News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

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News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
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More Big Companies Engage Health Networks Directly to Cover Their Employees’ Healthcare: Should Medical Laboratories Be Talking to Self-Insuring Employers?

By negotiating directly with healthcare systems employers garner cost savings, while creating opportunities for clinical laboratories willing to be flexible about claims and reimbursement

It’s a healthcare trend called “direct contracting” and it is the latest method that self-insuring employers are using to better manage the cost of their health benefits plan, while maintaining access and quality for their employees. The interesting thing about direct contracting is that it might be a strategy that could work for innovative regional clinical laboratories to negotiate a place for themselves in that employer’s provider network.

Healthcare costs continue to skyrocket in the United States, and in response, many large companies are providing healthcare services to their employees by working directly with health networks and other organizations, instead of using third-party administrators (TPAs) of insurance plans to create healthcare benefits packages for their employees.

This can provide clinical laboratories and anatomic pathology groups with opportunities to create revenue and further outreach into their communities. Astute lab leaders may want to consider meeting with the decision-makers at large companies in their areas and develop strategies for working together directly. Human resources managers may be interested in the benefits of working directly with medical laboratories.

Employers Already Engaged with Health Networks for Provider Services

Self-insuring is not a new concept. In a direct contracting relationship, the employer skips the TPA in hopes of achieving cost savings. Sometimes the direct contract is for specific services that employees need most often, or they can be designed to cover the entire spectrum of services available to employees.

Many companies have already engaged in direct contracting for healthcare services. Among them are: Cisco Systems, Boeing, Intel, Walmart, and Whole Foods. Amazon, JP Morgan Chase, and Berkshire Hathaway also have announced a joint agreement to self-insure their employees, which Dark Daily reported in June. (See, “Six New Jersey Hospitals and Several Major Corporations to Self-Insure Their Million+ Employees; Trend Could Impact How Local Clinical Laboratories Get Paid,” June 11, 2018.)

Cisco has negotiated a direct healthcare agreement with Stanford Health System. Stanford operates a clinic at the Cisco campus, so that the primary care doctor is a member of the community within the company.

“I’m in their space. I’m actually where they work. I’m a bit of a village doc,” Larry Kwan, MD (above), a doctor of internal medicine with Stanford Health Care, told Reuters about his role in the Stanford clinic at the Cisco campus. About 1,000 Cisco employees are enrolled in the Stanford plan. Katelyn Johnson, Integrated Health Manager at Cisco Systems, says it’s a program that requires a more active approach from companies than traditional health benefits plans. (Photo copyrights: Stanford Health Care.)

Boeing, too, has explored direct contracting in a program where the company negotiated directly with hospitals in four different states. The direct contracts have resulted in cost savings and cover some 15,000 employees plus their families. Some of those cost savings have come from things like getting doctors to prescribe generic drugs.

Intel also has a similar program, covering around 38,000 employees and their families. They have found success in managing chronic conditions like diabetes. Technology, such as video-conferencing, also has helped lower costs and improve retention.

Even health networks are getting into the game. One recent example is the Healthcare Transformation Consortium (HTC), a six-hospital healthcare systems in New Jersey that formed to self-insure and provide direct healthcare coverage for their employees.

Companies may gain some cost savings from directly negotiating, but there are gains for the health systems as well. In a deal with Whole Foods in 2016, Adventist Health System gained a new set of skills that they plan to use in negotiating similar deals with other employers.

“We have a little bit more flexibility as a health system to design around what Whole Foods defines as quality, or what Whole Foods defines as patient satisfaction, which is sometimes different than the traditional definitions,” Arby Nahapetian, MD, regional chief medical officer and SVP at Adventist-Southern California told Modern Healthcare.

Signs Point to Trend Continuing

The Healthcare Transformation Consortium in New Jersey, along with the joint agreement between Amazon, JP Morgan Chase, and Berkshire Hathaway, are examples of what the future is likely to hold. The more these kinds of collaborations and direct contracts result in both cost savings and patient satisfaction, the more companies will likely consider direct healthcare contracts.

Hospital-based and independent laboratories may want to consider meeting with the larger employers in their service regions and explain to the HR benefits managers how better utilization of selected lab tests could improve patient outcomes and contribute to better managing costs.

After all, employers tell health insurance companies what they want to cover with their health benefits plans. So, educating the employers’ HR teams about the true value of clinical laboratory tests could be a winning strategy for labs willing to take the time to do this.

