gaps undermine an organization’s ability to get paid. Donnelly estimates that bad-debt write-offs for commercial payer claims average over 15% of charges. To address these challenges, the company’s clean claims SaaS provides “instantaneous” patient insurance, demographic, and financial information.
Whether lower-dollar accessions such as routine testing, or the higher-dollar accessions of genetic tests, uncollected payments add up. Donnelly said that, in 2021, almost one-third of the company’s clients uncovered revenue ranging from $1 million to over $90 million using the software. Donnelly also estimated that the return for clients averages eight times the value of the investment in using the automated solution.
In one example, Sonora Quest, a joint venture between Banner Health and Quest Diagnostics, reported a 10-15% decline in write-offs due to aged claims, a savings of over $1million annually, as published in a case study. “As an aside, in a presentation at the Executive War College last November, they also attributed improvements in patient satisfaction measures to the software, including a 65% decrease in abandoned calls, 28% improvement in their call service factor, and 19% decrease in patient call volumes,” stated Donnelly.
Questions About Cost of Care Likely Cause Stress for Patients
As many know, nonpay issues are problematic not only for lab businesses and anatomic pathology practices but also for patients and their families who have little predictability with their cost of care in the midst of stressful health events. “From the time a patient is registered to the time the claim is paid, there are more challenges than people realize that jeopardize the patient’s experience as well as the provider’s ability to get reimbursed,” Donnelly explained. Medical laboratory administrators have struggled to respond, often by using traditional manual methods such as call centers, or more recently by considering the use of data automation tools.
From the patient payment perspective, Donnelly said, a good strategy is having the ability, on demand, to understand each patient’s specific financial situation and likelihood to pay. For example, using FrontRunnerHC’s software to gauge patients’ propensity to pay and determine financial disposition strategies, lab administrators may choose to offer payment plans or hardship discounts to those falling under the federal poverty level (FPL). Or they may choose to send a collection agency only the past-due accounts for patients who have a low likelihood to pay rather than sending them all past due accounts and focus in-house efforts on the others. One genetics lab client who recently started leveraging these software capabilities “is already seeing more than 5% in incremental net collections,” according to Donnelly.
Further, an estimated 2 million people switch insurance plans each month, reported Axios. “That velocity of change is tough for providers to manage, but it’s critical as insurance eligibility and registration issues are the number one reason for claims denials,” Donnelly said.
For a sense of the magnitude of the problem, “Between 25 and 33 cents of every dollar you spend on medical care pays for health care’s back office,” wrote Dana Miller Ervin in September 2021 for a series of investigations called “The Price We Pay,” published at WFAE 90.7 news in Charlotte, North Carolina. “Every medical provider and laboratory in the country has to negotiate with insurance companies. And since there are 900 health insurers, 6,000 hospitals and more than 100,000 physician practices—many of which are independent of larger systems—there are hundreds of thousands of negotiations.”
New Clinical Laboratory Business Challenges Making News Now
All these issues affecting revenue cycle management (RCM) for independent clinical laboratories, hospital and health system laboratories, and physician office laboratories could be compounded by three emerging issues.
Donnelly said that many lab clients have yet to be reimbursed for COVID tests they have performed, despite their HRSA-required due diligence prior to submitting the claims before the deadline. To avoid additional reimbursement risk, many labs have made the decision to stop testing the uninsured or charge them for it, ABC News reported in late March. As of early April, however, Congress was in discussions to re-fund at least some of the Uninsured Program, reported Politico.
Secondly, and also daunting, are the questions surrounding payer coverage and reimbursement for genetic tests and genomic testing. Thanks to high-deductible health plans (HDHPs), clinical laboratories and anatomic pathology groups increasingly must collect deductibles that may be the full amount of the test – and directly from patients rather than from insurance companies. Therefore, there is more demand from patients to understand their expected cost before the test, Donnelly added.
