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

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Clinical Laboratories and Pathology Groups

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Healthcare Consumers Opting for Lowest Cost Plans on Obamacare Exchanges, Putting Additional Pressures on Marketplace Insurers

Price transparency trend is altering decision-making in many aspects of healthcare and providing lesson for medical laboratory executives

Medical laboratory executives are well aware that price transparency is an increasingly powerful trend in healthcare. Now, as consumers increasingly opt for lower-cost options when making healthcare decisions, the 2010 Affordable Care Act (ACA) provides a notable example of this new reality, with consumers making cost, not choice, their top concern when selecting health plans through the federal health insurance marketplace exchanges.

A recent New York Times article reported that millions of people purchasing insurance in ACA marketplaces are motivated by how little they can pay in premiums, not the size of the physician and hospital networks, or an insurer’s reputation.

This economic reality may help explain why cost containment is a focus of healthcare reform bills currently under discussion in Congress. Whether you agree or disagree with the American Health Care Act (HR1628), the Republican Party’s plan to repeal and replace the ACA, it should be viewed in this broader context: Healthcare consumers are avoiding higher-priced healthcare plans in droves, and millions of younger Americans are finding the cost of coverage a barrier to entry. This is the challenge facing politicians of both parties, whether they will admit it publicly or not.

Obamacare Enrollee Numbers Dropping

A 2015 report by the Office of the Assistant Secretary for Planning and Evaluation in the Department of Health and Human Services, found that “the premium is the most important factor in consumers’ decision-making when shopping for insurance.” In 2014, 64% of people shopping in the marketplaces choose the lowest cost or second lowest cost plan in their metal tier, while 48% did so in 2015.

Perhaps more significantly, millions of people fewer than expected have enrolled in Obamacare. A CNN Money report noted that 10.3-million people enrolled in an ACA marketplace as of mid-March 2017, down from the 12.2-million who signed up for coverage when enrollment ended on January 31.

Mark T. Bertolini (left), Chief Executive of Aetna, and Joseph R. Swedish (right), Anthem’s Chief Executive, testified before a House committee hearing last fall. Major insurers are struggling to find a business model that works in the marketplaces created by the federal healthcare law. (Caption and photo copyright: New York Times/Jacquelyn Martin/Associated Press.)

Those numbers fall short of recent federal government projections for Obamacare and are dramatically less than original estimates. A 2015 report from Congressional Budget Office (CBO) projected marketplace enrollment would increase to 15-million in 2017, before rising to between 18-million and 19-million people a year from 2018 to 2026.

Shortly after Congress passed the ACA, the CBO projected that by 2016, 32-million people would gain healthcare coverage overall.

As a New York Times article pointed out, not only are young and healthy people selecting the cheapest ACA marketplace plans, but also many are opting to risk tax penalties and go without healthcare coverage.

“The unexpected laser focus on price has contributed to hundreds of millions of dollars in losses among the country’s top insurers, as fewer healthy people than expected have signed up,” the New York Times article noted.

ACA Marketplace Unsustainable, Says Anthem Chief Executive

Healthy younger people were expected to join the ranks of the insured and provide an essential counter balance that would offset insurers’ cost of care for newly insured unhealthy people. That prediction also has failed to materialize, forcing major insurance companies to re-evaluate their role in the marketplace or to exit Obamacare completely.

“The marketplace has been and continues to be unsustainable,” stated Joseph R. Swedish, Chairman, President and Chief Executive of Anthem, a Blue Cross and Blue Shield company, in the New York Times article.

In a CNN Money article, Anthem announced it would not participate in Ohio’s Obamacare exchange in 2018 and added that it was evaluating its participation in all 14 states where it currently offers plans.

“A stable insurance market is dependent on products that create value for consumers through the broad spreading of risk and a known set of conditions upon which rates can be developed,” Anthem stated in a press statement. “Today, planning and pricing for ACA-compliant health plans has become increasingly difficult due to the shrinking individual market as well as continual changes in federal operations, rules, and guidance.”

