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Patients and Physicians Go Online to Pressure Insurers on Prior Authorization Denial of Claims, Something Genetic Testing Labs Regularly Encounter

In a handful of cases, health insurers reversed denials after physicians or patients posted complaints on social media

Prior authorization requirements by health insurers have long been a thorn in the side of medical laboratories, as well as physicians. But now, doctors and patients are employing a new tactic against the practice—turning to social media to shame payers into reversing denials, according to KFF Health News (formerly Kaiser Health News).

Genetic testing lab companies are quite familiar with prior authorization problems. They see a significant number of their genetic test requests fail to obtain a prior authorization. Thus, if the lab performs the test, the payer will likely not reimburse, leaving the lab to bill the patient for 100% of the test price, commonly $1,000 to $5,000. Then, an irate patient typically calls the doctor to complain about the huge out-of-pocket cost.

One patient highlighted in the KFF story was Sally Nix of Statesville, North Carolina. Her doctor prescribed intravenous immunoglobulin infusions to treat a combination of autoimmune diseases. But Nix’s insurer, Blue Cross Blue Shield of Illinois (BCBSIL), denied payment for the therapy, which amounted to $13,000 every four weeks, KFF Health News reported. So, she complained about the denial on Facebook and Instagram.

“There are times when you simply must call out wrongdoings,” she wrote in an Instagram post, according to the outlet. “This is one of those times.”

In response, an “escalation specialist” from BCBSIL contacted her but was unable to help. Then, after KFF Health News reached out, Nix discovered on her own that $36,000 in outstanding claims were marked “paid.”

“No one from the company had contacted her to explain why or what had changed,” KFF reported. “[Nix] also said she was informed by her hospital that the insurer will no longer require her to obtain prior authorization before her infusions, which she restarted in July.”

“I think we’re on the precipice of really improving the environment for prior authorization,” said Todd Askew, Senior Vice President, Advocacy, for the American Medical Association, in an AMA Advocacy Update. If this was to happen, it would be welcome news for clinical laboratories and anatomic pathology groups. (Photo copyright: Nashville Medical News.)

Physicians Also Take to Social Media to Complain about Denials

Some physicians have taken similar actions, KFF Health News reported. One was gastroenterologist Shehzad A. Saeed, MD, of Dayton Children’s Hospital in Ohio. Saeed posted a photo of a patient’s skin rash on Twitter in March after Anthem denied treatment for symptoms of Crohn’s disease. “Unacceptable and shameful!” he tweeted.

Two weeks later, he reported that the treatment was approved soon after the tweet. “When did Twitter become the preferred pathway for drug approval?” he wrote.

Eunice Stallman, MD, a psychiatrist from Boise, Idaho, complained on X (formerly Twitter) about Blue Cross of Idaho’s prior authorization denial of a brain cancer treatment for her nine-month-old daughter. “This is my daughter that you tried to deny care for,” she posted. “When a team of expert [doctors] recommend a treatment, your PharmD reviewers don’t get to deny her life-saving care for your profits.”

However, in this case, she posted her account after Blue Cross Idaho reversed the denial. She said she did this in part to prevent the payer from denying coverage for the drug in the future. “The power of the social media has been huge,” she told KFF Health News. The story noted that she joined X for the first time so she could share her story.

Affordable Care Act Loophole?

“We’re not going to get rid of prior authorization. Nobody is saying we should get rid of it entirely, but it needs to be right sized, it needs to be simplified, it needs to be less friction between the patient and accessing their benefits. And I think we’re on really good track to make some significant improvements in government programs, as well as in the private sector,” said Todd Askew, Senior Vice President, Advocacy, for the American Medical Association, in an AMA Advocacy Update.

However, KFF Health News reported that Kaye Pestaina, JD, a Kaiser Family Foundation VP and Co-Director of the group’s Program on Patient and Consumer Protections, noted that some “patient advocates and health policy experts” have questioned whether payers’ use of prior authorization denials may be a way to get around the Affordable Care Act’s prohibition against denial of coverage for preexisting conditions.

