Jul 19, 2017 | Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Laboratory Testing, Management & Operations
New value-based healthcare payment models could have far-reaching effects on medical laboratories and the testing they provide
Hospitals, physicians, and medical laboratories recognize the transition from “volume to value” that’s underway in the American healthcare system. Fee-for-service payments for clinical services (regardless of whether they are needed or effective) will soon cease and providers will be increasingly paid on how much value they deliver to patient care. This will fundamentally alter the complete care continuum, from hospital stays to pathology consults to clinical laboratory testing services.
One such change involves value-based drug contracts with pharmaceutical manufacturers. According to an article in The Boston Globe, in an effort to reduce the ever-increasing cost of prescription drugs while still “giving patients access to costly treatments,” Harvard Pilgrim Health Care (Harvard Pilgrim)—one of Massachusetts’ largest health insurers with more than 1.3 million members—is negotiating value-based agreements with major pharmaceutical manufacturers. How much money Harvard Pilgrim pays for certain drugs will depend on how much the healthcare organization contributes to curing/improving their patients’ conditions.
Value-Based Pharmaceutical Agreements
Harvard Pilgrim first made news for their value-based drug contracts in 2015 when they contracted with three companies:
Harvard Pilgrim currently has 12 value-based pricing contracts with pharmaceutical companies. According to a news release, the contracts enable Harvard Pilgrim to monitor “specific criteria in patients following discharge” for the effectiveness of medication. “If the medicines fail to meet the agreed upon outcomes criteria in real patients, Harvard Pilgrim will be charged a lower amount,” the news release states.
The graph above is from an analysis by Avalere Health, a strategic advisory company in Washington, DC, that develops solutions for healthcare. It shows how, according to Avalere, “a majority of health plans are interested in forming outcomes-based contracts with biopharmaceutical manufacturers that tie product reimbursement to patient outcomes.” (Image copyright: Avalere Health.)
These contracts link a drug’s cost to its overall effectiveness in ways that make companies accountable for results in terms of real-world patient outcomes, rather than controlled trial results. Michael Sherman, MD, Harvard Pilgrim’s Chief Medical Officer and SVP of Health Services, stated in the news release that they put drug companies “at risk for delivering” on their promises.
According to Harvard Pilgrim Health Care President and CEO Eric Schultz, value-based agreements between insurance, hospitals, medical laboratories, and drug companies are becoming increasingly important. At the 2017 America’s Health Service Plans (AHIP) Institute and Expo, Schultz stated that in terms of value-based contracting, “right now, it’s all about clinical outcomes,” a FierceHealthcare article covering the event noted. Shultz believes this is a good thing for patients that could positively impact all areas of healthcare.
Harvard Pilgrim is not alone in shifting to value-based healthcare (AKA, value-based purchasing and Pay-for-Performance). According to a news release, the University of Pittsburgh Medical Center (UPMC) Health Plan recently created the Center for Value-Based Purchasing for Pharmaceuticals. According to William Shrank, MD, UPMC Health Plan’s Chief Medical Officer, the Center is determined to evaluate outcomes and effects of the new payment models, which have the potential to “rapidly influence pharmaceutical purchasing nationwide and promote greater value in medication use.”
Can Medical Laboratories Participate in Value-based Models?
The rise of value-based healthcare models affects more than just pharmaceutical companies; medical laboratories nationwide are considering how value-based systems might affect their work and mission as well. In an Orchard Software whitepaper titled, “The Value of the Laboratory in the New Healthcare Model,” Daniel J. Scully, CEO of New York’s Buffalo Medical Group, stated that the “50-million dollar” question for laboratories is “does the laboratory offer enough value in service and speed of results” for the new value-based healthcare models?
Clinical laboratories play such a vital role in healthcare quality—providing accurate diagnosing and crucial monitoring, as well as data collection and risk assessment—they may find themselves affected by value-based healthcare changes. Because of the high costs of equipment and testing, laboratories may also find themselves scrambling to eliminate costs and improve on efficiency, by monitoring resources and testing outcomes in connection to patient needs.