Problems can arise, for both labs and patients, if they don’t know whether a test has been preauthorized for medical necessity or if they lack accurate insurance information such as in-network or out-of-network. “Getting all the needed and accurate info upfront prior to it going into the LIS [Laboratory Information System] can be a reimbursement game changer,” stated Donnelly.
“For a high complexity, high-throughput diagnostic lab, an efficient workflow is critical,” stated Kyle Koeppler, President of nuCARE Medical Solutions Inc., a FrontRunnerHC client. “Capturing the correct patient demographics and insurance information at patient intake increases the accuracy of every order and makes every process involving patient information much more efficient,” Koeppler shared. “It’s simply too costly to risk having inaccurate information at intake.”
And lest we forget, the Protecting Access to Medicare Act (PAMA) is looming with its reimbursement cuts planned through 2026, and requirements of many labs to report private payer rates on a test-by-test basis. While delayed again, the 2023 PAMA reporting requirements and payment cuts must not be ignored, and planning is needed in order to ensure appropriate reimbursement, Donnelly added.
Addressing Long Payment Cycles for Claims, Dead Ends, and Decreased Collection Rates
The CAQH report cites that data automation resulted in efficiency savings of $122 billion annually for the US healthcare system in 2020 yet “meaningful opportunities for additional savings remain.”
Data automation can reduce the burden of labor-intensive functions in coding, billing, filing appeals, and collecting from payers and patients and, therefore, reduce overall RCM costs. The Council for Affordable Quality Healthcare’s (CAQH) 2020 Index reported, “Considering the millions of times these transactions occur every day, the savings potential across the healthcare economy [from streamlining administrative processes] is significant.”
“One way to avoid potential write-offs is by reworking a claim, but the rework is often left undone,” stated John (JD) Donnelly (above), CEO and Founder of FrontRunnerHC. “The better way to avoid a potential write-off is to ensure you’ve got a clean claim in the first place.” (Photo copyright: FrontRunnerHC.)
The intended outcome is an increase in the total amount of revenue collected from the same number of claims.
To that end, FrontRunnerHC’s software links critical data within its partner ecosystem. This ecosystem includes the well-established credit reporting agencies as well as data available through connected healthcare payers and providers equipped with electronic data interchange (EDI) capabilities. “While an employee may be able to manually work about six accessions in an hour, clients can process approximately 40,000 patients in an hour through software automation, leaving staff to work on more value-added initiatives,” stated Donnelly.
Ideally, missing and inaccurate patient information or insurance verification, which are crucial for producing prompt payments and clean claims, should be corrected before a specimen is collected, Donnelly said. However, if the laboratory is nursing aging accounts receivable (AR), Donnelly advises an audit and cleanup of the AR backlog as a first step to quickly fix information errors and reduce write-offs. “In your AR bucket of $10 million, you may have $3 million that’s collectible or $9.8 million that’s collectible. By leveraging software to clean up what can be collected, clients can go after the money they deserve.”
Improve Collections Through Data Automation While Assisting in the Patient Financial Journey
With the rise of telehealth/telemedicine, healthcare consumerism, and care delivered to nontraditional sites, it makes sense that the idea of the clinical laboratory as a silent partner in healthcare could be changing.
“Could we one day see patients asked for not only their preferred pharmacy but their preferred clinical laboratory as well?” Donnelly pondered and added, “I think the answer is yes, and it’s sooner than many think.”
Understanding the patient’s experience is a key step in providing patient-centered care. Therefore, patient experience programs that originate at clinical laboratories where specimens are processed, but before specimens have been collected, could make these labs more visible in their markets and enable them to capitalize on the advantages of data automation to sustainably improve revenue cycle management.
“The patient’s financial journey which runs in parallel to their clinical journey can get pretty bumpy, and those bumps impact their overall experience as well as the provider’s bottom line,” added Donnelly. “Getting accurate patient information upfront and catching any changes to the information as needed throughout the process helps clients create a smoother patient journey by enabling them to quickly manage through the bumps or eliminate them altogether.”
—Liz Carey
This article was produced in collaboration with FrontRunnerHC.
