How Price Transparency Increased Lab’s Revenue

Gene testing company finds patients want to get estimate of costs before test is ordered

price transparency

CEO SUMMARY: In California, a gene testing firm is increasing satisfaction among patients and physicians with a tool that provides patients with an estimate of the anticipated cost—before the physician orders a test! By providing transparency about the cost of tests upfront, Counsyl of South San Francisco increased revenue collected from patients by 63%, while also improving its customer satisfaction scores. This innovative online cost estimator tool is an example of how labs can deliver services that complement their lab tests and help them move “from volume to value.”

BY DELIVERING AN INNOVATIVE SERVICE that better meets the expectations of patients and provides more value, one genetic testing lab company in California has seen a 63% increase in revenue collected from patients while increasing its Net Promoter Score (NPS) by 4% for customer satisfaction. NPS is a measure of satisfaction or enthusiasm among customers.

Earlier this year, Counsyl, Inc. , a clinical laboratory and technology company in South San Francisco, implemented an online system that allows patients—even during a consult with the physician—to check the costs of genetic tests before the physician orders the test. This cost estimator was designed to be a customerfriendly method of helping patients
understand how much they might pay, based on their health insurance coverage, and spare them any sticker shock months after the test is completed.

“Every lab is familiar with this problem,” stated Tom Schoenherr, Counsyl’s Chief Commercial Officer. “Not only are patients unaware of the exact cost of most molecular and genetic tests at the time of service, but it may then take up to six months before the typical patient learns precisely how much money he or she will be required to pay for their lab tests. This is why patients are often unprepared to pay their share of the lab test bill.”

Counsyl aims to do a better job of meeting or exceeding patient and physician expectations. “Not only is our upfront lab cost estimator tool patient-friendly, but it is also physician-friendly,” he emphasized. “Physicians are fatigued by the myriad new genetic tests arriving on the market. Moreover, each genetic testing laboratory seems to have different billing procedures.

Meeting patients’ Needs

“Physicians are tired of talking to patients about billing because it is something over which they have no control,” stated Schoenherr. “It was our belief that physicians would welcome a cost transparency program that meets the needs of patients and that was quick and easy for patients to use.”

Counsyl’s lab test pricing tool has been popular with both patients and physicians, as the company’s data show. “Since introducing the tool this spring, Counsyl, which performs thousands of patient samples per month, has over 50% of their volume running through this transparency program,” he said.

“Counsyl’s online cost estimator is designed to be easy for patients to access and use,” continued Schoenherr. “When a physician recommends our test, a patient can pull up the cost estimator on a mobile phone, provide basic insurance information, and get a clear sense of the anticipated cost.

“Counsyl’s price transparency tool gives patients an accurate price estimate of what they might pay out-of-pocket, based on their health benefit plan and how much of their deductible has been met,” Schoenherr explained. “Ideally, patients can learn their out-of-pocket costs before their sample even arrives at our lab.”

Positive patient response

Counsyl was pleasantly surprised by the response from patients who receive an estimate of their costs upfront, he added. “Contrary to the popular assumption that patients will cancel lab tests if they know their expenses upfront, we had just a 1.4% increase in the number of patients canceling their tests after the price transparency tool was available for them to use. Since launching the program, Counsyl has found that patients welcome the transparency and use it to plan ahead,” he said.

“One positive outcome from the introduction of the price transparency tool is that patients like it, and it helps strengthen our patient satisfaction scores,” observed Schoenherr. “We score a 4.9 out of 5 and those scores cover all our services, ranging from genetic counseling to the patients’ experience with our billing department.

“We also saw billing inquiries in our client service center drop by 11%, which we thought was significant,” he commented. “Previously patients would call to ask how much a test would cost and those calls are among the highest volume of calls made to the client service centers of labs across the country.

Reducing Calls To Lab

“If we could eliminate those calls, we believed that it would take a lot of work and frustration off our team, even as we help patients at the same time,” added Schoenherr.

At this time, Counsyl offers three gene screening panels:

  1. Family Prep Screen, which can detect more than 100 inherited conditions passed from parent to child;
  2. Informed Pregnancy Screen, a cell-free DNA screen that detects chromosomal conditions, such as Down Syndrome and Turner Syndrome; and,
  3. Inherited Cancer Screen, which analyzes a patient’s DNA for more than 20 genes associated with an increased risk of developing certain cancers.

“We have a clinical advantage in that we consider our genetic screens to be top notch,” noted Schoenherr. “Further, because Counsyl is in-network with all the big health insurance companies nationwide, we also have a very competitive price point so that patients with insurance pay, on average, about $150 to $300 for our tests—depending on their benefits and coverage.

“We also provide on-demand genetic counseling to patients, a service that is unique to our lab,” he commented. (See sidebar on this page.)

To Be Patient- and Payer-Friendly, Counsyl Provides Genetic Counseling, Video Tutorials

SOME HEALTH INSURERS REQUIRE that a patient receive genetic counseling before approval for certain genetic tests. But even when insurers do not require genetic counseling, patients may need genetic counseling advice to make an informed decision about testing and understand their results, stated Tom Schoenherr, Chief Commercial Officer for Counsyl in South San Francisco.

