Consumer Reaction to High-Deductible Health Plans and Rising Out-of-Pocket Costs Continues to Impact Physicians and Clinical Laboratories

Because many Americans are ‘concerned’ about how they would pay an unexpected medical bill, they now are seeking upfront information about treatment costs and financing options

Clinical laboratories and anatomic pathology groups that depend on reliable sources of patient and test referrals are being impacted by a reduction in patients seeking care due to rising costs. Evidence continues to mount that high deductible health plans (HDHPs) and the overall rising cost of healthcare are straining Americans’ finances. This is causing them to delay payments, question treatment costs, and investigate payment options.

These trends underscore the need for clinical laboratories and pathology groups to have point-of-service collection strategies in place or risk declining revenues.

Study Highlights Increasing Consumer Healthcare Costs

JPMorgan Chase Institute’s Healthcare Out-of-pocket Spending Panel (JPMCI HOSP) recently studied the healthcare cost burden on 2.3-million de-identified Chase checking account holders aged 18 to 64. In a report titled, “Paying Out-of-Pocket: The Healthcare Spending of 2 Million US Families,” Chase noted the following key indicators that predict continued decline in healthcare revenues as patients’ costs increase:

·       “A clear correlation exists between timing of healthcare payments and an account-holder’s ability to pay, with the largest payments taking place in the years and months with increased liquid assets. This finding emphasizes the clear link between a family’s financial health and their access to healthcare services. The report found a clear spike in payments during the months of March and April, when nearly 80% of tax filers receive tax refunds.

·       “There is significant variation of out-of-pocket expenses among and within states, emphasizing the important role of states in shaping healthcare policy. Colorado families spent the most out of pocket, while families in Louisiana spent the most as a percent of income. California was among the lowest in terms of both raw dollar amounts and payments as a share of income. As part of this report, the JPMorgan Chase Institute has created online data visualization assets to illustrate these disparities and is providing downloadable payment data with information broken down to metro and county levels.

·       “Out-of-pocket payments grew each year since 2013, but have remained a stable share of income, also known as “burden.” However, women, low-income families and pre-seniors are bearing the highest cost burden. The finding merits further study to establish whether these higher payments represent broader healthcare utilization or a clear expense burden for populations that can afford it the least.

·       “Families that are in the top 10% of healthcare spend in a given year tend to remain the highest spenders on a year-over-year basis, emphasizing the substantial cost of chronic conditions and long-term healthcare needs.

·       “Doctor, dental, and hospital payments accounted for more than half of out-of-pocket payments. While doctor payments accounted for the greatest volume of expenditures, dental and hospital payments were much more significant in terms of expense.”

In a news release, Diana Farrell, President and CEO, JPMorgan Chase Institute points out that, “The reality is that many American families don’t have the cash buffer to withstand the volatility created by out-of-pocket healthcare payments, and we need to better understand the correlation between financial health and physical health.”

The JPMorgan Chase Institute report, released September 19, 2017, came on the heels of the Kaiser Family Foundation (KFF)/Health Research and Education Trust (HRET) 2017 Employer Health Benefits Survey. This annual benchmark survey indicates workers on average now contribute $5,714 annually toward their family premiums, which average $18,764, and that employees at firms with fewer than 200 workers contribute as much as $6,814 on average.

The findings of this survey will be useful for those clinical laboratories and anatomic pathology groups developing business and clinical strategies to serve the growing numbers of patients who are covered by high-deductible health plans. The KFF/HRET survey highlighted the impact growth of HDHPs is having on workers:

·       81% of covered workers were in plans with an annual deductible, up from 59% in 2007 and 72% in 2012;

·       The average deductible amounts for workers with employer-based coverage also is increasing steadily, rising from $616 in 2007 to $1,505 in 2017.

