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

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Clinical Laboratories and Pathology Groups

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CVS Health is Changing the Way it Prices Prescription Drugs Using a New Cost-Plus Model

New ‘simple’ pricing scheme will provide transparency and value to all stakeholders, says company’s Chief Pharmacy Officer

Woonsocket, R.I.-based CVS Health (NYSE:CVS) is planning to scrap what it says is an old-school prescription reimbursement model and turn to a new way to price prescription medications at its 9,000 CVS pharmacies nationwide. Why is this relevant for clinical laboratory and pathology managers? It shows the disruption that is ongoing in healthcare.

Like clinical laboratories, retail pharmacies have significant reimbursement, competition, and labor challenges to address. But unique to retail pharmacies is the emergence of pharmacy benefit management (PBM) companies that work between health insurance plans and drug makers.

“National pharmacy chains found themselves disintermediated from providing prescriptions to patients by pharmacy benefit management (PBM) companies. By 2021, PBMs had captured $484 billion of the total prescription drug spending of $576.9 billion. That meant PBMs controlled 84% of the prescription drug market! That caused retail pharmacies to look for new sources of revenue,” noted Dark Daily’s sister publication The Dark Report.

This arrangement may be motivating retail pharmacy companies to seek ways to recover the volume lost to PBMs.

CVS’ new CostVantage model will work with a formula based on how much CVS paid for the drug, a set markup over those costs, and a fee for pharmacy services to fill the prescription, according to a news release. Some experts and publications have compared the change to the approach used by the Mark Cuban Cost Plus Drug Company.

CVS Health expects to start CostVantage in 2024 before introducing it to PBMs for commercial payers in 2025.

CVS is “committed to lowering drug pricing,” CVS Health Chief Executive Officer Karen Lynch (above), CVS Health’s President and Chief Executive Officer, told CNBC. “What this (the new model) does is it essentially aligns the economics of our pricing for drugs to what consumers will pay at the pharmacy counter,” she added. Clinical laboratory managers and pathologists should understand that this new pricing strategy may be an attempt by CVS to win back prescription business lost to pharmacy benefit management companies. (Photo copyright: Rick Burn/Wikipedia.)

CVS Aims for Value and Transparency

CVS Health’s leaders believe it is time for a change in how the company’s pharmacies are reimbursed by PBMs and other payers.

Prem Shah, PharmD, Executive Vice President and Chief Pharmacy Officer, CVS Health, explained during a CVS Health Corporation Investor Day presentation some of the challenges of current pharmacy reimbursement:

  • Generic drugs dispensed in CVS pharmacies reached 90%. “That limits the capacity or the amount of value remaining through the higher levels of generic dispensing,” he said.
  • Also branded drugs have risen in price about 40% since 2019, leading to “higher costs for patients, our customers’ plans, and PBM plan sponsors.”

“This model has reached an inflection point that is just ripe for change,” Shah said. “We’re changing this outdated reimbursement model that made sense for the last decade, but no longer works today or in the future. We’re introducing a new simple model that provides value for all stakeholders across the supply chain in a much more simple, transparent, and comprehensive way,” he continued.

Cost-Plus Plans versus Retail Drug Prices 

Fierce Healthcare compared CVS CostVantage to the Mark Cuban Cost Plus Drug Company, which claims it offers prescription drugs at prices below traditional pharmacies and openly shares with customers the “15% markup over its cost, plus pharmacy fees.”

Some examples on the company’s website include: Abiraterone acetate (generic for Zytiga), a prostate cancer treatment. It is priced at $33.50, compared to $1,093 retail. Cost Plus Drug Company says its costs are:

  • Manufacturing: $24.60
  • 15% markup: $3.90
  • Pharmacy labor fee: $5.00

Another drug offered is canagliflozin (generic for Invokana), a type 2 diabetes medication, which sells for $245.92, compared to $676.14 retail. Cost Plus Drug Company says its costs are:

  • Manufacturing: $209.50
  • 15% markup: $31.42
  • Pharmacy labor fee: $5

Expert Sees More Cost-Plus Plans

In a column he penned for Drug Channels titled, “What CVS Pharmacy’s New Cost-Plus Reimbursement Approach Means for PBMs, Pharmacies, Plan Sponsors, and Prescription Prices,” Adam Fein, PhD, President of the Drug Channels Institute, a pharmaceutical research firm, wrote “Mark Cuban should be flattered but not fearful.”

