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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Federal Programs That Lower Hospital Readmissions Rates Impact Medical Laboratories Inpatient Test Ordering

Medical laboratory inpatient test volume may continue to decline as the Medicare hospital readmission reduction program expands in 2017 and state population health programs garner funding

 We are now several years into the Medicare program that is designed to reduce hospital readmissions. Statistics from these years show encouraging progress in reducing the readmission rate of Medicare patients. This is a trend that has important implications for all hospital-based clinical laboratories.

Hospitals are the most expensive site of care in the entire healthcare system. In its ongoing battle to reduce healthcare costs, the Centers for Medicare and Medicaid Services (CMS) implemented a carrot-and-stick program called the Hospital Readmission Reduction Program (HRRP) aimed at lowering hospital readmission rates nationwide.

Established in 2013 by the Affordable Care Act (also known as Obamacare), the HRRP lowers reimbursements to acute care hospitals that have high rates of Medicare readmissions within 30 days of initial discharge, and increases reimbursements to hospitals that lower their readmission rates, a March 2017 Kaiser Family Foundation (KFF) Issue Brief explained.

And, according to the KFF, these programs are having an impact. Readmission rates dropped by 8% nationwide as hospitals found ways to avoid the stiff financial penalties and earn the financial rewards. Additionally, patients are increasingly choosing ambulatory care settings, or to receive care at home, rather than re-entering hospitals. This has lowered states’ readmission rates even further.

From a healthcare cost perspective, this is good news. However, these programs have had unintentional consequences as well. The federal initiatives and state population health programs responsible for lowering readmission rates also directly impact medical laboratories by simultaneously reducing the flow of inpatient testing volume.

At the same time, clinicians at the nation’s hospitals—in their efforts to avoid readmissions—have a motive to become more effective at ordering the right medical laboratory test at the right time, and to use the lab test results to more effectively treat the patient. Thus, for the nation’s hospital labs, the Medicare program to reduce readmissions has both an upside and a downside.

Programs, Data Mining That Help Providers Avoid Readmissions

Hospitals nationwide are operating programs aimed at attracting federal financial rewards for keeping people healthy, and from being admitted to hospitals due to conditions that could have been prevented, USA Today reported.

One such program involves Christiana Care Health System (Christiana Care) of Wilmington, DE. Christiana Care implemented CMS’ Care Link transitions program through the Center for Medicare and Medicaid Innovation (CMMI), also known as The Innovation Center, which, “supports the development and testing of innovative healthcare payment and service delivery models.”

The provider experienced a 20% drop in patients being readmitted within 30 days of surgery, due to its “bundled payment” plan for heart failure, the USA Today article noted. Hip and knee replacement readmissions were down 25% 30 days after discharge as well.

“Without the funding we got through CMMI, it’s hard to imagine we’d be in the position we’re in today,” stated Janice Nevin, MD, CEO of Christiana Care.

Janice Nevin, MD

Janice Nevin, MD (above), CEO of Christiana Care Health System, Wilmington, DE, is concerned that the upcoming changes to the ACA will affect the funding the healthcare provider has received from the CMS Innovation Center. “I would strongly urge that we keep the commitment to CMMI (because) you have to innovate to learn,” she told USA Today. (Photo copyright: Christiana Care Health System.)

Changes to HRRP for Dual-Eligibles Could Affect Penalties

Some patients are more expensive than others. Patients who draw both Medicare and Medicaid funding simultaneously, for example. These “dual-eligibles” are disproportionately expensive for hospitals to treat, reported Modern Healthcare.

In fact, they are just 18% of CMS beneficiaries, but accounted for one-third of all Medicare fee-for-service (FFS) spending in 2013, according to a Medicare Payment Advisory Commission June 2016 demographic report.

CMS is proposing to adjust penalties in the HRRP to reflect the proportion of patients who are dual-eligible, presumably hoping the change will both lower costs and reduce penalties on healthcare providers.

Hospital Readmissions Data from 49 States

CMS data show that between 2010 and 2015 hospital readmission rates fell by 8%, reported Healthcare Finance News. Other key data recently released by CMS and reported by Healthcare Finance News:

·       49 states reduced avoidable hospital readmission rates since 2010;

·       Vermont’s readmission rate rose slightly from 15.3% in 2010 to 15.4% in 2015;

·       In 43 states, readmission rates fell by more than 5%;

·       11 states had a more than 10% drop in readmission rates;

·       The fall in readmission rate translates to about 104,000 hospital readmissions avoided for Medicare beneficiaries in 2015 and 565,000 readmissions averted since 2010; and

·       Avoidable admissions, occurring within 30 days of initial discharges, account for more than $17 billion in Medicare annual expenditures.