A JPMorgan Chase Institute study of family healthcare spending (not including premium payments) shows out-of-pocket costs varied widely in the US in 2016, both across and within states. Average spending ranged from a low of $596/year (California) to a high of $916/year (Colorado) in the 23 states where there are Chase retail banking branches. (Photo copyright: JPMorgan Chase Institute/Business Insider.)

Jay Bhatt, DO, President of KFF/HRET, and Senior Vice President and Chief Medical Officer at the American Hospital Association, notes that while some cost increases appear to be slowing, policymakers should continue seeking ways to reduce the burden on healthcare consumers.

“This year’s findings continue a positive run of a slowing in premium increases and in the growth of healthcare costs overall,” Bhatt states in a KFF news release. “As policymakers and providers continue to work to improve healthcare, ensuring it remains affordable and accessible is critically important.”

Importance of Providing Pricing and Payment Options

These results help explain why 42% of respondents to HealthFirst Financial’s Patient Survey stated they are “very concerned” or “concerned” about whether they could pay out-of-pocket medical expenses during the next two years. For example:

·       More than half (53%) of those surveyed were concerned about how to pay a medical bill of less than $1,000;

·       35% indicated they would find paying a bill less than $500 difficult; and,

·       16% were worried about paying a bill less than $250.

Such financial worries will likely impact revenues at clinical laboratories as well as medical doctor’s offices. They also explain why 77% of healthcare consumers who participated in the HealthFirst Financial survey responded that it’s “important” or “very important” to know their costs before treatment.

Additionally, 53% of those surveyed want to discuss financing options before receiving care. However, according to the survey, just 18% of providers discussed payment options.

The study also found 40% of millennials would likely switch to a different provider offering low- or zero-interest financing for medical bills.

“These findings highlight a huge gap in what patients want and what hospitals, medical groups, and other healthcare providers are delivering,” KaLynn Gates, JD, President and Corporate Counsel of HealthFirst Financial, said in a news release. “Providers that care for the financial as well as clinical needs of their communities are much more likely to thrive in this era of rising out-of-pocket costs and growing competition for patients among traditional and non-traditional providers.”

Clinical Laboratories and Anatomic Pathology Groups Are Particularly Challenged

In “Hospitals, Pathology Groups, Clinical Labs Struggling to Collect Payments from Patients with High-Deductible Health Plans,” Dark Daily reported that clinical laboratories and pathology groups face particular challenges because, as patients become responsible for more of their healthcare bills, many labs are not prepared for collecting full payments from patients on HDHPs. Nor are they prepared for reduction in test ordering, as patients opt to not follow through with prescribed tests and treatments to save money.

These recent reports are another strong indicator of how critical it is for medical laboratories and pathology groups to develop tools and workflow processes for collecting payments upfront from patients with HDHPs.

—Andrea Downing Peck

Related Information:

Out-of-Pocket Healthcare Costs Straining Americans’ Finances

Paying Out-of-Pocket: The Healthcare Spending of 2 Million US Families

Here’s How Much People Spend on Healthcare by State

2017 Employer Health Benefits Survey

Premiums for Employer-Sponsored Family Health Coverage Rise Slowly for Sixth Straight Year, up 3%, but Averaging $18,764 in 2017

HealthFirst Financial Patient Survey: It’s Never Too Soon to Communicate Pricing and Payment Options

From Millennials to Boomers, Patients Want to Discuss Healthcare Pricing and Payment Options before Treatment

Hospitals, Pathology Groups, Clinical Labs Struggle to Collect Payments from Patients with High-Deductible Health Plans

Innovative Pathologists and Clinical Laboratory Scientists Use Diagnostic Management Teams to Support Physicians with More Accurate, Faster Diagnoses

Innovative Pathologists and Clinical Laboratory Scientists Use Diagnostic Management Teams to Support Physicians with More Accurate, Faster Diagnoses

At institutions such as University of Texas Medical Branch, Galveston, and Vanderbilt University Medical Center, pathologists are using diagnostic management teams to improve patient outcomes while lowering the medical costs

Diagnostic Management Teams are a hot concept within the medical laboratory profession. In fact, a new annual DMT conference in Galveston, Texas, is the fastest-growing event in the clinical laboratory industry. This year’s Diagnostic Management Team Conference will take place on February 6-7, 2018, and is produced by the Department of Pathology at the University of Texas Medical Branch (UTMB) in Galveston.

