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Clinical Laboratories and Pathology Groups

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Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
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Artificial Intelligence in Digital Pathology Developments Lean Toward Practical Tools

Patient care gaps can be addressed by machine learning algorithms, Labcorp vice president explains

Is there hype for artificial intelligence (AI)? As it turns out, yes, there is. Keynote speakers acknowledged as much at the 2022 Executive War College Conference on Laboratory and Pathology Management. Nevertheless, leading clinical laboratory companies are taking real steps with the technology that showcase AI developments in digital pathology and patient care.

Labcorp, the commercial laboratory giant headquartered in Burlington, N.C., has billions of diagnostic test results archived. It takes samplings of those results and runs them through a machine learning algorithm that compares the data against a condition of interest, such as chronic kidney disease (CKD). Machine learning is a subdiscipline of AI.

Based on patterns it identifies, the machine learning algorithm can predict future test results for CKD based on patients’ testing histories, explained Stan Letovsky, PhD, Vice President for AI, Data Sciences, and Bioinformatics at Labcorp. Labcorp has found the accuracy of those predictions to be better than 90%, he added.

In “Keynote Speakers at the Executive War College Describe the Divergent Paths of Clinical Laboratory Testing as New Players Offer Point-of-Care Tests and More Consumers Want Access to Home Tests,” Robert Michel, Editor-in-Chief of Dark Daily, reported on how AI in digital pathology was one of several “powerful economic forces [that] are about to be unleashed on the traditional market for clinical laboratory testing.”

Labcorp also has created an AI-powered dashboard that—once layered over an electronic health record (EHR) system—allows physicians to configure views of an individual patient’s existing health data and add a predictive view based on the machine learning results.

For anatomic pathologists, this type of setup can quickly bring a trove of data into their hands, allowing them to be more efficient with patient diagnoses. The long-term implications of using this technology are significant for pathology groups’ bottom line.

Stan Letovsky, PhD
Stan Letovsky, PhD (above), Vice President for AI, Data Sciences, and Bioinformatics at Labcorp, discussed AI developments in digital pathology during his keynote address at the 2022 Executive War College in New Orleans. “The best thing as a community that we can do for patients and their physicians with AI is to identify care gaps early on,” he said, adding, “If pathologists want to grow and improve their revenue, they have to be more productive.” (Photo copyright: Dark Intelligence Group). 

Mayo Clinic Plans to Digitize 25 Million Glass Slides

In other AI developments, Mayo Clinic in Rochester, Minn., has started a project to digitally scan 25 million tissue samples on glass slides—some more than 100 years old. As part of the initiative, Mayo wants to digitize five million of those slides within three years and put them on the cloud, said pathologist and physician scientist Jason Hipp, MD, PhD, Chair of Computational Pathology and AI at Mayo Clinic.

“We want to be a hub within Mayo Clinic for digital pathology,” Hipp told Executive War College attendees during his keynote address.

Hipp views his team as the bridge between pathologists and the data science engineers who develop AI algorithms. Both sides must collaborate to move AI forward, he commented, yet most clinical laboratories and pathology groups have not yet developed those relationships.

“We want to embed both sides,” Hipp added. “We need the data scientists working with the pathologists side by side. That practical part is missing today.”

The future medical laboratory at Mayo Clinic will feature an intersection of pathology, computer technology, and patient data. Cloud storage is a big part of that vision.

“AI requires storage and lots of data to be practical,” Hipp said. 

Scott Wallask

Related Information:

Keynote Speakers at the Executive War College Describe the Divergent Paths of Clinical Laboratory Testing

COVID-19 Testing Reimbursement Scrutiny is Coming for Clinical Laboratories, Attorneys Predict at Executive War College

What is Machine Learning?

Data Scientist Overview

Keynote Speakers at the Executive War College Describe the Divergent Paths of Clinical Laboratory Testing as New Players Offer Point-of-Care Tests and More Consumers Want Access to Home Tests

27th annual meeting of medical laboratory and pathology managers delivers insights on the path ahead for diagnostics, ranging from the supply chain shortage and the ‘Great Resignation’ to advances in artificial intelligence and whole genome sequencing in service of precision medicine

Divergent paths of diagnostic testing are among the central topics being discussed at the 27th annual Executive War College on Laboratory and Pathology Management happening this week in New Orleans.

