What is not clear is how Aetna might engage independent clinical laboratories as in-network providers for this health insurance plan
For years, Dark Daily and its sister publication The Dark Report have regularly predicted that the traditional fee-for-service reimbursement model of indemnity health insurance that requires beneficiaries to pay a co-pay is on the way out. What is not known is how the nation’s biggest health insurers plan to reinvent themselves, as value-based reimbursement for providers becomes more common.
That may be clearer now, at least for one insurance giant. Aetna recently announced it was incorporating CVS Health services provided at CVS-owned pharmacies and retail clinics into a healthcare plan for individuals in the greater Kansas City, Mo., area.
The Aetna Connected Plan “combines CVS Health services—including free one to two-day prescription delivery and 20% discounts on thousands of health-related items—with Aetna’s cost-saving I-35 Performance Network to deliver a more convenient and connected member experience, along with up to 20% premium savings compared to comparable PPO products in the market,” states a CVS Health press release.
Members can schedule appointments at CVS Health MinuteClinics, request consultations at CVS HealthHUBs for no copay, and access other services, including telehealth visits, through CVS pharmacies. Essentially, Aetna made network providers for this range of CVS-owned health services.
CVS Health services, according to the press release, include:
$0 copay at local HealthHUB and MinuteClinic locations,
Free one to two-day prescription delivery,
20% discounts on thousands of health-related items in-store and online,
The Aetna health plan will be made available next year to employers with 101 or more workers in three counties in Missouri (Clay, Jackson, and Platte) and two counties in Kansas (Johnson and Wyandotte). Aetna claims the premiums for their new plan are 20% less expensive than other similar plans for the region, MedCity News reported.
AMA Expressed Concerns over CVS Purchase of Aetna
CVS acquired Aetna for $70 billion in late 2018 and the two companies have been working to integrate their businesses ever since.
There are currently more than 1,000 CVS MinuteClinics located throughout 33 states and the District of Columbia. CVS began opening HealthHUB clinics in the Houston area last year and plans to open more than 1,500 HealthHUBs by the end of 2021, the Houston Chronicle reported.
Critics of the 2018 purchase of Aetna by CVS were concerned that CVS would somehow use Aetna’s 40 million members to drive revenue for its stores. Many groups, including the American Medical Association (AMA), Consumers Union, and pharmacy organizations were opposed to the merger due to anticompetitive concerns.
The AMA felt the merger would reduce competition in some pharmaceutical markets, which could lead to higher premiums and lower the quality of some insurance products. The organization also believed that the merger “faced enormous implementation challenges and was unlikely to realize efficiencies that benefit patients,” the AMA noted in a statement.
“We are very concerned about the consolidation in healthcare because we know that as healthcare systems consolidate, prices tend to go up,” AMA President Barbara McAneny, MD said in the statement. “And we are very concerned that with the CVS purchase of Aetna that drug prices will continue to rise and that is a major pain point of patients all across the country.”
The AMA also stressed concerns regarding how the lack of competition could have negative impacts on the pharmaceutical industry.
“It’s also causing harm to a lot of the parts of the industry,” McAneny added. “Independent pharmacies are going out of business and this consolidation makes them (CVS) just such a stronger player in that market that competition is really difficult.”
Despite the opposition, the CVS and Aetna merger received final approved from regulators last year. Before the merger was approved, the two companies had to convince state attorneys general, antitrust regulators, and Congress that the consolidation would not result in anticompetitive practices and impair independent drugstores and other national chains.
Will Aetna Engage Independent Clinical Laboratories?
Aetna’s new health plan is another example of how the nation’s biggest health insurers are adapting away from fee-for-service and to value-based reimbursement for healthcare providers. Clinical laboratory managers will want to watch how CVS and Aetna do or do not work with independent laboratory companies to collect lab specimens at the pharmacies and provide testing.