In simplest terms, a diagnostic management team (DMT) is described by pathologist Michael Laposata, MD, PhD, as “involving a group of experts who meet daily and focus on the correct selection of laboratory tests and the interpretation of complex test results in a specific clinical field. Typically, DMTs are led by pathologists focusing on the diagnosis of a specific group of diseases, along with physicians and other lab experts involved in the disease or health condition that is the focus of the DMT.”

How Pathologists Use Diagnostic Management Teams

“What differentiates a DMT are two changes from the classic diagnostic pathway,” continued Laposata. “First, the ordering physician gets assistance in selecting the correct tests. This can be done in several ways, such as creating expert-driven algorithms that are updated regularly to manage utilization of laboratory tests and dramatically minimize overuse and underuse. Use of such algorithms with reflex testing makes it easy for treating healthcare providers to order the right tests and only the right tests.

“The second key difference in this new diagnostic pathway is that, within the DMT’s specific clinical context, an expert-driven, patient-specific interpretation of the test results in a specific clinical context is generated by the members of the DMT,” he said. “This requires the knowledge of a true expert—not someone who may have a general idea about the meaning of a particular laboratory test result—and the participation of someone to help that expert search the medical record for relevant data to be included in the interpretation.

DMTs Typically Organized to Support Specific Diseases or Health Conditions

He pointed out that the DMT has a rather simple organization. There is a front-end and a back-end. The front-end starts when “physicians order tests by requesting evaluation of an abnormal screening test or clinical sign or symptom,” explained Laposata. “Upon receiving that request, the expert physician and colleagues in the DMT then synthesize the clinical and laboratory data and provide a narrative interpretation based upon medical evidence. This happens not only when specifically requested by the referring physician, but also for every case handled by the DMT.”

Diagnostic Management Teams are making significant contributions at the University of Texas Medical Branch (UTMB), Galveston. Pictured above, the members of UTMB’s coagulation DMT are (L-R): Jack Alperin, MD; Michael Laposata, MD; Aristides Koutrouvelis, MD; Camila Simoes, MD; Chad Botz, MD; Aaron Wyble, MD: and Jacob Wooldridge, MD. (Photo copyright: University of Texas Medical Branch, Galveston.)

The back-end of the process involves the DMT conducting an “expert-driven, patient-specific interpretation of the test results in a specific clinical context.” Here is where the participating clinical experts—supplemented by staff who conduct an informed search of the medical record to identify and collect data relevant to the diagnosis—sift through this much richer quantity of information to develop the diagnosis.

Overworked Physicians Value the Expertise, Diagnostic Accuracy of DMTs

Laposata points out that individual physicians who already may be overworked in their daily routines generally welcome the help of DMT experts who are up-to-date on the current literature, and who have decades of experience in these diseases and health conditions. He likes to point out that, in coagulation alone, a physician could have as many as 60 to 90 tests that can be ordered. He also notes that typical primary care physicians, for example, are generally not experts in selecting the best coagulation test to order for every group of symptoms, nor do they know how to order the most appropriate reflexive test to continue the diagnostic pathway.

Knowing how to interpret the results of the 60 to 90 different coagulation tests is equally challenging to most physicians.

Over the course of his career, Laposata has signed out more than 50,000 cases in the field of coagulation. “Every positive case that identified a diagnosis resulted in an earlier and more accurate diagnosis,” stated Laposata. “Every case negative for coagulopathy allowed the treating healthcare provider to focus on a diagnosis other than one related to bleeding and thrombosis.”

