Medical laboratories and anatomic pathologists may need to squeeze into narrow networks to be paid under value-based schemes, especially where Medicare Advantage is concerned
Pathologists have likely heard the arguments in favor of value-based payment versus fee-for-service (FFS) reimbursement models: FFS encourages providers to order medically unnecessary procedures and lab tests. FFS removes incentives for providers to order patient services more carefully. Fraudsters can generate huge volumes of FFS claims that take payers months/years to recognize and stop.
Studies that favor value-based payment schemes support these claims. But do hospitals and other healthcare providers also accept them? And how is value-based reimbursement really doing?
To find out, Chicago-based thought leadership and advisory company 4Sight Health culled data from various organizations’ reports that suggest value-based reimbursement shows signs of growth as well as signs of stagnation.
Value-Based Payment Has Its Ups and Downs
Healthcare journalist David Burda is News Editor and Columnist at 4Sight Health. In his article, “Is Value-Based Reimbursement Mostly Dead or Slightly Alive?” Burda commented on data from various industry reports that indicated value-based reimbursement shows “signs of life.” For example:
More doctors are accepting pay-for-performance payments: 44.5% in 2020, up from 42.3% in 2018, according to an American Medical Association (AMA) biennial report on physician participation in value-based reimbursement, titled, “Policy Research Perspectives: Payment and Delivery in 2020.”
On the other hand, Burda reported that value-based reimbursement also has these declining indicators:
39.3% of provider payments “flowed” through FFS plans in 2020 with no link to cost or quality. This was unchanged since 2019. (HCPLAN report)
19.8% of FFS payments to providers in 2020 were linked to cost or quality, down from 22.5% in 2019. (HCPLAN report)
88% of doctors reported accepting FFS payments in 2019, an increase from 87% in 2018. (AMA report)
Does Today’s Healthcare Industry Support Value-based Care?
A survey of 680 physicians conducted by the Deloitte Center for Health Solutions suggests the answer could be “not yet.” In “Equipping Physicians for Value-Based Care,” Deloitte reported:
“Physician compensation continues to emphasize volume more than value.
“Availability and use of data-driven tools to support physicians in practicing value-based care continue to lag.
“Existing care models do not support value-based care.”
Deloitte analysts wrote, “Physicians increasingly recognize their role in improving the affordability of care. We repeated a question we asked six years ago and saw a large increase in the proportion of physicians who say they have a prominent role in limiting the use of unnecessary treatments and tests: 76% in 2020 vs. 57% in 2014.
“Physicians also recognize that today’s care models are not geared toward value,” Deloitte continued. “They see many untapped opportunities for improving quality and efficiency. They estimate that even today, sizable portions of their work can be performed by nonphysicians (30%) in nontraditional settings (30%) and/or can be automated (18%), creating opportunities for multidisciplinary care teams and clinicians to work at the top of their license.”
Hospital CFOs Also See Opportunities for Value-based Care
This could be problematic for clinical laboratories, according to Robert Michel, Editor-in-Chief of Dark Daily and our sister publication The Dark Report. According to Guidehouse, “Nearly 60% of health systems plan to advance into risk-based Medicare Advantage models in 2022.”
Medicare Advantage (MA) enrollments have escalated over 10 years: 26.4 million people of the 62.7 million eligible for Medicare chose MA in 2021, noted a Kaiser Family Foundation brief that also noted MA enrollment in 2021 was up by 2.4 million beneficiaries or 10% over 2020.
The graph above is taken from the Kaiser Family Foundation report, “Medicare Advantage in 2021: Enrollment Update and Key Trends.” According to the KFF, “In 2021, more than four in 10 (42%) Medicare beneficiaries—26.4 million people out of 62.7 million Medicare beneficiaries overall—are enrolled in Medicare Advantage plans; this share has steadily increased over time since the early 2000s.” Since MA employs narrow networks for its healthcare providers, it’s likely this trend will continue to affect clinical laboratories that may find it difficult to access these providers. (Graphic copyright: Kaiser Family Foundation.)
“The shift from Medicare Part B—where any lab can bill Medicare on behalf of patients for doctor visits and outpatient care, including lab tests—to Medicare Advantage is a serious financial threat for smaller and regional labs that do a lot of Medicare Part B testing. The Medicare Advantage plans often have networks that exclude all but a handful of clinical laboratories as contracted providers,” Michel cautioned. “Moving into the future, it’s incumbent on regional and smaller clinical laboratories to develop value-added services that solve health plans’ pain points and encourage insurers to include local labs in their networks.”
Medical laboratories and anatomic pathology groups need to be aware of this trend. Michel says value-based care programs call on clinical laboratories to collaborate with healthcare partners toward goals of closing care gaps.
“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,” he added.
Value-based reimbursement may eventually replace fee-for-service contracts. The change, however, is slow and clinical laboratories should monitor for opportunities and potential pitfalls the new payment arrangements might bring.
