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Clinical Laboratories and Pathology Groups

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Clinical Laboratories and Pathology Groups

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As the Public Becomes More Aware of the Large Variability in how Clinical Laboratories Price Their Tests, All Labs Need Strategy for Complying with CMS’ Pricing Transparency Requirements

Journalists, researchers, and a growing number of consumers now recognize the often huge variability in the prices different medical laboratories charge for the same lab tests

One step at a time, the Medicare program, private health insurers, and employers are putting policies in place that require providers—including clinical laboratories and pathology groups—to allow patients and consumers to see the prices they charge for their medical services. Recent studies into test price transparency in hospitals and health networks have garnered the attention of journalists, researchers, and patients. These groups are now aware of enormous variations in pricing among providers within the same regions and even within health networks.

There are several reasons that pricing is such a popular topic at the moment. Many medical laboratory professionals know, for example, how in January 2019 the Centers for Medicare and Medicaid Services (CMS) passed the IPPS/LTCH PPS final rule, which requires hospitals to post pricing information on their websites. Dark Daily covered this in “New CMS Final Rule Makes Clinical Laboratory Test/Procedure Pricing Listed on Hospital Chargemasters Available to Public.”

Now that hospitals’ medical laboratory test prices are required to be easily accessible to patients, researchers are beginning to compile test prices across different hospitals and in different states to document and publicize the wide variation in what different hospital labs charge for the same medical laboratory tests.

Journalists are jumping on the price transparency bandwagon too. That’s because readers show strong interest in stories that cover the extreme range of low to high prices providers will charge for the same lab test. This news coverage provides patients with a bit more clarity than hospitals and other providers might prefer.

Shocking Variations in Price of Healthcare Services, including Medical Laboratory Tests

The Health Care Cost Institute (HCCI) in conjunction with the Robert Wood Johnson Foundation (RWJF), examines price levels of various procedures and medical laboratory tests at healthcare institutions across the United States in the first release of a series called Healthy Marketplace Index. According to the HCCI website, “a common blood test in Beaumont, Texas ($443) costs nearly 25 times more than the same test in Toledo, Ohio ($18).”

In April, the New York Times (NYT) made the wide variation in how clinical laboratories price their tests the subject of an article titled, “They Want It to Be Secret: How a Common Blood Test Can Cost $11 or Almost $1,000.” The article discusses the HCCI findings.

The coverage by these two well-known entities is increasing the public’s awareness of the broad variations in pricing at clinical laboratories around the country.

Aside from the large differences in medical laboratory test prices in different regions, the HCCI found that there are sometimes huge price variations within a single metro area for the same lab tests. “In just one market—Tampa, Fla.—the most expensive blood test costs 40 times as much as the least expensive one,” the NYT notes.

In other industries, those kinds of price discrepancies are not common. The NYT made a comparatively outrageous example using ketchup, saying, “A bottle of Heinz ketchup in the most expensive store in a given market could cost six times as much as it would in the least expensive store,” adding, however, that most bottles of ketchup tend to cost about the same.

“It’s shocking. The variation in prices in healthcare is much greater than we see in other industries,” Amanda Starc, PhD, Associate Professor, Kellogg School of Management, Northwestern University, told the NYT.

The graphic above is taken from the New York Times article on test price discrepancies in healthcare. The range of prices for the medical lab test known as a comprehensive metabolic panel are for metropolitan areas only. The data is sourced from the Health Care Cost Institute study. It’s easy to see why patients would be confused by clinical laboratory pricing that varies so widely. (Graphic copyright. The New York Times.)

The CMS mandate designed to make the prices of medical services accessible to healthcare consumers has, in many ways, made things more confusing. For example, most hospitals simply made their chargemaster available to consumers. Chargemasters can be confusing, even to industry professionals, and are filled with codes that make no sense to the average consumer and patient.

“This policy is a tiny step forward but falls far short of what’s needed. The posted prices are fanciful, inflated, difficult to decode and inconsistent, so it’s hard to see how an average person would find them useful,” Jeanne Pinder, Founder and Chief Executive of Clear Health Costs, a consumer health research organization, told the NYT in an article on how hospitals are complying with the mandate to publish prices.