Using Clinical Laboratory Data to Improve Patient Outcomes, Reduce Costs

There are other reasons why a growing number of medical lab administrators and clinical pathologists believe that DMTs are the right solution at the right time. One reason is the steady reduction in reimbursement from Medicare and private payers. Another is the trend to measure and publish the quality metrics of hospitals and individual physicians.

There are ever more quality metrics that include diagnostic accuracy and total cost per healthcare encounter. Diagnostic Management Teams are proven to improve diagnostic accuracy and ensure the patient gets the right therapy faster. Both of these benefits contribute to substantial reductions in the cost per healthcare encounter.

Pathologists and clinical laboratory professionals interested in learning more about diagnostic management teams have two opportunities.

At the Galveston Island Convention Center on Feb. 6 -7, 2018, the second annual Diagnostic Management Team Conference will take place. Last year, several hundred-people attended. Information can be found at:

Special Webinar on Diagnostic Management Teams on January 17

For those interested in learning via webinar, Dark Daily is presenting Laposata and his colleagues in a special session on Wednesday, Jan. 17 at 1:00 PM EASTERN. It is titled, “Using Diagnostic Management Teams to Add Value with Clinical Laboratory Tests and Pathologists’ Expertise.”

During this valuable webinar, you’ll hear from three experts. First to speak will be Michael Laposata, MD, PhD. He will provide you with a detailed overview of DMTs, including:

  • How to assemble the right team;
  • How to engage with referring physicians; and,
  • How to work through individual cases.

Laposata will introduce you to the structure and organization of effective diagnostic management teams, organized around a specific disease or health condition and made up of pathologists, other lab scientists, and physicians who are expert in their particular clinical field. The objective of the DMT is to meet daily with the goal of coming up with faster, more accurate diagnoses in support of a patient’s care team.

Experience from a Diagnostic Management Team Focused on the Liver

Next to speak will be Heather Stevenson-Lerner, MD, PhD, a liver and transplantation pathologist and Assistant Professor, Department of Pathology, UTMB. She will discuss a DMT organized around diseases of the liver. This is a useful, step-by-step description of an effective DMT, illustrated with case studies that demonstrate how diagnostic management teams can make a positive and substantial contribution to improving individual patient outcomes.

The webinar’s third presenter is Christopher Zahner, MD, a resident pathologist at UTMB. He will share how to pull together all the information needed to support DMT interpretations. From the electronic health record (EHR) system to other overlooked sources of useful data, Zahner will explain the most productive ways to assemble any information that will be useful to the diagnostic management team and that will make a positive difference in patient care.

To register for the webinar and see details about the topics to be discussed, use this link (or copy and paste this URL into your browser:

This is an essential webinar for any pathologist or lab manager wanting to put the lab front and center in contributing clinical value in ways that directly improve patient outcomes while reducing medical costs. With hospital lab budgets shrinking and fee-for-service payments being slashed, the time is right for your lab team to consider how organizing diagnostic management teams can be the perfect vehicle to demonstrate why clinical lab tests and expertise can be a diagnostic game-changer within your hospital or health system.

And don’t forget, your participation in this webinar can be the foundation for a highly-successful effort to collaborate with physicians and clinical services, to the benefit of both the parent hospital and individual patients. That makes this webinar the smartest investment you can make for crafting your lab’s test utilization and added-value programs in support of clinical care.

—Michael McBride


Related Information:

Webinar: Using Diagnostic Management Teams to Add Value with Clinical Laboratory Tests and Pathologists’ Expertise

Pathologist Michael LaPosata, MD, Delivers the Message about Diagnostic Management Teams and Clinical Laboratory Testing to Attendees at Arizona Meeting

China Struggling to Keep Up with Demand for Anatomic Pathologists

As the still-developing pathology profession in China struggles to meet demand, 3rd-party medical laboratory groups, and university/industry arrangements, find opportunities to fill the needs of China’s hospitals

China is currently facing a severe shortage of anatomic pathologists, which blocks patients’ access to quality care. The relatively small number of pathologists are often overworked, even as more patients want access to specialty care for illnesses. Some hospitals in China do not even have pathologists on staff. Thus, they rely on understaffed anatomic pathology departments at other facilities, or they use imaging only for diagnoses.