Clinical pathologists may also find themselves more frequently called upon to assist in guiding clinicians to more “effectively utilize lab services to achieve better care,” according to the Orchard Software white paper.
Clinical Associations Say Medical Laboratories Crucial to Success of Value-based Healthcare
The American Association for Clinical Chemistry (AACC) and the American Society for Clinical Pathologists (ASCP) have both addressed what the change to a value-based healthcare system may mean for clinical pathologists.
An ASCP white paper states that clinical pathology data has become increasingly important as “clinical laboratory data are now used to measure provider performance, both individual and organizational, as well as to inform value-based purchasing that optimizes healthcare resources and decreases costs.”
In a position statement, the AACC noted that laboratory testing was crucial to this new model, and that “laboratory professionals are uniquely positioned” to help increase value within healthcare by helping “clinicians identify the most effective testing protocol and interpret the results accurately. Clinical laboratorians can further reduce healthcare costs by developing new, more precise tests to personalize patient care and creating computerized clinical decision support interventions to aid test selection.” Some types of testing, however, particularly expensive molecular and genetic testing, may end up a target of similar value-based agreements between the labs that perform these tests and the provider organizations that use the tests.
Much of the focus on value-based healthcare is currently on value-based pharmaceutical contracts, such as those from Harvard Pilgrim. Nevertheless, clinical laboratories will likely play vital roles in providing care, guiding testing, and evaluating care outcomes under these new payment models. They also could find themselves part of a larger debate concerning overuse of testing or data collection.
Changes to healthcare from pay-for-service to pay-for-value will undoubtedly have far-reaching effects as healthcare fields attempt to cut costs while providing better services. Every clinical laboratory must be proactive in finding its place in these new models.
— Amanda Warren
Related Information:
Harvard Pilgrim Expands Use of Novel Drug Purchasing Deals
Value for Consumer Drugs—Harvard Pilgrim Leads the Way
Harvard Pilgrim Signs Outcomes-Based Contracts with AstraZeneca for Brilinta and Bydureon
UPMC Health Plan Establishes Unprecedented Center for Value-Based Purchasing for Pharmaceuticals
Harvard Pilgrim Signs Second Groundbreaking Contract with Amgen for Repatha
Lilly’s Trulicity Joins Pay-for-performance Trend with Harvard Pilgrim Deal
Advancing Value-Based Healthcare: Laboratory Medicine’s Essential Role
The Value of the Laboratory in the New Healthcare Model
AHIP 2017: Harvard Pilgrim, Eli Lilly CEOs Talk Drug Prices and Paying for Value
Health Insurers Go All in on Value-based Drug Pricing
Health Plans Are Interested in Tying Drug Payments to Patient Outcomes
Harvard Pilgrim Bets on Value-based Drug Payments with New Deals
Harvard Pilgrim to Pay for 2 Autoimmune Drugs Based on Outcomes, Value
Value-based Contracts Key to Solving U.S. Drug Pricing ‘Crisis’
Nearly One-Third of Traditional Medicare Payments Now Based on Value-Based Reimbursement and Alternative Payment Models
Ongoing Growth in Volume of Clinical Laboratory Tests That Support Precision Medicine Due to Physician Acceptance; Payers Still Have Concerns
Pathologists and Clinical Lab Executives Take Note: Medicare Has New Goals and Deadlines for Transitioning from Fee-For-Service Healthcare Models to Value-Based Reimbursement
Up to 50% of Aetna, UnitedHealth Group, and Anthem Reimbursements Go to Value-Based Contracts; Clinical Laboratories Must Implement Value-Based Strategies to Remain Competitive
Mar 16, 2017 | Instruments & Equipment, Laboratory Instruments & Laboratory Equipment, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Laboratory Testing, Management & Operations
Every medical laboratory ready to begin the move away from fee-for-service payment and towards value-based reimbursement needs to start offering lab tests that support the practice of precision medicine
Nearly every clinical laboratory and pathology group in America today is aware of the opportunity to provide medical laboratory tests that enable physicians to successfully practice precision medicine. The goal of precision medicine is to enable a patient to get a more accurate diagnosis, receive the most appropriate therapy, and have his/her condition monitored with unprecedented insight during the course of treatment.
