Insurance industry claims new federal price transparency regulations cost each payer as much as $13.6 million in set up and maintenance costs
Price transparency in hospital, clinical laboratory, and other service provider costs marches ever closer to reality for America’s healthcare consumers. Meanwhile, some insurers and hospital groups are working to block implementation of federal rules they argue will confuse consumers and potentially lead to higher costs.
The first is a Proposed Rule, titled, “Transparency in Coverage Proposed Rule” (CMS-9915-P) that would require payers to make public on their websites negotiated rates for in-network providers and allowed amounts paid for out-of-network providers. Insurers also would be required to make an online “tool” available to members that would provide consumers with out-of-pocket cost estimates for “all covered healthcare items and services.” The 60-day public comment period for this rule went into effect November 15, 2019.
Medical laboratories and anatomic pathology groups may want to closely monitor ongoing efforts by payers and hospital groups to block these rules, since any changes will extend to their services, as well as extend price transparency to most employer-based group health plans and health insurance issuers offering group and individual coverage.
Will Transparency Lead to Higher Healthcare Costs?
In its story on insurer claims, FierceHealthcare reported that the rule would require payers to disclose a “staggering” amount of data, leading to implementation costs 26 times more than the Trump administration’s $510,000 estimate. To comply with the federal rule, an insurer will spend as much as $13.63 million on setup and maintenance. That prediction is based on an economic analysis from economic consulting firm Bates White, which conducted the survey on behalf of The Blue Cross Blue Shield Association (BCBSA).
“Some plans have indicated they would be forced to run two sets of tools—one designed to meet member shopping needs and another implemented only to meet the requirements of the proposed rule,” the BCBSA told FierceHealthcare.
Meanwhile, the Association for Community Affiliated Plans (ACAP) argued in a letter to Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma that cost-sharing liability estimates—which are not a price quote for care—could “lead to consumer confusion and frustration.” The ACAP also asserts the transparency plan could inadvertently lead to higher healthcare cost increases.
“In the absence of quality data, consumers may determine that high cost equates to higher value, select the higher-cost providers, and ultimately drive up medical expenses, especially in circumstances where the consumer’s out-of-pocket costs have been met,” wrote ACAP Chief Executive Officer Margaret A. Murray.
“We have long supported efforts to make quality and pricing information more accessible, understandable, and actionable for consumers,” the ACHP wrote. “But they need real-time, patient-specific information tied to individual coverage benefits, not a massive published list of prices that may only frustrate consumers and likely increase costs over time.”
Hospital Associations and Healthcare Systems Bring Lawsuit Against HHS
In December 2019, several hospital associations and healthcare groups filed a lawsuit to block next year’s implementation of the hospital price transparency rule. The plaintiffs included the:
These healthcare organizations and providers joined together to argue that HHS lacks the statutory authority to require and enforce public disclosure of individually negotiated rates between commercial health insurers and hospitals. They also say consumers are likely to be confused by the information they receive.
“America’s hospitals and health systems stand with patients and are dedicated to ensuring they have the information needed to make informed healthcare decisions, including what their expected out-of-pocket costs will be,” said Rick Pollack (above), President and CEO, American Hospital Association, in a news release. “Instead of giving patients relevant information about costs, this rule will lead to widespread confusion and even more consolidation in the commercial health insurance industry.” (Photo copyright: American Hospital Association.)
In its legal response, HHS contends that hospitals are adding to consumers’ confusion by failing to provide transparency.
“They do not dispute that consumers are casting about for accurate information about prices in a complex healthcare system, yet they rely on that same complexity as an affirmative reason to deprive patients of pricing information they need to figure out their out-of-pocket expenses,” HHS said in its brief.
DePaul University Professor Anthony LoSasso, PhD, who specializes in healthcare economics, admits to being “on the fence” regarding the pros and cons of transparency plans.
“I want to think that people can benefit from price transparency. But for a variety of reasons, people don’t look at pricing info even when it’s available,” LoSasso told WTTW News in Chicago.
Nevertheless, HHS vows to continue its push for price transparency.
“Hospitals should be ashamed that they aren’t willing to provide American patients the cost of a service before they purchase it,” HHS Deputy Assistant Secretary and National Spokesperson Caitlin Oakley told Reuters in a response to the hospital groups’ lawsuit.
In light of the government’s push to make healthcare pricing more transparent, clinical laboratory and anatomic pathology leaders in hospitals and health systems would be wise to prepare for a future that includes price shopping by consumers.