Fein predicts there will be more cost-plus models by retail pharmacies. “Other large pharmacies will likely follow CVS with attempts to force payers and PBMs to accept some form of cost-plus reimbursement,” he wrote.

Fein noted pharmacies prefer cost-plus models for reasons including the “stripping away of complexity and hidden cross-subsidies. … For a pharmacy, the same PBM would pay the same price for the same prescription regardless of the PBM’s arrangement with different plan sponsors.”

Turbulent Retail Pharmacy Market

CVS has also been dealing with limited growth, pharmacist labor relations issues, and a decline in COVID-19 testing, Healthcare Dive reported.

Meanwhile, pharmacies have been closing store sites and affiliated physician practices. CVS announced plans to close 900 stores between 2022 and 2024, according to a news release.

Rite Aid Corporation, Philadelphia, announced last year that it had filed for bankruptcy and may eventually close 400 to 500 of its 2,100 stores. 

Walgreens Boots Alliance, Deerfield, Ill., intends to close 150 US and 300 United Kingdom locations, according to its former Chief Financial Officer James Kehoe’s remarks in a third quarter 2023 earnings call transcribed by Motley Fool.

The turbulence in the retail pharmacy market is another sign of ongoing disruption in healthcare. Long-established sectors are experiencing market shifts that are eroding their access to patients and ability to generate adequate profits.

Understanding how pharmacies approach these issues may help medical laboratory and pathology managers develop strategies for adding value to their relationships with healthcare providers and insurance plans.

—Donna Marie Pocius

Related Information:

CVS Health Highlights Path to Accelerating Long-Term Growth through Building a World of Health Around Every Consumer

CVS to Change How it Prices Prescription Drugs with New Pharmacy Reimbursement Model

CVS Health Corporation Investor Day

Navigating CVS’s New Pricing Models: What to Know about CVS CostVantage and CVS Caremark TrueCost

CVS Health Revamps Pharmacy Reimbursement Model Amid Scrutiny on High Drug Prices

What CVS Pharmacy’s New Cost-Plus Reimbursement Approach Means for PBMs, Pharmacies, Plan Sponsors, and Prescription Prices

CVS Health Announces Steps to Accelerate Omnichannel Health

CVS Overhauls How Its Retail Pharmacies Charge for Prescription Drugs

Walgreens to Close 60 VillageMD Locations

Bankruptcies and Store Closings are Signs of Tough Times Ahead for US Retail Pharmacy Chains

Executive War College Headliners Connect Genetic Testing, Wearable Technology, Precision Medicine, and Struggle Over Claim Reimbursement between Clinical Labs and Payers

Keynote speakers advise clinical laboratory leaders to leverage diagnostic data that feeds precision therapies

At this week’s Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management in New Orleans, keynote presenters dissected ways that clinical laboratory leaders and anatomic pathologists can contribute to innovative treatment approaches, including wearable technology and precision medicine.

The speakers also noted that labs must learn to work collaboratively with payers—perhaps through health information technology (HIT)—to establish best practices that improve reimbursements on claims for novel genetic tests.

Harnessing the ever-increasing volume of diagnostic data that genetic testing produces should be a high priority for labs, said William Morice II, MD, PhD, CEO and President of Mayo Clinic Laboratories.

“There will be an increased focus on getting information within the laboratory … for areas such as genomics and proteomics,” Morice told the keynote audience at the Executive War College on Wednesday.

William Morice II, MD, PhD

“Wearable technology data is analyzed using machine learning. Clinical laboratories must participate in analyzing that spectrum of diagnostics,” said William Morice II, MD, PhD (above), CEO and President of Mayo Clinic Laboratories. Morice spoke during this week’s Executive War College.

Precision Medicine Efforts Include Genetic Testing and Wearable Devices

For laboratories new to genetic testing that want to move it in-house, Morice outlined effective first steps to take, including the following:

  • Determine and then analyze the volume of genetic testing that a lab is sending out.
  • Research and evaluate genetic sequencing platforms that are on the market, with an eye towards affordable cloud-based options.
  • Build a business case to conduct genetic tests in-house that focuses on the long-term value to patients and how that could also improve revenue.