What’s coming as healthcare providers move to post-COVID-19 pandemic workflows will be of keen interest to clinical laboratory leaders attending this critical event. Several new and dynamic market changes are reshaping the development of, ordering, and reimbursement for medical laboratory tests. They include:

  • Millennials as change agents in how care is accessed and delivered.
  • New buyers of large volumes of clinical lab tests, such as retail pharmacies.
  • How clinical laboratories can earn new sources of revenue while supporting precision medicine.

Clinical Labs Should Prepare for the ‘Coming Roller Coaster Ride’

Robert L. Michel, Editor-in-Chief of Dark Daily’s sister publication, The Dark Report, and Founder of the Executive War College, described the “coming roller coaster ride” for the pathology and clinical laboratory industries.

Amid the usual operational issues labs deal with (e.g., workforce shortages, supply chain disruptions, regulatory pressures), he noted the emergence of new and powerful forces pulling clinical laboratories and pathology groups in all directions.

“One primary factor is how Millennials will use healthcare differently than Gen Xers and Baby Boomers,” Michel noted. “Similarly, Millennials will make up 75% of the pathologists and the lab workforce by 2025.

“Another major force for change will be new buyers of clinical laboratory tests,” he continued. “For example, expect to see national retail pharmacy chains build thousands of primary care clinics in their retail pharmacies. These clinics will need lab tests and will become major buyers of near-patient analyzers and lab tests.

“A third interesting factor is that a new class of in vitro diagnostics (IVD) manufacturers are developing analyzers and test systems that use minimal amounts of specimens and return answers in minutes. Primary care clinics in retail pharmacies will be interested in buying these lab testing solutions,” Michel concluded.

Robert L. Michel
Robert L. Michel (above), Editor-in-Chief of The Dark Report and Founder of the Executive War College, has studied and worked with leaders of clinical laboratories and pathology groups for more than four decades. During his keynote address, he predicted that powerful economic forces are about to be unleashed on the traditional market for clinical laboratory testing. Those forces include the use of artificial intelligence (AI) in digital pathology, primary care in retail pharmacies, and increased focus on precision medicine. (Photo copyright: The Dark Intelligence Group.)

Peer-to-Peer Learning Opportunities

With approximately 90 presenters scheduled, clinical laboratory leaders from such prestigious institutions as Johns Hopkins Hospital, Mayo Clinic, United Indian Health Services, and more will facilitate peer-to-peer learnings throughout the conference.

In addition, industry executives scheduled to deliver keynotes include Jon Harol, Lighthouse Lab Services Founder and President; Stan Letovsky, PhD, Vice President for AI, Data Sciences and Bioinformatics as well as other executives from Labcorp; and Curtiss McNair II, Vice President and General Manager of Laboratory Services at American Oncology Network.

In addition, several sessions and panel Q/A discussions will cover critical legal and regulatory issues and payer challenges facing the industry.

New Technologies, Workflows, Analytics

The 2022 Executive War College master classes, breakouts, panel discussions, and benefactor sessions will highlight several significant themes:

  • Lab data analytics and utilization. Sessions this year are heavily weighted toward data analytics, aggregation, and utilization. Look for case studies demonstrating the value of lab data, and where and how data has become actionable and monetized. As Dark Daily previously reported, useful data structures have been difficult to achieve for clinical laboratories; however, the case studies featured during this week’s conference will demonstrate signs of progress and highlight lessons learned.
  • Automation. Several case studies are planned that focus on expansion and modernization using laboratory automation. From Butler Health System, an independent hospital system in western Pa., Robert Patterson, MD, Medical Director of Pathology, Laboratory Medicine, and Laboratory Outreach, will detail steps Butler took that enabled its labs to better compete with other area health systems and national reference laboratories. Likewise, Eric Parnell, System Supervisor of Microbiology for Bronson Healthcare in southern Mich., will discuss his lab’s transition to and implementation of total laboratory automation.
  • Genetic testing and next-generation sequencing (NGS). Quickly becoming the foundational disruptor technology on which many new and powerful clinical laboratory tests and procedures are based, genomic testing has now become accessible and affordable. Many clinical laboratories and pathology groups are using molecular diagnostics testing to deliver clinical value to referring physicians.

