TAG:

Fee-for-service

Fee-for-service has long been the primary payment model for clinical laboratories and pathology groups. Fee-for-service (FFS) is a payment model in which services are paid for as itemized in the provider’s invoice. It gives an incentive for physicians to provide more treatments because payment is dependent on the quantity of care, rather than quality of care. Similarly, patients are incentivized to welcome any medical service that might not be necessary. Insurance companies shield themselves against ruin by setting cover limits for every beneficiary.

FFS raises costs, discourages the efficiencies of integrated care, and a variety of reform efforts have been attempted, recommended, or initiated to reduce its influence (such as moving towards bundled payments and capitation).

Medicare Parts A (hospital insurance) and B (optional insurance that covers physician, outpatient hospital, home health, laboratory tests, durable medical equipment, designated therapy, outpatient prescription drugs, and other services not covered by Part A) are FFS programs. Medicare processes over one billion FFS claims per year.

As part of the ongoing drive to cut healthcare costs, this model is gradually being phased out by payers and healthcare organizations in favor of value-based payment models, such as pay-for-performance programs and accountable care organizations that are intended to cap costs and spread financial risk among providers, while encouraging coordination of care, disease prevention and better management of chronic conditions. This is seen as a threat to the survival of clinical labs, which expect to see far fewer tests ordered by healthcare providers.

The Clinical Laboratory Management Association is working to help labs navigate these changes. “As fee-for-service reimbursement gives way to bundled reimbursement and per-member-per-month payment, labs will only be successful if they add value to physicians by helping them diagnose disease earlier and more accurately,” says CLMA President Paul Epner.

CLMA has named this program “Increasing Clinical Effectiveness,” or ICE. THE DARK REPORT is one of CLMA’s partners in this effort.

“Our hope is that ICE is a catalyst that helps lab administrators, pathologists, and medical laboratory scientists broaden the focus of their laboratory beyond operational efficiency to include measurable impact on positive patient outcomes,” says Epner.

UnitedHealth Rumored to Be Excluding Labs from Its Network

IN RECENT DAYS, RUMORS HAVE SURFACED that UnitedHealthcare has begun to terminate the contracts it holds with a number of regional and non-national clinical laboratories. This news surfaced just as The Dark Report went to press. Given its importance to the clinical laboratory indust…

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Project Santa Fe Labs Deliver Value with Tests

CEO SUMMARY: No bigger threat looms over the financial security of the nation’s clinical laboratories than healthcare’s transition from fee-for-service payment to value-based reimbursement. To navigate that transition successfully, medical labs and pathology groups will need to adopt …

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Sonic Uses Lab Data, Patient-Contact Tools, to Improve Outcomes

CEO SUMMARY: In its work for a federally qualified health center, Sonic Healthcare USA helped physicians use a data-driven approach to population health management that incorporated integrated financial and clinical analytics. Also, Sonic developed technologies that give ordering physicia…

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Sonic Adds More Value to Help Physicians Treat CKD Patients

BUILDING ON THE LESSONS IT LEARNED by developing lab services that helped primary care physicians identify, diagnose, and treat diabetes patients in their practices, Sonic Healthcare USA was ready to do the same for another disease. Sonic wanted to go beyond simply reporting an accu…

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Pathology Groups Should Act Now to Define Value

CEO SUMMARY: Payers and health system administrators generally agree that healthcare is moving away from fee-for-service toward value-based payment. Because adoption of value-based contracts is slower for pathologists than for other providers, pathologists have the opportunity to define h…

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Seismic Shift in Managed Care Contracting for Labs?

RECENTLY TWO OF THE NATION’S LARGEST HEALTH INSURERS abandoned a managed care contracting strategy that they adopted 11 years ago. Back in 2007, UnitedHealthcare and Aetna each were willing to grant exclusive national provider status to a single lab company in exc…

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CMS Shows Its Hand in New Draft Rules for 2019

CEO SUMMARY: Publication of the draft Medicare Physician Fee Schedule on July 12 brought unwelcome news for the clinical lab industry, at least as it pertains to whether hospital lab outreach data should be included in the PAMA market study that the federal Centers for Medicare and Medica…

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New Aetna, UHC Contracts Create Openings for Labs

CEO SUMMARY: New national lab contracts that LabCorp and Quest announced in May could disrupt the lab testing market in ways regional labs can exploit, experts said. Health plans entered these new contracts after realizing that the exclusive network contracts do not work, one lab consulta…

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CMS physician fee schedule: Will hospital labs be excluded again from PAMA price reporting?

CEO SUMMARY: Publication of the draft CMS Physician Fee Schedule on July 12 brought unwelcome news for the clinical lab industry, at least as it pertains to that perennial question: Should hospital lab outreach data be included in a PAMA market study? The federal Centers for Medicare and …

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July 9, 2018 Intelligence: Late Breaking Lab News

Wake Forest Baptist Medical Center of Wake Forest, N.C., has been notified by the Centers for Medicare and Medicaid Services (CMS), in a letter dated June 15, that it is back in compliance with Medicare Conditions of Participation. Earlier this year, following inspe…

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