Morice suggested that neuroimmunology is a reasonable place to start with genetic testing. Mayo Clinic Laboratories found early success with tests in this area because autoimmune disorders are rising among patients.

A related area for clinical laboratories and pathology practices to explore is their role in how clinicians treat patients using wearable technology.

For example, according to Morice, Mayo Clinic has monitored 20,000 cardiac patients with wearable devices. The data from the wearable devices—which includes diagnostic information—is analyzed using machine learning, a subset of artificial intelligence.

In one study published in Scientific Reports, scientists from Mayo’s Departments of Neurology and Biomedical Engineering found “clear evidence that direct seizure forecasts are possible using wearable devices in the ambulatory setting for many patients with epilepsy.”

Clinical laboratories fit into this picture, Morice explained. For example, depending on what data it provides, a wearable device on a patient with worsening neurological symptoms could trigger a lab test for Alzheimer’s disease or other neurological disorders.

“This will change how labs think about access to care,” he noted.

For Payers, Navigating Genetic Testing Claims is Difficult

While there is promise in genetic testing and precision medicine, from an administrative viewpoint, these activities can be challenging for payers when it comes to verifying reimbursement claims.

“One of the biggest challenges we face is determining what test is being ordered. From the perspective of the reimbursement process, it’s not always clear,” said Cristi Radford, MS, CGC, Product Director at healthcare services provider Optum, a subsidiary of UnitedHealth Group, located in Eden Prairie, Minnesota. Radford also presented a keynote at this year’s Executive War College.

Approximately 400 Current Procedural Terminology (CPT) codes are in place to represent the estimated 175,000 genetic tests on the market, Radford noted. That creates a dilemma for labs and payers in assigning codes to novel genetic tests.

During her keynote address, Radford showed the audience of laboratory executives a slide that charted how four labs submitted claims for the same high-risk breast cancer panel. CPT code choices varied greatly.

“Does the payer have any idea which test was ordered? No,” she said. “It was a genetic panel, but the information doesn’t give us the specificity payers need.”

In such situations, payers resort to prior authorization to halt these types of claims on the front end so that more diagnostic information can be provided.

“Plans don’t like prior authorization, but it’s a necessary evil,” said Jason Bush, PhD, Executive Vice President of Product at Avalon Healthcare Solutions in Tampa, Florida. Bush co-presented with Radford.

[Editor’s note: Dark Daily offers a free webinar, “Learning from Payer Behavior to Increase Appeal Success,” that teaches labs how to better understand payer behavior. The webinar features recent trends in denials and appeals by payers that will help diagnostic organizations maximize their appeal success. Click here to stream this important webinar.]

Payers Struggle with ‘Explosion’ of Genetic Tests

In “UnitedHealth’s Optum to Offer Lab Test Management,” Dark Daily’s sister publication The Dark Report, covered Optum’s announcement that it had launched “a comprehensive laboratory benefit management solution designed to help health plans reduce unnecessary lab testing and ensure their members receive appropriate, high-quality tests.”

Optum sells this laboratory benefit management program to other health plans and self-insured employers. Genetic test management capabilities are part of that offering.

As part of its lab management benefit program, Optum is collaborating with Avalon on a new platform for genetic testing that will launch soon and focus on identifying test quality, streamlining prior authorization, and providing test payment accuracy in advance.

“Payers are struggling with the explosion in genetic testing,” Bush told Executive War College attendees. “They are truly not trying to hinder innovation.”

For clinical laboratory leaders reading this ebriefing, the takeaway is twofold: Genetic testing and resulting precision medicine efforts provide hope in more effectively treating patients. At the same time, the genetic test juggernaut has grown so large so quickly payers are finding it difficult to manage. Thus, it has become a source of continuous challenge for labs seeking reimbursements.

Heath information technology may help ease the situation. But, ultimately, stronger communication between labs and payers—including acknowledgement of what each side needs from a business perspective—is paramount. 