“As an example, for the genes that are part of our Inherited Cancer Screen, at least one national payer requires pre-test counseling through a third-party genetic counselor before they will authorize the test,” he said. “In those cases, the counselor is usually recommended by the patient’s physician. But patients also need help understanding their genetic test results.

“That is why Counsyl has a series of educational videos,” noted Schoenherr. “Once the results of the genetic screen are ready, we can have patients view a tutorial or educational video that is specific to their results.

“While viewing the video, a patient can click an option to get an on-demand genetic counselor on the phone in less than five minutes,” commented Schoenherr. “Patients can also set up a telephone appointment with a genetic counselor if that works better for them. “For patients who want on-demand counseling, Counsyl makes genetic counselors available 12 hours a day five days a week by telephone,” he added. “Should the patient prefer to schedule an appointment for counseling, we have genetic counselors available at different times, including weekends.”

In this way, Counsyl adds value that differentiates it from competing labs. That’s because it is not always simple for a patient to get access to a genetic counselor.

“Nationwide, there are currently only about 4,000 genetic counselors,” said Shoenherr. “As recently as 2013, these genetic counselors could address only about 10% to 15% of the need across the country. So it can be challenging for patients to find and get an appointment with a genetic counselor. This is why we include that service for them as part of our screens.

“Currently there are 35 genetic counselors who work with us and they specialize in prenatal tests and inherited cancer tests,” he concluded. “We have enough counselors to meet current demand, but as volume increases, we may need to add more genetic counselors.”

Adding Value For physicians

“Another feature that adds value for our physicians is how we track this activity for them,” he stated. “Physicians know when the patient got the cost estimate and if the patient viewed the cost estimate. We also track when results are sent to the patient and if the patient reviewed those results.

“We know if and when the patient selects a genetic counselor, when the counseling session has been done, and when the counseling report is sent back to the physician,” added Schoenherr. “All of this information takes much of the workload off the physician’s plate.

“We can do this because Counsyl is a health technology and software organization that has a laboratory embedded within,” he stated. “Among our 400 employees, we have more than 100 engineers on staff. Over half of them are software engineers. That allows us to build sophisticated software programs—such as our cost estimator tool—that other labs typically would not invest the resources to create.

“It took a while to build this cost estimator tool and test it before we rolled it out at the end of the first quarter and the beginning of the second quarter this year,” he noted. “Currently about half of our lab volume is on this program and a about half our client clinics use it. We expect to have it in use for 100% of our volume by the end of the third quarter.

Need For Collateral Pieces

“One lesson we learned as we did pilot testing of our cost estimator tool was the need to have collateral materials that physicians could hand to their patients,” recalled Schoenherr. “Counsyl took that feedback seriously and has since created a postcard for physicians to hand to patients regarding billing inquiries.

“For us, the benefit of these materials was that patients had the details of how to use the online tool and how to contact us online or by phone,” he said. “In addition, our lab directly benefits in other ways.
“For example, early patient engagement on lab test costs has reduced the number of invoice inquiries and the average time to resolution,” concluded Schoenherr. “In fact, patients now use their phones to pay invoices and the time to payment with these patients is two to three weeks faster than with paper invoices.”

There is much that other clinical labs and pathology groups can learn from Counsyl’s experience with providing patients with up-front estimates of their costs for lab tests. In many ways, this is a radical idea, as the entire lab industry has a tradition of waiting until the health insurer settles the claim before engaging patients to collect the balance of the bill.

Managed Care Strategy Is to Be a Network Provider

BECAUSE BOTH HEALTH INSURERS AND PATIENTS with high-deductible health plans are concerned about the cost of expensive genetic tests, Counsyl has designed a pricing strategy to differentiate its genetic screens in the marketplace.

“We know that we are already about 50% to 90% less expensive than our competitors,” stated Tom Schoenherr, Chief Commercial Officer at Counsyl. “We bill at least 50% less than our competitors for similar lab tests. To serve uninsured patients, we can offer a low self-pay price that is accessible at a few hundred dollars.

“When insurers receive our claims, they reimburse us according to our contract with them,” he noted. “To make these genetic tests affordable, it was our goal to be in-network with the majority of the national health insurers.

“By getting into as many managed care networks as possible, we could offer a very competitive price point for our genetic screens,” added Schoenherr. “At this time, Counsyl holds managed care contracts that allow it to be an in-network benefit for approximately 80% of all the commercial lives in the United States.”

Accurate Metrics

For its part, Counsyl is making the effort to collect accurate metrics about how patients respond to the service of obtaining an estimate of what their out-of-pocket costs are at the time that these genetic tests are suggested by their physicians. To date, it is an impressive statistic that only 1.4% more patients declined to go forward with the testing, once the cost estimates were available. This demonstrates that a significant proportion of patients want to proceed with genetic tests their physicians deem useful. Moreover, it is interesting that these patients tell Counsyl that they appreciate the cost estimate because it allows them to make arrangements to pay their share of the bill.”

At a time when tens of millions of Americans are enrolled in high-deductible health plans and thus responsible for annual family deductibles of as much as $10,000, it is imperative that all labs have a strategy as to how they will successfully collect these funds from their patients.

Contact Shivani Nazareth at 917-409-7051 or shivani@counsyl.com.

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