Dava Stewart

Related Information:

Fed Up with Rising Costs, Big US Firms Dig into Healthcare

Left Out of the Game: Health Systems Offer Direct-To-Employer Contracting to Eliminate Insurers

Six New Jersey Hospitals and Several Major Corporations to Self-Insure Their Million-plus Employees; Trend Could Impact How Local Clinical Laboratories Get Paid

 

Six New Jersey Hospitals and Several Major Corporations to Self-Insure Their Million+ Employees; Trend Could Impact How Local Clinical Laboratories Get Paid

Plans by large-scale employers to self-insure brings into question how clinical laboratories would submit claims and get reimbursed from inside and outside of a corporate provider/payer network

Clinical laboratories and anatomic pathology groups serving the nation’s hospitals and health systems may get increased network access to patients due to new developments in the health insurance marketplace. In recent months, both large corporate players and a number of smaller hospital systems have decided to form their own health insurance companies.

For example, six New Jersey hospital health systems announced they have taken steps to self-insure their employees by forming the Healthcare Transformation Consortium (HTC). This follows a similar joint agreement by Amazon, Berkshire Hathaway, and JPMorgan Chase to self-insure their employees as well. Inhouse medical laboratories and anatomic pathology groups that service these entities will likely find themselves part of new private provider/payer networks, which will impact how and when they get reimbursed for their services.

Both groups hope to slow skyrocketing healthcare costs, improve outcomes, and avoid having to navigate the increasingly complex insurance industry. Between the two groups, nearly one million employees will be insured directly by their companies.

Another reason these two events could be good news for the hospitals, doctor’s groups, and medical laboratories involved is they will no longer have to deal with narrow networks and mandates required of health plans subject to the federal Employee Retirement Income Security Act (ERISA) of 1974. This also may include regulations in the Health Insurance Portability and Accountability Act (HIPAA), which amended ERISA in 1996.

Local clinical laboratories will likely automatically become part of the combined provider group as well, which is good. But will they have to alter how they submit claims and get reimbursed for services rendered to a private corporate payment system?

Goals of Corporate Healthcare

In a press release, Amazon, JPMorgan Chase, and Berkshire Hathaway stated they are “partnering on ways to address healthcare for their US employees, with the aim of improving employee satisfaction and reducing costs.” A not-uncommon healthcare goal, these days.

One of the few concrete details in the release stated, “The initial focus of the new company will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost.”

The six N.J. healthcare providers in the HTC include:

Together, they employ approximately 50,000 individuals who all will be enrolled in a single health plan, scheduled to go live January 1, 2019.

Kevin Slavin (above), President and CEO of St. Joseph’s Health in Syracuse, N.Y., told HealthLeaders Media. “Each of us have had our different strategies to reduce costs and improve care for our beneficiaries, but now we have six systems that can share those ideas and harness power together.” He added that they expect to see immediate cost savings per enrollee for hospital, outpatient, and medical laboratory services. (Photo copyright: St. Joseph’s Healthcare System.)

Stocks Fall in Response to Announcements

On the day that Amazon (NASDAQ:AMZN), JPMorgan Chase (NYSE:JPM), and Berkshire Hathaway (NYSE:BRK.A, BRK.B) made their announcement, UnitedHealth Group (NYSE:UNH), Anthem (NYSE:ANTM), and other healthcare companies saw their stocks fall. This demonstrates how disruptive such partnerships and coalitions can be in the healthcare marketplace, the New York Times reported.

They can be disruptive in more immediate ways, as well. For example, companies may use collected patient data to devise wellness programs they then offer their employees for free—even going as far as providing a financial incentive to participate. A healthier employee workforce means lower healthcare costs, but also less revenue to surrounding hospitals, physician’s practices, and medical laboratories.

What’s good for one group is not so good for the other, even though people are getting healthier in the long run.

And, to be fair, removing a million people from health insurance plans surely will negatively impact those companies’ finances, as well. The six HTC entities spend approximately $250 million annually for health benefits.

Kevin Joyce, VP of Insurance Networks at Atlantic Health System, a six-hospital health system in Morristown, N.J., told Healthcare Finance that, because the organizations involved in the HTC are healthcare providers themselves, the consortium has a particularly intimate knowledge of the issues causing the ever-rising cost of care.

