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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Even Medicare Advisors Recognize the Trend to Treat Patients in Settings Other than Hospitals with New Recommendations to Congress

Shifts to new types of facilities where patients are treated provide clinical laboratories and pathology groups with new opportunities to add value to providers and patients

Two important trends have serious implications for the nation’s traditional hospitals. One is the ongoing shift of patient care from inpatient settings to outpatient providers. The other trend is to proactively manage patients so as to avoid the need for hospitalization. Both trends create challenges and opportunities for medical laboratories and anatomic pathology groups.

Thus, it is significant that one advisory group to the federal government on Medicare and health policy recognizes these trends with the recommendations it made to Congress. In June, the Medicare Payment Advisory Commission (MedPAC) released its “Medicare and the Health Care Delivery System” report to Congress. It includes proposals that support healthcare’s shift toward outpatient settings and away from in-hospital care. It also makes two recommendations that impact EDs based on their locations (rural versus urban) and proximity to parent hospitals.

MedPAC believes that shifting money/reimbursement toward different sites of care and for different services improves the ability of providers to be proactive and manage patients in ways that support earlier diagnosis and more active management of conditions—all in ways that help avoid acute events that would otherwise send patients to hospitals.

Thus, for clinical laboratories, the message with MedPAC is that other sites of service would get better reimbursement for the above reasons and would want lab services that support the objectives of their providers. And the recommended enrichment of reimbursement for ambulatory evaluation and similar management services would encourage providers to do a better job of ordering the right test and doing the right thing with the results. This gives labs an opportunity to add value.

Ensuring Access to ED Services in Rural Environments

MedPAC is a nonpartisan legislative branch agency that provides the US Congress with analysis and policy advice on the Medicare program. Most of the points the June report makes pertain to the Medicare program in general. However, chapter two of MedPAC’s report addresses payments to emergency departments specifically, including:

  • Increasing Medicare payment rates to isolated rural stand-alone EDs; and,
  • Decreasing payment rates to urban stand-alone EDs located near hospital-based emergency departments.

To ensure rural residents have access to ED services, MedPAC recommends allowing hospitals located more than 35 miles from another ED to convert to stand-alone EDs that would bill under the Outpatient Prospective Payment System (OPPS). Effectively they would become “outpatient-only” hospitals and would receive annual payments to assist with their fixed costs.

In contrast, MedPAC noted an oversupply of emergency services in urban areas, where stand-alone EDs—particularly those affiliated with nearby hospitals—may be shifting services from lower cost urgent care centers and physicians’ offices to higher cost 24/7 stand-alone EDs.

MedPAC reported that outpatient Medicare ED payments increased 72% per beneficiary between 2010 and 2016. A MedPAC press release attributed the growth in off-campus EDs in certain urban locations to “Medicare payment policy [rather] than unmet need for ED services.”

“I think [the MedPAC proposal] is a move in the right direction,” Renee Hsia, MD, MSc, Professor of Emergency Medicine and Institute of Health Policy Studies at the University of California-San Francisco, told Leaders in Health Care. “We have to understand there are limited resources, and the fixed costs for stand-alone EDs are lower.” Hsia co-authored a report titled, “Don’t Hate the Player; Hate the Game,” published in the Annals of Emergency Medicine. In it she argues that “freestanding EDs will continue to proliferate in areas in which there are few restrictions, potentially creating more supply than demand.” (Photo copyright: University of California San Francisco.)

75% of Freestanding EDs within Six Miles of Hospital EDs

In April, MedPAC published an analysis of five healthcare markets—Charlotte, Cincinnati, Denver, Dallas, and Jacksonville, Fla. In “Using Payment to Ensure Appropriate Access to and Use of Hospital Emergency Department Services,” MedPAC showed that 75% of the freestanding EDs were located within six miles of a hospital emergency room. The average drive time to the nearest hospital was 10.3 minutes.

In that report, MedPAC proposed cutting payment rates 30% for off-campus stand-alone EDs located within six miles of an on-campus hospital emergency room. This proposal means off-campus EDs, which have lower standby costs and typically treat patients with less acute medical problems, would receive Medicare payment rates on par with ED facilities open less than 24/7. If the rate change is enacted, MedPAC estimates Medicare would save between $50 million and $250 million annually.