In their letter, the Representatives wrote, “As you are aware, the recently enacted Paycheck Protection Program and Health Care Enhancement Act (PPPHCE Act) invests $25 billion in the [Public Health and Social Services Emergency Fund (PHSSEF)], including $11 billion for states, localities, territories, and tribes, to enhance all aspects of COVID-19 testing capacity. This funding is in addition to the funds already appropriated to the PHSSEF under the CARES Act.
“While laboratories are eligible, along with other providers, for these funds,” they continued, “there have been no federal funds specifically designated for the laboratories that have stepped up in this public health crisis and have made significant investments to expand access to COVID-19 testing despite 40-60 percent reductions in regular commercial volume due to the economic lockdowns.
“As laboratories work to maintain their investments in critical resources for testing platforms, reagents, swabs, and PPE, as well as hiring, training, and overtime pay for the laboratory workforce, we urge HHS to direct a portion of funding that has not already been allocated towards these efforts. These funds will ensure that labs can continue to rapidly scale up diagnostic and antibody testing, particularly for healthcare workers, first responders, and other Americans on the frontlines of this pandemic,” concluded the Representatives.
ACLA President Made Similar Plea for Direct Funding to Clinical Laboratories
“In order to deliver accurate, reliable results for patients at a national scale, we must allocate funding to support [clinical laboratories’] expanded efforts,” she said in a statement following an April 27 meeting at the White House.
In her letter, Khani wrote, “It is essential that HHS allocate $10 billion from the fund to support labs’ further expansion of testing capacity to fulfill the testing needs of all of the states and to protect the lives and livelihood of all Americans.
“Further,” she continued, “HHS should note that investing in the nation’s laboratories will not only enhance testing capacity in the short-term, but it also will allow the country to benefit from a robust testing infrastructure for the duration of the COVID-19 pandemic and beyond.”
President Trump signed H.R.266 into law on April 24. It includes $25 billion earmarked for research, development, validation, manufacturing, purchasing, administering, and expanding capacity for COVID-19 testing. According to the language of H.R.266, that includes, “tests for both active infection and prior exposure, including molecular, antigen, and serological tests, the manufacturing, procurement and distribution of tests, testing equipment and testing supplies, including personal protective equipment needed for administering tests, the development and validation of rapid, molecular point-of-care tests, and other tests, support for workforce, epidemiology, to scale up academic, commercial, public health, and hospital laboratories, to conduct surveillance and contact tracing, support development of COVID-19 testing plans, and other related activities related to COVID-19 testing.”
Financial Struggles for Hospitals and Clinical Laboratories
This new round of stimulus funding comes at a time when many providers and clinical laboratories are struggling financially, despite the influx of COVID-19 patients.
“Across the country, laboratories have made significant investments to expand capacity, including purchasing new platforms, retraining staff, and managing the skyrocketing cost of supplies. To continue to make these investments and expand patient access to high-quality testing in every community, laboratories will need designated resources. Without sustainable funding, we cannot achieve sustainable testing,” said Khani in an ACLA statement.
As the COVID-19 coronavirus pandemic evolves, federal regulations, as well as emergency funding for COVID-19 testing that is provided by federal legislation, will evolve in unexpected ways. For that reason, clinical laboratory leaders will want to closely track announcements by such federal agencies as the Department of Health and Human Services, the Centers for Medicare and Medicaid Services, the Food and Drug Administration, the Centers for Disease Control and Prevention, and the Federal Emergency Management Administration as decisions are made about how to assign the $25 billion authorized in H.R.266 for “testing.”
Employers that manage the entire process—from securing
passports for their employees, to ensuring they have access to high-quality care
outside the country’s borders—report saving money as well as simplifying the
process for their employees. An apparent win-win.
However, questions linger about:
Availability of diagnostic testing and clinical
If patients treated outside the US receive
adequate protections; and
Whether the quality of care is equal to that in
One recent example of a company helping employers and employees receive high quality care outside of the US is NASH—the North American Specialty Hospital. NASH was featured in a Kaiser Health News (KHN) article that described one patient’s experience traveling to Cancún for a surgical procedure.