Other sessions include:

  • Launching and scaling clinical NGS testing in a clinical environment (featuring a project at Rady Children’s Hospital in San Diego).
  • How labs and payers can work together to achieve better outcomes and health equity using genomic testing.
  • Effective ways to repurpose PCR and other genetic test instruments to build specimen volume and increase lab revenue.

Paths Forward for Clinical Labs and Pathology Groups

Another important topic being discussed at the 2022 Executive War College is how to position clinical laboratories and pathology groups for the next phase of modern healthcare.

Legal experts and consultants from McDonald Hopkins LLC, Advanced Strategic Partners, Pathology Practice Advisors, and ECG Management Consultants, among others, will answer questions on:

  • Attracting capital for clinical labs and pathology groups.
  • Emerging concepts in growth strategies.
  • Business valuation factors.
  • Unexpected disruptions during sales closings.

These are just a few highlights of the informative sessions and expert speakers scheduled during this week’s 27th annual Executive War College in New Orleans. Look for more coverage in Dark Daily during the days ahead and in upcoming editions of our sister publication The Dark Report.

Full details about the 2022 Executive War College can be found by clicking on this link. (Or copy/paste this URL into your web browser: http://www.executivewarcollege.com.)

Speakers, session topics, and the conference agenda can be viewed by clicking on this link. (Or copy/paste this URL into your web browser: https://executivewarcollege.darkintelligencegroup.com/executive-war-college-agenda-2022.)

—Liz Carey

Related Information:

Executive War College on Lab and Pathology Management

Executive War College: Efficient Data Structure Can Bring in More Reimbursement Dollars and Allow Clinical Laboratories to Sell Aggregated Information

Supreme Court May Be Partly to Blame for Shortage of At-Home Rapid COVID-19 Tests During Pandemic

High court decision in 2012 altered patent law and effectively blocked protections for certain clinical laboratory diagnostic tests and procedures

Clinical laboratory leaders and pathologists will be interested to learn that a US Supreme Court (SCOTUS) decision from 2012 may be partly to blame for the shortage of at-home COVID-19 rapid antigen tests while the SARS-CoV-2 Omicron variant surged this past winter.

During that time, consumer demand for all COVID-19 at-home tests quickly depleted the already dwindling supply. However, the 2012 SCOTUS ruling in Mayo Collaborative Services v. Prometheus—which rewrote patent law in the biotech industry—effectively blocked patent protections for many medical laboratory diagnostic tests and procedures, wrote Paul R. Michel in a column he penned for STAT.

Michel served on the United States Court of Appeals for the Federal Circuit from 1988 to his retirement in 2010, and formerly was its chief judge from 2004 to 2010.

Shortage of COVID-19 Home Tests Due to ‘Tsunami of Demand’

The diagnostic test shortage that continued throughout the second year of the pandemic has been blamed on a “tsunami of demand,” as vaccine and testing mandates went into effect, according to CNBC. Other causes of the shortages were linked to shortages of raw materials and the US Food and Drug Administration’s slow review process, The Wall Street Journal reported.

However, as Michel noted in STAT, Mayo v. Prometheus “was a legal bombshell that upended the prior law on patent eligibility. And it has had disastrous real-world consequences for Americans.”

San Diego-based Prometheus Laboratories had developed a diagnostic test that measured how well patients metabolized medicines to treat autoimmune diseases. When Mayo Collective Services, which does business as Mayo Clinic Laboratories, developed its own test based on the Prometheus design, Prometheus sued for patent infringement. But it lost when the case reached the Supreme Court.

Michel points out that developing new clinical laboratory diagnostic tests and methods is “slow and expensive” work that becomes financially unsustainable for biotech companies when patent protections are removed.

In the “wake of the Mayo decision,” he wrote, many small biotech companies that had been focused on developing new diagnostics went out of business. Simultaneously, some major research centers, such as the Cleveland Clinic, ended programs aimed at discovering new diagnostic methods.