Clinical laboratories will want to develop value-based lab testing services as the nation’s largest health insurers prepare to engage with Medicare Advantage patients in record numbers
UnitedHealth Group (UNH), the nation’s largest health insurer, forecasts wildly impressive growth of Medicare Advantage plans and value-based care. If this happens, it would further shrink the proportion of fee-for-service payments to providers, including medical laboratories.
Switching to a value-based care reimbursement system, administered through Medicare Quality Payment Programs (QPPs), is one of the more disruptive changes to hit physicians, including pathologists. And, given UnitedHealthcare’s predictions, healthcare system adoption of QPPs will likely accelerate and continue to impact clinical laboratory revenue.
“Within 10 years, we expect half of all Americans will be receiving their healthcare from physicians operating in highly evolved and coordinated value-based care designs,” stated David Wichmann, CEO, UnitedHealth Group (NYSE:UNH), during the company’s second-quarter earnings call in April. (Photo copyright: Minneapolis/St. Paul Business Journal.)
50% of All Americans in Value-based Care Systems by 2028
UnitedHealth Group also envisions more than 50% of seniors enrolled in Medicare Advantage plans within five to 10 years, up by 33% over current enrollments, Healthcare Finance reported.
“Where it can go, hard to tell, but I don’t think it’s unreasonable to think about something north of 40% and approaching 50%. It doesn’t seem like an unreasonable idea,” said Steve Nelson, CEO, UnitedHealthcare, a division of UnitedHealth Group, during the earnings call.
In light of UNH’s widely-publicized comments, clinical labs should consider:
Preparing strategies to reduce dependence on fee-for-service payments;
Developing diagnostic services that add value in value-based reimbursement arrangements.
For labs, more seniors in Medicare Advantage plans means fewer patients with Medicare Part B benefits, which cover tests in a fee-for-service style. In contrast, Medicare Advantage plans are marketed to seniors by companies that contract with Medicare. These insurance companies typically restrict their provider network to favor clinical laboratories that offer them the best value.
Why Insurers Like Medicare Advantage Plans
UnitedHealth Group is not the only insurer anticipating big changes in the Medicare Advantage market. Humana (NYSE:HUM) of Louisville, Ky., is reallocating some services from Affordable Care Act health insurance exchange plans to the Medicare Advantage side of the business, Healthcare Dive reported.
According to a Kaiser Family Foundation (KFF) report, these insurers are ranked by number of enrollees in Medicare Advantage plans:
UnitedHealthcare—24%;
Humana—17%;
Blue Cross Blue Shield affiliates—13%.
Healthcare Dive noted that, in a volatile healthcare industry, payers seem to prefer the stability and following benefits of Medicare Advantage plans:
Market potential, as evidenced by growing elderly population;
Good retention rate of Medicare Advantage customers; and
Favorable payments by the Centers for Medicare and Medicaid Services (CMS) to the insurers.
Cleveland Clinic Makes Deals with Humana, Blue Cross Blue Shield
Last year, Cleveland Clinic and Humana announced creation of two Medicare Advantage health plans with no monthly premiums or charges for patients to see primary care doctors, and no need for referrals to in-network specialists, according to a joint Humana-Cleveland Clinic news release.
And, along with Anthem Blue Cross and Blue Shield in Ohio, Cleveland Clinic also launched Anthem MediBlue Prime Select, a Medicare Advantage HMO plan with no monthly premium, a news release announced. For most of their care needs, members access Cleveland Clinic hospitals and physicians.
Control Costsas Medicare Advantage Plans Grows
These examples highlight the necessity for clinical laboratories to prepare as the Medicare Advantage program expands and accompanying networks narrow.
“Medicare Advantage plans will result in more pressure on providers [such as clinical laboratories] and hospitals to focus on the cost of care,” said Michael Abrams, Managing Partner at Numerof and Associates, told Healthcare Dive.
With an exploding elderly population, medical laboratories should analyze what the shift to value-based care and Medicare Advantage plans may mean for their revenues.
Medical laboratory leaders must take steps to protect their lab’s financial stability and know how to prepare and respond to investigations and regulatory threats
Clinical laboratories and anatomic pathology groups may soon face a new normal that includes more frequent and tougher audits by both private payers and the government, resulting in larger monetary demands. The financial strain medical laboratories will experience from more aggressive audits will be compounded by the roll out on January 1, 2018, of new Medicare Part B price cuts.
Attorney Richard S. Cooper, Co-chair, National Healthcare Practice Group, McDonald Hopkins, LLC, in Cleveland, says audit activity has been “ramping up” during the past 18 months, but has accelerated in recent months.