To serve a population of 1.4 billion people, China has only 29,000 hospitals with seven million beds. Among the healthcare providers, there just 20,000 licensed pathologists, according to the Chinese Pathologist Association. By contrast, recent statistics show that the United States has a population of 326 million people with approximately 18,000 actively practicing pathologists and 5,815 registered hospitals with 898,000 beds.

The largest pathology department in China is at Fudan University Shanghai Cancer Center (FUSCC), a hospital with 1,259 beds in operation and 50 pathologists on staff. News accounts say those pathologists are expected to process 40,000 cases this year, surpassing their 2016 workload by 5,000 cases. The FUSCC pathologists are supported by a small number of supplemental personnel, which include assistants, technicians, and visiting clinicians.

Qifeng Wang, a pathologist at FUSCC, indicated that most leading hospitals in China with average or above-average pathology staffing are experiencing similar barriers as FUSCC. Large hospitals, such as:

·       Cancer Hospital at the Chinese Academy of Medical Sciences;

·       Beijing Cancer Hospital;

·       Peking Union Medical College Hospital;

·       West China Hospital; and

·       First Affiliated Hospital of Sun Yat-sen University also deal with similar staffing shortages and excessive workloads for their pathology departments.

“The diagnostic skill level at FUSCC is not that different from that in the U.S.,” Wang told Global HealthCare Insights (GHI). He added, however, that the competent skill level of their staffers is not sufficient to handle the internal workload at FUSCC plus the additional workload referred to them from other facilities.

Though not at the top of the list, as the graphic above illustrates, China is preceded only by Uganda, Sudan, and Malaysia for the number of patients per anatomic pathologist. China has approximately one pathologist per 74,000 people. By contrast, the United States has one pathologist for every 19,000 people. Studies indicate that, globally, the number of pathologists each year is shrinking. (Image copyright: Clinical Laboratory Products)

Patients Forced to Migrate to Receive Diagnoses

Because there are so few pathologists in the vast, heavily-populated country, many Chinese patients travel to major cities to increase their chances of obtaining reliable diagnosis and care, which further overwhelms the system.

The 1,530-bed Yunnan Cancer Hospital in the western city of Kunming handles more than 4,000 cases forwarded to them from other institutions annually. The 14 pathologists at the center also sometimes travel to rural communities to provide anatomic pathology services.

“It’s the complex cases that make it hard to keep up with our workload” said Yonglin Wang, an anatomic pathologist at the Yunnan Cancer Hospital, in the GHI article. The pathologists at Yunnan often refer their more demanding cases to larger hospitals to ensure the best analysis and outcomes for the patients.

Workload, Low Pay, and Lawsuits Discourage Pathology Enrollments

A logical solution to the critical shortage of pathologists in China would be to increase the number of people choosing the profession. However, medical students in the country tend to steer clear of surgical pathology due to the excessive workload, lower pay and status, and the threat of lawsuits relating to improper diagnoses.

To address the demand, a private pathology industry is emerging in China. There are currently more than 300 private medical laboratories located throughout the country. The largest of these businesses is KingMed Diagnostics in Guangzhou. According to their website, the 3rd-party medical laboratory group focuses on medical testing, clinical trials, food and hygiene testing, and scientific research. They examine more than 4,000 pathology cases annually, concentrating on:

·       Immunohistochemistry;

·       Specialized staining; and,

·       Ultrastructural and molecular pathological diagnosis.

American Colleges Partnering with Chinese Laboratory Groups

Organizations from other countries, including the United States, also are entering the pathology industry in China.