Scott Wallask

Related Information:

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

What Key Laboratory Leaders Will Learn at This Week’s 2023 Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management

Ambulatory Seizure Forecasting with a Wrist-Worn Device Using Long-Short Term Memory Deep Learning

UnitedHealth’s Optum to Offer Lab Test Management

Learning from Payer Behavior to Increase Appeal Success

COVID-19 Testing Reimbursement Scrutiny is Coming for Clinical Laboratories, Attorneys Predict at Executive War College

Investigators may look into various angles, including drive-through testing sites for COVID-19 and whether uninsured patients were verified before free tests

Three healthcare compliance attorneys gave a clear and concise message to clinical laboratory managers and pathologists at the 2022 Executive War College Conference on Laboratory and Pathology and Management: Expect the government to scrutinize reimbursements it paid for COVID-19 testing, particularly for testing conducted at drive-through sites that popped up all over the country.

“The important question is: What is the fair market value of those specimens?” noted attorney Emily Johnson, JD, a Member at law firm McDonald Hopkins in Chicago. Johnson spoke during a legal panel on Wednesday at the Executive War College in New Orleans.

The panel spent 75 minutes discussing various legal concerns, many of them related to COVID-19 testing, before a crowd of about 80 attendees.

Attorney Emily Johnson, JD, of Chicago law firm McDonald Hopkins explained possible COVID-19 test fraud enforcement to attendees at the 2022 Executive War College. (Photo copyright: The Dark Intelligence Group.)

Audits May Be Coming of HRSA Reimbursements for COVID-19 Testing

Consumer Reports noted in a January article that COVID-19 testing prices varied wildly both in traditional healthcare settings and popup sites—in some cases, exceeding $1,400.

The average price for such a test within an insurance company’s network was $130.

Some people paid for those tests out of pocket or got them covered by insurance. For uninsured patients, the federal Health Resources and Services Administration (HRSA) established a pool of money to reimburse labs for free COVID-19 tests. That pool recently dried up and Congress has not approved more funding.

The U.S. Department of Justice may investigate the uninsured aspect of claims—specifically, whether there were attempts by laboratory staff members to verify whether a patient truly was not covered by health insurance, explained Karen Lovitch, JD, Chair of the Health Law and Healthcare Enforcement Defense Practice at law firm Mintz in Washington.

These issues bring up False Claims Act risks, especially if a clinical laboratory audits its own COVID-19 test claims. “If labs go back retroactively and determine a claim was paid that shouldn’t have been paid, those labs must absolutely be prepared to return that money,” Lovitch warned.

Clinical Laboratories Need a Business Plan for Post-COVID-19 Testing

Related to HRSA payments ending for COVID-19 testing of uninsured payments, clinical laboratories should be wary about outright ending such testing without a documented business plan demonstrating the rationale for doing so, Johnson noted. That advice is relevant for labs and pathology groups that received financial assistance from HRSA’s Provider Relief Fund during the pandemic.

Some have interpreted information about the fund to mean providers are obligated to treat uninsured patients, Johnson added.

“If I stop accepting uninsured patients for COVID testing, am I in violation of the Provider Relief Fund?” she asked. A clearly documented reason for doing so, such as a need to keep the business afloat through paid testing, would be a first step for concerned medical laboratories to take, she added.

Another point for labs to ponder: In March, the federal government named Kevin Chambers, JD—who is currently Associate Deputy Attorney General at the DOJ—as the first Director of COVID-19 Fraud Enforcement.

That appointment emphasizes the government’s commitment to undercovering SARS-CoV-2 wrongdoing, said attorney David Gee, JD, a Partner at law firm Davis Wright Tremaine in Seattle. Gee rounded out the panel at the Executive War College.

“I guarantee Chambers’ bosses want him to demonstrate the government is serious about COVID-19 fraud,” Gee commented.

EKRA Becomes New Tool against COVID-19 Fraud

Finally, as Dark Daily previously reported, the Eliminating Kickbacks in Recovery Act of 2018 (EKRA) is sometimes being used to prosecute cases of alleged COVID-19 testing fraud.

EKRA has generally been associated with rules against paying clinical laboratory sales reps a commission based on testing volumes they generate. However, Johnson predicted more EKRA cases will be filed related to alleged kickbacks paid in return for referrals for COVID-19 testing.

