News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups
Hosted by Robert Michel

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Clinical Laboratories and Pathology Groups
Hosted by Robert Michel
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Up to 50% of Aetna, UnitedHealth Group, and Anthem Reimbursements Go to Value-Based Contracts; Clinical Laboratories Must Implement Value-Based Strategies to Remain Competitive

Jun 2, 2017 | Coding, Billing, and Collections, Laboratory Operations, Laboratory Pathology, Laboratory Testing, Management & Operations

Aetna expects 75% to 80% of its medical spending will be value-based by 2020

Many pathologists and medical laboratory executives may be surprised to learn how quickly private health insurers are moving away from fee-for-service payment arrangements. According to Forbes, the nation’s largest health insurance companies now associate nearly 50% of reimbursements they make to value-based insurance initiatives.

This is a sign that value-based managed care contracting continues to gain momentum. And that interest remains strong in this form of reimbursement, which associates payment-for-care to quality and rewards efficient providers.

UnitedHealth Group (NYSE:UNH) and Aetna (NYSE:AET) are the fastest adopters of value-based payment models, with Anthem (NYSE:ANTM) close behind, the Forbes article noted.

Moreover, UnitedHealth and Aetna intend to increase their percentage of value-based contracts. For example, Aetna, which now ties 45% of its reimbursements to value, says its goal is to have 75% to 80% of its medical spending in value-based relationships by 2020, Healthcare Finance News pointed out.

These compelling data should motivate pathology groups and medical laboratory leaders to adopt strategies for value-based contracting. That’s because payment schemes based on clinical laboratory performance will likely grow quickly, as compared to traditional fee-for-service reimbursement models, which are being phased out.

Aetna: Lowering Acute Admits

Aetna and other insurance companies are rewarding in-network hospitals, medical laboratories, and physicians who help them keep their customers healthy.

“One way we measure our success is by how well we are able to keep our members out of the hospital and in their homes and communities,” stated Mark Bertolini, Aetna’s Chairman and Chief Executive Officer, in the Healthcare Finance News article.

“I think value-based contracting is going to continue to be encouraged by even the current [federal] administration as a way of getting a handle on healthcare costs,” he continued. In fact, Aetna lowered acute admissions by 4% in 2016 and reduced readmission rates by 27%, reported Healthcare Finance News.

UnitedHealth: Outpatient Care a Focal Point

Meanwhile, UnitedHealth Group spends $52 billion (or about 45%) of a $115 billion annual budget on value-based initiatives, Forbes noted.

In March, UnitedHealth Group joined Optum, its health services company, to Surgical Care Associates, an ambulatory (outpatient) surgery provider with 205 sites nationwide.

As surgical cases (such as total joint replacements) continue their migration to ambulatory surgery center sites, UnitedHealth Group expects this merger to offer value to patients, payers, and physicians, a statement pointed out.

“We’ve been able to drive down on a per capita basis inpatient, and inside that we’ve focused a lot in those early years around the conversion of inpatient to outpatient. And I think this is sort of the continued evolution as we focus more on the side of service to how do we get that outpatient into the ambulatory setting,” said Dan Schumacher, UnitedHealthcare Chief Financial Officer, in the Healthcare Finance News story.

 

The graphic above is from a slide presentation given by Eleanor Herriman, MD, MBA, Chief Medical Informatics Officer with Viewics, a provider of big-data management solutions for hospitals and clinical laboratories. Because of healthcare’s drive toward value-based payment models, clinical labs must focus on “operational efficiencies” and “testing utilization management,” and be prepared to “demonstrate value of testing to payers and health organizations,” Herriman’s presentation notes. (Image copyright: Viewics, Inc.)

Also, in 2016, OptumRx (pharmacy benefit management) announced partnerships with Walgreens and CVS Pharmacy. The joint pharmacy care agreements are intended to improve patient outcomes, connect platforms for health data leverage, and address costs of care, UnitedHealth Group stated in dual press releases (Walgreens and CVS) announcing the strategic partnerships.