In 2014, the UCLA Department of Pathology and Laboratory Medicine partnered with Chinese firm Centre Testing International Corporation (CTI) to operate a clinical laboratory in Shanghai. In the endeavor, pathologists from UCLA trained Chinese lab specialists on the proper interpretation of tests at the 25,000 square-foot facility. (See The Dark Report, “UCLA, Centre to Open Lab In China to Offer High Quality Testing,” May 19, 2014.)

“Because pathology has a history of being undervalued in China, the country has a shortage of pathologists trained to diagnose and interpret complex test results in specialized fields of medicine,” said Scott Binder, MD, Senior Vice Chair at UCLA Health in a statement. “Our partnership gives CTI and UCLA the opportunity to save lives by changing that.”

“Our collaboration will offer the people of China oncology, pathology, and laboratory medicine services they can trust. Many of these services are not largely available in China and are needed by physicians and healthcare providers to accurately diagnose and treat their patients,” stated Dr. Sangem Hsu, President of CTI in the UCLA statement.

As the need for pathologists increases worldwide, many countries will struggle to fulfill the demand. This may create even more opportunities for enterprising medical laboratory organizations and anatomic pathology groups who have the wherewithal and determination to make a difference overseas.

—JP Schlingman

Related Information:

China Grapples with a Pathologist Shortage

In China, More Irate Patients Violently Attack Doctors over Wrong Diagnoses and Poor Healthcare

UCLA Launches Joint Venture with Chinese Firm to Open Sophisticated Lab in Shanghai

The Pathologist Workforce in the United States

UCLA, Centre to Open Lab In China to Offer High Quality Testing

Digital Pathology Gives Rise to Computational Pathology

Pathologist Workforce in the United States: I. Development of a Predictive Model to Examine Factors Influencing Supply

Anatomic Pathology in China Is a Booming Growth Industry

Digital Pathology Enables UCLA-China Lab Connection

Lab Testing, Pathology is Fast-growing in China


Are Payers Ganging up on Clinical Laboratories and Pathology Groups? Is this a Trend or Simply a Sign of Tougher Financial Times?

Medical laboratories today struggle to submit clean claims and be promptly and adequately reimbursed as health insurers institute burdensome requirements and audit more labs

Across the nation, clinical laboratories and anatomic pathology groups of all sizes struggle to get payment for lab test claims. Veteran lab executives say they cannot remember any time in the past when medical laboratories were challenged on the front-end with getting lab test claims paid while also dealing on the back-end with ever-tougher audits and unprecedented recoupment demands.

These issues center upon the new policies adopted by the Medicare program and private health insurers that make it more difficult for many clinical laboratories to be in-network providers, to obtain favorable coverage guidelines for their tests, and to have the documentation requested when auditors show up to inspect lab test claims. This is true whether the audit is conducted by a Medicare Recovery Audit Contractor (RAC) or a team from a private health insurer.

Source of Financial Pressure on Medical Laboratories in US

Another source of financial pressure on medical laboratories in the United States today is the ongoing increase in the number of patients who have high-deductible health plans—whether from their employer or from the Affordable Care Act’s Health Insurance Marketplace (AKA, health exchanges). The individual and family annual deductibles for these plans typically start at around $5,000 and go to $10,000 or more. Many labs are experiencing big increases in patient bad debt because they don’t have the capability to collect payment from patients when they show up in patient service centers (PSCs) to provide specimens.

Some of these developments make it timely to ask the question: Is it a trend for payers to gang up on clinical laboratories and pathology groups and make it tougher for them to be paid for the lab tests they perform? Multiple factors can be identified to support this thesis.