“Prosecutors seem willing to go after these cases aggressively,” she added.

And in The Dark Report’s upcoming Regulatory Update, “Dept. of Justice: EKRA Governs Lab Sales and Marketing Commissions,” Dark Daily’s sister publication covers how a recent ruling by a federal judge may weaken EKRA and “immunize conduct that drives up medical costs.”

Subscribers to The Dark Report will want to stay informed on critical changes taking place that affect how EKRA operates.

—Scott Wallask

Related Information:

Keynote Speakers at the Executive War College Describe the Divergent Paths of Clinical Laboratory Testing

Your Questions About Home COVID-19 Tests, Answered

DOJ: Combatting COVID-19 Fraud

On-Demand Webinar: What Lab Leaders Need to Know: Data Security Agreements, Surprise Billing, EKRA, AKS, CURES Act, and More

EKRA Now Used to Combat Fraudulent COVID-19 Testing, Too

Clinical Laboratories Still Struggle with Write-offs and Establishing Patient Relationships

Potentially increasing the revenue write-off burden for clinical laboratories, HRSA changes, insurance contracting, policy and coverage questions for genetic and genomic testing, and patient relationship disconnects will expose cracks in lab test claim generation and billing processes

Last year it was estimated that collection agencies held $140 billion in unpaid medical bills, in addition to the amount of unpaid bills in pre-collection status, according to a New York Times report. More recently, the American Hospital Association showed that hospitals have provided upwards of $700 billion in uncompensated care since 2000, with over $40 billion in 2019 alone.

Because strategies to collect the unpaid can be complicated and time-consuming, many healthcare organizations, including clinical laboratories, choose to write off these uncollectible bills. Dark Daily and The Dark Report have covered clinical laboratory revenue challenges for many years. In considering the paths forward, software-as-a-service (SaaS) provider FrontRunner Healthcare (FrontRunnerHC) recently provided snapshots into the how and where of improved collections.

Fixing Data Issues that Lead to Forfeited Clinical Laboratory Revenue

The underpinnings of unpaid lab tests are many. In a recent interview with Dark Daily, FrontRunnerHC CEO and Founder John (JD) Donnelly estimated that about one-third of claims (prior to submission) include incorrect or missing patient information, such as insurance policy identification or demographics. These gaps undermine an organization’s ability to get paid. Donnelly estimates that bad-debt write-offs for commercial payer claims average over 15% of charges. To address these challenges, the company’s clean claims SaaS provides “instantaneous” patient insurance, demographic, and financial information.

Whether lower-dollar accessions such as routine testing, or the higher-dollar accessions of genetic tests, uncollected payments add up. Donnelly said that, in 2021, almost one-third of the company’s clients uncovered revenue ranging from $1 million to over $90 million using the software. Donnelly also estimated that the return for clients averages eight times the value of the investment in using the automated solution.

In one example, Sonora Quest, a joint venture between Banner Health and Quest Diagnostics, reported a 10-15% decline in write-offs due to aged claims, a savings of over $1million annually, as published in a case study. “As an aside, in a presentation at the Executive War College last November, they also attributed improvements in patient satisfaction measures to the software, including a 65% decrease in abandoned calls, 28% improvement in their call service factor, and 19% decrease in patient call volumes,” stated Donnelly.

Questions About Cost of Care Likely Cause Stress for Patients

As many know, nonpay issues are problematic not only for lab businesses and anatomic pathology practices but also for patients and their families who have little predictability with their cost of care in the midst of stressful health events. “From the time a patient is registered to the time the claim is paid, there are more challenges than people realize that jeopardize the patient’s experience as well as the provider’s ability to get reimbursed,” Donnelly explained. Medical laboratory administrators have struggled to respond, often by using traditional manual methods such as call centers, or more recently by considering the use of data automation tools.