“They take in premiums and don’t pay claims,” family physician and healthcare consultant Linda Peeno, MD, told KFF Health News. “That’s how they make money. They just delay and delay and delay until you die. And you’re absolutely helpless as a patient.” Peeno was a medical reviewer for Humana in the 1980s and then became a whistleblower.

The issue became top-of-mind for genetic testing labs in 2017, when Anthem (now Elevance) and UnitedHealthcare established programs in which physicians needed prior authorization before the insurers would agree to pay for genetic tests.

Dark Daily’s sister publication The Dark Report covered this in “Two Largest Payers Start Lab Test Pre-Authorization.” We noted then that it was reasonable to assume that other health insurers would follow suit and institute their own programs to manage how physicians utilize genetic tests.

At least one large payer has made a move to reduce prior authorization in some cases. Effective Sept. 1, UnitedHealthcare began a phased approach to remove prior authorization requirements for hundreds of procedures, including more than 200 genetic tests under some commercial insurance plans.

However, a source close to the payer industry noted to Dark Daily that UnitedHealthcare has balked at paying hundreds of millions’ worth of genetic claims going back 24 months. The source indicated that genetic test labs are engaging attorneys to push their claims forward with the payer.

Is Complaining on Social Media an Effective Tactic?

A story in Harvard Business Review cited research suggesting that companies should avoid responding publicly to customer complaints on social media. Though public engagement may appear to be a good idea, “when companies responded publicly to negative tweets, researchers found that those companies experienced a drop in stock price and a reduction in brand image,” the authors wrote.

However, the 2023 “National Customer Rage Survey,” conducted by Customer Care Measurement and Consulting and Arizona State University, found that nearly two-thirds of people who complained on social media received a response. And “many patients and doctors believe venting online is an effective strategy, though it remains unclear how often this tactic works in reversing prior authorization denials,” KFF Health News reported.

Federal Government and States Step In

KFF Health News reported that the federal government is proposing reforms that would require some health plans “to provide more transparency about denials and to speed up their response times.” The changes, which would take effect in 2026, would apply to Medicaid, Medicare Advantage, and federal Health Insurance Marketplace plans, “but not employer-sponsored health plans.”

KFF also noted that some insurers are voluntarily revising prior authorization rules. And the American Medical Association reported in March that 30 states, including Arkansas, California, New Jersey, North Carolina, and Washington, are considering their own legislation to reform the practice. Some are modeled on legislation drafted by the AMA.

Though the states and the federal government are proposing regulations to address prior authorization complaints, reform will likely take time. Given Harvard Business Review’s suggestion to resist replying to negative customer complaints in social media, clinical labs—indeed, all healthcare providers—should carefully consider the full consequences of going to social media to describe issues they are having with health insurers.

—Stephen Beale

Related Information:

Doctors and Patients Try to Shame Insurers Online to Reverse Prior Authorization Denials

Delays Related to Prior Authorization in Inflammatory Bowel Disease

Why You Shouldn’t Engage with Customer Complaints on Twitter

Feds Move to Rein In Prior Authorization, a System That Harms and Frustrates Patients

“Damaged Care” Premiere Features HMO Whistleblower

Major Insurers to Ease Prior Authorizations Ahead of Federal Crackdown

How Labs Can Improve Their Relationships with Payers for Genomic Test Reimbursement

Payers Request More Claims Documentation

Executive War College Keynote Speakers Highlight How Clinical Laboratories Can Capitalize on Multiple Growth Opportunities

From ‘new-school’ rules of running a clinical laboratory to pharmacy partnerships to leveraging lab data for diagnostics, key industry executives discussed the new era of clinical laboratory and pathology operations

Opening keynotes at the 28th Annual Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management taking place in New Orleans this week covered three main forces that healthcare and medical laboratory administrators should be preparing to address: new consumer preferences, new care models, and new payment models.