In addition to the pricing information being difficult for consumers to parse, it also may lead them to believe they would need to pay much more for a given procedure than they would actually be billed, resulting in patients opting to not get care they actually need.

Why Having a Strategy Is Critically Important for Clinical Laboratories

Clinical laboratories are in a particularly precarious position in all of this pricing confusion. For one thing, most hospital-based medical laboratories don’t have a way to communicate directly with consumers, so they don’t have a way to explain their pricing. Additionally, articles and studies such as those in the NYT and from the HCCI, which describe drastic price variations for the same tests, tend to cast clinical laboratories in a somewhat sinister light.

To prepare for this, medical laboratory personnel should be trained in how to address customer requests for pricing and how to explain variations in test prices among labs, before such requests become problematic. Lab staff should be able to explain how patients can find out the cost of a given test, and what choices they have regarding specific tests.

In 2016, Dark Daily’s sister-publication, The Dark Report (TDR), dedicated an entire issue to the impact of reference pricing on the clinical laboratory industry. In that issue, TDR reported on how American supermarket chain Safeway helped guide their employees to lower-priced clinical laboratories for lab tests, resulting in $2.7 million savings for the company in just 24 months. Safeway simply implemented reference pricing; the company analyzed lab test prices of 285 tests for all of the labs in its network, and then set the maximum amount it would pay for any given test at the 60th percentile.

If a Safeway employee selected a medical laboratory with prices less than the 60th percentile, the normal benefits and co-pays applied. But if a Safeway employee went to clinical laboratories that charged more than the 60th percentile level, they were required to pay both their deductible and the amount above Safeway’s maximum.

Safeway’s strategy revealed wide variation in testing prices, just as the HCCI report found. This means that employers can be added to the list of those who are paying much closer attention to medical laboratory test pricing than they have in the past. These are developments that should motivate forward-looking pathologists and clinical laboratory executives to act sooner rather than later to craft an effective strategy for responding to consumer and patient requests for lab test price transparency.

—Dava Stewart

Related Information:

Healthy Marketplace Index

Past the Price Index: Exploring Actual Prices Paid for Specific Services by Metro Area

They Want It to Be Secret: How a Common Blood Test Can Cost $11 or Almost $1,000

Hospitals Must Now Post Prices. But It May Take a Brain Surgeon to Decipher Them

New CMS Final Rule Makes Clinical Laboratory Test/Procedure Pricing Listed on Hospital Chargemasters Available to Public

Using the Reference Pricing Strategy, Safeway and its Employees Reduce Spending on Clinical Laboratory Tests by 32% in Only 24 Months by Selecting Lab with Lowest Prices

Online Negative Reviews Can Threaten Clinical Laboratories Not Prepared to Address Feedback or Manage Their Internet Presence

As consumers increasingly choose physicians and service providers based on other people’s feedback on review websites, Internet-based customer service programs are becoming critical business tools for clinical laboratories and pathology groups

Clinical laboratory managers are becoming increasingly aware that negative reviews on anonymous online review sites, such as Yelp and others, can negatively impact revenues.

Official sources and surveys, such as Medicare’s Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS), already provide information and ratings on healthcare service providers. However, recent coverage in Healthcare Dive highlights how consumers are finding the narrative reviews on websites such as Yelp more accessible and relatable. And, that these reviews focus on the criteria consumers find most important.

“We’re moving to a health system where patient ratings are becoming more important, [one] where top-down ratings are really inaccessible to patients and probably not that useful,” Yevgeniy Feyman, PhD, told Healthcare Dive. Feyman, along with Paul Howard, PhD, co-authored the Manhattan Institute report, “Yelp for Health.”

In the report, they examined the correlation between Yelp reviews of New York hospitals and objective measures of hospital quality. “We find that higher Yelp ratings are correlated with better-quality hospitals and that they provide a useful, clear, and reliable tool for comparing the quality of different facilities as measured by potentially preventable readmission rates (PPR), a widely accepted metric,” they stated.

This is a significant finding for clinical laboratory administrators and pathologists. It demonstrates that how patients review their provider experiences does align with objective measures of provider quality that may be public, but are not as easy for consumers to find as websites like Yelp, Healthgrades, and others.

Online Reviews: A Metric for Determining Healthcare Value and Quality?