Financial Repercussions of the SCOTUS Ruling

“In essence, in the four years following Mayo, investment in disease diagnostic technologies was nearly $9.3 billion dollars lower than it would have been absent Mayo,” wrote A. Sasha Hoyt, in her analysis of financial repercussions caused by the loss of venture capital investment in new medical laboratory diagnostics. Hoyt is an incoming associate and judicial extern at Finnegan, Henderson, Farabow, Garrett and Dunner, LLP in Washington DC.

“However,” she added, “it is important to note that the yearly investment totals for disease diagnostic technologies have generally increased in the years following Mayo—but it has increased at a lower rate compared to all other industries.”

Shahrokh Falati, PhD, JD, director of the Patent Law Clinic at New York Law School, maintains that the Supreme Court-created exceptions to existing patent law have damaged America’s standing as a leader in new technology development and commercialization.

“The US Supreme Court effectively redefined the scope of patent eligible subject matter when it decided Mayo. This decision focused on medical diagnostic technology and has had a profound effect on the biotechnology and personalized medicine industries in the United States …,” he wrote in the North Carolina Journal of Law and Technology.

Shahrokh Falati, PhD, JD
“[The Supreme Court’s ruling] has caused havoc in the biopharmaceutical industry by not only making it a near impossibility to obtain a patent in certain fields, but also by vastly increasing the number of medical diagnostic patents being invalidated based on Section 101 of Title 35 of the US Code,” said Shahrokh Falati, PhD, JD (above), director of the Patent Law Clinic at New York Law School, in an article he wrote for the North Carolina Journal of Law and Technology. Funding for clinical laboratory diagnostics development also has curtailed since the SCOTUS ruling. (Photo copyright: Albany Law School.)

Precision Medicine at Risk without Intellectual Property Protection

Elizabeth O’Day, PhD, CEO and founder of Olaris, Inc., a precision medicine company, has advocated for reform of Section 101. In an Olaris blog post, she argues that reform should provide intellectual property protection for therapeutic companies that develop biomarkers and algorithms used in precision medicine.

“We have the omic technologies (genomic, proteomic, metabolomic, etc.) and analytical tools needed to uncover biomarkers that could dramatically enhance our ability to detect and treat disease,” O’Day wrote. “Let’s reform Section 101 so that these breakthrough products have the opportunity to reach the people that need them.”

In, “CMS Cuts BRCA Price by 49% in Response to Competition,” Dark Daily’s sister publication, The Dark Report, highlighted the negative consequences the Mayo decision had on the clinical laboratory diagnostic testing industry.

US Senators Urge Patent Reform

While Congress has not yet stepped in to restore patent protections for diagnostics companies, key senators have been working toward that goal. Last year, US Senators Christopher Coons, Tom Cotton, Thom Tillis, and Mazie Hirono sent a letter to Drew Hirshfeld, director of the United States Patent and Trademark Office, urging him to support patent reform, which has yet to pass Congress despite Senate hearings and draft legislation.

“It is past time that Congress act to address this issue,” they wrote. “To assist us as we consider what legislative action should be taken to reform our eligibility laws, we ask that you publish a request for information on the current state of patent eligibility jurisprudence in the United States, evaluate the responses, and provide us with a detailed summary of your findings.” That letter went to Hirshfeld on March 5, 2021, with a request for findings no later than March 5, 2022.

For now, patent reform appears to be locked in uncertainty, which means SCOTUS’ decision that altered patent law affecting the biotech industry may continue to hamper development of new diagnostic tests as well as the current supply of at-home COVID-19 tests. Clinical laboratory leaders involved with diagnostic test developers will want to closely monitor for any changes to the Supreme Court’s ruling.

Andrea Downing Peck

Related Information:

The Supreme Court Is Partly to Blame for the COVID-19 Test Kit Shortage

COVID-19 Rapid Test Shortages Seen Compounded by Slow Federal Action

Senate Judiciary Committee Subcommittee on Intellectual Property Letter to Director of United States Patent and Trademark Office

Why Pharma, Private Equity Want to Reshape Lab Industry

Drugstores Struggle to Keep COVID At-Home Tests in Stock as Omicron Rages Across US

Mayo Collaborative Services, DBA, Mayo Medical Laboratories, et al. v. Prometheus Laboratories, Inc.