“We are seeing a dramatic increase in the number of audits and the dollar amount the payers are trying to recoup as a result of those audits,” Cooper said in an interview with Dark Daily, noting monetary demands can reach “seven to eight” figures.
“We’re seeing that with both government payers as well as commercial payers and we’re seeing much more aggressive audit tactics being utilized than we have in the past.”
Payers Put Clinical Laboratories Under Increased Scrutiny
While toxicology/pharmacogenomics and molecular/genetic testing laboratories frequently are the targets of the increased scrutiny, Cooper says no medical laboratory is immune from questioning. The “medical necessity” of providing and billing for diagnostic tests or services, and laboratory waivers of “patient responsibility” for copays and deductibles, are the two most common compliance issues being cited, states Cooper, who points to Cigna, UnitedHealthcare and Blue Cross Blue Shield as among the most active commercial payers his firm encounters.
“There are large dollars at stake and they are going after those dollars,” Cooper explains.
In this new environment, Cooper maintains medical directors and lab executives must:
Protect the lab’s financial stability in 2018 by considering operational changes and taking other steps to prepare for revenue losses due to PAMA (Protecting Access to Medicare Act).
Get educated about practices that can trigger audits by commercial payers, or state and federal regulators, and consider conducting self-audits using an independent third-party.
Know how to respond if a lab is charged with proficiency test violations, which can result in significant penalties from Centers for Medicaid and Medicare Services (CMS), such as loss of a lab’s CLIA license and revocation of the medical director’s license to operate a medical laboratory for two years.
Expect scrutiny of “piggyback” arrangements with toxicology labs that could raise compliance concerns and violate commercial payer contracts. A “piggyback” arrangement is where a lab bills under the payer contract of another provider because it is unable to contract with the payer directly. This often involves “piggybacking” on lab or hospital (usually Critical Access Hospital) contracts. In many cases, the billing entity does not perform the lab services for which they are billing. The services are instead performed by the non-participating lab, and the billing provider pays most of the collections back to the non-billing laboratory, retaining a fee for using the contracts. There may not be disclosure to the payers about which entity actually performed the test.
Navigating Tougher Clinical Laboratory Laws and Regulations
Attorney Richard S. Cooper, Co-chair, National Healthcare Practice Group, McDonald Hopkins LLC, in Cleveland will be a featured speaker and moderator during a new Dark Daily webinar on the Medicare Part B price cuts, and the critical legal and compliance issues clinical laboratories and pathology groups face starting in 2018. (Photo copyright: McDonald Hopkins LLC.)
This crucial learning event takes place on Wednesday, November 8, 2017, at 1 p.m. EST.
These three attorneys are among the nation’s foremost experts in issues unique to clinical laboratories, pathology groups, hospital labs, toxicology/pharmacogenomics labs, and molecular/genetic testing labs. Following our speakers’ presentations, there will be a question and answer period, during which you can submit your own specific questions to our experts.
You can’t afford to miss this opportunity. Click here to get up to speed on the most serious regulatory, compliance, and managed care contracting issues confronting all labs today. This webinar will provide solutions to the perils facing labs now and in 2018 by helping you map a proactive and effective course of action for your clinical lab or pathology group.
Yet financial pressures on insurers continue to increase premiums and potentially squeeze reimbursement rates for clinical laboratories and pathology groups
Walmart shoppers expect to find low prices on the retailer’s shelves, but the discounter’s full-time employees may be surprised to learn their company healthcare plan is also a low-cost leader. This is a significant finding and is significant for pathologists and clinical lab managers because the Walmart health benefit plan includes an expanded provider network, at a premium that is about half of the subsidized rate for a comparable health plan at Healthcare.gov.
The report also noted that Walmart’s participation in a national healthcare network means employees typically choose from a list of participating providers and high-profile hospitals that dwarfs the number of options on Obamacare exchanges. (more…)
Pathologists should take note that an increasing number of patients who want genetic tests are complaining when they learn their insurance plan will not pay for such tests
Concerned about the increased cost of genetic tests, health insurers are becoming reluctant to pay for many types of molecular diagnostics and gene tests. When refusing to pay for these tests, however, they face a buzz saw of angry patients—many of whom see a genetic test as their last resort for a diagnosis and selection of a therapy that might just work for them.
Reuters recently reported that health insurance companies are reluctant to pay providers for genetic-sequencing tests until more research becomes available. This is a sign for pathologists and clinical laboratory managers that enough patients have been affected by this situation to justify news coverage by a major news source. (more…)