Andrea Ducas, Senior Program Manager with the Robert Wood Johnson Foundation (RWJF), told Healthcare Dive the primary considerations patients use to pick providers include:

  • “Treats patients with respect;
  • “Accepts insurance;
  • “Shares in decision-making;
  • “Responsiveness to phone calls; and,
  • “Professional skill.”

Research into how patients find/choose their physicians conducted by OnePoll and commissioned by Binary Fountain determined that, of more than 1,000 adults surveyed:

  • “95% of respondents regard online ratings and reviews as ‘somewhat’ to ‘very’ reliable;
  • “75% of Americans say online ratings and review sites have influenced their decision when choosing a physician; and,
  • “30% of consumers share their own healthcare experiences via social media and online ratings and review sites.”

Common research sources listed by respondents included:

Can Online Reviews Damage Healthcare Providers?

“Given that the majority of quality measures out there … aren’t really that accessible for patients, this is a very good proxy,” Feyman told U.S. News in a report on physicians’ concerns about the use and popularity of review sites.

“[T]he emphasis placed on a small number of patient opinions—far fewer patients leave reviews than are treated in a typical health system—makes it harder for doctors to do their job for fear of a career-harming bad review. And a few negative posts from disgruntled patients could unfairly skew public perception—and eventually, a provider’s bottom line,” U.S. News noted.

Despite this, Luther Lowe, Yelp’s Senior Vice President of Public Policy and Government Affairs, assured Healthcare Dive they have processes to “filter spam and quell suspicious activity daily.”

Online reviews recently played an important role in the Wall Street Journal (WSJ) exposé on Theranos, which Dark Daily covered in 2016. Investigative reporter John Carreyrou (above) used Yelp to locate patients who reported negative experiences with specific healthcare services and practices. He described how he used the platform during a presentation to the Association of Health Care Journalists (AHCJ) in April 2018. Click on this link to watch a video of Carreyrou’s presentation. (Photo copyright: Association of Healthcare Journalists.)

Negative Reviews: A Critical Concern for Medical Laboratories

Consumers continue to use Internet platforms to both share ratings and compare information on healthcare professionals and the clinical laboratories supporting them. Thus, to prevent damage from negative reviews, labs must actively monitor feedback, pursue inaccurate information posted online, and encourage consumers to provide positive feedback and opinions.

According to data from Alexa, Yelp is the 32nd most visited website in the United States. Yelp’s own data reports that more than 150-million reviews have been added to the site since its inception 13 years ago.

And, Yelp categorizes 7% of the reviewed businesses as “health-related.”

Between easy-to-access information distributed online and an increased push for transparency, clinical laboratories and other healthcare service providers must work to take charge of the narrative created about their businesses and encourage positive feedback on these developing platforms.

Failing to do so could cost laboratories the physicians’ practices they service.

“There are some providers who are trying to get ahead of the curve and post reviews directly on their website,” Ducas told Healthcare Dive. “Another thing they can do is encourage their patients to read some reviews online and invite them to leave feedback. That’s a radical invitation but it’s certainly something they can do.”

As healthcare customers increasingly turn to review sites for feedback about healthcare facilities and the service providers supporting them, clinical laboratories and anatomic pathology groups must focus on their Internet presence and respond quickly to any negative review feedback with great customer service.

—Jon Stone

Related Information:

Providers Jittery over ‘Yelpification’ of Healthcare

Highlights from the Healthcare Consumer Insight and Digital Engagement Survey

Yelp Proving to Be Reliable for Hospital Reviews, Addresses 12 More Measures than HCAHPS Scores

Using Yelp for Your Health

Most Top Hospital Online Reviews Are Lukewarm or Negative

Hospitals That Receive Top Marks in Quality Rankings Earn Mediocre Reviews Online, Analysis Finds

Study: Nearly 63% of Yelp Reviewers Give Top-Ranked Hospitals Mediocre to Poor Ratings

Study Suggests Yelp Can Help People Find Quality Healthcare

Yelp for Health: Using the Wisdom of Crowds to Find High-Quality Hospitals

Federal Appeals Court Rules Yelp Not Responsible for Bad Reviews; Labs Advised to Examine Their Online Presence

CVS Announces Plans to Add More Clinical Services to Its Minute Clinic Locations, Including Certain Medical Laboratory Tests

It’s all about convenience and offering consumers multiple services at a single location. That’s why certain clinical laboratory tests will soon be offered at CVS Health Minute Clinics

As predicted, operators of rapid clinics located in retail pharmacies and other retail stories are adding additional clinical services. In the case of CVS Health, it recently announced plans to add certain clinical laboratory testing services to its Minute Clinic locations.