“Is it a coincidence that, in recent years, so many payers are initiating numerous requirements that add complexity to how labs submit claims for lab tests and how they get paid?” asked Richard Faherty of RLF Consulting LLC. Faherty was formerly Executive Vice President, Administration, with BioReference Laboratories, Inc. “I can track four distinct developments that, collectively, mean that fewer lab claims get paid, expose clinical laboratories to extremely rigorous audits with larger recoupment demands, and heighten the risk of fraud and abuse allegations due to use of contract or third-party sales and marketing representatives who represent independent medical lab companies.”

Faherty described the first of his four developments as prior-authorization requirements for molecular and genetic tests. “Health insurers are reacting to the explosion in molecular and genetic testing—both in the number of unique assays that a doctor can order and the volume of orders for these often-expensive tests—by establishing stringent prior-authorization requirements,” he noted.

More Prior-Authorization Requirements for Molecular, Genetic Tests

“At the moment, many clinical lab companies and pathology groups are attempting to understand the prior-authorization programs established by Anthem (which became effective on July 1) and UnitedHealthcare (which became effective on November 1),” explained Faherty. “Just these two prior-authorization programs now cover as many as 80 million beneficiaries. There are plenty of complaints from physicians and lab companies because the systems payers require them to use are not well-designed and quite time-consuming.

“One consequence is that many lab executives complain that they are not getting paid for genetic tests because their client physicians are unable to get the necessary prior authorization—yet the lab decides to perform the test to support good patient care even though it knows it won’t be paid.”

Richard Faherty (left), CEO, RLF Consulting LLC, and formerly with Bio-Reference Laboratories, Inc., will moderate this critical webinar. Joining him will be Rina Wolf (center), Vice President, Commercialization Strategies, Consulting and Industry Affairs, XIFIN, Inc., and Karen S. Lovitch (right), JD, Practice Leader, Health Law Practice, Mintz Levin, PC, Washington, DC. The webinar takes place Wednesday, December 6, 2017, at 2 p.m. EST; 1 p.m. CST; 12 p.m. MST; 11 a.m. PST. Click here to register. (Photo copyright: Dark Intelligence Group.)

Payers Checking on How Clinical Laboratories Bill, Collect from Patients

Faherty’s second trend involves how medical lab companies are billing and collecting the amounts due from patients. “Most payers now pay close attention to how clinical laboratories bill patients for co-pays, deductibles, and other out-of-pocket amounts that are required by the patients’ health plans,” he commented. “Labs struggle with this for two reasons.

“One reason is the fact that tens of millions of Americans currently have high-deductible health insurance plans,” said Faherty. “In these cases, medical laboratories often must collect 100% of the cost of lab testing directly from the patients. The second reason is the failure of many independent lab companies to properly and diligently balance-bill their patients. This puts these labs at risk of multiple fraud and abuse issues.”

Many Medical Lab Companies Undergoing More Rigorous Audits by Payers

Faherty considers trend number three to be payers’ expanding use of rigorous audits of lab test claims. “In the past, it was relatively uncommon for a clinical lab company or pathology group to undergo audits of their lab test claims,” he observed. “That has changed in a dramatic way. Today, the Medicare program has increased the number of private auditors that visit labs to inspect lab test claims. At the same time, private health insurers are ramping up the number and intensity of the audits they conduct of lab test claims and substantially increasing their demands for recoupment without audit.

“One consequence of these audits is that medical laboratories are being hit with substantial claims for recoupment,” noted Faherty. “I am aware of multiple genetic testing companies that have been hit with a Medicare recoupment amount equal to two or three years of the lab’s annual revenue. Some have filed bankruptcy because the appeals process can take three to four years.”

Are Contract Lab Sales Reps More Likely to Offer Physicians Inducements?

Faherty’s fourth significant trend involves the greater use of independent contractors that handle lab test sales and marketing for clinical lab companies. “This trend affects both labs that use third-party lab sales reps and labs that don’t,” he said. “Labs that use contract sales and marketing representatives do not have direct control over the sales practices of these contractors. There is ample evidence that some independent lab sales contractors are willing to pay inducements to physicians in exchange for their lab test referrals.