Anthem: Planning for 50% Value-Based Care by Next Year

For its part, Anthem now has 43% of its operating budget focused on shared savings programs. Furthermore, the company reportedly has a plan to associate at least 50% of its budget with value-based care by 2018.

“When you combine this with our pay for performance programs, we will have well over half our spend in collaborative arrangements over the next five years,” Jill Becher, Anthem Staff Vice President of Communications, told Forbes.

Clinical Laboratories Need Value-Based Strategy

The rise of value-based care should motivate clinical laboratory leaders to create and implement novel and responsive strategies as soon as possible. Without a focus on value, labs could be denied entry into provider networks.

In a Clinical Laboratory Daily News article, Danielle Freedman, MD, noted that value-based clinical laboratory strategies could entail the following:

  • Working with physicians on appropriate retesting intervals;
  • Adding clinical decision support tools; and
  • Vetting testing requests.

Freedman is Director of Pathology at Luton and Dunstable University Hospital NHS Foundation Trust in the United Kingdom (UK).

Clinical laboratory executives and pathology practice administrators should take note of the fact that some large healthcare insurers already have nearly half of their reimbursement under value-based contracts, with plans to grow their investment in value-based relationships in the future.

Already facing the challenges of narrowing healthcare networks, it is imperative that lab leaders also get their lab team to focus on value (and not just volume). It can be expected that, as health insurers look to partner with labs in different regions and communities, they will want medical laboratories that are creative in developing high-value diagnostic testing services.

—Donna Marie Pocius

 

Related Information:

United Health, Aetna, Anthem Near 50% of Value-Based Care Spending

Aetna, UnitedHealth Show Increasing Appetite for Value-Based Care Contracts

Aetna Premier Care Network Plus Helps Reduce Costs for National Employers and Members Through Simple Access to Value-Based Care

Surgical Care Associates/OptumCare to Combine

OptumRx and Walgreens to Expand Consumer Choice, Reduce Costs, and Improve Health Outcomes

OptumRx and CVS Pharmacy to Expand Consumer Choice, Reduce Costs, and Improve Health Outcomes

“V” is for Value, Not Volume

Advanced Laboratory Analytics—A Disruptive Solution for Health Systems

 

McKinsey Reports That Consumers Will Find Fewer Options under the ACA in 2017 while Fewer Health Plans Means Less Access for Clinical Laboratories

Dec 21, 2016 | Compliance, Legal, and Malpractice, Laboratory Management and Operations, Laboratory News, Laboratory Pathology

Local medical labs and pathology groups are often excluded from narrow networks. Thus, another round of “network provider reduction” is a serious issue

Total enrollment in health insurance products may be increasing, but in its recently-issued study, McKinsey and Company determined that the Health Insurance Marketplace (Health Exchange) is shrinking even as the number of enrollees continues to rise.

The development is unfavorable to the nation’s clinical laboratories and pathology groups because fewer health plans on the exchange means less access to patients. It also means that the remaining health insurers are taking steps to further narrow their existing networks in order to curb expenses by limiting options.

The new report published by McKinsey and Company reveals that insurers are moving towards plans that offer fewer options for consumers, mostly due to losses suffered on the health exchanges. The report, titled, “2017 Exchange Market: Plan Type Trends,” states that in 2017 a majority of the healthcare plans (about 75%) available to consumers under the Affordable Care Act (ACA) will be Health Maintenance Organizations (HMOs) and other similar limited-option plans, such as Exclusive Provider Organizations (EPOs).