Inaccurate CBO Predictions Impact Clinical Laboratories and Pathology Groups

Anthem is not the only large insurer losing money selling insurance in the marketplaces. Humana and Aetna also this year scaled back their involvement with Obamacare, with Aetna citing $430-million in losses selling insurance to individuals since January 2014.

“Providing affordable, high-quality healthcare options to consumers is not possible without a balanced risk pool,” Aetna Chairman and CEO Mark T. Bertolini declared in an Aetna statement.

How this plays out may matter a great deal to the nation’s clinical laboratories and anatomic pathology practices. As noted above, in 2010, at the time that the Affordable Care Act was passed, the Congressional Budget Office estimated that as many as 32-million additional people would have health insurance in 2016 because of the ACA. The reality is much different. Less than a third of that number have health insurance policies because of the Affordable Care Act.

Pathologists and medical laboratory managers may want to consider how wrong that 2010 CBO estimate of coverage was. If the CBO’s estimate could be off by 66% in 2016, how reliable are CBO estimates when the federal agency scores the various “repeal and replace” bills that Republicans have proposed during the current Congress?

—Andrea Downing Peck

Related Information:

Federal Subsidies for Health Insurance Coverage for People Under Age 65: 2016 to 2026

Cost, Not Choice, Is Top Concern of Health Insurance Customers

Health Plan Choice and Premiums in the 2016 Health Insurance Marketplace

CBO’s Analysis of the Major Health Care Legislation Enacted in March 2010

Obamacare Enrollment Slides to 10.3 Million

Anthem Statement on Individual Market Participation in Ohio

Aetna to Narrow Individual Public Exchange Participation

Startup Oscar Health Finds Big Partners in Ohio’s Cleveland Clinic and Nashville’s Humana Inc.

Two different deals aim to bring a new style of healthcare insurance to individuals and small businesses

Designed to be a new model for health insurance, the much-watched Oscar Health (Oscar), founded in 2012, has just inked deals with both the Cleveland Clinic and Humana, Inc. What makes Oscar worth watching by pathologists and clinical laboratory managers is that the innovative insurer was founded and is run by Gen X and Gen Y (Millennial) executives.

Oscar Health is billed by its Millennial cofounders as a new type of health insurance—one that “curates” or coordinates members’ care with the help of health information technology (HIT) on the Internet, a smartphone app, and personalized services by concierge teams. So, it is interesting for pathologists and medical laboratory leaders to note that New York-based Oscar is partnering, through two different deals, with well-established Cleveland Clinic and rival Humana to enter the Ohio and Tennessee healthcare markets.

As Dark Daily reported in a previous e-briefing, Oscar aims to leverage sophisticated technology solutions and data to challenge complexity and costs associated with traditional healthcare insurance. An approach no doubt driven by the modern thinking of the company’s young founders. We alerted lab leaders that the insurance startup could be the latest example of technology’s power in the hands of Gen Y and Gen X entrepreneurs.

And while Oscar has reportedly experienced financial challenges, it is moving forward with the widely publicized new partnerships, as well as additional plans to expand insurance coverage in more states. Therefore, it’s important for clinical laboratory professionals to follow Oscar, which soon could be a healthcare payer of clinical laboratory and anatomic pathology services in more regions of the country.

Why Is Oscar Teaming Up with Cleveland Clinic, Humana?

In short, Cleveland Clinic is making its debut into the health insurance market with Oscar. And Oscar is moving into Ohio on the coat tails of this nationally prominent healthcare provider. The co-branded Cleveland Clinic/Oscar Health insurance plan will be offered to northeast Ohio residents in the fall for coverage effective Jan. 1, according to a Cleveland Clinic news release.

“This is a rare opportunity to work with the Cleveland Clinic to deliver the simpler, better, and affordable healthcare experience that consumers want,” said Mario Schlosser, Oscar’s Chief Executive Officer and cofounder in the news release.

 

Josh Kushner (left) and Mario Schlosser (right) cofounded Oscar Health, a New York-based health insurer that employs computer technologies, a mobile app, and concierge-style healthcare teams to provide members with a modern health plan experience and easy access to quality healthcare providers. (Photo copyright: Los Angeles Times.)

