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Clinical Laboratories and Pathology Groups

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Clinical Laboratories and Pathology Groups

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CMS’ Latest Value-Based Care Reimbursement Model Explores Geographic Direct Contracting for Medicare, Focuses on Costs and Quality

Physicians engaged with CMS in value-based care are asking clinical laboratories to help them close gaps in patient care through testing  

Clinical laboratories know that any change to how the federal Centers for Medicare and Medicaid Services (CMS) reimburses healthcare providers could also affect how labs are reimbursed for services they provide. Thus, lab leaders will want to take note of the latest value-based reimbursement model being tested by the Center for Medicare and Medicaid Innovation at CMS.

Called the Geographic Direct Contracting Model (GEO), CMS’ new “voluntary payment model” aims at giving providers of Medicare Part A and Part B services “a direct incentive to improve care across entire geographic regions,” according to a CMS press release.

“The Geographic Direct Contracting Model is part of the Innovation Center’s suite of Direct Contracting models and is one of the Center’s largest bets to date on value-based care,” Brad Smith, Deputy Administrator and Director of the Center for Medicare and Medicaid Innovation (CMMI), told RevCycleIntelligence. Smith is also the former CEO and co-founder of Aspire Health.

According to a CMS Fact Sheet, the GEO model “will test whether a geographic-based approach to value-based care can improve quality of care and reduce costs for Medicare beneficiaries across an entire geographic region.”

“This model allows participating entities to build integrated relationships with healthcare providers and invest in population health in a region to better coordinate care, improve quality, and lower the cost of care for Medicare beneficiaries in a community, said CMS Administrator Seema Verma in the CMS press release. Clinical laboratories may find opportunities as well, to collaborate with physicians in the clinical decision-making process. (Photo copyright: Business Insider.)

CMS Continues to Move Away from Fee-for-Service

Years ago in “CMS Seeks ‘New Direction’ for its Innovation Center as the Agency Evaluates Current Value-Based Payment Models for Medicare Services, including Medical Laboratory Testing,” Dark Daily alerted readers that CMS was planning to offer different models of value-based care and that medical laboratory revenues could be affected as the federal agency aims to move reimbursement for healthcare—including clinical laboratory testing—away from the fee-for-service payment model.

“Leveraging best practices and lessons learned from prior Innovation Center models, Geo will enable Direct Contracting Entities (DCEs) to build integrated relationships with healthcare providers and community organizations in a region to better coordinate care and address the clinical and social needs of Medicare beneficiaries,” the CMS Fact Sheet states.

“If we’re successful, we’ll move value-based care from something that might be 10 or 20% of somebody’s revenue to something that’s 80 or hopefully 100% of somebody’s revenue (in five to 10 years),” Smith told MedPage Today.

Healthcare providers and health plans that participate in the Geographic Direct Contracting model must be covered entities under the Health Insurance and Portability Accountability Act (HIPAA) and submit applications by April 2, 2021, the CMS fact sheet states.

 The first performance period starts Jan. 1, 2022, and participation is voluntary. Direct contracting entities take “100% shared savings and shared losses for Medicare Part A and B services for aligned Medicare fee for service beneficiaries in a defined region,” the CMS fact sheet explained.

CMS is considering implementing the GEO model in Atlanta, Dallas, Denver, Detroit, Houston, Los Angeles, Miami, Minneapolis, Orlando, Phoenix, Philadelphia, Pittsburgh, Riverside, San Diego, and Tampa.

“By initially testing the model in a small number of geographies, we will be able to thoughtfully learn how these flexibilities are able to impact quality and costs,” Smith told RevCycleIntelligence.

How Will Value-Based Care Programs Affect Clinical Laboratories?

Value-based payment arrangements require doctors to accept changes to how they are reimbursed for their services. In kind, doctors are examining how clinical laboratories can take on an enhanced role in clinical decision making.

“Physicians and hospitals in a value-based environment need a different level of service and professional consultation from the lab and pathology group because they are being incented to detect disease earlier and be active in managing patients with chronic conditions to keep them healthy and out of the hospital,” said Robert Michel, Publisher and Editor-in-Chief of Dark Daily and its sister publication The Dark Report.

Michel explained that value-based care providers are calling on labs to go beyond reporting accurate test results within allotted turnaround times. “They want collaboration in identifying at-risk patients and in finding and closing gaps in care by using laboratory test results.”

Medical laboratory leaders may want to reach out to healthcare providers participating in value-based care models to explore areas of interest relating to patient population, chronic conditions, and severity of illness. 

As Dark Daily reported in “Repositioning the Clinical Laboratory as a Strategic Pillar of the Value-Based Healthcare Organization, Consistent with Clinical Lab 2.0,” labs need to be effective and efficient performers in integrated delivery networks and play a critical role in coordinating care.

Clinical laboratories that offer testing and reporting and additionally collaborate with healthcare providers and health plans in ways that contribute to improved patient outcomes and lowered costs, may be in a position to earn any financial rewards from these and other new value-based arrangements.

—Donna Marie Pocius

Related Information:

CMS Announces New Model to Advance Regional Value-Based Care in Medicare

CMS Announces a New Value-Based Direct Contracting Model

CMMI Expanding Direct Contracting, Advancing Other New Models

Facts: Geographic Direct Contracting Model “Geo”

Changes Coming to Bundled Payments and Direct Contracting, CMMI Chief Says

CMS Seeks New Direction for Its Innovation Center as the Agency Evaluates Current Value-Based Payment Models for Medicare Services Including Medical Laboratory Testing

Repositioning the Clinical Laboratory as a Strategic Pillar of the Value-Based Healthcare Organization Consistent with Clinical Lab 2.0

University of Kansas Health System Laboratory Shares Lessons from Assessing Pooled Testing for COVID-19 Patients

Available funds and disease prevalence affect whether pooled testing is feasible and desirable, notes University of Kansas Health System microbiology laboratory director

Pooled testing for the SARS-CoV-2 coronavirus has its supporters and its critics. There is no one-size-fits-all when it comes to pooling multiple patients’ biological samples into a single COVID-19 test in the hopes that the result will be all negative. Several factors must be in place for COVID-19 pooled testing to be viable at individual clinical laboratories. The experience of medical labs that considered doing pooled testing are informative.