Consumer demand is driving these decisions. After all, who doesn’t want to save time and money these days? Combining errands into as few trips as possible means getting more at each location. This imperative drove big-box stores Walmart (NYSE:WMT) and Target (NYSE:TGT) to combine their household lines with grocery products all under one roof, and customers loved it!

Thus, it was no surprise when pharmacy chains got in on the act by adding rapid care clinics to retail stores that already included health and beauty products, pharmaceuticals, and limited grocery items. This important trend has been written about by Dark Daily in previous e-briefings.

Now, during a second quarter earnings call, CVS Health revealed that they plan to expand their offerings at Minute Clinic locations to include services intended to help consumers manage chronic health conditions. The move could be considered part of the same trend—providing customers with more options at each visit. However, there’s more to it. The new services aim at empowering chronic disease suffers through population health management tools. For patients and caregivers of chronic disease patients, this could be quite beneficial.

But how will this impact medical laboratories and pathology groups, when patients realize they can employ tools that monitor their chronic conditions at convenient locations where they can likely fulfill other needs as well? Might this impinge on revenues from tests and specimen gathering procedures traditionally performed at clinical laboratories?

Demand for Low-Cost Quality Care Driving Growth in Retail Clinics

There are currently more than 1,100 Minute Clinics located inside CVS stores in 33 states and the District of Columbia. Headquartered in Woonsocket, R.I., CVS expects an escalation in the need for their Minute Clinic services due to:

·       A shortage of primary care physicians;

·       An increase in chronic diseases; and

·       The aging US population.

CVS Health’s initial service offerings will help diabetes patients:

·       Monitor glucose levels;

·       Adhere to medication schedules, and,

·       Modify their lifestyles through education.

During the next two years, CVS plans to add similar services at their Minute Clinic locations for other chronic conditions, including:

·   Asthma;

·   Depression;

·  Hypercholesterolemia (high cholesterol); and,

·   Hypertension.

The Minute Clinics operate seven days a week, with half of their patients seen in the evenings and weekends—times when most traditional medical offices are closed. CVS Health plans to open an additional 150 Minute Clinic locations within the next year.

Patients waiting to be seen by nurse practitioner Marti Wolfson (right) at a Minute Clinic in La Mesa, CA. CVS announced that it will introduce certain clinical laboratory testing services to its chain of rapid care clinics located in CVS retail pharmacies. (Photo copyright: San Diego Union Tribune/John Gastaldo.)

According to a report from the Robert Wood Johnson Foundation and Manatt Health Solutions, there are more than 1,800 retail clinics in the United States and CVS Minute Clinics hold more than 50% of the market. Access to walk-in appointments, convenience, extended hours of service, lower costs, and having no primary source of care are the most common reasons given by people who utilize services at the clinics.

“Patients are looking for easy access to care, good quality, and low cost,” Andrew Sussman, President, Minute Clinic, told the Boston Globe. “That’s part of what’s making us so successful.”

Retail clinics account for 10.5 million healthcare visits annually, which represent about 2% of primary care encounters in the country. The number of retail clinics in the US increased by 900% between 2006 and 2014 and is expected to continue to climb.

According to AMN Healthcare research, the most common reasons for visits to the clinics include:

·       Diagnosis and treatment of new illnesses and symptoms;

·       Vaccinations;

·       Prescription renewals; and,

·       Basic health screenings.

Other major players in the retail clinic industry include Walgreens Healthcare Clinic, Kroger Little Clinic, Walmart Retail Clinic, and Rite Aid RediClinic.

VA Now Referring Vets to Retail Clinics in Phoenix Area

In April, CVS Health, the Department of Veterans Affairs (VA), and TriWest Healthcare Alliance joined forces to improve access to health services for veterans in the Phoenix area. This initiative allows healthcare professionals at the Phoenix VA to refer veterans to Minute Clinic for minor health conditions.