“This is a problem in two dimensions,” noted Faherty. “On one hand, clinical lab companies that use third-party sales contractors don’t have full control over the marketing practices of these sales representatives. Yet, if federal and state prosecutors can show violations of anti-kickback and self-referral laws, then the lab company is equally liable. In certain cases, government attorneys have even gone after executives on a personal basis.

“On the other hand, I am hearing lab executives complain now that a substantial number of office-based physicians are so used to various forms of inducement offered by third-party sales representatives that the lab’s in-house sales force cannot convince those physicians to use their lab company without a comparable inducement. If true, this is a fundamental shift in the competitive market for lab testing services and it puts labs unwilling to pay similar inducements to physicians at a disadvantage.”

These four trends describe the challenges faced by every clinical laboratory, hospital laboratory outreach program, and pathology group when attempting to provide lab testing services to office-based physicians in a fully-compliant manner and be paid adequately and on time by health insurers.

Why Some Labs Continue to Be Successful and What They Can Teach You

These four trends may also explain why many medical lab companies are dealing with falling revenue and encountering financial difficulty. However, there continue to be independent lab companies that have consistent success with their coding, billing, and collections effort. These labs put extra effort into aligning their business practices with the requirements of the Medicare program and private health insurers.

To help pathologists and managers running clinical laboratory companies, hospital lab outreach programs, and pathology groups improve collected revenue from lab test claims and to improve lab compliance, Pathology Webinars, LLC, is presenting a timely webinar, titled, “How to Prepare Your Lab for 2018: Essential Insights into New Payer Challenges with Lab Audits, Patient Billing, Out-of-Network Claims, and Heightened Scrutiny of Lab Sales Practices.” It takes place on Wednesday, December 6, 2017 at 2:00 PM EDT.

Three esteemed experts in the field will provide you with the inside scoop on the best responses and actions your clinical lab and pathology group can take to address these major changes and unwelcome developments. Presenting will be:

·       Rina Wolf, Vice President, Commercialization Strategies, Consulting and Industry Affairs, XIFIN, Inc. in San Diego; and,

·       Karen S. Lovitch, JD, Practice Leader, Health Law Practice, Mintz Levin, PC, in Washington, DC;

·       Moderating will be Richard Faherty of RLF Consulting LLC, and formerly with Bio-Reference Laboratories, Inc.

Special Webinar with Insights on How Your Lab Can Collect the Money It’s Due

To register for the webinar and see details about the topics to be discussed, use this link (or copy and paste this URL into your browser:

This is an essential webinar for any pathologist or lab manager wanting to improve collected revenue from lab test claims and to improve lab compliance. During the webinar, any single idea or action your lab can take away could result in increasing collected revenue by tens of thousands even hundreds of thousands of dollars. That makes this webinar the smartest investment you can make for your lab’s legal and billing/collection teams.

—Michael McBride

Related Information:

How to Prepare Your Lab for 2018: Essential Insights into New Payer Challenges with Lab Audits, Patient Billing, Out-of-Network Claims, and Heightened Scrutiny of Lab Sales Practices

Risk, Compliance, Pay—A Juggling Act for Labs

Continued ‘Aggressive Audit Tactics’ by Private Payers and Government Regulators Following 2018 Medicare Part B Price Cuts Will Strain Profitability of Clinical Laboratories, Pathology Groups

Threats to Profitability Causing Clinical Laboratories, Pathology Groups to Take on Added Risk by Entering into ‘Problematic’ Business Relationships and Risky Pricing Plans

Payers Hit Medical Laboratories with More and Tougher Audits: Why Even Highly-Compliant Clinical Labs and Pathology Groups Are at Risk of Unexpected Recoupment Demands

‘Death by 1,000 Knives’ Could Be in Store for Clinical Laboratories, Pathology Groups Not Prepared to Comply with New Medicare Part B Regulations