Patent Eligibility of Disease Diagnosis

CMS Cuts BRCA Price by 49% in Response to Competition

US Senators Letter to Commissioner of Patents

Oregon-based Interpath Laboratory Launches Pilot Program to Explore Delivering Biological Specimens by Drone from Yellowhawk Tribal Health Center

Drone program will enable delivery of medical laboratory samples during the day, rather than just at night, allowing daytime sample processing that will increase efficiency and shorten time to results

Healthcare network clinical laboratories continue to explore the use of unmanned aerial vehicles (UAVs), commonly known as drones, to safely deliver medical supplies and clinical laboratory specimens between locations. Dark Daily has covered several similar pioneering drone programs taking place around the world in recent years.

The latest medical laboratory company to launch a drone delivery program is Interpath Laboratory, an independent full-service medical laboratory in the Pacific Northwest.

In partnership with Arizona-based Spright—the drone division of Air Methods, a patient transport company with 300 bases in 48 states—Interpath recently announced the launch of its drone delivery pilot program for delivering lab testing specimens from Yellowhawk Tribal Health Center to Interpath’s medical laboratory in Pendleton, Oregon.

The two organizations hope the initiative will expedite the turnaround time needed for test results, thus allowing for timelier diagnoses and improving patient care and outcomes.

Joe Resnik, president of Spright
“Many communities located in remote or rural areas lack timely and convenient access to essential medical supplies and service,” said Joe Resnik (above), president of Spright in a press release. “We look forward to this proof-of-concept, showcasing drone delivery’s ability to solve many of healthcare’s existing access and efficiency challenges, while also improving patient care and experience.” (Photo copyright: KVS Technologies.)

Replacing Automobile-based Medical Laboratory Specimen Delivery

“If this pilot program is successful and we are able to utilize this service, our patients have the opportunity to benefit from more rapid test results and access follow-up medical procedures and services,” stated Aaron Hines, CEO of Yellowhawk Tribal Health Center in a press release. “This project could help us further our mission of providing high-quality, primary healthcare for the Confederated Tribes of the Umatilla Indian Reservation (CTUIR).”

Currently, patient samples taken throughout the day at various Yellowhawk facilities are picked up and delivered to Interpath’s clinical laboratory in the evening via gasoline-powered vehicles. A successful drone service would allow lab test specimens to be repeatedly picked up and delivered to the lab for analysis throughout the day.

“Medical laboratory services in rural areas frequently must invest intensive time and resources into sample pick-up,” said Tom Kennedy, president of Interpath Laboratory, in the press release. “We anticipate Spright’s drone delivery service will alleviate many of the drawbacks and costs associated with automobile-based delivery. This initiative represents an example of our embrace of innovative solutions that provide more efficient and effective services to our clients.”

Wingcopter 198 drone
In February, Spright held test flights that transported clinical laboratory specimens from Yellowhawk Tribal Health Center to Interpath’s main medical laboratory in Pendleton, Ore. The 15-mile flight used a Wingcopter 198 drone (above) which employs beyond-visual-line-of-sight (BVLOS) technology. Manufactured in Germany, the Wingcopter 198 has a wingspan of five feet ten inches and can carry up to 13 pounds. It has a range of 46 to 68 miles, and a maximum speed of approximately 62 to 90 miles per hour, depending on the weight of its load. (Photo copyright: sUAS News.)

Other Clinical Laboratory Drone Deliver Programs Worldwide

Dark Daily has published many articles on the use of drones to deliver medical supplies and laboratory specimens. In “SUNY Upstate Medical University and NUAIR Complete Trial Delivery Service of Medical Supplies on Campus Using Unmanned Drones,” we covered how SUNY Upstate Medical University was experimenting with the feasibility of utilizing drones to deliver medical supplies between buildings on their campus.