“This is one of the ways to try to bend the cost curve,” he noted. “I honestly believe with the rise in high-deductible plans, trying to make healthcare more affordable should be the mission of both payer and provider. What makes us different from Amazon is that we as competitors came together to do this. This should have a ripple effect across all of our membership.”

Kevin Lenahan, CPA, Senior Vice President, Chief Financial and Administrative Officer, at Atlantic Health System agrees, adding, “It’s like-minded organizations that came together. We know each other. We all felt that we have a responsibility to improve quality, help transparency.”

Huge Obstacles on All Sides

In a CNBC interview covered by Inc. Magazine, Berkshire Hathaway CEO Warren Buffett emphasized that the obstacles such coalitions face are enormous.

“You talk about something that has $3.3 trillion in revenues presently going to people, and most people that are on the receiving end of the $3.3 trillion are happy with things.” He added, “If it was easy, it’d have been done.”

Nevertheless, both coalitions hope to serve as models for others. “By working closely with like-minded organizations, we can share best practices, learn from one another, and lead the transition from fee-for-service to value-based care, using our own benefit plans as proving grounds,” Joyce told Healthcare Finance.

As the trend to self-insure employees gains steam across corporate America, it will be interesting to see how the inhouse medical laboratories, and independent clinical laboratories and pathology groups that service these entities, are affected by the change.

—Dava Stewart

Related Information:

New Jersey Beats Amazon to the Punch on Self-Insured Health Plan

Amazon, Berkshire Hathaway, and JPMorgan Chase to Partner on US Employee Healthcare

Amazon, Berkshire Hathaway, and JPMorgan Team Up to Try to Disrupt Health Care

Six New Jersey Health Systems Borrow a Page from Amazon

Winners of the Qualcomm Tricorder XPRIZE for Medical Laboratory Testing Were Announced in April, Five Years After the Competition Began

More than 312 teams applied for the completion and the prize-winning hand-held device uses clinical laboratory assays to diagnose up to 34 different medical conditions

Star Trek fans among clinical laboratory manager and pathologist will be excited to learn that the winners of the Qualcomm Tricorder XPRIZE were announced earlier this year, five years after the contest began. The purpose of the XPRIZE competition was to challenge teams to create a mobile integrated diagnostic device that weighed less than five pounds and had the ability to monitor health metrics and diagnose 13 specific health conditions. The premise for the contest was inspired by the Star Trek medical tricorder that was first conceptualized on the television show “Star Trek” in the 1960s.

In the popular science-fiction show, the tricorder was a multifunctional hand-held device used for sensor scanning, data analysis, and recording data. The name “tricorder” was an abbreviation for the full name of the gadget, “tri-function recorder,” which referred to the three primary functions of the device.

Based in Culver City, Calif, the XPRIZE Foundation is a non-profit organization that creates and oversees prestigious technological competitions for the purpose of prompting innovations that could benefit humanity.

Handheld Device That Can Perform Multiple Clinical Laboratory Assays

The Qualcomm Tricorder XPRIZE competition was launched in January 2012. Participants had until August 2013 to register for the contest. The qualifying round was held the following August. Three hundred and twelve teams entered the competition. Qualifiers had until March 2015 to design and build their prototypes. Consumer testing on the products began in September 2016 and the winners were announced in April 2017.

The top prize of $2.6 million was awarded to Final Frontier Medical Devices, the team led by Basil Harris, MD, an emergency room physician with a PhD in Materials Engineering led the team, along with his network engineer brother, George Harris.

Basil Leaf Technologies, founded by Basil Harris, MD, PhD, FACEP (above center); and his brother George, a Network Engineer (second from left), is a medical technology company headquartered in Paoli, Pa. Their winning entry, called DxtER (pronounced Dexter), is a small FDA-approved group of medical devices that enable consumers to diagnose illnesses at home or remotely and share that data with healthcare providers. (Photo copyright: XPRIZE Foundation.)

The collection of FDA-approved devices that make up the “tricorder” includes sensors designed to gather data about vital signs, body chemistry, and biological functions. The DxtER device walks patients through the self-diagnosis of 34 medical conditions. The instruments include:

·       A compact spirometer that calculates lung strength;

·       A test kit for Mononucleosis;

·       A heart rate monitor;

·       A respiration monitor;

·       The DxtER Orb, a digital stethoscope that also serves as a thermometer; and

·       An artificial intelligence (AI) “engine” that diagnoses medical conditions.