For example, when Rachael Liesman, PhD, Director of Microbiology in Pathology and Laboratory Medicine at the University of Kansas Health System in Kansas City, researched developing a plan for pooled testing of COVID-19 patients for her health system, she found the strategy less than ideal for two reasons:

  • First was the rate of infection in the population being tested. If the rate was too high, pooled testing produced too many positive results, making the process impractical.
  • Second was the need for expensive automated equipment in the microbiology laboratory, the funding to buy that equipment, and the room to accommodate it.

Last summer, as Liesman and her microbiology lab staff were evaluating pooled testing, she spoke with Dark Daily’s sister publication The Dark Report. “We were trying to decide whether pooled testing really would save us anything,” she said in the exclusive interview. “We were looking at the barriers and trying to understand what we’d gain and what we’d lose.”

Deciding Against Pooled Testing at University of Kansas Health System

After careful consideration, the lab staff stopped considering pooled testing due to increased prevalence in the community, Liesman said in December. “Our positivity rate is double what we were seeing in the summer,” she noted.

“Of course, the biggest challenge with pooling specimens is you have to have a patient population that has a low enough virus prevalence to make it worth your time,” she noted. “For us, there may be some patient populations that have a low enough level of prevalence, but not enough to make pooling feasible.”

University of Kansas Health System’s microbiology laboratory has been running 800 to 1,000 COVID-19 molecular tests 24 hours a day, seven days a week, although the lab runs fewer tests on the weekends. On Jan. 8, the number of new coronavirus cases in Kansas was at 1,780 per million, according to the COVID Tracking Project (CTP). That was about the highest rate since the pandemic began early in the year.

Rachael Liesman, PhD smiling headshot
“Pooling makes a lot of sense for massive high-volume reference labs. I don’t have the capacity to run 6,000 specimens a day through my lab,” noted Rachael Liesman, PhD (above), Director of Microbiology in Pathology and Laboratory Medicine at the University of Kansas Health System, in an exclusive interview with The Dark Report. Not all clinical laboratories can or should consider pooled testing, which Dark Daily noted in previous e-briefings. (Photo copyright: Twitter.)

“One of the challenges in any lab is when you get specimens arriving in volume of say 100 or 200 specimens every few hours,” Liesman explained. “When that happens, you have to determine rapidly which of those specimens you would want to pool and which of them you wouldn’t pool. Or, if you had the right circumstances, you could pool all of them.

“You might have asymptomatic patients in one group and symptomatic patients in another group. So, then you could put all samples from one group into a pool. But if you’re not set up that way, just figuring that part out could be really time consuming,” she noted.

“Another challenge,” Liesman added, “is if your laboratory doesn’t have liquid handlers, which are the instruments that do the pooling for you.”

Manual versus Automated Pooling

In a clinical laboratory without liquid handlers, the task of pooling is not automated and instead requires staff to do the work manually—one specimen and one pool at a time.

Without the right equipment, Liesman noted, somebody in the lab must physically take five tubes and combine them in into one tube. And that one person has to ensure the test tube of pooled specimens is appropriately stickered. Then, once that is completed, the information must be input into the laboratory information system (LIS).

“We have a liquid handler because we purchased one from Hamilton specifically for COVID testing. But getting all that information into the computer system can take a lot of time,” she said. “A lot of labs don’t have access to this type of instrumentation, which means the process becomes very hands-on.

“We already see repetitive-use injuries, and if many of your staff are spending their eight-hour shifts doing pipetting motions, then they’re at greater risk for repetitive-use injury,” she added.

In addition, having humans doing repetitive motions in a clinical laboratory increases the risk of specimen-handling errors such as tubes being mislabeled or misplaced. “Those mistakes are very hard to find,” Liesman noted. “For us, we’ve been asking if we have the resources to do pooling successfully. And, if we put all these resources into it, what do we gain? That’s the big question for us.”

As Dark Daily reported in “University of Vermont Microbiology Laboratory Identifies Inefficiencies When Performing Pooled Testing for COVID-19,” the microbiology laboratory at the University of Kansas is not the only lab to have considered pooled testing and found it not desirable.

For a clinical laboratory to successfully initiate and maintain an effective program for pooled testing of the SARS-CoV-2 coronavirus, it must have specific equipment available to reduce manual touches of the specimens and automate as many work processes as possible. The lab’s manager must also consider the staffing required to handle pooled testing. Even then, if disease prevalence climbs above a certain level, pooled testing will not be a viable solution.

These are the reasons why many medical laboratories have considered a pooled testing arrangement but decided it would not be appropriate for their organization. Meanwhile, at other clinical labs pooled SARS-CoV-2 testing has been a major success, partly because it enables the labs to test many more patients using the same quantity of test kits and related supplies.

—Joseph Burns

Related Information:

University of Vermont Microbiology Laboratory Identifies Inefficiencies When Performing Pooled Testing for COVID-19

Memphis Path Lab Pivots to COVID, Pooled Testing

NY Hospital Lab Succeeds with Pooled COVID-19 Testing

Is COVID-19 Pooled Testing Good for Labs, Bad for IVDs?

Officials Differ on Value of COVID-19 Pooled Testing