COVID-19 didn’t change a whole lot of things in one sense, but it accelerated a lot of trends that were already happening in healthcare,” said Robert L. Michel, Editor-in-Chief of Dark Daily and its sister publication The Dark Report, and Founder of the Executive War College, during his opening keynote address to a packed ballroom of conference attendees. “Healthcare is transforming, and the transformation is far more pervasive than most consumers appreciate.

Disintermediation, for example, is taking traditional service providers and disrupting them in substantial ways, and if you think about the end of fee-for-service, be looking forward because your labs can be paid for the value you originate that makes a difference in patient care,” Michel added.

Another opportunity for clinical laboratories, according to Michel, is serving Medicare Advantage plans which have soared in enrollment. “Lab leaders should be studying Medicare Advantage for how to integrate Medicare Advantage incentives into their lab strategies,” he said, highlighting the new influence of risk adjustment models which use diagnostic data to predict health condition expenditures.

Robert L. Michel

Opening sessions at this week’s annual Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management, presented by Robert L. Michel (above), Editor-in-Chief of Dark Daily and its sister publication The Dark Report, discussed demand for delivering healthcare services—including medical laboratory testing—as consumer preferences evolve, new care models are designed, and as payers seek value over volume. While these three forces may be challenging at the outset, they also create opportunities for clinical laboratories and pathology groups—a focal point of the Executive War College each year. (Photo copyright: The Dark Intelligence Group.)

Medical Laboratories Must Adapt to ‘New-School’ Rules

During his keynote address, Stan Schofield, Vice President and Managing Principal at The Compass Group, noted that while the basic “old-school” rules of successfully running a clinical laboratory have not changed—e.g., adding clients, keeping clients, creating revenue opportunities, getting paid, and reducing expenses—the interpretation of each rule has changed. The Compass Group is a trade federation based in South Carolina that serves not-for-profit healthcare integrated delivery networks (IDNs), including 32 health systems and 600 hospitals.

Schofield advised that when it comes to adding new clients under the “new-school” rules of lab management, clinical laboratory directors must be aware of and adapt to hospital integrations of core labs, clinical integrations across health systems, seamless services, direct contracting with employers in insurance relationships, and direct-to-consumer testing. Keeping clients, Schofield said, involves five elements:

  • Strong customer service.
  • A tailored metrics program for quality services based on what is important to a lab’s clients.
  • Balanced scorecards that look at the business opportunity and value proposition with each client.
  • Monitoring patients’ experiences and continuous improvement.
  • Participation in all payer agreements.

As to the problem of commoditization of laboratory goods and services, Schofield said, “Right now, we’re facing the monetization of the laboratory. We’re going to swiftly move from commoditization to monetization to commercialization.”

Pharmacies Enter the Clinical Laboratory Market

In another forward looking keynote address, David Pope, PharmD, CDE, Chief Pharmacy Officer at OmniSYS, XiFin Pharmacy Solutions, discussed the “test to treat” trend which could bring clinical laboratories and pharmacies together in new partnerships.

Diagnostics and pharmacy now intersect, according to Pope. “Pharmacists are on the move, and they are true contender as a new provider for you,” he said. “An area of pharmacy that is dependent upon labs is specialty medications.”

Specialty medicines now account for 55% of prescription spending, up from 28% in 2011, driven by growth in auto-immune and oncology, Pope noted. Other examples include companion diagnostics required for targeted treatments pertaining to all major cancers, and new areas like thalassemia (inherited blood disorders), obesity, next-generation sequencing, and pharmacogenomics, in addition to routine testing such as liver function and complete blood count (CBC).

Federal legislation may soon recognize pharmacists as healthcare providers who will be trained to perform specific clinical services, Pope said. Some states already recognize pharmacists as providers, he noted, explaining that pharmacies need lab data for three primary reasons:

  • Service—Pharmacies can act as a referral source to clinical laboratories. When referring, pharmacies may need to communicate lab test results to patients or providers to coordinate care.
  • Value-based care—Pharmacies would draw on data to counsel, prescribe, and coordinate care for chronic disease management, among other services.
  • Diagnostics and pharmacogenetics—Specialty medication workflows require documented test results within a specific timeframe prior to dispensing.