The coverage will be sold on and off the Ohio Affordable Care Act state exchange. Here’s what consumers will receive, noted statements by the Cleveland Clinic and Oscar Health:

  • Access to primary care providers affiliated with the Cleveland Clinic, and an Oscar Health concierge team (a nurse and three care guides) that can refer patients based on their needs to other providers in the care continuum;
  • Virtual care visits enabled by Cleveland Clinic Express Care Online and Oscar’s Virtual Visits;
  • Smartphone technology to make it possible for members to explore their health needs, find options, and review costs.

“We are looking to build a new relationship among payers, providers, and patients. This relationship goes beyond the traditional approach of getting sick and seeing the doctor,” noted Brian Donley, MD, Cleveland Clinic’s Chief of Staff.

In an article on the partnership, Forbes suggested that narrow healthcare networks like the Cleveland Clinic/Oscar model might be just what the ACA exchanges need to remain operational.

However, a Business Insider article suggests that Oscar—already active in New York, Texas, and California health exchanges—could be adversely affected by a successful replacement of the ACA, currently being debated by Congressional lawmakers.

Nevertheless, Alan Warren, PhD, Oscar’s Chief Technology Officer, told Business Insider that the Cleveland Clinic/Oscar Health insurance plan would go forward even if Obamacare did not.

Formal Rival Humana Now Oscar’s Partner in Small Business Insurance

Meanwhile, the partnership with Humana takes Oscar, which launched Oscar for Business in April, 2017, further into the small business health insurance market. Humana and Oscar will sell commercial health insurance to small businesses in a nine-county Nashville, Tenn., area effective in the fall, according to a joint Oscar/Humana news release.

“The individual market was a good starting point. But it was clear from the beginning that the majority of insurance in the US is delivered through employers,” Schlosser stated in a New York Times article.

As to who does what, Beth Bierbower, Humana’s Group and Specialty Segment President, explained in an article in the Tennessean that Humana will contract with hospitals and doctors for small business insurance, while Oscar’s technology solutions will help small businesses and their employees manage healthcare benefits and gain access to providers. “These people [at Oscar] are on to something,” she noted. “They are doing something a little different. Maybe this is a situation where one plus one, together, might equal three.”

Future Growth Planned by Oscar

The New York Times called Nashville “a new step for Oscar,” and noted that it follows Oscar’s recent loss of $25.8 million during the first three months of 2017—47% less than Oscar lost during the same period in 2016. Since its inception, however, Oscar has raised $350 million in investment capital, much of it from Silicon Valley investors.

Also, Oscar’s small-business health insurance plans, which started in the spring in New York, might launch in New Jersey and California as well, an Oscar spokesperson stated in a Modern Healthcare article that also reported on Oscar’s intent to increase individual plans sold in the ACA Marketplace from three states to six in 2018.

Clinical Laboratories Benefit from Increased Consumer Access to Health Providers

Could Oscar succeed with its new Cleveland Clinic and Humana partners? Possibly. Both deals are pending regulatory approval as of this writing.

In any case, the whole idea of making insurance more palatable for consumers is something clinical laboratories, which are gateways to healthcare, should applaud and support. It is good to know that insurers like Oscar are using technology and personal outreach to ease consumers’ access to providers and help them explore options and costs.

—Donna Marie Pocius

Related Information:

Cleveland Clinic, Oscar Health to Offer Individual Health Insurance Plans in Northeast Ohio

Introducing Cleveland Clinic Oscar Health Plans

Oscar Health Partners with Cleveland Clinic on Obamacare Exchange

Oscar Health Partners with Cleveland Clinic

Oscar Health to Join Human in Small-Business Venture

Humana Oscar Health Pilot Small Business Insurance Partnership in Nashville

Oscar and Humana Team up to Sell Small-Business Plans

Insurance Start-Up Oscar Seeks to Shake Up Healthcare Through Its App

Gen Y Entrepreneurs Launch Oscar, A Consumer-Friendly Health Insurance Company in Bid to Disrupt Traditional Health Insurers