In “Walmart, Quest Diagnostics, and DroneUp Collaborate on Pilot Project to Deliver COVID-19 Laboratory Tests to Consumers in Select Cities,” we reported that Walmart, Quest Diagnostics, and DroneUp had collaborated on a pilot program to deliver at-home self-collection COVID-19 test kits to residents of several areas that were hit hard by the COVID-19 pandemic. 

And in, “Hospitals in United States and Germany Team Up with Matternet and UPS to Make Medical Laboratory Deliveries by Drone the New Normal,” we reported on California-based Matternet’s launch of the first BVLOS-operated medical drone network in Europe. This project was launched at Labor Berlin, Europe’s largest hospital laboratory, which includes facilities in 13 hospitals located throughout Berlin. 

Innovative approaches, such as the utilization of drones to make clinical laboratory specimen deliveries, can help circumvent many of the challenges in delivering healthcare to rural areas. But UAV delivery networks work equally well for faster specimen transferals in urban environments as well, leading to timelier diagnoses of diseases and ultimately to better patient outcomes.   

JP Schlingman

Related Information:

Spright and Interpath Laboratory Launch Medical Drone Delivery Pilot Service

Medical Drone Delivery in US: Wingcopter Lands Deal with Spright

SUNY Upstate Medical University and NUAIR Complete Trial Delivery Service of Medical Supplies on Campus Using Unmanned Drones

Hospitals in United States and Germany Team Up with Matternet and UPS to Make Medical Laboratory Deliveries by Drone the New Normal

American Robotics Gets FAA Approval to Operate First Fully Automated Drone for Commercial Use ‘Beyond Visual Line of Sight’ Bringing Unmanned Delivery of Medical Supplies and Clinical Laboratory Specimens a Step Closer to Reality

Walmart, Quest Diagnostics, and DroneUp Collaborate on Pilot Project to Deliver COVID-19 Laboratory Tests to Consumers in Select Cities

Amazon’s Prime Air Drone Fleet Receives FAA Approval to Make Deliveries to Customers, Could Clinical Laboratory Specimens and Supplies be Next?

California Company Creates ‘Uber for Blood’ to Speed the Transport of Life-Saving Medical Laboratory Supplies and Blood Products in Rwanda

Clinical Laboratories Still Struggle with Write-offs and Establishing Patient Relationships

Potentially increasing the revenue write-off burden for clinical laboratories, HRSA changes, insurance contracting, policy and coverage questions for genetic and genomic testing, and patient relationship disconnects will expose cracks in lab test claim generation and billing processes

Last year it was estimated that collection agencies held $140 billion in unpaid medical bills, in addition to the amount of unpaid bills in pre-collection status, according to a New York Times report. More recently, the American Hospital Association showed that hospitals have provided upwards of $700 billion in uncompensated care since 2000, with over $40 billion in 2019 alone.

Because strategies to collect the unpaid can be complicated and time-consuming, many healthcare organizations, including clinical laboratories, choose to write off these uncollectible bills. Dark Daily and The Dark Report have covered clinical laboratory revenue challenges for many years. In considering the paths forward, software-as-a-service (SaaS) provider FrontRunner Healthcare (FrontRunnerHC) recently provided snapshots into the how and where of improved collections.

Fixing Data Issues that Lead to Forfeited Clinical Laboratory Revenue

The underpinnings of unpaid lab tests are many. In a recent interview with Dark Daily, FrontRunnerHC CEO and Founder John (JD) Donnelly estimated that about one-third of claims (prior to submission) include incorrect or missing patient information, such as insurance policy identification or demographics. These gaps undermine an organization’s ability to get paid. Donnelly estimates that bad-debt write-offs for commercial payer claims average over 15% of charges. To address these challenges, the company’s clean claims SaaS provides “instantaneous” patient insurance, demographic, and financial information.

Whether lower-dollar accessions such as routine testing, or the higher-dollar accessions of genetic tests, uncollected payments add up. Donnelly said that, in 2021, almost one-third of the company’s clients uncovered revenue ranging from $1 million to over $90 million using the software. Donnelly also estimated that the return for clients averages eight times the value of the investment in using the automated solution.