Another point Pope made: Large pharmacies are seeking lab partners. Labs that can provide rapid turnaround time and good pricing on complex tests provide pharmacies with partnership opportunities.

Using AI to Create Patients’ ‘Digital Twins’ That Help Identify Disease and Improve Care

High-tech healthcare technology underlies many opportunities in the clinical laboratory and pathology market, as evidenced throughout the Executive War College’s 2023 curriculum. An ongoing challenge for labs, however, is how to produce the valuable datasets that all labs have the potential to generate.

“It feels like we’ve come so far,” explained Brad Bostic, CEO of hc1 during his keynote address. “We’ve got the internet. We’ve got the cloud. All of this is amazing, but in reality, we have this massive proliferation of data everywhere and it’s very difficult to know how to actually put that into use. And nobody’s generating more data than clinical laboratories.

“Every single interaction with a patient that generates data gives you this opportunity to create the idea of a ‘digital twin.’ That means that labs are creating a mathematical description of what a person’s state is and using that information to look at how providers can optimally diagnose and treat that person. Ultimately, it is bigger than just one person. It’s hundreds of millions of people that are generating all this data, and many of these people fall into similar cohorts.”

This digital twin opportunity is heavily fueled by medical laboratory testing, Bostic said, adding that labs need to be able to leverage artificial intelligence (AI) to:

  • Improve lab operations.
  • Identify disease earlier.
  • Personalize treatment.
  • Run predictive analytics.

“I recommend lab leaders sit down with their teams and any outside partners they trust and identify what are their lab’s goals,” Bostic stated. “Think about how this technology can advance a lab’s mission. Look at strategy holistically—everything from internal operations to how patient care is affected.”

Lab and pathology leaders are invited to continue these and other conversations by joining the Executive War College Discussion Group and The Dark Report Discussion Group on LinkedIn.

Liz Carey

Related Information:

Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management

Report to Congress: Risk Adjustment in Medicare Advantage

Executive War College Press

Transition from Fee-for-Service to Value-Based Reimbursement for Hospitals, Physicians, and Clinical Laboratories Continues, Albeit Slowly, Reports Say 

Medical laboratories and anatomic pathologists may need to squeeze into narrow networks to be paid under value-based schemes, especially where Medicare Advantage is concerned

Pathologists have likely heard the arguments in favor of value-based payment versus fee-for-service (FFS) reimbursement models: FFS encourages providers to order medically unnecessary procedures and lab tests. FFS removes incentives for providers to order patient services more carefully. Fraudsters can generate huge volumes of FFS claims that take payers months/years to recognize and stop.

Studies that favor value-based payment schemes support these claims. But do hospitals and other healthcare providers also accept them? And how is value-based reimbursement really doing?

To find out, Chicago-based thought leadership and advisory company 4Sight Health culled data from various organizations’ reports that suggest value-based reimbursement shows signs of growth as well as signs of stagnation.

Value-Based Payment Has Its Ups and Downs

Healthcare journalist David Burda is News Editor and Columnist at 4Sight Health. In his article, “Is Value-Based Reimbursement Mostly Dead or Slightly Alive?” Burda commented on data from various industry reports that indicated value-based reimbursement shows “signs of life.” For example:

On the other hand, Burda reported that value-based reimbursement also has these declining indicators:

  • 39.3% of provider payments “flowed” through FFS plans in 2020 with no link to cost or quality. This was unchanged since 2019. (HCPLAN report)
  • 19.8% of FFS payments to providers in 2020 were linked to cost or quality, down from 22.5% in 2019. (HCPLAN report)
  • 88% of doctors reported accepting FFS payments in 2019, an increase from 87% in 2018. (AMA report)

Does Today’s Healthcare Industry Support Value-based Care?