 

 

University of Michigan Study Links Value-Based Care Programs to Lower Readmission Rates and $32 Million in Medicare Savings in 2015; Clinical Laboratories Play Critical Role

Meaningful use, accountable care organizations, and bundled payment initiatives work best together to reduce readmissions, UM research suggests

Ever since the Centers for Medicare and Medicaid Services (CMS) implemented the Hospital Readmission Reduction Program (HRRP) in 2012, healthcare organizations all over America have sought to prevent unnecessary hospital readmissions within 30 days of discharge. For some clinical laboratories, this meant performing precise microbiology testing to ensure patients are discharged with prescriptions for oral antibiotics in-hand to combat possible infections. Now, a recent study reports that the effort could be paying off, and clinical laboratories played a critical role.

Research performed at the University of Michigan (UM) has linked lower readmission rates under the HRRP to voluntary value-based programs. The three value-based programs the UM researchers identified as contributing to the successful lowering of hospital readmission rates are:

The UM researchers published their findings in the Journal of the American Medical Association (JAMA) Internal Medicine. It could be the first study to demonstrate that synergistic value-based reward programs facilitate healthcare improvement and efficiency. As opposed to HRRP financial penalties alone that is, according to a UM news release.

Researchers Had No Expectations of Payment Reform Programs

Researchers at UM found that all three programs operating together in 2015 (the last year included in the longitudinal study) resulted in about 2,400 fewer readmissions and a $32-million savings to Medicare, the UM release noted.

The team analyzed data on patients treated at 2,877 hospitals from 2008 through 2015 for:

Their source of information was publicly available Hospital Compare readmission data.

“We had no real expectations that hospitals’ participation in voluntary reforms would be associated with additional reductions in readmissions. We thought that it was just as likely that hospital participation in meaningful use, accountable care organization programs, or the Bundled Payment for Care [Improvement] Initiative may be distracting to hospitals, limiting readmissions reduction,” stated Andrew Ryan, PhD, in ACEPNow, a publication of the American College of Emergency Physicians (ACEP) in Irving, Texas. Ryan is an Associate Professor, Health Management and Policy, at UM’s School of Public Health.

More Participation Leads to Greater Reduction in Readmissions

Nevertheless, the UM researchers linked more reductions in readmissions based on common diagnoses to value-based “reward-style” programs than to HRRP financial penalties. And the more value-based programs a provider implemented, the greater reduction in hospital readmission rates, the study found.

Nearly all hospitals studied were participating in at least one of the value-based programs by 2015, as compared to no program participants in 2010, when the Affordable Care Act was signed into law, noted a Healthcare Dive article.

illustrates the reduction in hospital readmissions starting in 2012

The chart above from the Kaiser Family Foundation (KFF) illustrates the reduction in hospital readmissions starting in 2012, which multiple studies have linked to the CMS Hospital Readmission Reduction Program (HRRP). The rates, according to the KFF, are risk adjusted to account for age and certain medical conditions. (Image copyright: Kaiser Family Foundation.

For 56 providers that were not participating in value-based care programs by 2015, researchers found the following readmission reductions also were associated with HRRP:

  • 3% drop in heart failure readmissions;
  • 76% drop in heart attack readmissions; and
  • 82% decline in pneumonia readmissions.

For the majority of providers, however, escalating value-based care program participation resulted in greater readmission rate reductions, the study noted.

Readmission Reductions for Heart Failure Patients

Noting the influence of value-based programs, HealthcareDIVE and FierceHealthcare reported the following results for the heart-failure patients studied:

  • ACOs result in 2.1% annual readmission reduction;
  • MU participation attributed to a 2.3% drop in annual readmission reduction;
  • Involvement in all three programs (ACOs, MU, and bundled payments) result in the largest annual readmission declines for hospitals of 2.9%.

Readmission Reductions for Heart Attack, Pneumonia Patients

For myocardial infarction patients, the study showed these effects from value-based programs on readmission declines:

  • 7% from ACO launch;
  • 5% associated with MU; and
  • 2% readmission reductions when all programs were in effect.

