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

Hosted by Robert Michel

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

Hosted by Robert Michel
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Speakers from UCLA, Alverno Clinical Laboratories, and TriCore Reference Labs Discuss the Creation of Value-Added Lab Services at 20th Annual Executive War College

Primary themes were healthcare’s transition away from fee-for-service and how innovative medical laboratories are delivering more value with lab testing services

NEW ORLEANS, LA.—Two clear themes for clinical labs and pathology groups emerged from yesterday’s opening presentations at the 20th annual gathering of the Executive War College on Laboratory and Pathology Management.

Transitioning from Fee-For-Service to Value-based Reimbursement Programs

Theme one is that the pace of transformation within the U.S. healthcare system is accelerating. In his opening remarks, Executive War College Founder Robert L. Michel warned medical laboratory professionals that they must not allow their lab organizations to be unprepared or unresponsive to the changes now unfolding across the nation’s healthcare system.

In particular, Michel reminded the more than 850 lab executives and pathologists in the audience that fee-for-service payment for clinical laboratory tests and anatomic pathology services will not remain the dominant form of reimbursement for much longer. “This market trend is aptly described as ‘volume to value,’” noted Michel. “For decades, labs maximized revenue and operating profits by maximizing the volume of specimens that they tested. Those days are coming to an end. Healthcare will increasingly want lab testing services to be high value. These lab services will be paid as part of a bundle, or included in the different forms of global payments and budgeted payments that are made to integrated care delivery organizations, such as ACOs and patient-centered medical homes.” (more…)

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

Alternative payment models and value-based payment schemes create financial unknowns for clinical laboratories and anatomic pathology groups

What happens to pathologists and clinical laboratories when fee-for-service reimbursement ceases to be the primary payment method for anatomic pathology services and medical laboratory tests?

After all, fee-for-service reimbursement for lab tests is what underpins today’s financial model for lab test services. Under this transaction-based business arrangement, a clinical laboratory that can increase its specimen volume will realize a lower average cost-per-test because of economies of scale within the lab. At the same time, the lower costs mean a bigger net margin available from profit, given the fixed price of the reimbursement for lab tests.

So what is a medical laboratory to do as healthcare shifts to a value-based reimbursement (VBR) model, formerly known as pay-for-performance? The answer to that question won’t take long to answer because of a recent announcement by the Department of Health and Human Services (HHS). (more…)

Physicians and Pathologists at Atrius Health Collaborate to Reduce Unnecessary Clinical Laboratory Test Orders and End Up Saving $1 Million Annually

In Massachusetts, a 1,000-physician group gets 70% of revenue from capitated payments, motivating the physicians to reduce unnecessary utilization of medical laboratory tests

Accumulating market evidence indicates that unnecessary utilization of medical laboratory tests—a problem bemoaned by pathologists for decades—may finally be addressed by an unlikely source: ordering physicians! Such a trend would have both positive and negative consequences for clinical laboratories throughout the United States.

What motivates physicians, on their own initiative, to reduce the unnecessary utilization of medical laboratory tests are changes in how they are paid. Many private health plans are reimbursing office-based physicians using global payment arrangements, such as capitation. (more…)

In Its Second Year, Medical Home Program of CareFirst BCBS Produced $98 Million in Savings, along with Significant Quality Improvements

In Its Second Year, Medical Home Program of CareFirst BCBS Produced $98 Million in Savings, along with Significant Quality Improvements

One of the nation’s largest patient-centered medical home  (PCMH) programs has reduced costs dramatically and improved care quality for the second consecutive year. It recently reported the achievements produced during its first two years of operation.

This accomplishment is more evidence for pathologists and clinical laboratory executives that a properly implemented medical home program can deliver measurable gains in patient outcomes and corresponding reductions in the overall cost of care. In January 2011, CareFirst BlueCross BlueShield started a PCMH program for primary-care physicians (PCPs). It serves about 1 million members in Maryland, Washington, D.C., and northern Virginia.
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Fee-for-Service Payment to Phase Out in Five Years? That’s the Recommendation of National Commission on Physician Payment Reform

Commission issues 12 recommendations to enhance physician and patient satisfaction, while creating a financially sustainable healthcare system

How quickly will fee-for-service disappear as a primary source of reimbursement for clinical laboratories, pathologists, hospitals, and physicians? If the recommendation of one credible group of physicians has its way, fee-for-service reimbursement could disappear in as little as five years.

This recommendation was made by National Commission on Physician Payment Reform as part of a report it issued in May. In its press release, the commission issued a call “for eliminating stand-alone fee-for-service payment by the end of the decade.” The group urges a transition over five years to a blended payment system that will yield better results for both public and private payers, as well as patients.” (more…)

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