DxtER communicates with a tablet and/or smartphone-based app. Since the components are FDA-approved, diagnostic test results can be taken directly to healthcare professionals.

“You can [receive the] results and take them to the ER or to your physician or whoever’s helping you, and they can build off those results,” George Harris explained in an Engadget article. “They don’t have to start back at square one. They can jump off at that point and move on with their healthcare.”

Basil Leaf Technologies’ DxtER “tricorder” (above) enables the user to self-diagnose up to 34 medical conditions. Each individual component is FDA-approved, so hospital physicians can rely on the accuracy of the test results. (Photo copyright: XPRIZE Foundation.)

According to the contest website, “at the heart of DxtER is an artificially intelligent engine that learned to diagnose by integrating years of experience in clinical emergency medicine with data analysis from actual patients having a variety of medical conditions and outcomes.”

“It is very exciting that our vision of mobile, personalized patient-centric healthcare is getting closer to becoming a reality thanks to the great work of the Qualcomm Tricorder XPRIZE teams,” declared Paul E. Jacobs, PhD, Executive Chairman of Qualcomm Incorporated (NASDAQ:QCOM) in an XPRIZE press release. “Creating technology breakthroughs in an industry as complex as healthcare is quite a milestone, and what these teams accomplished is a great stepping stone to making mobile healthcare a viable option across the world.”

DxtER Functions Like a Mobile Medical Laboratory

In addition to the $2.6-million prize, Qualcomm Foundation is giving the Basil Leaf team $3.8 million to further develop the device. This amount includes a:

·       $2.5 million proposal grant to the University of California San Diego; and a

·       $1.6-million gift from the Roddenberry Foundation to adapt the tricorder for hospital use in the developing world.

The XPRIZE competition required contestants to create a tricorder device that could accurately diagnose 13 health conditions. This included 10 core conditions and a choice of three elective health conditions. The devices also needed to be able to acquire five real-time vital signs:

1.     Blood pressure;

2.     Heart rate;

3.     Oxygen saturation;

4.     Respiratory rate; and

5.     Temperature.

The 10 core conditions the devices had to be able to identify were:

1.     Anemia;

2.     Atrial Fibrillation;

3.     Chronic Obstructive Pulmonary Disease;

4.     Diabetes Mellitus;

5.     Leukocytosis;

6.     Pneumonia;

7.     Otitis;

8.     Sleep Apnea;

9.     Urinary Tract Infection; and

10.  Absence of condition.

The contest also required participants to choose three elective conditions from the following list:

·       Cholesterol screen;

·       Food-borne illness;

·       Human Immunodeficiency Virus (HIV) screen;

·       Hypertension;

·       Hypothyroidism/Hyperthyroidism;

·       Melanoma;

·       Mononucleosis;

·       Pertussis;

·       Shingles, and

·       Strep throat.

It is notable that the TriCorder XPRIZE—with its $2.6 million prize—generated entries from 312 teams. Pathologists and clinical laboratory managers can take this high number of entrants as a sign that the ongoing advances in technology are poised to support a new generation of very small medical lab testing devices. Thus, miniaturized diagnostic technologies, when combined with more sophisticated computing chips and software are making it simpler and more feasible to pack multiple diagnostic instruments into a hand-held package.

—JP Schlingman

Related Information:

Final Frontier Medical Devices

Family-led Team Takes Top Prize in Qualcomm Tricorder XPRIZE Competition for Consumer Medical Device Inspired by Star Trek

The Contest to Build the First Star Trek Tricorder Has a Winner [Infographic]

XPRIZE Winner Says its Tricorder is Better Than ‘Star Trek’

Underdog Team Wins Millions in Competition to Make Real-Life Tricorder

Star Trek’s “Tricorder” Medical Scanner Just Got Closer to Becoming a Reality

Qualcomm Tricorder XPRIZE Goes to US Team for Device Fusing AI, IoT, Health

Tricorder X Prize – Wikipedia

Star Trek’s Tricorder, Realized? This Device Uses AI to Diagnose Medical Conditions

The Race to Build a Real Star Trek Tricorder

Qualcomm TriCorder XPRIZE Selects 10 Finalists: Next Step Is for Devices to Diagnose Patients using Clinical Laboratory Test Technologies and Similar Diagnostic Tools

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