Tag: Fee-for-service

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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.

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 how provider systems can pay for value contributed by pathologists. However, to take advantage of this opportunity,

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Did National Labs Sign Value-based Payer Contracts?

IT IS AN IMPORTANT SIGN OF THE TIMES when press releases about the two new national lab services agreements that UnitedHealthcare just announced with Laboratory Corporation of America and Quest Diagnostics emphasize how value-based programs will be an important element in the health insurer’s relationships with the two national lab companies.

In fact, the joint announcements

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Newsmaker Interview: Healthcare’s Transformation Now Bringing Changes to Lab Industry

“Today, patients want to get diagnosis and treatment faster with fewer visits to the doctor’s office. They want speedier and more comprehensive delivery of clinical services, be it laboratory tests, imaging, or other procedures.”

—Ralph Taylor, President, Sysmex America, Inc.

CEO Summary: To bring testing closer to patients, clinical laboratories will need to offer sophisticated point-of-care systems

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