From the patient payment perspective, Donnelly said, a good strategy is having the ability, on demand, to understand each patient’s specific financial situation and likelihood to pay. For example, using FrontRunnerHC’s software to gauge patients’ propensity to pay and determine financial disposition strategies, lab administrators may choose to offer payment plans or hardship discounts to those falling under the federal poverty level (FPL). Or they may choose to send a collection agency only the past-due accounts for patients who have a low likelihood to pay rather than sending them all past due accounts and focus in-house efforts on the others. One genetics lab client who recently started leveraging these software capabilities “is already seeing more than 5% in incremental net collections,” according to Donnelly.

Further, an estimated 2 million people switch insurance plans each month, reported Axios. “That velocity of change is tough for providers to manage, but it’s critical as insurance eligibility and registration issues are the number one reason for claims denials,” Donnelly said.

For a sense of the magnitude of the problem, “Between 25 and 33 cents of every dollar you spend on medical care pays for health care’s back office,” wrote Dana Miller Ervin in September 2021 for a series of investigations called “The Price We Pay,” published at WFAE 90.7 news in Charlotte, North Carolina. “Every medical provider and laboratory in the country has to negotiate with insurance companies. And since there are 900 health insurers, 6,000 hospitals and more than 100,000 physician practices—many of which are independent of larger systems—there are hundreds of thousands of negotiations.”

New Clinical Laboratory Business Challenges Making News Now

All these issues affecting revenue cycle management (RCM) for independent clinical laboratories, hospital and health system laboratories, and physician office laboratories could be compounded by three emerging issues.

First is the recent action by the Health Resources and Services Administration (HRSA) to stop accepting claims for COVID-19 testing and treatment for uninsured people as of March 22, 2022. The reason? Funding for HRSA’s COVID-19 Uninsured Program dried up.

Donnelly said that many lab clients have yet to be reimbursed for COVID tests they have performed, despite their HRSA-required due diligence prior to submitting the claims before the deadline. To avoid additional reimbursement risk, many labs have made the decision to stop testing the uninsured or charge them for it, ABC News reported in late March. As of early April, however, Congress was in discussions to re-fund at least some of the Uninsured Program, reported Politico.

Secondly, and also daunting, are the questions surrounding payer coverage and reimbursement for genetic tests and genomic testing. Thanks to high-deductible health plans (HDHPs), clinical laboratories and anatomic pathology groups increasingly must collect deductibles that may be the full amount of the test – and directly from patients rather than from insurance companies. Therefore, there is more demand from patients to understand their expected cost before the test, Donnelly added.

Problems can arise, for both labs and patients, if they don’t know whether a test has been preauthorized for medical necessity or if they lack accurate insurance information such as in-network or out-of-network. “Getting all the needed and accurate info upfront prior to it going into the LIS [Laboratory Information System] can be a reimbursement game changer,” stated Donnelly.

“For a high complexity, high-throughput diagnostic lab, an efficient workflow is critical,” stated Kyle Koeppler, President of nuCARE Medical Solutions Inc., a FrontRunnerHC client. “Capturing the correct patient demographics and insurance information at patient intake increases the accuracy of every order and makes every process involving patient information much more efficient,” Koeppler shared. “It’s simply too costly to risk having inaccurate information at intake.”

And lest we forget, the Protecting Access to Medicare Act (PAMA) is looming with its reimbursement cuts planned through 2026, and requirements of many labs to report private payer rates on a test-by-test basis. While delayed again, the 2023 PAMA reporting requirements and payment cuts must not be ignored, and planning is needed in order to ensure appropriate reimbursement, Donnelly added.

Addressing Long Payment Cycles for Claims, Dead Ends, and Decreased Collection Rates

The CAQH report cites that data automation resulted in efficiency savings of $122 billion annually for the US healthcare system in 2020 yet “meaningful opportunities for additional savings remain.”

Data automation can reduce the burden of labor-intensive functions in coding, billing, filing appeals, and collecting from payers and patients and, therefore, reduce overall RCM costs. The Council for Affordable Quality Healthcare’s (CAQH) 2020 Index reported, “Considering the millions of times these transactions occur every day, the savings potential across the healthcare economy [from streamlining administrative processes] is significant.”

“One way to avoid potential write-offs is by reworking a claim, but the rework is often left undone,” stated John (JD) Donnelly (above), CEO and Founder of FrontRunnerHC. “The better way to avoid a potential write-off is to ensure you’ve got a clean claim in the first place.” (Photo copyright: FrontRunnerHC.)