EPOs are a hybrid of HMOs and PPOs and share some common options from both. Of the states investigated, McKinsey found that about 15% of customers eligible for ACA exchanges will have no PPOs available to them. (more…)

Higher Deductibles and Co-Insurance Costs Squeezing Healthcare Consumers’ Wallets; A Reasons for Clinical Labs to Make Lab Test Prices Easy to See

Sep 14, 2016 | Compliance, Legal, and Malpractice, Laboratory News, Laboratory Pathology, Laboratory Testing

Two new studies show patients are being increasingly burdened with a greater share of healthcare costs, which requires providers, including medical labs, to collect more money from patients at time of service

Although wage increases remain stagnant, consumers now pay a steadily increasing share of their healthcare costs. That’s because of rising deductibles, co-insurance, and other out-of-pocket costs. Not only will this cost-sharing trend continue to stretch patients’ budgets, it also will apply more pressure on clinical laboratories and pathology groups to increase price transparency for patients.

A recent study at the University of Michigan (UM), published in the Journal of the American Medical Association (JAMA), highlighted the growth in out-of-pocket insurance costs for hospitalized patients. For the average consumer with private health insurance, costs rose from $738 in 2009 to $1,013 in 2013—a 37% increase. During that same 4-year period, overall healthcare spending grew at 2.9% per year and health insurance premiums went up 5.1% annually.

Two types of health insurance plan charges were responsible for the biggest change in out-of-pocket spending: deductibles and co-insurance. During the same period, deductibles rose by 86%! Co-insurance costs increased 33% over the same period. Co-payments (a flat fee) were used in fewer hospitalizations. (more…)

Cleveland Clinic Gives Patients Statewide 24/7 Access to Physicians through Smartphones, iPads, Tablets and Online: Will Telemedicine Also Involve Pathologists?

Feb 8, 2016 | Digital Pathology, Instruments & Equipment, Laboratory Instruments & Laboratory Equipment, Laboratory News, Laboratory Operations, Laboratory Pathology, Uncategorized

New service allows patients statewide to access urgent care via telephones and other devices as Cleveland Clinic positions itself to be a 24/7 provider of choice

Urgent care by telephone is the latest patient-centric and customer-friendly medical service to be offered by the Cleveland Clinic. It is also the first 24-hour online statewide healthcare service of its kind in Ohio, a milestone that has implications for pathologists and clinical laboratory executives because lab testing is often required in support of patients wanting access to urgent care, particularly after hours.

Express Care Online (formerly MyCare Online) is the Cleveland Clinic’s new telemedicine service. It enables patients to see a medical professional for urgent matters via computer or smartphone 24 hours a day/seven days a week, according to a Cleveland Clinic statement. (more…)

CMS Says Obamacare Premiums to Increase by an Average of 7.5% in 2016, But Squeeze on Consumers’ Wallets Will Vary Depending on Where They Live

Jan 4, 2016 | Compliance, Legal, and Malpractice, Laboratory News, Laboratory Operations, Laboratory Pathology, Managed Care Contracts & Payer Reimbursement

UnitedHealthcare announces it may exit the federal marketplace because of slow growth and higher-than-expected claims; clinical laboratories may see less reimbursement

Health insurance premiums in 2016 for plans offered through federal Obamacare exchanges (more formally known as the Health Insurance Marketplace) will see an average rate hike on midrange plans of 7.5%. This amount may vary widely depending on which state a consumer lives. In 2016, 38 states will have healthcare consumers apply for and enroll in coverage through the HealthCare.gov platform.

Big increases in healthcare premiums from one year to the next have a direct link to the amount of money health insurers will pay clinical laboratories for lab test claims. That’s because, when health insurers are in a financial squeeze, they tend to reduce reimbursement to providers, including clinical laboratories.

This news about premium increases for 2016 comes from a report issued by the Centers for Medicare and Medicaid Services (CMS). The rate analysis is part of the federal agency’s 2016 Marketplace Affordability Snapshot. CMS said that nearly eight in 10 returning marketplace consumers will be able to find a plan with premiums for less than $100 per month after tax credits and seven out of 10 will pay less than $75, once taxpayer subsidies are factored in.

“For most consumers, premium increases for 2016 are in the single digits and they will be able to find plans for less than $100 a month,” stated Kevin Counihan, CEO of the Health Insurance Marketplace, in the CMS statement. (more…)

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