The simple definition of value-based care is better patient outcomes combined with smarter spending. As the US healthcare system transitions from a fee-for-service model to incentivizing providers for improved care at a better cost, there are specific practices in the ecosystem that need to be addressed. The laboratory test panel is one of them.
Panel padding describes how laboratories add tests of no clinical value to panels and then charge for them. This is an example of a little-discussed practice in the health care system that rewards abuse.
The laboratory industry develops test order menus from which physicians order laboratories. While developing panels that represent useful tests usually ordered together, laboratories may add additional tests that are not useful in the physician’s diagnostic evaluation.
Avalon Healthcare Solutions has analyzed claims for paid laboratory tests and concluded that independent laboratories conduct the most nonadherent test units that are inconsistent with published health plan policies that document best practice guidelines and evidence-based medicine.
Vitamin D tests are a good example of wastefully stuffing tests into routine laboratory panels. Several laboratories add an experimental subcomponent assay to the vitamin D panel that does not inform care. For thyroid panels, there are seven unique tests, but only two are important for the most common clinical scenarios, raising the cost of a routine thyroid panel from about $30 to $137. In fact, a common panel thyroid test is only for pregnant women, and any patient—male or female—who has a thyroid panel receives and pays for that test.
The cost of filling the panel
With the U.S. forecast to spend up to $27.9 billion annually on low-value screening, testing, and procedures considered waste, there needs to be a new approach to how the laboratory industry develops test menus from which physicians order labs.
Laboratory tests that do not have a clinical indication can lead to unnecessary patient sampling, as well as a higher risk of false positives and unnecessary costs.
We estimate that, on average, the waste caused by panel overflow in processed claims costs about $2 per member per month. Patients pay, on average, 1/3 of the point-of-care costs, and payers pay the other 2/3, so for every 1 million health plan members, the member’s out-of-pocket costs are $8 million of the $24 million in useless tests reimbursed each year .
Explosion in laboratory tests
Laboratory tests currently represent the largest volume of medical activity, and over the next decade, 4,000 new tests are expected to come to market, none of which currently require FDA approval. With about 30% of laboratory tests Because it is unnecessary, the challenge remains how doctors and health plans can keep up with lab tests that truly inform care.
Contributing to this challenge is the significant growth in genetic testing. The number of genetic tests paid for by commercial health plans is increasing significantly due to the growth of marketed genetic tests, decreasing prices over time, and increasing consumer demand. The four-year trend in commercial fee-for-service genetic testing reflects a 17% compound annual growth rate, in contrast to Medicare’s increased growth rate of nearly 50%.
Health plans will need to incorporate changes in policies and operational practices as genetic correlations between complex traits and diseases are identified. Plans are also challenged to ensure that high-volume, low-cost routine testing meets clinical policies.
Meeting these challenges to improve value-based care requires a focus on science combined with innovative automation that manages all routine and genetic laboratory testing with minimal wear and tear.
Laboratory benefit management
While physicians need education and transparency about what the panel includes, health plans also need to prioritize the appropriate use of laboratory tests. Laboratory benefit management has traditionally focused on eliminating waste and abuse from laboratory testing, helping to address the increasing complexity of genetic testing and helping health plans reduce their costs per independent network unit. While this has proven value, it really ends up adjudicating the lab claim and relaying the result to the physician.
With solid science at its core, payment integrity programs that include laboratory benefit management can flag nonadherent tests from both panel completion and inappropriate genetic test orders before the test is performed. The digitized lab results and analytics engine provide lab knowledge for the right test, the right data, the right intelligence, and the right care. This laboratory testing innovation will help transform the way quality care is delivered to individuals and populations while helping health plans, providers and patients save time, uncertainty and risk.
We don’t have to choose between achieving quality clinical outcomes or proven cost savings. Eliminating panel clutter brings us closer to running and paying for only lab tests that truly impact patient care.
Photo: Anastasia Usenko, Getty Images