MedPAC’s recommendation drew the ire of the American Hospital Association (AHA) and other hospital industry stakeholders who believe a payment cut could result in off-campus stand-alone EDs closing. The AHA in March submitted a “comment letter” to MedPAC Executive Director James E. Mathews, PhD, calling the proposal “unfounded and arbitrary.”

“The recommendation is not based on any analysis of Medicare beneficiaries, Medicare costs, or Medicare payments, and would make Medicare’s record underpayment of outpatient departments and hospitals even worse,” Joanna Hiatt Kim, Vice President of Policy at the AHA, told Modern Healthcare. “Even more troubling to us is that [the recommendation] has the potential to reduce patient access to care, particularly in vulnerable communities, following a year in which hospital EDs responded to record-setting natural disasters and flu infections.”

This latest report indicates MedPAC believes shifting reimbursement toward different sites of care and for different services improves the ability of providers to be proactive and manage patients in ways that support earlier diagnosis and active management of conditions.

Medical laboratories and anatomic pathology groups should use this opportunity to create lab services that support these objectives and add value to both providers and patients.

—Andrea Downing Peck

Related Information:

Report to the Congress: Medicare and the Health Care Delivery System

Medicare Payment Advisory Commission Releases Report on Medicare and the Health Care Delivery System

Using Payment to Ensure Access to and Use of Hospital Emergency Department Services

American Hospital Association Comment Letter

MedPAC Votes to Cut Payments for Free-Standing ERs

Congress Urged to Cut Medicare Payments to Many Stand-Alone ERs

Don’t Hate the Player; Hate the Game

MedPAC Issues June 2018 Report to Congress, Including Two Emergency Department Recommendations

Anthem Blue Cross Blue Shield of Georgia Drops Coverage for Non-Emergency ER Visits; Medical Laboratories Could See Drop in ER Clinical Lab Test Orders

Experts concerned people will be unable to judge a true emergency from a minor health concern; patients could be left with a big ER bill if they are wrong

Here’s a groundbreaking way payers are keeping healthcare costs down: Anthem Blue Cross and Blue Shield (BCBS) of Georgia sent letters to its members in May informing them that they will no longer be reimbursed by the insurer for “non-emergency” related services obtained in emergency rooms (ERs).

Pathology groups and medical laboratory leaders, will want to monitor and potentially respond to this important emergency coverage development. Hospital-based medical laboratories receive high volumes of test orders from the ER. Any decline in ER visits from a payer policy like this will have staffing and budget implications for hospital labs.

Medical Groups Warn of Dire Consequences

The new policy garnered national media coverage in addition to local exposure in Georgia, where it went into effect on July 1. BCBS affiliates in New York, Missouri, and Kentucky are considering similar policies as well, noted an article in The Fiscal Times.

“Anthem believes that primary care doctors are in the best position to have a comprehensive view of their patient’s health status and should be the first medical professionals patients see with any non-emergency medical concerns,” Anthem stated in the Fiscal Times article.

In its letter, BCBS of Georgia defines an emergency as a “medical or behavioral health condition of recent onset” that a “prudent layperson” deems health-threatening. However, many symptoms, such as chest pain, can lead to sudden death. How is the average person to know if what they are experiencing will turn out to be angina, a painful but often non-fatal condition, and not a life-threatening embolism?

“The prudent layperson standard requires that insurance coverage is based on a patient’s symptoms, not their final diagnosis,” the American College of Emergency Physicians (ACEP) in Georgia explained in its own statement.

“Anyone who seeks emergency care suffering from symptoms that appear to be an emergency, such as chest pain, should not be denied coverage if the final diagnosis does not turn out to be an emergency,” the ACEP concluded.

Are Patients Able to Judge Where They Should Go?

Some experts warn that many people might be unable to judge the true nature of their conditions when under stress.

