Good Information Drives Good Decisions

RECENT DEVELOPMENTS DEMONSTRATE that a long-standing business adage remains as true today as when many of us first learned it decades ago.

I am referring to the pithy piece of management wisdom often written as: “You need good information to make good decisions.” It is a trait held in common by well-run corporations and effective executives. It makes the point that the time spent accumulating accurate data and metrics on an issue creates the foundation for smart and informed decision-making.

What brings this to mind today is the news, presented on pages 10 through 12, that the lab industry has finally funded a study of national and local pricing for clinical laboratory tests that compares the prices Medicare Part B pays for lab tests with the price that private insurers pay. Commissioned by the American Clinical Laboratory Association (ACLA), the research was done by Avalere Health of Washington, D.C. and used a claims database involving 56 million Americans that contained 2013 pricing for clinical laboratory testing.

Many of you probably ascribe to the popular wisdom that a significant number of private health insurers pay less—sometimes significantly less— than Medicare Part B. Researchers at Avalere determined that the popular wisdom is wrong. With the exception of certain regions and certain tests, Medicare Part B actually pays less than private payers for clinical laboratory tests. You can find a summary of the report on the ACLA website.

Of course, the devil is in the details. ACLA has released a summary of the finding. I, for one, would like to see more details about the study, its methodology, and how researchers factored in the variety of deeply-discounted pricing arrangements that are known to exist between the largest health insurance companies and the national lab companies.

Certainly it is time that the clinical laboratory industry paid to have credible and detailed studies performed about the actual prices that Medicare Part B pays for clinical lab tests and compares those to the prices paid by the private payers that operate in every region of the nation. The lack of good information has meant that our legislators in Congress and the administrators of the Medicare program have not had accurate and complete knowledge upon which to make their decisions when it comes to establishing prices for the Part B clinical laboratory testing fee schedule.