Every medical laboratory ready to begin the move away from fee-for-service payment and towards value-based reimbursement needs to start offering lab tests that support the practice of precision medicine
Nearly every clinical laboratory and pathology group in America today is aware of the opportunity to provide medical laboratory tests that enable physicians to successfully practice precision medicine. The goal of precision medicine is to enable a patient to get a more accurate diagnosis, receive the most appropriate therapy, and have his/her condition monitored with unprecedented insight during the course of treatment.
The good news for the clinical laboratory industry concerning precision medicine is that it is the fastest-growing sector of lab testing and these are the tests that contribute the greatest value in patient care. For example, molecular and genetic tests are revolutionizing the diagnosis and treatment of infectious disease. These are the clinical lab tests that enable a physician to identify the specific subtype of the bacteria or virus, then help him or her select the therapeutic drug that will have maximum benefit for the patient.
Clinical Laboratories Support Cancer Diagnosis with Companion Diagnostic Tests
It is equally true that the diagnosis and treatment of cancer is undergoing a major transformation. Genetic knowledge is being used to develop both diagnostic tests and new therapies that enable physicians to better diagnose cancer, and then treat it with the drugs identified by a companion diagnostic test as having the best potential to cure the patient or slow the progression of the disease.
But if there is an area of precision medicine with immense potential, it is pharmacogenomics and its associated testing.
In 2015, the Kaiser Family Foundation reported that more than four billion prescriptions were filled in the United States. As science understands more about the human genome, proteome, metabolome, and microbiome (to name just a few of the “omes”), it becomes possible to design clinical laboratory tests that:
1. Contribute to a more accurate diagnosis;
2. Identify which prescription drugs will be of the greatest benefit; and
3. Inform the physician as to which drugs will not be effective and may even be harmful to the patient.
More Good News for Medical Laboratories
There is even more good news. Many clinical laboratories, hospital labs, and pathology groups already have lab instruments capable of performing the tests used in precision medicine. For these labs, no major up-front investment is needed to begin offering tests that allow physicians to practice precision medicine.
“Many of our lab clients got started in this way,” stated Don Rule, MBA, Founder and Chief Executive Officer of Translational Software in Bellevue, Wash. “They realized that their existing lab instruments could run some of the lab tests physicians use when practicing precision medicine. This would be a low-cost way to enter the precision medicine field and they could, on a small scale with minimal risk, begin offering these tests to gain experience, learn more about the market, and identify which such tests would have highest value to the physicians in the communities they serve.”
Is Your Pathology Group Interested in Supporting Precision Medicine?
“For a lab that is serious about understanding the current and future clinical demand for precision medicine tests, several careful steps are recommended,” he continued. “One step is to build demand by educating clinicians and their staffs about the best ways to use these tests to improve patient care. Keep in mind that more of a physician’s reimbursement is now keyed to the patient outcomes they deliver. These doctors recognize that labs helping them do a better job with precision medicine are also helping them demonstrate greater value in the patient care they provide.
“There are other steps required to launch an effective, clinically successful precision medicine testing program,” Rule noted. “For example, labs need to understand how to be paid by the health insurers in their region. That includes getting in-network and teaching physicians and lab staff how to follow each payer’s clinical and coding criteria so that clean claims will be paid in a timely manner.
“Another step is to build the market in a careful fashion,” he emphasized. “For example, labs should identify the thought leaders among their clients and work with them to demonstrate the clinical utility of tests performed in support of precision medicine. And above all, it’s important to focus on patients that are most likely to get some insight from testing. When your lab starts with the right population, it’s remarkable how often you will uncover actionable issues.”
Clinical Labs Can Enter Precision Medicine by Initially Referring Tests
“It’s also feasible for a lab to start its precision medicine strategy by referring out testing in the early stages and using third-party experts to do the interpretations,” Rule advised. “Then, as specimen volume increases, and the lab’s clinical team gains more experience with these molecular and genetic tests, it becomes easy to bring that testing in-house to develop the market further with faster turnaround times and in-house expertise that local physicians appreciate.”
Two expert speakers will cover the essentials that all labs should know about building a market presence in precision medicine. First to present is Don Rule of Translational Software. Rule currently provides a variety of services to more than 80 lab clients, which includes the annotation and interpretation of gene sequences. In addition, Rule and his team provide consulting expertise to help labs develop their strategies for precision medicine, identify the best tests to offer physicians, and develop the steps needed to obtain network status with payers.
Webinar Will Present the Best Successes of Molecular, Genetic Testing Labs
Rule will share the experiences and best successes of the molecular and genetic testing labs he has worked with since 2009. He will discuss the types of lab tests used in precision medicine in different specialties, identify the fastest-growing sectors, and note which instruments already found in most clinical laboratories can be used to provide lab tests used for precision medicine.