The ACEP and its Missouri Chapter said in a statement that Anthem BCBS lists almost 2,000 diagnoses it considers to be “non-urgent” and not covered in the ER. The professional organization contends, however, that some of the diagnoses on the insurer’s list have the propensity to be medical emergency symptoms as well.

Two examples ACEP noted are:

However, cold symptoms, sore throat, physical exams, and minor injuries are among the complaints best addressed by walk-in clinics or urgent care centers, BCBS explained in a blog article.

Nevertheless, Debbie Diamond, Public Relations Director for BCBS of Georgia, told The Fiscal Times that a person who mistakes indigestion for chest pain is likely to be covered for ER care (in keeping with prudent layperson guidance).

Distinguishing Between Necessary and Unnecessary ER Visits

It’s not always simple to recognize an emergency from a non-emergency. Even emergency medicine professionals often have difficulty doing so.

In a Los Angeles Times article, Renee Hsia, MD, Professor and Director of Health Policy Studies, Department of Emergency Medicine at the University of California San Francisco School of Medicine, noted that, “People don’t come with a sticker on their forehead saying what the diagnosis is. We as physicians can’t always distinguish necessary from unnecessary visits.”


Renee Hsia, MD

Renee Hsia, MD (above), is Professor and Director of Health Policy Studies, Department of Emergency Medicine at the University of California School of Medicine, San Francisco (UCSF). She told the Los Angeles Times that the Blue Cross Blue Shield of Georgia emergency coverage policy is a “well-intentioned policy with dangerous consequences.” (Photo copyright: Angie’s List/Adm Golub.)

According to the Centers for Disease Control and Prevention, there are 130.4 million emergency department visits each year in the US. A study published in the Journal of the American Medical Association (JAMA) Journal of Internal Medicine found that six of the 10 top symptoms that send people to non-emergency care settings match those driving decisions to head to emergency departments as well. They include:

  1. Back symptoms;
  2. Abdominal pain;
  3. Sore throat;
  4. Headache;
  5. Chest pain; and
  6. Low back pain.

“Our findings indicate that either patients or healthcare professionals do entertain a degree of uncertainty that requires further evaluation before diagnosis,” the authors wrote in JAMA.

Where Next? Who’s Next?

Despite the discord over the reduction in non-emergency coverage, more BCBS affiliates may soon adopt the same policy. And what of other large insurers? Might they be watching and considering whether to alter their emergency coverage, as well, to save money?

Thus, clinical laboratories in Georgia hospitals will want to closely monitor their institution’s ER test volume. It could take a while for Blue Cross patients in Georgia to realize that some ER visits (and the clinical laboratory tests associated with them) might not be covered by their insurance. This will happen in instances where their insurer denies claims for services that, in Anthem’s opinion, were better suited for primary care doctors and urgent care centers rather than ERs.

—Donna Marie Pocius


Related Information:

Got Chess Pain? This Insurer May Not Cover Your Emergency Room Visit

Blue Cross in Georgia to Limit Emergency Room Coverage

Choosing Between ER and Urgent Care

Blue Cross Blue Shield of Georgia Launch Emergency Room Policy

Emergency Physicians: Anthem Blue Cross Blue Shield Policy Violates Federal Law

Emergency Physicians: Georgia Blue Cross Blue Shield Policy Violates Federal Law

A Big Health Insurer is Planning to Punish Patients for Unnecessary ER Visits

Urgent Care Needs Among Non-Urgent Visits to the Emergency Department

Medicare Officials Post Prices of 3,000 Hospitals in Effort to Raise Consumer Awareness of Arbitrary Hospital Pricing

Goal is to provide transparency to help consumers shop for hospitals; experts predict more transparency in healthcare prices, including for clinical laboratory and pathology testing

For the first time ever, a federal agency has posted on the Internet the prices hospitals charge for healthcare services specifically to help consumers price shop when they select a hospital. This is a major development and has direct implications for clinical laboratories and pathology groups that are based in hospitals and health systems.

On May 8th, the U.S. Department of Health and Human Services announced the availability of hospital-specific cost data for inpatient services at 3,000 hospitals. The data are now available on the Medicare Website. (more…)