For pneumonia patients, the research suggested these changes in readmission declines were associated with value-based programs:

  • 4% from ACO launch;
  • 4% due to MU; and
  • 9% when all programs were in effect.

The researchers advise that providers, aiming for quality improvement and cost savings, should leverage as many of these programs as possible.

“There is a reason to believe these [value-based] programs are reinforcing the broader push to value-based care. Our findings show the importance of a multi-pronged Medicare strategy to improve quality and value,” noted Ryan in the UM news release.

Clinical Laboratories Play Key Role in Reducing Readmissions

Accurate medical laboratory testing plays a critical role in the success of these hospital readmission reduction programs. Thus, all pathologists and laboratory personnel should congratulate themselves for a job well done. And commit to continuing their outstanding performance.

—Donna Marie Pocius 

Related Information:

Association Between Hospitals’ Engagement in Value-Based Reforms and Readmission Reduction in the Hospital Readmission Reduction Program

Voluntary Value-Based Health Programs Dramatically Reduce Hospital Readmissions

Value-Based Reforms Linked to Readmission Reductions

Hospitals Participating in Value-Based Programs Have Lower Readmission Rates

Study: Value-Based Care Programs Reduce Readmissions

Involving Patient’s Family in Discharge Process Linked to 25% Reduction in Hospital Readmissions

Integrating Caregivers at Discharge Significantly Cuts Patient Readmissions, Pitt Study Finds

Hospitals with Lowest 30-Day Readmission Rates Succeed at Reducing Rates by Improving Care Coordination and Monitoring of Patients After Discharge

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

Another big question is whether the lobbying of medical laboratory and pathology societies can educate and convince members of Congress to delay and reform the PAMA Final Rule that uses the market price study of what private payers pay for lab tests

Coming in just five months are the deepest, most painful clinical laboratory test price cuts ever implemented by Medicare officials. During calendar 2018 alone, both the Centers for Medicare and Medicaid Services (CMS) and the Office of Inspector General US Department of Health and Human Services (OIG) expect the price cuts to the Medicare Part B Clinical Laboratory Fee Schedule (CLFS) to lower spending on lab tests by $400 million!

The bad news doesn’t stop there. Lab industry observers say that significant numbers of hospital laboratories and independent lab companies are unprepared for the drop in revenue they will experience once the Medicare price cuts take effect. And, with only 157 days remaining before Jan. 1, 2018, medical laboratory executives and pathologists have precious little time to prepare their labs to operate on significantly less Medicare revenue.

PAMA Market Study of What Private Payers Pay for Clinical Laboratory Tests

Blame it on the Protecting Access to Medicare Act (PAMA) of 2014! PAMA directed CMS to conduct a market study of the lab test prices paid by private health insurers, and then use this data to set the prices of the CLFS. As many lab professionals know, CMS spent the last 24 months publishing a final price reporting rule that defined which medical laboratories must report the prices they are paid by private payers, and then collecting that data.

The data reporting period ended on May 31. In coming months, CMS will publish the new CLFS test prices and allow time for public comment.

Recognizing the need to help lab executives and pathologists understand the scale and scope of the Medicare lab test price cuts coming their way, Dark Daily and its sister publication, The Dark Report, have asked two experts with unique knowledge about this issue to give interested lab managers an up-to-the-minute intelligence briefing during an important webinar. It’s titled, “Deep Medicare Fee Cuts Are Coming to Your Clinical Laboratory in 157 Days: What You Must Do Now, Why Congress Might Intervene, and Action Steps to Protect Your Lab’s Financial Integrity,” and it happens later this week on Thursday, July 20, at 1 PM Eastern.

First Opportunity to See What Private Payers Pay for Medical Laboratory Tests

The first expert to speak is Lâle White, Executive Chairman and CEO of XIFIN, Inc., a health information technology (HIT) company headquartered in San Diego. Annually, White and her colleagues handle as many as 300 million lab test claims for hundreds of their clinical laboratory clients. Also, XIFIN is electronically interfaced with every health insurance plan in the US. These two facts mean that White has essentially the same data their lab clients reported to CMS.