A survey of 680 physicians conducted by the Deloitte Center for Health Solutions suggests the answer could be “not yet.” In “Equipping Physicians for Value-Based Care,” Deloitte reported:

  • “Physician compensation continues to emphasize volume more than value.
  • “Availability and use of data-driven tools to support physicians in practicing value-based care continue to lag.
  • “Existing care models do not support value-based care.”

Deloitte analysts wrote, “Physicians increasingly recognize their role in improving the affordability of care. We repeated a question we asked six years ago and saw a large increase in the proportion of physicians who say they have a prominent role in limiting the use of unnecessary treatments and tests: 76% in 2020 vs. 57% in 2014.

“Physicians also recognize that today’s care models are not geared toward value,” Deloitte continued. “They see many untapped opportunities for improving quality and efficiency. They estimate that even today, sizable portions of their work can be performed by nonphysicians (30%) in nontraditional settings (30%) and/or can be automated (18%), creating opportunities for multidisciplinary care teams and clinicians to work at the top of their license.”

Hospital CFOs Also See Opportunities for Value-based Care

In his 4sight Health article, Burda reported on data from a “Guidehouse Center for Health Insights’ analysis of a 2021 Healthcare Financial Management Association (HFMA) survey of more than 100 health systems CFOs that found that most said they are still interested in seeking value-based payment arrangements this year.”

According to the HFMA survey, among the arrangement CFOs indicated, 59% expressed interest in Medicare Advantage value-based payment contracts.

This could be problematic for clinical laboratories, according to Robert Michel, Editor-in-Chief of Dark Daily and our sister publication The Dark Report. According to Guidehouse, “Nearly 60% of health systems plan to advance into risk-based Medicare Advantage models in 2022.”

Medicare Advantage (MA) enrollments have escalated over 10 years: 26.4 million people of the 62.7 million eligible for Medicare chose MA in 2021, noted a Kaiser Family Foundation brief that also noted MA enrollment in 2021 was up by 2.4 million beneficiaries or 10% over 2020.

Graph of Medicare Advantage Enrollment
The graph above is taken from the Kaiser Family Foundation report, “Medicare Advantage in 2021: Enrollment Update and Key Trends.” According to the KFF, “In 2021, more than four in 10 (42%) Medicare beneficiaries—26.4 million people out of 62.7 million Medicare beneficiaries overall—are enrolled in Medicare Advantage plans; this share has steadily increased over time since the early 2000s.” Since MA employs narrow networks for its healthcare providers, it’s likely this trend will continue to affect clinical laboratories that may find it difficult to access these providers. (Graphic copyright: Kaiser Family Foundation.)

“The shift from Medicare Part B—where any lab can bill Medicare on behalf of patients for doctor visits and outpatient care, including lab tests—to Medicare Advantage is a serious financial threat for smaller and regional labs that do a lot of Medicare Part B testing. The Medicare Advantage plans often have networks that exclude all but a handful of clinical laboratories as contracted providers,” Michel cautioned. “Moving into the future, it’s incumbent on regional and smaller clinical laboratories to develop value-added services that solve health plans’ pain points and encourage insurers to include local labs in their networks.”

Medical laboratories and anatomic pathology groups need to be aware of this trend. Michel says value-based care programs call on clinical laboratories to collaborate with healthcare partners toward goals of closing care gaps.

“Physicians and hospitals in a value-based environment need a different level of service and professional consultation from the lab and pathology group because they are being incented to detect disease earlier and be active in managing patients with chronic conditions to keep them healthy and out of the hospital,” he added.

Value-based reimbursement may eventually replace fee-for-service contracts. The change, however, is slow and clinical laboratories should monitor for opportunities and potential pitfalls the new payment arrangements might bring.

—Donna Marie Pocius

Related Information:

Is Value-Based Reimbursement Mostly Dead or Slightly Alive?

