New Laboratory Industry Trend: Labs Must Prepare for End of Fee-for-Service Model

Speakers at Executive War College last week emphasized need for labs to deliver more value

CEO SUMMARY: One stark difference between the presentations delivered at last year’s Executive War College and this year’s presentations in New Orleans last week was near-unanimous recognition that the era of fee-for-service payment is soon to end! Speaker after speaker urged the audience to accept this marketplace reality in laboratory industry trends. The common recommendation was for lab administrators and pathologists to take immediate steps to help their laboratories respond to this development in effective ways.

IF THERE WAS ONE UNIFYING THEME to most of the presentations delivered at this year’s Executive War College on Lab and Pathology Management, it was the need for clinical labs of all sizes and types to be more nimble and responsive to the changing needs of physicians, patients, and payers.

There was a specific reason why so many knowledgeable speakers addressed this laboratory industry trend. It is the recognition that the era of fee-for-service reimbursement is coming to an end—and fast! This was an important element in the keynote presentation delivered by Robert L. Michel, Editor-in- Chief of THE DARK REPORT and Founder of the Executive War College who opened the program on Tuesday, May 5.

In his remarks, Michel reminded the audience that the federal Department of Health and Human Services (HHS) was accelerating the Medicare program’s transition away from the traditional payment model and toward other forms of reimbursement. “In its press conference on January 26, HHS officials declared that the goal was to tie 30% of existing payments to ‘quality or value’ via such delivery models as accountable care organizations and bundled payments,” noted Michel.

“This will happen with unprecedented speed,” he emphasized. “HHS says it wants to reach this 30% conversion by the end of 2016! That’s just 19 months from now. It also wants to raise that 30% to 50% by the end of 2018.

“The story doesn’t end here,” continued Michel.



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