During her presentation, White will show you how her company analyzed the real information from hundreds of millions of medical lab test claims that were reimbursed by thousands of private payers. You are in for a big surprise!

Learn Why Medicare Lab Test Fee Cuts Will Be Deep and Painful

XIFIN’s conclusions are based on real-world data. They demonstrate how the CMS final rule was written to direct the way federal officials calculate and set the 2018 Part B clinical laboratory test prices, and reveal why the fee cuts will be deep and painful for the lab industry’s highest-volume tests. You’ll hear facts about XIFIN’s analysis and learn to use that knowledge to model and predict precisely how deep Medicare’s revenue cuts to your lab will be when the new price schedule becomes effective on Jan. 1.

 

Lâle White (above left), CEO of XIFIN, Inc., spoke at the Executive War College on Laboratory and Pathology Management last May, where she shared insights about the coming price cuts to the Medicare Part B Clinical Laboratory Fee Schedule (CLFS). Julie Scott Allen (above right) is Senior Vice President of the District Policy Group, Drinker Biddle, and represents the National Independent Laboratory Association (NILA) in Washington, DC. White and Allen will be speaking at a special Dark Daily webinar later this week on the current status of the Medicare fee cuts and how lab executives should respond to protect the financial integrity of their labs. (White photo copyright: The Dark Report. White photo by Linda Reineke. Allen photo copyright: Drinker Biddle.)

 

Because it is generally agreed that CMS officials will target the top 20 lab tests by volume for the deepest price cuts, the actual revenue drop will depend on your mix of tests and the volume of Medicare patients associated with each test. CMS says it will use the weighted median of the private payer lab test price data to determine its new Part B fees.

However, that is a flawed approach and the source of much criticism.

White will show why the weighted median generates a lower price than the use of a weighted average calculation. You’ll see the direct impact that CMS’ use of the weighted median will have on your lab’s Medicare revenue, beginning on Jan. 1.

Understanding Current Developments at CMS and Within Congress

Julie Scott Allen will be the second speaker on the July 20 webinar. She is Senior Vice President, District Policy Group, Drinker Biddle, and represents the National Independent Laboratory Association (NILA) in Washington, DC. In this role, Allen works with officials at CMS, the Department of Health and Human Services (HHS), and with members of Congress on issues relevant to the clinical laboratory members of NILA. She regularly participates as part of the Clinical Laboratory Coalition on these matters.

Allen will give you an up-to-the minute perspective on efforts by the clinical laboratory industry to educate officials within Congress, HHS, and CMS about the consequences of allowing the PAMA final rule price cuts to become effective on January 1, 2018. This is important information you can use to craft strategies to protect your lab’s financial stability. You’ll also recognize opportunities to contact your elected officials in Congress at the time when your input can make an important difference.

The message of many in the Clinical Laboratory Coalition to members of Congress is that, if the PAMA Medicare fee cuts happen as planned, many hospital lab outreach programs and community lab companies in the states and districts of the various Senators and Representatives will probably end up going out of business, filing bankruptcy, or selling to a national lab company.

Behind the Scenes on PAMA Fee Cuts, ACA Repeal-and-Replace

Allen will take you behind the scenes of the inside-the-beltway developments that relate to the coming Medicare Part B clinical laboratory fee cuts. Different players from the clinical laboratory community are in discussions with CMS officials about the need to delay and reform the implementation of these price cuts.

Meanwhile, there are several developments unfolding within Congress that affect clinical laboratories. Yes, one of them is the PAMA final rule on lab price cuts. However, congressional efforts to repeal and replace the Affordable Care Act (ACA) are creating opportunities for different medical specialties—including the profession of laboratory medicine—to advocate for needed reforms in their areas of clinical services.

When clinical laboratory and anatomic pathology leaders are informed, they are more effective in two roles:

  1. Protecting the clinical excellence and financial sustainability of their respective laboratories;
  2. Advocating with government officials and lawmakers on the issues that are important to keeping the nation’s laboratories financially viable and key contributors to improving the quality of patient care.