APM Measurement Progress of Alternative Payment Models: 2020-2021 Methodology and Results Report   

Policy Research Perspectives: Payment and Delivery in 2020

Equipping Physicians for Value-Based Care: What Needs to Change in Care Models, Compensation, and Decision-Making Tools

Nearly 60% of Health Systems Pursuing Risk-Based Medicare Advantage Models in 2022, Guidehouse Analysis Shows

Medicare Advantage in 2021: Enrollment Update and Key Trends

CMS’ Latest Value-Based Reimbursement Model Explores Geographic Direct Contracting for Medicare and Focuses on Costs and Quality

Department of Justice Recovers $1.8B from Medical Laboratory Owners and Others Accused of Alleged Healthcare Fraud During COVID-19 Pandemic

It did not take long for fraudsters to pursue hundreds of billions of federal dollars designated to support SARS-CoV-2 testing and it is rare when federal prosecutors bring cases only a few months after illegal lab testing schemes are identified

As if the COVID-19 pandemic weren’t bad enough, unscrupulous clinical laboratory operators quickly sought to take advantage of the critical demand for SARS-CoV-2 testing and defraud the federal government.

Unfortunately for the many defendants in these cases, federal investigations into alleged cases of fraud were launched with noteworthy speed. As a result of these investigations into alleged healthcare fraud by clinical laboratories and other organizations during fiscal year (FY) 2020, the US Department of Justice (DOJ) announced the US government has recovered $1.8 billion.

The federal prosecutions involved dozens of medical laboratory owners and operators who paid back “hundreds of millions in alleged federal healthcare program losses,” Goodwin Life Sciences Perspectives explained.

The annual report of the Departments of Health and Human Services (HHS) and Justice Health Care Fraud and Abuse Control Program (HCFAC) reported that federal agencies found and prosecuted alleged healthcare fraud for unnecessary laboratory testing related to:

The HCFAC is a joint program of the HHS Office of Inspector General (OIG), Centers for Medicare and Medicaid Services (CMS), and DOJ, a CMS fact sheet explained.

Billions Recovered by HCFAC Program

When combined with similar efforts starting in prior years, the program has returned to the federal government and private individuals a total of $3.1 billion, the DOJ noted.

“In its 24th year of operation, the program’s continued success confirms the soundness of a collaborative approach to identify and prosecute the most egregious instances of healthcare fraud, to prevent future fraud and abuse, and to protect program beneficiaries,” the report states.

Graphic oh healthcare fraud

According to the graphic above, which is based on analysis by B2B research company MarketsandMarkets, “North America will dominate the healthcare fraud analytics market from 2020–2025.” As clinical laboratory testing represents a significant portion of the fraud, medical lab managers will want to remain vigilant. (Graphic copyright: MarketsandMarkets.)

COVID-19 Pandemic an Opportunity for Fraud

The HHS report notes that the COVID-19 pandemic required CMS to develop a “robust fraud risk assessment process” to identify clinical laboratory fraud schemes, such as offering COVID-19 tests in exchange for personal details and Medicare information.

“In one fraud scheme, some labs are targeting retirement communities claiming to offer COVID-19 tests but are drawing blood and billing federal healthcare programs for medically unnecessary services,” the HHS report notes.

Still other alleged schemes involved billing for expensive tests and services in addition to COVID-19 testing. “For example, providers are billing a COVID-19 test with other far more expensive tests such as the Respiratory Pathogen Panel (RPP) and antibiotic resistance tests,” the report says.

“Other potentially unnecessary tests being billed along with a COVID-19 test include genetic testing and cardiac panels CPT (current procedural terminology) codes. Providers are also billing respiratory, gastrointestinal, genitourinary, and dermatologic pathogen code sets with the not otherwise specified code CPT 87798,” the report states.

Different Types of Healthcare Organizations Investigated in 2020

Beyond clinical laboratories, the HHS’ 124-page report also shares criminal and civil investigations of other healthcare organizations and areas including:

  • clinics,
  • drug companies,
  • durable medical equipment,
  • electronic health records,
  • home health providers,
  • hospice care,
  • hospitals and healthcare systems,
  • medical devices,
  • nursing home and facilities,
  • pharmacies, and
  • physicians/other practitioners.  