Location, Pre-Existing Conditions, Length of Stay, Etc.,
Affect Final Bill in US
One of NASH’s corporate clients is Ashley Furniture Industries. Headquartered
in Arcadia, Wis., the American home furnishings manufacturer and retailer employs
approximately 17,000 people, including Terry Ferguson. Terry’s wife, Donna, is
the patient highlighted in the KHN story.
One of the healthcare providers NASH partners with is Galenia Hospital, a 55-bed general services hospital in Cancún, Mexico. NASH leases the entire third floor of the hospital. Galenia is next door to a Four Points Sheraton Hotel, making lodging a simple matter for medical tourists.
Currently, NASH focuses on orthopedic surgeries such as total
knee replacements, the medical procedure Donna Ferguson underwent.
A 2015 BlueCross
BlueShield study showed that costs for total-knee-replacement surgery in
the US averaged about $31,000. However, depending on where the surgery takes
place, it can cost as low as $11,317 (Alabama) and as high as $69,654 (New York
City). Pre-existing conditions, length of time in the operating room, number of
days in the hospital, and numerous other factors contribute to the final bill.
NASH, however, sets the final price is up front.
Some Companies Pay Their Employees to Use Medical Tourism
With the average cost for the surgery coming in at around
$12,000, the cost savings to employers is so great some companies actually pay employees
who are willing to travel for procedures, KHN reported. Donna Ferguson paid
no co-pays for her surgery, paid nothing out of pocket for travel or lodging
while in Cancún, and the Ferguson’s received a $5,000 check from Ashley
Ferguson told KHN, “It’s been a great experience.
Even if I had to pay, I would come back here because it’s just a different
level of care—they treat you like family.”
That’s important for hospitals, clinical laboratories, and
all healthcare providers in America to consider. In the minds of patients,
quality of care starts with their experience at the hands of the provider.
Clinical Laboratory Tests in US, Surgery in Mexico
Prior to traveling outside the US for surgery, Ferguson
underwent a physical exam, X-rays, and other diagnostic testing to ensure the
treatment approach was the best for her. Once that was confirmed, IndusHealth, Ashely’s medical travel
plan administrator, “coordinated [Donna’s] medical care and made travel
arrangements, including obtaining passports, airline tickets, hotel and meals,”
for both Donna and Terry Ferguson, KHN reported.
It seems reasonable to assume that NASH has agreements with
multiple clinical pathology laboratories and healthcare facilities throughout
the US for patients to get the tests they need prior to surgery. Partnerships
with medical tourism companies may well represent an avenue for pathology
laboratories to pursue.
Protections for Patients
So, why hasn’t medical tourism become the healthcare juggernaut some experts predicted? Managed Care suggests one reason is that Americans tend to be skeptical of the quality of care they will receive in a foreign facility.
“Building a familiar culture in a foreign destination may be appealing to some American consumers, but I do not see it as a sustainable business,” Health consultant Irving Stackpole, PhD, MEd, Psychology, told KHN. “It’s not unusual for people thinking about this to have doctors, family, and friends who will see this as a high-risk undertaking.”
Several factors helped Ferguson feel better about her
decision to travel to Mexico for surgery. One is that Galenia is credentialed.
In addition to a credentialed facility and a highly trained
surgeon, NASH also provides US malpractice insurance coverage, giving patients
recourse in the event something goes wrong. Ferguson and American patients like
her would be able to sue in the US if care under this arrangement was not
Medical Tourism Pays Surgeon’s Full Fee
One fascinating twist in this story is that an American physician was flown to Cancun to perform this operation and was paid his full fee. The surgeon scheduled to perform Ferguson’s operation, Thomas Parisi, MD, JD, trained at the Mayo Clinic. He traveled from Wisconsin to Cancún to perform the procedure. “Dr. Parisi trained at Mayo, and you can’t do any better than that,” Ferguson told KHN.