Full details about this important webinar are at this link. Or copy and paste this URL into your browser: https://ddaily.wpengine.com/webinar/deep-medicare-fee-cuts-are-coming-to-your-clinical-laboratory-in-157-days-what-you-must-do-now-why-congress-might-intervene-and-action-steps-to-protect-your-labs-financial-integrity to register.

—Michael McBride

 

Related Information:

NILA and Other Stakeholders Ask HHS to Delay the Medicare Laboratory Payment Reform Rule

Nation’s Most Vulnerable Clinical Laboratories Fear Financial Failure If Medicare Officials Cut Part B Lab Fees Using PAMA Market Price Data Final Rule

Overview of CMS-1621-F Medicare Clinical Diagnostic Laboratory Test Payment System Final Rule

Dark Report Cracks the Mystery on PAMA Pricing; Genetic Coverage Still Tough Going

XIFIN Analysis of Its Real Price Data Shows Hospital Lab Price Effect: Study Based on Hundreds of Millions of Lab Test Claims

10% PAMA Fee Cut Would Lower Medicare Pay to Laboratories by $400 Million: New OIG Report Provides Clues as to How Cuts to CLFS Prices Will Reduce Payments to Clinical Labs

CMS Issues PAMA Final Rule That Aims to Cut Medicare’s Clinical Laboratory Test Price Schedule Sharply Beginning in 2018

Deep Medicare Fee Cuts Are Coming to Your Clinical Laboratory in 157 Days: What You Must Do Now, Why Congress Might Intervene, and Action Steps to Protect Your Lab’s Financial Integrity

Federal Programs That Lower Hospital Readmissions Rates Impact Medical Laboratories Inpatient Test Ordering

Medical laboratory inpatient test volume may continue to decline as the Medicare hospital readmission reduction program expands in 2017 and state population health programs garner funding

 We are now several years into the Medicare program that is designed to reduce hospital readmissions. Statistics from these years show encouraging progress in reducing the readmission rate of Medicare patients. This is a trend that has important implications for all hospital-based clinical laboratories.

Hospitals are the most expensive site of care in the entire healthcare system. In its ongoing battle to reduce healthcare costs, the Centers for Medicare and Medicaid Services (CMS) implemented a carrot-and-stick program called the Hospital Readmission Reduction Program (HRRP) aimed at lowering hospital readmission rates nationwide.

Established in 2013 by the Affordable Care Act (also known as Obamacare), the HRRP lowers reimbursements to acute care hospitals that have high rates of Medicare readmissions within 30 days of initial discharge, and increases reimbursements to hospitals that lower their readmission rates, a March 2017 Kaiser Family Foundation (KFF) Issue Brief explained.

And, according to the KFF, these programs are having an impact. Readmission rates dropped by 8% nationwide as hospitals found ways to avoid the stiff financial penalties and earn the financial rewards. Additionally, patients are increasingly choosing ambulatory care settings, or to receive care at home, rather than re-entering hospitals. This has lowered states’ readmission rates even further.

From a healthcare cost perspective, this is good news. However, these programs have had unintentional consequences as well. The federal initiatives and state population health programs responsible for lowering readmission rates also directly impact medical laboratories by simultaneously reducing the flow of inpatient testing volume.

At the same time, clinicians at the nation’s hospitals—in their efforts to avoid readmissions—have a motive to become more effective at ordering the right medical laboratory test at the right time, and to use the lab test results to more effectively treat the patient. Thus, for the nation’s hospital labs, the Medicare program to reduce readmissions has both an upside and a downside.

Programs, Data Mining That Help Providers Avoid Readmissions

Hospitals nationwide are operating programs aimed at attracting federal financial rewards for keeping people healthy, and from being admitted to hospitals due to conditions that could have been prevented, USA Today reported.