The intended outcome is an increase in the total amount of revenue collected from the same number of claims.

To that end, FrontRunnerHC’s software links critical data within its partner ecosystem. This ecosystem includes the well-established credit reporting agencies as well as data available through connected healthcare payers and providers equipped with electronic data interchange (EDI) capabilities. “While an employee may be able to manually work about six accessions in an hour, clients can process approximately 40,000 patients in an hour through software automation, leaving staff to work on more value-added initiatives,” stated Donnelly.

Ideally, missing and inaccurate patient information or insurance verification, which are crucial for producing prompt payments and clean claims, should be corrected before a specimen is collected, Donnelly said. However, if the laboratory is nursing aging accounts receivable (AR), Donnelly advises an audit and cleanup of the AR backlog as a first step to quickly fix information errors and reduce write-offs. “In your AR bucket of $10 million, you may have $3 million that’s collectible or $9.8 million that’s collectible. By leveraging software to clean up what can be collected, clients can go after the money they deserve.”

Improve Collections Through Data Automation While Assisting in the Patient Financial Journey

With the rise of telehealth/telemedicine, healthcare consumerism, and care delivered to nontraditional sites, it makes sense that the idea of the clinical laboratory as a silent partner in healthcare could be changing.

“Could we one day see patients asked for not only their preferred pharmacy but their preferred clinical laboratory as well?” Donnelly pondered and added, “I think the answer is yes, and it’s sooner than many think.”

Understanding the patient’s experience is a key step in providing patient-centered care. Therefore, patient experience programs that originate at clinical laboratories where specimens are processed, but before specimens have been collected, could make these labs more visible in their markets and enable them to capitalize on the advantages of data automation to sustainably improve revenue cycle management.

“The patient’s financial journey which runs in parallel to their clinical journey can get pretty bumpy, and those bumps impact their overall experience as well as the provider’s bottom line,” added Donnelly. “Getting accurate patient information upfront and catching any changes to the information as needed throughout the process helps clients create a smoother patient journey by enabling them to quickly manage through the bumps or eliminate them altogether.”

—Liz Carey

This article was produced in collaboration with FrontRunnerHC.

Related Information:

New Trends Reshaping Healthcare, Lab Testing

Millennials Set to Reorder Healthcare and Lab Testing

Congress Votes a One-Year Delay in Implementation of the Next Round of Fee Reductions to Medicare CLFS

HRSA Important Update Regarding Submission of Claims

Free COVID-19 Tests Ending for Uninsured Americans

CMS Billing and Coding: MolDX: Testing of Multiple Genes

U.S. Health Care Administration Costs Are Responsible For At Least 25% Of Medical Bills

Fact Sheet: Uncompensated Hospital Care Cost

Millions Already Lose or Change Health Plans Every Year

Americans’ Medical Debts Are Bigger Than Was Known, Totaling $140 Billion

FrontRunner Healthcare

How Smart Clinical Laboratories and Genetic Testing Labs Are Collecting More Revenue by Pricing Tests to Meet the Expectations of Patients

By rethinking how their medical labs relate to health insurers, physicians, and patients, a handful of progressive lab companies are enjoying increased revenue while also lifting patient and payer satisfaction

There is widespread agreement across the clinical laboratory industry that it is becoming ever more difficult to have health plans reimburse claims for common tests, molecular assays, and genetic tests in a reliable and consistent manner. Many lab companies report that they are experiencing high rates of denied claims. Moreover—even for claims reimbursed by payers—the amount paid will vary on claims for the same type of lab test.

“Essentially, on this point, the consistent theme we hear from many lab companies—particularly those labs with a menu of proprietary, specialized molecular and genetic tests—is that it is now almost a crap-shoot to submit lab test claims to many payers and see timely and predictable reimbursement for those claims,” stated Robert L. Michel, Editor-In-Chief of Dark Daily’s sister publication, The Dark Report. “One could say that, today, the function of billing patients and payers for clinical lab testing has become financial quicksand for most labs. By following traditional coding, billing, and collection practices, in today’s healthcare market, they find themselves sinking steadily deeper in this financial quicksand.” (more…)

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