Action Steps for Clinical Laboratories

Pathologists and lab leaders need to efficiently work with colleagues, especially when caring for hospitalized patients with conditions relative to the HRRP. Clear and patient-friendly discharge instructions for diagnostics are important. And, the lab’s coordination with post-acute-care providers, such as skilled nursing facilities, on follow-up testing is key to avoiding unnecessary readmissions.

Regardless, medical laboratory inpatient test volume will likely continue to decline. As Dark Daily readers know, the decline in inpatient testing is associated with more than just the HRRP. The transition to new models of integrated care that has taken place over the last few years is also a factor, as Dark Daily reported in “Falling Inpatient Revenues at Many Hospitals is Sign of Healthcare’s Transition to New Models of Integrated Care and Changes in Medical Laboratory Test Utilization.”

Medical laboratory directors and sales teams are advised to continue their efforts at boosting outpatient volume to fill the inpatient void.

—Donna Marie Pocius

Related Information:

Hospitals Work to Keep Patients from Being Admitted

Aiming for Fewer Hospital U-Turns: The Medicare Hospital Readmission Reduction Program

49 States, DC Reduce Avoidable Hospital Readmissions

Dual-eligibles: The Next Target in Hospital Readmissions Penalties

June 2016 Data Book, Section 2: Medicare Beneficiary Demographics

Hospitals Mine Clinical Data to Help Reduce Costs and Avoid Readmissions, Creating Opportunities for Clinical Laboratories and Pathologists to Contribute to Improved Patient Outcomes

Falling Inpatient Revenues at Many Hospitals is Sign of Healthcare’s Transition to New Models of Integrated Care and Changes in Medical Laboratory Test Utilization

As Medical Laboratory Test Utilization Grows, Health Insurers Develop Programs to Manage Rising Costs

After seeing a rise in the volume of clinical lab tests physicians order, managed care plans are develop a variety of strategies to manage utilization and costs

Health insurers are taking more aggressive actions to control the cost of clinical laboratory testing. For many years, clinical laboratories and pathology groups have been concerned about the strategies used by Medicare to control the utilization and costs of medical laboratory tests. Private health insurers usually follow the actions of Medicare, the nation’s largest health insurer. But today, managed care plans are developing their own lab-test-utilization strategies in addition to following those of Medicare.

Recently, Managed Care magazine explained many of the steps health insurers take to keep the costs of clinical laboratory tests under control. The cover story in the October issue of the magazine, “Health Plans Deploy New Systems To Control Use of Lab Tests,” outlined how health insurers Cigna, Group Health Cooperative, Priority Health, and UnitedHealthcare (UHC) are managing lab test utilization. (more…)

American Medical Association and PBS Both Join Pathology Profession in Publicizing Why Declining Autopsy Rates May Hurt Quality of Healthcare

Pathologists point out that autopsies consistently reveal doctors make a high rate of diagnostic errors—even with increasingly sophisticated imaging equipment

Pathologists and public health officials say the downward trend in autopsy rates is having far-reaching consequences for healthcare in the United States. The decline in the number of autopsies performed annually comes in spite of extensive literature documenting multiple benefits of the autopsy procedure.

No less an authority than the American Medical Association is calling attention to this situation. The AMA just published a story titled, “Declining Autopsy Rates Affect Medicine and Public Health,” to call attention to the fact that the rate of autopsies has fallen significantly. (more…)

Why Congress Is Considering Deep Cuts to Medical Laboratory Test Fees

Nation’s clinical laboratories may see significant reductions in federal funding for medical laboratory tests in the 2012 federal budget

Unprecedented cuts in funding for clinical laboratory services are expected from Congress in coming months. That’s because federal legislators need deep cuts from many sources to cope with the current budget crisis. It is also why some Beltway insiders predict that fees for medical laboratory testing will be substantially reduced.

Although many lab industry associations have alerted their members to certain of these proposals—such as the proposed plan to reinstitute the patient co-pay/co-insurance requirement for Medicare Part B Medical Laboratory Tests—few clinical laboratory managers and pathologists know that there are at least three separate proposals to reduce funding for medical laboratory tests. Each proposal has a chance to make it through the legislative pipeline and become part of the final 2012 federal budget.

CMS Proposes Preauthorization Imaging Services, a Dangerous Precedent for Laboratory Testing

MedPAC recommendation targets high-cost imaging done in physician’s offices

Following the lead of some private insurers, Medicare may soon require preauthorization for high-cost imaging tests—including CT, MRI and PET scans—done in physician offices. This is one of two strategies aimed at reducing payments for Part B physician radiology services that was recommended by the Medicare Payment Advisory Commission (MedPAC) in its report to Congress in March.

The General Accounting Office (GAO) estimates that preauthorization could save the Medicare program $220 million by 2014 and about $1 billion by 2019. To make preauthorization work, the Centers for Medicare & Medicaid Services would establish a panel of experts, to be known as a Radiology Benefits Managers (RBMs), to assist in evaluating and adjusting payment for potentially overvalued imaging services ordered by physicians with their own imaging facilities.