In one example, Sonora Quest, a joint venture between Banner Health and Quest Diagnostics, reported a 10-15% decline in write-offs due to aged claims, a savings of over $1million annually, as published in a case study. “As an aside, in a presentation at the Executive War College last November, they also attributed improvements in patient satisfaction measures to the software, including a 65% decrease in abandoned calls, 28% improvement in their call service factor, and 19% decrease in patient call volumes,” stated Donnelly.

Questions About Cost of Care Likely Cause Stress for Patients

As many know, nonpay issues are problematic not only for lab businesses and anatomic pathology practices but also for patients and their families who have little predictability with their cost of care in the midst of stressful health events. “From the time a patient is registered to the time the claim is paid, there are more challenges than people realize that jeopardize the patient’s experience as well as the provider’s ability to get reimbursed,” Donnelly explained. Medical laboratory administrators have struggled to respond, often by using traditional manual methods such as call centers, or more recently by considering the use of data automation tools.

From the patient payment perspective, Donnelly said, a good strategy is having the ability, on demand, to understand each patient’s specific financial situation and likelihood to pay. For example, using FrontRunnerHC’s software to gauge patients’ propensity to pay and determine financial disposition strategies, lab administrators may choose to offer payment plans or hardship discounts to those falling under the federal poverty level (FPL). Or they may choose to send a collection agency only the past-due accounts for patients who have a low likelihood to pay rather than sending them all past due accounts and focus in-house efforts on the others. One genetics lab client who recently started leveraging these software capabilities “is already seeing more than 5% in incremental net collections,” according to Donnelly.

Further, an estimated 2 million people switch insurance plans each month, reported Axios. “That velocity of change is tough for providers to manage, but it’s critical as insurance eligibility and registration issues are the number one reason for claims denials,” Donnelly said.

For a sense of the magnitude of the problem, “Between 25 and 33 cents of every dollar you spend on medical care pays for health care’s back office,” wrote Dana Miller Ervin in September 2021 for a series of investigations called “The Price We Pay,” published at WFAE 90.7 news in Charlotte, North Carolina. “Every medical provider and laboratory in the country has to negotiate with insurance companies. And since there are 900 health insurers, 6,000 hospitals and more than 100,000 physician practices—many of which are independent of larger systems—there are hundreds of thousands of negotiations.”

New Clinical Laboratory Business Challenges Making News Now

All these issues affecting revenue cycle management (RCM) for independent clinical laboratories, hospital and health system laboratories, and physician office laboratories could be compounded by three emerging issues.

First is the recent action by the Health Resources and Services Administration (HRSA) to stop accepting claims for COVID-19 testing and treatment for uninsured people as of March 22, 2022. The reason? Funding for HRSA’s COVID-19 Uninsured Program dried up.

Donnelly said that many lab clients have yet to be reimbursed for COVID tests they have performed, despite their HRSA-required due diligence prior to submitting the claims before the deadline. To avoid additional reimbursement risk, many labs have made the decision to stop testing the uninsured or charge them for it, ABC News reported in late March. As of early April, however, Congress was in discussions to re-fund at least some of the Uninsured Program, reported Politico.

Secondly, and also daunting, are the questions surrounding payer coverage and reimbursement for genetic tests and genomic testing. Thanks to high-deductible health plans (HDHPs), clinical laboratories and anatomic pathology groups increasingly must collect deductibles that may be the full amount of the test – and directly from patients rather than from insurance companies. Therefore, there is more demand from patients to understand their expected cost before the test, Donnelly added.

Problems can arise, for both labs and patients, if they don’t know whether a test has been preauthorized for medical necessity or if they lack accurate insurance information such as in-network or out-of-network. “Getting all the needed and accurate info upfront prior to it going into the LIS [Laboratory Information System] can be a reimbursement game changer,” stated Donnelly.

“For a high complexity, high-throughput diagnostic lab, an efficient workflow is critical,” stated Kyle Koeppler, President of nuCARE Medical Solutions Inc., a FrontRunnerHC client. “Capturing the correct patient demographics and insurance information at patient intake increases the accuracy of every order and makes every process involving patient information much more efficient,” Koeppler shared. “It’s simply too costly to risk having inaccurate information at intake.”

