On Jan. 1, 2018, Medicare’s new payment rates for clinical testing took effect, marking a 10 percent reduction from the 2017 payment rates, according to the American Medical Association. The cuts come as part of CMS’ Protecting Access to Medicare Act, which calls for a 35 to 45 percent reduction in payments for tests typically performed at physician offices. The cuts are meant be staggered over the span of three years, meaning the reduction on this year’s payments is just the beginning. Another 10 percent reduction in lab reimbursement can be expected in 2019, followed by another 10 percent reduction in 2020.
In an Oct. 17 webinar hosted by Becker’s Hospital Review and sponsored by Sunquest Information Systems, David B. Drothler, manager of laboratory medicine at Washington, D.C.-based Children’s National Medical Center, and Kathy Hendrickson, the director of clinical systems for Albuquerque, N.M.-based TriCore Reference Laboratories, discussed the ways labs can drive strategic growth for health systems and hospitals. Jonathan Pierson, the COO of Sunquest, moderated the panel.
The panelists discussed how process standardization, health system partnership and creating added value for labs through data analytics and genetic testing can help healthcare organizations stay competitive in the years to come.
Standardize processes during mergers and acquisitions
More than 10 percent of the total U.S hospital population, more than 550 hospitals, have experienced some sort of lab merger and acquisition activity in recent years, Mr. Pierson said.
“Mergers and acquisitions occur for a variety of reasons,” he said. “More often than not, they’re due to pressures hospitals are seeing in terms of lowering costs.”
When an organization is going through a merger, standardizing lab processes with a data analytics system that supports interoperability can help labs overcome challenges presented by new reimbursement models by standardizing processes during the transition process, said Ms. Hendrickson.
“We took it upon ourselves to standardize our processes,” she said. “As we work with folks we offer management services to, we can propose a platform that fits into a standard protocol. For example, we use CentraLink and the Siemens devices for our chemistry. All of our devices connect through Data Innovations, and that feeds our Sunquest system with the results from automation.”
The lab as a partner to health systems
One way for labs to support the healthcare system’s transition from volume to value is to ensure these entities are adding value to hospitals and health systems by becoming a commodity through bolstering patient care for at-risk patients.
The “Clinical Lab 2.0” (Lab 2.0) movement supports such a shift. The concept stems from the Project Santa Fe Foundation that is positioning labs as international leaders in the shift to value-based care. Lab 2.0 aims to develop labs as a partner to providers and payers. As a member of the Project Santa Fe committee, TriCore embraces the Lab 2.0 concept. New Mexico’s largest medical laboratory positions itself as a provider partner to organizations focused on community health by compiling and analyzing patient data that can help hospitals better identify at-risk patients. TriCore proactively manages the healthcare of a hospital’s patients, which adds value for both the lab and the hospital in treating at-risk patients.
“Over 70 percent of diagnostic information is produced by the laboratory,” Ms. Hendrickson said. “Labs should be partnering and providing the assistance that providers and payers need so that they can focus on individual patients.”
Like TriCore, the lab at Children’s National Medical Center is adding value by using analytics in the lab to identify potential at-risk patients. More than 95 percent of the patients who come to Children’s National Medical Center use lab services, Mr. Drothler said.
“We tie in and partner with the nursing programs and the schools in the area, so we can use our testing to see where we have problems with flu this season and what areas have [a] low vaccination rate. We can then tie all the information together in our EHR and LIF,” Mr. Drothler said.
Genetic testing goes mainstream
Another way for labs to add value is to expand genetic testing services, Mr. Drothler said. The expansion of genetic testing services increased reimbursement for Children’s National Medical Center. When developing a genetic testing program, Children’s National Medical Center had the goal of going live in six months and being budget neutral in 12.
“On average, we get about a 40 percent reimbursement with genetic testing,” Mr. Drothler said. “Some of our payers pay better, but some like Medicare and Medicaid pay far less.”
Even though creating a genetic testing program was another way to boost reimbursement, Mr. Drothler said genetic testing programs have their challenges as well.
“We’re constantly reevaluating it to make sure we’ve got the right combination of CBTs to make sure we have the best reimbursement,” he said.
Key takeaways
Creating strategic value for the lab helps drive savings for healthcare organizations amid declining reimbursements through positioning the lab as an asset to hospitals. By applying value-based care
Standardizing lab processes and workflows helps manage clinical system interoperability. Putting a focus on precision medicine leads to personalized treatments and diagnoses, which adds value for both the lab and the health system it serves. Labs can also add value to hospitals and health systems through the adoption of genetic testing services.
Click here to learn more about Sunquest, and here to listen to the full webinar.
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