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.
Consumer-Directed Health Plans To Be Healthcare’s Next Wave
“There is an opportunity for laboratories to put strategies in place to benefit from the changes triggered by wider use of CDHPs.” —Paul Mango CEO SUMMARY: It is widely known that growing numbers of employers are turning to consumer-directed…
Picking Top Ten Stories Of 2005 for Lab Industry
CEO SUMMARY: THE DARK REPORT offers its pic…
Our Tenth Anniversary Serving Your Needs
CEO SUMMARY: It was on September 25, 1995 that the first issue of THE DARK REPORT was published. The laboratory industry was in financial turmoil. There was widespread consolidation in both the commercial lab sector and among hospital laboratories. Reimbursement for lab testing services w…
Payer Consolidation: United Buys Pacificare
CEO SUMMARY: For the second time in nine months, a health insurer company has spent around $9 billion to grow by acquisition. This time, it is UnitedHealth Group purchasing PacifiCare Health Systems. These types of deals impact local labs and pathology groups as existing contracts expire….
DOJ Sends Subpoenas To Quest & LabCorp
CEO SUMMARY: In Newark, New Jersey, the Office of the U.S. Attorney served subpoenas to each of the two blood brothers, seeking information on “capitation and risk-sharing arrangements with government and private payers for the years 1993 through 1999.” At this point, little is known …
Medicare Managed Care Is Poised to Double in Size
MEDICARE MANAGED CARE PLANS are poised to double in size. This can be both a threat and an opportunity for regional laboratories. The Center for Medicare and Medicaid Services (CMS) recently reported that it had received 141 applications for new local Medicare Advantage plans for 20…
Doctor “Pay to Perform” Launched by Medicare
CEO SUMMARY: Medicare’s just-announced physician “pay-for-performance” program will be a positive development for laboratories and pathologists. One consequence is that physicians will be measured on how effectively they use recommended lab tests in certain areas of care. This will …
Florida Medicaid Contract Is On-Again, Off-Again
CEO SUMMARY: Start with a flawed idea: Medicaid lab testing costs in Florida can be cut by awarding an exclusive statewide contract to one laboratory company. Compound that bad idea by designing a contract awards process that guarantees the state will pay twice for a number of tests while…
TriPath Imaging and Ventana Sign Major Development Pact
IF THE NEW BUSINESS AGREEMENT between Ventana Medical Systems, Inc. and TriPath Imaging, Inc. is successful, then the anatomic pathology laboratory may have a very different look in future years. Last week, Ventana Medical Systems, Inc. announced a …
Price Discount Practices May Prove Troublesome
CEO SUMMARY: Some laboratories continue to offer deeply-discounted prices to the nation’s largest managed care plans as a way to maintain provider status and keep market share. In one case, these deep discounts surprised a long-time lab executive, who decided to share the information, a…
CURRENT ISSUE
Volume XXXII, No. 6 – April 21, 2025
Now that a federal judge has vacated the FDA’s LDT rule, The Dark Report analyzes the judgement and notes the various steps the FDA could take in response. Also, lab testing at pharmacies is proving to be less successful than was once anticipated.
See the full table of contentsHow Much Laboratory Business Intelligence Have You Missed?
Lab leaders rely on THE DARK REPORT for actionable intelligence on important developments in the business of laboratory testing. Maximize the money you make-and the money you keep! Best of all, it is released every three weeks!
Sign up for TDR Insider
Join the Dark Intelligence Group FREE and get TDR Insider FREE!
Never miss a single update on the issues that matter to you and your business.