One such program involves Christiana Care Health System (Christiana Care) of Wilmington, DE. Christiana Care implemented CMS’ Care Link transitions program through the Center for Medicare and Medicaid Innovation (CMMI), also known as The Innovation Center, which, “supports the development and testing of innovative healthcare payment and service delivery models.”

The provider experienced a 20% drop in patients being readmitted within 30 days of surgery, due to its “bundled payment” plan for heart failure, the USA Today article noted. Hip and knee replacement readmissions were down 25% 30 days after discharge as well.

“Without the funding we got through CMMI, it’s hard to imagine we’d be in the position we’re in today,” stated Janice Nevin, MD, CEO of Christiana Care.

Janice Nevin, MD

Janice Nevin, MD (above), CEO of Christiana Care Health System, Wilmington, DE, is concerned that the upcoming changes to the ACA will affect the funding the healthcare provider has received from the CMS Innovation Center. “I would strongly urge that we keep the commitment to CMMI (because) you have to innovate to learn,” she told USA Today. (Photo copyright: Christiana Care Health System.)

Changes to HRRP for Dual-Eligibles Could Affect Penalties

Some patients are more expensive than others. Patients who draw both Medicare and Medicaid funding simultaneously, for example. These “dual-eligibles” are disproportionately expensive for hospitals to treat, reported Modern Healthcare.

In fact, they are just 18% of CMS beneficiaries, but accounted for one-third of all Medicare fee-for-service (FFS) spending in 2013, according to a Medicare Payment Advisory Commission June 2016 demographic report.

CMS is proposing to adjust penalties in the HRRP to reflect the proportion of patients who are dual-eligible, presumably hoping the change will both lower costs and reduce penalties on healthcare providers.

Hospital Readmissions Data from 49 States

CMS data show that between 2010 and 2015 hospital readmission rates fell by 8%, reported Healthcare Finance News. Other key data recently released by CMS and reported by Healthcare Finance News:

·       49 states reduced avoidable hospital readmission rates since 2010;

·       Vermont’s readmission rate rose slightly from 15.3% in 2010 to 15.4% in 2015;

·       In 43 states, readmission rates fell by more than 5%;

·       11 states had a more than 10% drop in readmission rates;

·       The fall in readmission rate translates to about 104,000 hospital readmissions avoided for Medicare beneficiaries in 2015 and 565,000 readmissions averted since 2010; and

·       Avoidable admissions, occurring within 30 days of initial discharges, account for more than $17 billion in Medicare annual expenditures.

Action Steps for Clinical Laboratories

Pathologists and lab leaders need to efficiently work with colleagues, especially when caring for hospitalized patients with conditions relative to the HRRP. Clear and patient-friendly discharge instructions for diagnostics are important. And, the lab’s coordination with post-acute-care providers, such as skilled nursing facilities, on follow-up testing is key to avoiding unnecessary readmissions.

Regardless, medical laboratory inpatient test volume will likely continue to decline. As Dark Daily readers know, the decline in inpatient testing is associated with more than just the HRRP. The transition to new models of integrated care that has taken place over the last few years is also a factor, as Dark Daily reported in “Falling Inpatient Revenues at Many Hospitals is Sign of Healthcare’s Transition to New Models of Integrated Care and Changes in Medical Laboratory Test Utilization.”

Medical laboratory directors and sales teams are advised to continue their efforts at boosting outpatient volume to fill the inpatient void.

—Donna Marie Pocius

Related Information:

Hospitals Work to Keep Patients from Being Admitted

Aiming for Fewer Hospital U-Turns: The Medicare Hospital Readmission Reduction Program

49 States, DC Reduce Avoidable Hospital Readmissions

Dual-eligibles: The Next Target in Hospital Readmissions Penalties

June 2016 Data Book, Section 2: Medicare Beneficiary Demographics

Hospitals Mine Clinical Data to Help Reduce Costs and Avoid Readmissions, Creating Opportunities for Clinical Laboratories and Pathologists to Contribute to Improved Patient Outcomes

Falling Inpatient Revenues at Many Hospitals is Sign of Healthcare’s Transition to New Models of Integrated Care and Changes in Medical Laboratory Test Utilization

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