And lest we forget, the Protecting Access to Medicare Act (PAMA) is looming with its reimbursement cuts planned through 2026, and requirements of many labs to report private payer rates on a test-by-test basis. While delayed again, the 2023 PAMA reporting requirements and payment cuts must not be ignored, and planning is needed in order to ensure appropriate reimbursement, Donnelly added.

Addressing Long Payment Cycles for Claims, Dead Ends, and Decreased Collection Rates

The CAQH report cites that data automation resulted in efficiency savings of $122 billion annually for the US healthcare system in 2020 yet “meaningful opportunities for additional savings remain.”

Data automation can reduce the burden of labor-intensive functions in coding, billing, filing appeals, and collecting from payers and patients and, therefore, reduce overall RCM costs. The Council for Affordable Quality Healthcare’s (CAQH) 2020 Index reported, “Considering the millions of times these transactions occur every day, the savings potential across the healthcare economy [from streamlining administrative processes] is significant.”

“One way to avoid potential write-offs is by reworking a claim, but the rework is often left undone,” stated John (JD) Donnelly (above), CEO and Founder of FrontRunnerHC. “The better way to avoid a potential write-off is to ensure you’ve got a clean claim in the first place.” (Photo copyright: FrontRunnerHC.)

The intended outcome is an increase in the total amount of revenue collected from the same number of claims.

To that end, FrontRunnerHC’s software links critical data within its partner ecosystem. This ecosystem includes the well-established credit reporting agencies as well as data available through connected healthcare payers and providers equipped with electronic data interchange (EDI) capabilities. “While an employee may be able to manually work about six accessions in an hour, clients can process approximately 40,000 patients in an hour through software automation, leaving staff to work on more value-added initiatives,” stated Donnelly.

Ideally, missing and inaccurate patient information or insurance verification, which are crucial for producing prompt payments and clean claims, should be corrected before a specimen is collected, Donnelly said. However, if the laboratory is nursing aging accounts receivable (AR), Donnelly advises an audit and cleanup of the AR backlog as a first step to quickly fix information errors and reduce write-offs. “In your AR bucket of $10 million, you may have $3 million that’s collectible or $9.8 million that’s collectible. By leveraging software to clean up what can be collected, clients can go after the money they deserve.”

Improve Collections Through Data Automation While Assisting in the Patient Financial Journey

With the rise of telehealth/telemedicine, healthcare consumerism, and care delivered to nontraditional sites, it makes sense that the idea of the clinical laboratory as a silent partner in healthcare could be changing.

“Could we one day see patients asked for not only their preferred pharmacy but their preferred clinical laboratory as well?” Donnelly pondered and added, “I think the answer is yes, and it’s sooner than many think.”

Understanding the patient’s experience is a key step in providing patient-centered care. Therefore, patient experience programs that originate at clinical laboratories where specimens are processed, but before specimens have been collected, could make these labs more visible in their markets and enable them to capitalize on the advantages of data automation to sustainably improve revenue cycle management.

“The patient’s financial journey which runs in parallel to their clinical journey can get pretty bumpy, and those bumps impact their overall experience as well as the provider’s bottom line,” added Donnelly. “Getting accurate patient information upfront and catching any changes to the information as needed throughout the process helps clients create a smoother patient journey by enabling them to quickly manage through the bumps or eliminate them altogether.”

—Liz Carey

This article was produced in collaboration with FrontRunnerHC.

Related Information:

New Trends Reshaping Healthcare, Lab Testing

Millennials Set to Reorder Healthcare and Lab Testing

Congress Votes a One-Year Delay in Implementation of the Next Round of Fee Reductions to Medicare CLFS

HRSA Important Update Regarding Submission of Claims

Free COVID-19 Tests Ending for Uninsured Americans

CMS Billing and Coding: MolDX: Testing of Multiple Genes

U.S. Health Care Administration Costs Are Responsible For At Least 25% Of Medical Bills

Fact Sheet: Uncompensated Hospital Care Cost

Millions Already Lose or Change Health Plans Every Year

Americans’ Medical Debts Are Bigger Than Was Known, Totaling $140 Billion

FrontRunner Healthcare

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