KHN reported that Parisi spent less than 24 hours in
Cancun and was paid $2,700 for this surgery. That fee is three times of the
amount Medicare pays for this procedure. Further, Parisi’s fee was
significantly above what many managed care plans would negotiate for this type
American-trained physicians are common at many of the
facilities credentialed by the Joint Commission International. “Many overseas
hospitals are staffed in part by physicians and other health professionals who
were trained in US hospitals. One hospital in India has 200 US-trained
board-certified surgeons,” wrote James E. Dalen, MD,
MPH, ScD, and Joseph S. Alpert,
MD, in “Medical Tourists: Incoming and Outgoing,” published in The American
Journal of Medicine (AMJMED).
“In the past, medical tourism has been mostly a blind leap to a country far away, to unknown hospitals and unknown doctors with unknown supplies, to a place without US medical malpractice insurance. We are making the experience completely different and removing as much uncertainty as we can,” James Polsfut, CEO and Chairman, North American Specialty Hospital (NASH), told KHN.
Clinical laboratories in America may find opportunities
providing testing services to medical tourism organizations like NASH. It’s
As physicians continue to re-evaluate their career strategies, clinical laboratories must closely monitor changes to test ordering from formerly self-employed doctors
For the first time, more doctors are employed by health networks than are in private practice. That’s according to a recent report from the American Medical Association (AMA). In a press release, the AMA describes the event as “the continuation of a long-term trend that has slowly shifted the distribution of physicians away from ownership of private practices.”
This trend impacts independent clinical
laboratories and anatomic
pathology groups because hospital-based physicians have reasons to order
tests from in-house medical
laboratories. Thus, a reduction in independent self-employed doctors could also
mean reductions in test orders from those physicians.
According to the new release, employed physicians made up
47.4% of all patient care doctors in 2018—an increase of 6% since 2012. Meanwhile,
self-employed doctors represented 45.9% of physicians in patient care—down 7% (from
53.2%) since 2012.
“Due to this swing, for the first time in 2018, there were
fewer physician owners than employed physicians,” the AMA researchers wrote in their
The AMA has conducted its benchmark surveys every other year
since 2012. They are nationally representative surveys of doctors to record
employment status, practice size, specialties, and ownership.
Who Employs Doctors?
Physicians can be employed by other doctors in
physician-owned practices, by hospitals directly, and by hospital-owned medical
Most, however, work for other doctors, reported Fierce Healthcare. In a summary of
the latest AMA survey data, Fierce noted that:
54% of doctors are owners, employees, or contractors
in practices owned by physicians—compared to 60% in 2012;
8% of doctors work directly for a hospital—up
from 5.6% in 2012;
26.7% of doctors are employed by hospital-owned
practices—up from 23.4% in 2012; and
34.7% of doctors work for a hospital or a
practice partly owned by a hospital in 2018—up from 29% in 2012.
The AMA partly attributed the increase in employed physicians
to age: 70% of doctors under the age of 40 reported as employees in 2018,
compared to 38.2% of doctors 55 and over who reported as employed.
Family Practice Physicians
Most Likely to Become Employed by Hospitals
Other intriguing data points include the percentages of practice
ownership among medical specialties.
Pathology was not broken out. However, the AMA’s report did state
that, “surgical subspecialties had the highest share of owners (64.5%) followed
by obstetrics/gynecology (53.8%) and internal medicine subspecialties (51.7%).
“Emergency medicine had the lowest share of owners (26.2%)
and the highest share of independent contractors (27.3%). Family practice was
the specialty with the highest share of employed physicians (57.4%),” the
researchers also noted that the number of doctors seeking employment in
healthcare networks may be decreasing. “The trend away from physician-owned
practices and toward working directly for a hospital or for a hospital-owned
practice appears to be slowing—more than half of that shift occurred in the first
two years of [the benchmark survey] period [2012 to 2018].”