According to the DOJ, “enforcement actions” in 2020 included:

  • 1,148 new criminal healthcare fraud investigations opened,
  • 440 defendants convicted of healthcare fraud and related crimes,
  • 1,079 civil healthcare fraud investigations opened, and
  • 1,498 pending civil health fraud matters at year-end.

“Federal Bureau of Investigation (FBI) investigative efforts resulted in over 407 operational disruptions of criminal fraud organizations and the dismantlement of the criminal hierarchy of more than 101 healthcare fraud criminal enterprises,” the DOJ reported. 

Furthermore, the report said OIG investigations in 2020 led to:

  • 578 criminal actions against people or organizations for Medicare-related crimes,
  • 781 civil actions such as false claims, and
  • 2,148 people and organizations eliminated from Medicare and Medicaid participation.

Implications for Clinical Laboratories

In 2020, OIG issued 178 reports, completed 44 evaluations, and made 689 recommendations to HHS divisions.

Clinical laboratory leaders may be most interested in those related to patient identification as a means to combating fraud and Medicare Part B lab testing reimbursement.

The HHS report says, “Medicare Advantage (MA) encounter data continue to lack National Provider Identifiers (NPIs) for providers who order and/or refer … clinical laboratory services,” adding that, “Almost half of MA organizations believe that using NPIs for ordering providers is critical for combating fraud.”

Additionally, the report states, “Medicare Part B spending for lab tests increased to $7.6 billion in 2018, despite lower payment rates for most lab tests. The $459 million spending increase was driven by:

  • “increased spending on genetic tests,
  • “ending the discount for certain chemistry tests, and the
  • “move to a single national fee schedule.”

Medical laboratory leaders may be surprised to learn that federal healthcare investigators were so vigorous in their investigations, even during the worst of the COVID-19 pandemic.

Vigilance is critical to ensure labs do not fall under the DOJ’s scrutiny. This HHS report, which describes the types and dollars involved in fraudulent schemes by clinical labs and other providers, could help inform revisions to federal compliance regulations and statutes.

Donna Marie Pocius

Related Information

Annual Report of the Departments of Health and Human Services (HHS) and Justice Healthcare Fraud and Abuse Control (HCFAC) Program FY 2020

DOJ Recoups a Total of $1.8 Billion from Healthcare Fraud in 2020, Laboratory Recoupments Alone Account for Hundreds of Millions

Healthcare Fraud and Abuse Control Program Protects Consumers and Taxpayers by Combatting Healthcare Fraud

2020 National Health Care Fraud Takedown

New Proposed Federal Rule Could Remove Requirement for Hospitals to Share Negotiated Medicare Advantage Rates with CMS

CMS says it is responding to hospitals’ plea for relief from burdensome reporting requirements, but not altering federal price transparency laws

Despite federal price transparency law that went into effect January 1 after a year-long court battle, some hospitals continue to balk at sharing their payer-negotiated rates for healthcare goods and services—including medical laboratory testing—claiming a variety of challenges due to the COVID-19 pandemic, vaccine distribution, and other difficulties, Modern Healthcare reported.

Now, after the American Hospital Association (AHA) in a January 7 letter asked the federal Centers for Medicare and Medicaid Services (CMS) to “exercise enforcement discretion with respect to the hospital price transparency rule,” CMS has removed the requirement that hospitals report certain negotiated-rates.

The CMS “Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long Term Care Hospital (LTCH)” proposed rule for fiscal year (FY) 2022 (CMS-1752-P) removes hospitals’ need to report Medicare Advantage (MA) rates on Medicare cost reports effective Jan. 1, 2021, according to a CMS fact sheet.