The good news for the clinical laboratory industry concerning precision medicine is that it is the fastest-growing sector of lab testing and these are the tests that contribute the greatest value in patient care. For example, molecular and genetic tests are revolutionizing the diagnosis and treatment of infectious disease. These are the clinical lab tests that enable a physician to identify the specific subtype of the bacteria or virus, then help him or her select the therapeutic drug that will have maximum benefit for the patient.
Clinical Laboratories Support Cancer Diagnosis with Companion Diagnostic Tests
It is equally true that the diagnosis and treatment of cancer is undergoing a major transformation. Genetic knowledge is being used to develop both diagnostic tests and new therapies that enable physicians to better diagnose cancer, and then treat it with the drugs identified by a companion diagnostic test as having the best potential to cure the patient or slow the progression of the disease.
But if there is an area of precision medicine with immense potential, it is pharmacogenomics and its associated testing.
In 2015, the Kaiser Family Foundation reported that more than four billion prescriptions were filled in the United States. As science understands more about the human genome, proteome, metabolome, and microbiome (to name just a few of the “omes”), it becomes possible to design clinical laboratory tests that:
1. Contribute to a more accurate diagnosis;
2. Identify which prescription drugs will be of the greatest benefit; and
3. Inform the physician as to which drugs will not be effective and may even be harmful to the patient.
More Good News for Medical Laboratories
There is even more good news. Many clinical laboratories, hospital labs, and pathology groups already have lab instruments capable of performing the tests used in precision medicine. For these labs, no major up-front investment is needed to begin offering tests that allow physicians to practice precision medicine.
“Many of our lab clients got started in this way,” stated Don Rule, MBA, Founder and Chief Executive Officer of Translational Software in Bellevue, Wash. “They realized that their existing lab instruments could run some of the lab tests physicians use when practicing precision medicine. This would be a low-cost way to enter the precision medicine field and they could, on a small scale with minimal risk, begin offering these tests to gain experience, learn more about the market, and identify which such tests would have highest value to the physicians in the communities they serve.”
Is Your Pathology Group Interested in Supporting Precision Medicine?
“For a lab that is serious about understanding the current and future clinical demand for precision medicine tests, several careful steps are recommended,” he continued. “One step is to build demand by educating clinicians and their staffs about the best ways to use these tests to improve patient care. Keep in mind that more of a physician’s reimbursement is now keyed to the patient outcomes they deliver. These doctors recognize that labs helping them do a better job with precision medicine are also helping them demonstrate greater value in the patient care they provide.
“There are other steps required to launch an effective, clinically successful precision medicine testing program,” Rule noted. “For example, labs need to understand how to be paid by the health insurers in their region. That includes getting in-network and teaching physicians and lab staff how to follow each payer’s clinical and coding criteria so that clean claims will be paid in a timely manner.
“Another step is to build the market in a careful fashion,” he emphasized. “For example, labs should identify the thought leaders among their clients and work with them to demonstrate the clinical utility of tests performed in support of precision medicine. And above all, it’s important to focus on patients that are most likely to get some insight from testing. When your lab starts with the right population, it’s remarkable how often you will uncover actionable issues.”
Clinical Labs Can Enter Precision Medicine by Initially Referring Tests
“It’s also feasible for a lab to start its precision medicine strategy by referring out testing in the early stages and using third-party experts to do the interpretations,” Rule advised. “Then, as specimen volume increases, and the lab’s clinical team gains more experience with these molecular and genetic tests, it becomes easy to bring that testing in-house to develop the market further with faster turnaround times and in-house expertise that local physicians appreciate.”
Every clinical lab, hospital lab, and pathology group that is considering how to support precision medicine will want to participate in a special webinar, titled, “What Molecular and Genetic Testing Labs Need to Know to Succeed with Commercialization of Their Precision Medicine Products.” It will take place on Wednesday, March 22, 2017 at 1 PM EDT.