Don Rule (above left), Founder and CEO of Translational Software, and Kyle Fetter (above right), Vice President of Advanced Diagnostics at XIFIN, will share their unique insights, knowledge, and experience at developing a precision medicine lab testing program for clinical laboratories that want to build more market share, make the billing/collections team more effective, and increase revenue. (Photo copyright: Dark Daily.)
As one example, a growing number of long-term care facilities are using tests to practice precision medicine—and paying for these tests under value-based arrangements—because so many of their patients are taking from 10 to 15 prescriptions each day. If a lab test indicates that the patient may not be getting therapeutic benefit from a specific drug (or that there are negative side effects from the polypharmacy), then the long-term care facility is money ahead because of less spending on drugs and the decreased care costs from patients who remain healthier. In the extreme case, the care facility might lose a patient to a skilled nursing facility due to mental fog or a fall that is precipitated by adverse drug effects.
Making the Case for a Precision Medicine Lab Testing Program
Additional topics to be discussed are:
• How to make the case to administration and the clinicians;
• How to build demand; and
• How to identify thought leaders and work with them to educate the physicians in the lab’s service region.
The second speaker will address the important topic of how to get paid. Kyle Fetter, MBA, is Vice President of Advanced Diagnostics at XIFIN, Inc., based in San Diego. XIFIN provides revenue cycle management (RCM) services to more than 200 labs and handles as many as 300 million lab test claims annually. What this means is that Fetter sees which labs are most successful with their coding, billing, and collections for molecular and genetic tests. He also sees how different payers are handling these claims.
During his presentation, Fetter will provide you and your lab team with valuable knowledge about the best ways to collect the information needed to submit clean claims and be paid promptly. He will illustrate ways to optimize the process of gathering this data and the different software tools that not only make the job easier, but help ensure that a higher proportion of claims are clean and paid at first submission.
Secrets of Preparing for Payer Challenges, Denials, and Audits
But the single best element of Fetter’s presentation will be how labs performing molecular and genetic testing should prepare, as part of the normal course of business, for the inevitable challenges, denials, and audits. He will describe the elements of a system that helps labs be ready to make the case that claims are properly documented, and that they represent appropriate and necessary tests for the patient.
You can find details for this important webinar at this link. (Or copy this URL and paste it into your browser: https://www.darkdaily.com/webinar/what-molecular-and-genetic-testing-labs-need-to-know-to-succeed-with-commercialization-of-their-precision-medicine-products.)
This webinar is perfect for any lab that is already performing molecular and genetic tests, and which is interested in building more market share, making the billing/collections team more effective, and increasing revenue.
For every lab watching the precision medicine space, this webinar is a “must attend” because it delivers to you and your lab team the collective knowledge and insights from two experts who are working with hundreds of the nation’s most successful labs. It is your guaranteed way to get the accurate, relevant information you need to craft your own lab’s strategy for expanding its molecular and genetic testing opportunities.
Clinical laboratories and pathology groups feel the impact of many of the Center’s demonstration projects that move healthcare toward value-based reimbursement
One perennial criticism of this nation’s healthcare system is that it is slow to innovate. Technologies and management principals widely adopted by many industries may take a decade or longer to gain acceptance by hospitals, physicians, and clinical laboratories.
To encourage faster adoption by useful technologies and innovations by providers, the Affordable Care Act (ACA) has a section that is not well known. This part of the law, passed in 2010, created the Center for Medicare & Medicaid Innovation.
Faster than expected transition from fee-for-service healthcare should grab attention of clinical laboratories and anatomic pathology groups who face financial unknowns under new payment systems
That means the transition away from fee-for-service payment for medical laboratory tests and other healthcare services is moving ahead of schedule. As evidence, HHS recently announced it reached the 30% target at the start of 2016, nearly a year ahead of the schedule laid out when the Obama Administration outlined a plan to reward healthcare providers based on quality of care rather than the volume of services they provide.
If bundled payment becomes more common in treatment of cancer, then anatomic pathologists need a strategy to demonstrate their clinical value to physicians and payers
MD Anderson Cancer Center and UnitedHealthcare (NYSE: UNH) announced a bundled payment agreement for the treatment of certain types of cancer. This development has implications for anatomic pathologist who provide cancer testing services to hospitals throughout the United States.
The new three-year pilot at MD Anderson’s Head and Neck Center in Houston, Texas, is the first use of a bundled payment model in a large, comprehensive cancer center. Officials say it is expected to lower costs while improving the quality of patient care and outcomes. As many as 150 patients with head and neck cancer who are enrolled in employer-sponsored UnitedHealthcare (UHC) plans will participate in the pilot.
“For the last five years, MD Anderson and its Institute for Cancer Care Innovation have been looking at how to best approach a single price for treating cancers. It is a complex question because cancer is a complex disease and each patient unique,” stated Thomas W. Feeley, M.D., Head of Anesthesiology and Critical Care, and Head of the Institute, in an MD Anderson news release. “Bundled pricing is something that patients and care providers want, and this is our first opportunity to better understand how we can manage costs without sacrificing quality care and patient outcomes.” (more…)