This requirement was originally part of the Hospital Price Transparency Final Rule (84 FR 65524), passed in 2019 during the Trump administration, which required hospitals to “establish, update, and make public a list of their standard charges for the items and services that they provide,” including clinical laboratory test prices. This reporting requirement did not sit well with the AHA.

In a statement, Ashley Thompson, Senior Vice President for Public Policy Analysis and Development for the American Hospital Association, said, “This policy will require hospitals to divert critically needed resources during this historic pandemic to administrative tasks that will not benefit patients.” She added, “We do not believe CMS has the authority to compel the disclosure of these terms and our legal challenge remains ongoing.”

However, if the new proposed rule goes into effect, CMS would no longer expect hospitals to report the rates they have negotiated with each Medicare Advantage plan, RevCycleIntelligence reported.

HHS-Secretary-Xavier-Becerra-at-podium
“Hospitals are often the backbone of rural communities—but the COVID-19 pandemic has hit rural hospitals hard, and too many are struggling to stay afloat,” HHS Secretary Xavier Becerra (above) said in an announcement, RevCycleIntelligence reported. “This rule will give hospitals more relief and additional tools to care for COVID-19 patients and it will also bolster the healthcare workforce in rural and underserved communities.” (Photo copyright: Modern Healthcare.)

CMS Relieving a Burden, Not Eliminating a Requirement

In the fact sheet, CMS wrote that it “is proposing to repeal the requirement that a hospital report on the Medicare cost report the median payer-specific negotiated charge that the hospital has negotiated with all of its MA organization payers, by MS-DRG (Medicare-severity diagnosis related group), for cost reporting periods ending on or after January 1, 2021. CMS estimates this will reduce administrative burden on hospitals by approximately 64,000 hours.”

Experts noted that CMS is attempting to reduce providers’ administrative burdens, while keeping federal price transparency requirements in effect.

“The repeal of this requirement more falls into the bucket of easing hospitals’ burden as opposed to the agency’s stance on hospital price transparency,” Caitlin Sheetz, Director and Head of Analytics at ADVI Health, LLC, told Fierce Healthcare.

Still, the recent CMS action could be a sign that price transparency requirements for hospitals will not intensify, she added. “I would think it is very unlikely that [CMS] would put out a rule that is easing up hospital administrative burden [and] they would then ramp up audits for the hospital price transparency rule.”

AHA Supports CMS’ Latest Proposed Rule on Hospital Reporting

The AHA said the new proposed rule moves in the right direction. 

In a statement, Tom Nickels, Executive Vice President of the AHA, said, “We have long said that privately negotiated rates take into account any number of unique circumstances between a private payer and a hospital and their disclosure will not further CMS’ goal of paying market rates that reflect the cost of delivering care.” He added, “We once again urge the agency to focus on transparency efforts that help patients access their specific financial information based on their coverage and care.”

Though federal price transparency rules are evolving, medical laboratories are encouraged to accept that consumer demand is one powerful force driving this trend. Thus, clinical laboratories that currently make it easy for patients to see the prices for common medical laboratory tests in advance of service should gain competitive advantage from this feature over time.

Donna Marie Pocius

Related Information:

Fact Sheet: Fiscal Year (FY) 2022 Medicare Hospital Inpatient System (IPPS) and Long-Term Care Hospital (LTCH) Rates Proposed Rule (CMS 1752-P)

CMS Proposes $2.5B IPPS Rate Hike, with Eye on Rural Health Equity

Experts Say CMS is Still Committed to Price Transparency after Proposal to Pull MA Requirements

AHA Statement on FY 2022 Proposed IPPS Rule

AHA Urges HHS to Exercise Enforcement Discretion with Respect to the Hospital Price Transparency Rule

Hospitals Slow to Disclose Their Payer-Negotiated Rates

CMS Price Transparency Rule Offers Providers, Payers a Win, Too

Wall Street Journal Investigation Finds Computer Code on Hospitals’ Websites That Prevents Prices from Being Shown by Internet Search Engines, Circumventing Federal Price Transparency Laws

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