Employers, Payers Are Challenging ‘High’ Test Prices

ONE NATIONAL TREND IN CLINICAL LABORATORY TESTING that has not yet gotten wide play outside the pages of THE DARK REPORT is the emergence of what might be termed a “war” by national and regional health insurers against the “higher” prices often charged by hospital laboratories.

This is a key strategic shift in the managed care contracting marketplace. This war has the potential to seriously undermine the financial underpinnings of hos- pital laboratories, particularly those hospitals and health systems which have flourishing laboratory outreach programs. Similarly, pathology groups that are hospital-based are equally at risk, since they often market their testing services in tandem with the laboratory of their parent hospital or health system.

The “war” metaphor aptly characterizes what some knowledgeable lab experts believe is the motivation behind important changes in how labs can bill for services provided to patients covered by the BlueCard program. These experts believe the primary goal of the BlueCard changes is to exclude local laboratories as providers to the greatest extent possible and, at the same time, significantly reduce the price at which these lab tests are reimbursed.

The details about the BlueCard changes that we provide on pages 3-9 should be evaluated against the assumption—noted above—that the motive behind the changes is to restrict the access of local labs to BlueCard patients while reducing the amount of reimbursement paid for lab testing to the greatest extent possible, using in-network vs. out-of-network status as one criteria.

At issue in this payer war is the fact that many hospital laboratories bill for lab tests using their hospital inpatient price schedule. This has caught the attention of employers, particularly those employers who self-insure. They notice that the price charged by a hospital laboratory (that is using its inpatient fee schedule) can be much higher than the Medicare Part B price. Those prices are also substantially higher than the deeply-discounted prices the employer may be paying to one or both of the large national lab companies.

At a time when the increased annual cost of health benefits is a burden on employers, it should be no surprise that they are becoming aggressive at challeng- ing those lab providers they consider to be “high-priced” when compared to labs offering them rock-bottom low lab test prices. For this reason, hospital lab administrators should heed the warning that it may be timely to revisit their lab test pricing strategy and take proactive steps to offer more competitive prices.