The AMA also noted that the success or failure of accountable
care organizations (ACOs) could have an effect on hospital acquisition of
private practices. “Should evolving models of care not deliver on their theoretical
savings or improvements, that might put a break on consolidation,” the researchers
It’s critical that clinical laboratories continue to improve
the quality and efficiency of outreach services to retain and grow medical
laboratory testing business that increasingly may come from health networks
versus physician-owned private medical practices.
Often when a hospital health system buys an independent physicians’ practice, the new owner would like its clinical laboratory to serve that medical group
After a hospital or health system buys a physicians’ practice, it is common that the new owner has its in-house medical laboratory provide lab testing to the newly-acquired medical group. Such a purchase is generally good for hospital labs, but not so good for any independent lab that, prior to the sale, had been serving the newly-sold medical practice.
Therefore, when hospitals purchase thousands of physician practices, the impact on the nation’s independent clinical laboratories has the potential to be significant. That’s one conclusion contained in a newly updated report based on co-research by Physicians Advocacy Institute (PAI) and Avalere Health, a healthcare and life sciences consulting firm headquartered in Washington, D.C.
Clinical Laboratory Test Orders Drop as Physicians Join Hospital Staff
According to a PAI news release, hospitals acquired 5,000 independent physician practices between July 2015 and July 2016. Building on a previous Avalere-PAI study, the data suggest that over four years (from mid-2012 to mid-2016) the percentage of hospital-employed physicians increased by more than 63%. In other words, 42% of doctors were employed by hospitals in July 2016, as compared to 25% of doctors in July 2012, a proportion that nearly doubled in just four years!
As more physicians move from owning their private practice to becoming employees of the new owner, independent labs serving those medical practices are at risk of losing the lab test referrals from the practice.
Of course, this can be a boon for hospital-based or healthcare system labs that see an uptick in lab test referrals, as more physician practices or outreach customers join the hospital team. However, surveys show, for hospitals, acquiring and owning more doctors’ practices can be problematic.
“As payers and hospitals continue [to] drive consolidation across the healthcare system, it is becoming more and more difficult for a physician to maintain an independent practice,” stated Robert Seligson (above), PAI President and CEO of the North Carolina Medical Society, in the PAI news release. “Payment policies mandated by insurers and [the] government heavily favor large health systems, creating a competitive advantage that stacks the deck against independent physicians, who are already struggling to survive under expensive, time-consuming administrative and regulatory burdens.” (Photo copyright: Physicians Advocacy Institute.)
“Physician compensation is one of the fastest growing expenses in health systems. It has become as high as 10% of total expenses for some systems. The burden is not sustainable,” Joel French, Chief Executive Officer, SCI Solutions, told Modern Healthcare.
Medicare Pays More to Hospitals for the Same Services
The PAI-Avalere report also noted that Medicare pays more for certain services when performed in hospital outpatient departments instead of doctors’ offices.
$5,148 for hospital cardiac imaging compared to $2,862 in a doctor’s office;
$1,784 for a colonoscopy in-hospital versus $1,322 in a physician’s office; and,
$525 for in-hospital evaluation and management services compared to $406 in the doctor’s office.
“The shift toward more physicians employed by hospitals could mean higher costs for the entire healthcare system,” Kelly Kenney, PAI Executive Vice President, stated in the PAI news release.
Practice Ownership Effects Quality of Care
While the PAI-Avalere analysis explored physician employment’s impact on payment for some services, another study explored its effects on quality of care.
Researchers analyzed data from three national surveys of physician practices. Their report, published in the American Journal of Managed Care (AJMC), found that in hospital-owned physician practices, there was more use of recommended care management processes (CMPs), such as, disease registries and nurse coordinators.
“The current findings suggest that hospital acquisition of practices may have beneficial effects for patients with chronic illnesses,” the researchers wrote in AJMC.
As medical groups change owners, independent clinical laboratories must work hard to retain the testing business—especially when the new owner is a hospital or healthcare system with its own in-hospital medical laboratories.