Two expert speakers will cover the essentials that all labs should know about building a market presence in precision medicine. First to present is Don Rule of Translational Software. Rule currently provides a variety of services to more than 80 lab clients, which includes the annotation and interpretation of gene sequences. In addition, Rule and his team provide consulting expertise to help labs develop their strategies for precision medicine, identify the best tests to offer physicians, and develop the steps needed to obtain network status with payers.
Webinar Will Present the Best Successes of Molecular, Genetic Testing Labs
Rule will share the experiences and best successes of the molecular and genetic testing labs he has worked with since 2009. He will discuss the types of lab tests used in precision medicine in different specialties, identify the fastest-growing sectors, and note which instruments already found in most clinical laboratories can be used to provide lab tests used for precision medicine.
Don Rule (above left), Founder and CEO of Translational Software, and Kyle Fetter (above right), Vice President of Advanced Diagnostics at XIFIN, will share their unique insights, knowledge, and experience at developing a precision medicine lab testing program for clinical laboratories that want to build more market share, make the billing/collections team more effective, and increase revenue. (Photo copyright: Dark Daily.)
As one example, a growing number of long-term care facilities are using tests to practice precision medicine—and paying for these tests under value-based arrangements—because so many of their patients are taking from 10 to 15 prescriptions each day. If a lab test indicates that the patient may not be getting therapeutic benefit from a specific drug (or that there are negative side effects from the polypharmacy), then the long-term care facility is money ahead because of less spending on drugs and the decreased care costs from patients who remain healthier. In the extreme case, the care facility might lose a patient to a skilled nursing facility due to mental fog or a fall that is precipitated by adverse drug effects.
Making the Case for a Precision Medicine Lab Testing Program
Additional topics to be discussed are:
• How to make the case to administration and the clinicians;
• How to build demand; and
• How to identify thought leaders and work with them to educate the physicians in the lab’s service region.
The second speaker will address the important topic of how to get paid. Kyle Fetter, MBA, is Vice President of Advanced Diagnostics at XIFIN, Inc., based in San Diego. XIFIN provides revenue cycle management (RCM) services to more than 200 labs and handles as many as 300 million lab test claims annually. What this means is that Fetter sees which labs are most successful with their coding, billing, and collections for molecular and genetic tests. He also sees how different payers are handling these claims.
During his presentation, Fetter will provide you and your lab team with valuable knowledge about the best ways to collect the information needed to submit clean claims and be paid promptly. He will illustrate ways to optimize the process of gathering this data and the different software tools that not only make the job easier, but help ensure that a higher proportion of claims are clean and paid at first submission.
Secrets of Preparing for Payer Challenges, Denials, and Audits
But the single best element of Fetter’s presentation will be how labs performing molecular and genetic testing should prepare, as part of the normal course of business, for the inevitable challenges, denials, and audits. He will describe the elements of a system that helps labs be ready to make the case that claims are properly documented, and that they represent appropriate and necessary tests for the patient.
You can find details for this important webinar at this link. (Or copy this URL and paste it into your browser: https://www.darkdaily.com/webinar/what-molecular-and-genetic-testing-labs-need-to-know-to-succeed-with-commercialization-of-their-precision-medicine-products.)
This webinar is perfect for any lab that is already performing molecular and genetic tests, and which is interested in building more market share, making the billing/collections team more effective, and increasing revenue.
For every lab watching the precision medicine space, this webinar is a “must attend” because it delivers to you and your lab team the collective knowledge and insights from two experts who are working with hundreds of the nation’s most successful labs. It is your guaranteed way to get the accurate, relevant information you need to craft your own lab’s strategy for expanding its molecular and genetic testing opportunities.
—Michael McBride
Related Information:
Genetic Tests and Precision Medicine Start to Win Acceptance by Some Payers; Pathologists and Clinical Laboratories Have Opportunity as Advisors