“This new public-private collaboration between CVS, TriWest, and the VA is an important step forward in enhancing choice and flexibility in veterans’ healthcare,” Senator John McCain noted in a CVS Health press release. “I’ve long believed that veterans in need of routine healthcare services should not have to wait in line for weeks to get an appointment when they can visit community health centers like Minute Clinic to receive timely and convenient care.”

Because of this collaboration, 120,000 veterans living in the Phoenix area may now receive care, when appropriate, at the 24 Minute Clinic locations in the metropolitan area.

“Our number one priority is getting veterans access to care when and where they need it. The launch of this partnership will enable VA to provide more care for veterans in their neighborhoods,” stated Baligh Yehia, MD, MPP, MSc, in the CVS Health press release. Yehia is Senior Medical Director at Johns Hopkins Medicine, and Deputy Undersecretary for Health at the US Department of Veterans Affairs.

As retail clinics become more popular a growing number of medical laboratory test samples that traditionally came from office-based physicians may originate from these clinics. Clinical laboratory outreach, physician support, and patient education programs have never been more critical.

—JP Schlingman

Related Information:

CVS Expanding Minute Clinic Chronic Disease Programs

Phoenix VA Healthcare System, TriWest, and CVS Health Partner to Increase Veteran Access to Healthcare Services

CVS Health (CVS) Q2 2017 Results – Earnings Call Transcript

The Value Proposition of Retail Clinics

Convenient Care: Growth and Staffing Trends in Urgent Care and Retail Medicine

Walk-in Clinics Force Big Medicine to Rethink

Five Reasons Why Retail Clinics Are a “Game-Changing” Threat to Traditional Healthcare Providers That Could Strain Clinical Laboratories and Pathologists

Retail Clinics Are Poised to Offer More Health Services, Participate in ACOS, and Offer Expanded Menu of Clinical Pathology Laboratory Tests

The Affordable Care Act and the Consumer Experience: A Look at the Figures Over the Past Six Years for Clinical Pathology Laboratory Professionals

Much hype has been written about the ACA’s Healthcare Marketplace and the user’s experience. Does the reality measure up to the positive press coverage? Dark Daily takes a look

One major element of the Affordable Care Act (ACA) was to radically alter the health insurance industry while increasing the number of Americans with health coverage. As a consequence, both medical laboratories and anatomic pathology groups have experienced significant changes in how payers contract for, and reimburse, lab testing services.

These changes in payer contracting and reimbursement are just one way that the ACA is altering the landscape of healthcare in America. From C-suite executives of the nation’s largest health systems, to working-class families seeking coverage on the so-called “Health Insurance Marketplace,” everyone has been affected.

According to data from the U.S. Department of Health & Human Services, to date, approximately 20 million people have taken advantage of the provisions included in the ACA. However, a recent New York Times article pointed out that the reality of the consumer experience—how people actually use the ACA plans—differs somewhat from early reports. The whole thing’s turning out to be more complex than originally predicted.

Much hype has been written about the ACA. Pathologists and clinical laboratory managers should want to better understand the “real” experience for healthcare consumers after they (and providers) have endured six years of change associated with this federal law. (more…)

In the New Health Engagement Model of Health Benefits, Clinical Pathology Laboratories Can Help Beneficiaries through Timely Medical Lab Testing

Oregon adopts health engagement model for its state employees, as evidence of cost savings grows

Across the nation, pathologists and clinical laboratory managers will want to learn about a new model of healthcare reform. It is the “health engagement model” (HEM) and it is being rolled out by a number of health insurers.

Variations of the HEM model are gaining ground in states around the country because health insurers see HEMs as a way to reduce costs and improve quality of healthcare. One new HEM is taking root in the Pacific Northwest. The Oregon Public Employees’ Benefit Board (PEBB) recently adopted a new HEM for state employees, according to a story published by the Lund Report.

What may cause some medical laboratory managers to sit up and take notice is the fact that PEBB’s HEM is producing impressive participation numbers. “Thus far, 48% of members have enrolled for health plans,” stated Ingrid Norberg, Communications Coordinator at PEBB. “And 87% of participating members chose to participate in the health engagement model.”