Market Price Data Sample from: Hospital Labs with NPI Numbers

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Here is the market price data for hospital labs with NPI numbers from XIFIN Inc. Lâle White, Founder and CEO of XIFIN, discusses the data with THE DARK REPORT.

EDITOR: The analysis XIFIN has done of hospital lab market price data will be of high interest, not just in the lab industry, but also among legislators and healthcare policy experts. That’s because your analysis uses a large set of data and this data presents the actual prices private payers paid to hospital labs from Jan. 1, 2016, through June 30, 2016.

WHITE: I agree. We have over 22 hospital labs as clients and most of them have quite large lab businesses.

EDITOR: Do all of these hospital labs have national provider identifiers (NPIs)?

WHITE: Yes, all of them do.

EDITOR: Your data set represents hospitals labs that are required to report their PAMA market data to CMS. What did your analysis reveal?

WHITE: When these hospital labs with NPIs report their data to CMS, it will show that they were paid a weighted average of 25.4% more than Medicare by private payers for that list of 20 tests.

EDITOR: Of the approximately 5,000 hospitals in the United States, how many hospital labs have their own NPI numbers?

WHITE: A cursory look at the NPI database indicates that probably only a couple of hundred hospital labs actually have NPIs. That being said, our subset probably represents less than 10% of the ones that have NPIs, but they’re among the biggest ones. What that means is that the volume of testing our hospital lab clients do each year probably makes up a higher percentage of the overall number of lab tests performed by hospital labs with NPIs.

EDITOR: This is useful information. If I were to apply Pareto’s Law (the 80/20 rule that says roughly 80% of the effects come from 20% of the causes) to your analysis, is it reasonable to assume that XIFIN’s hospital lab clients with NPIs, as 10% of the 200 hospital labs with NPIs, probably handle 50% of the lab test volume coming from this segment of the lab industry? That adds credibility to your determination that private payers pay these labs a weighted average of 25.6% than Medicare.

WHITE: Yes. And we don’t see the prices that private health insurers pay to those hospital labs that don’t have NPIs because they are not our clients. The PAMA final rule excludes those hospital labs from reporting.

EDITOR:  Here’s another assumption. Would it be reasonable to assume that private payers pay hospital labs more because they serve communities and regions where the larger national lab companies have few or no patient service centers to enable patient access?

WHITE: Yes, that is definitely a fair assumption. I would add that, even in communities where a major lab company has good coverage, bigger hospitals in that same city have payer contracts. So this is not just about patient access.

EDITOR: These are important insights. That’s because, since CMS issued the draft PAMA lab test market price reporting rule earlier this year, experts have intuited that hospital lab prices are significantly higher than the Medicare Part B clinical lab test fee schedule. XIFIN’s analysis of the market price data its clients will report to CMS demonstrates that this assumption is correct. In fact, Medicare already pays lower lab test prices than many private health insurers.

Screenshot 2016-11-15 10.58.26

  • This data was gathered from the lab clients of XIFIN, for payments between Jan.1  and June 30, 2016.
  • Data comes from more than 22 large hospital labs with NPI numbers and tens of millions of lab test claims.
  • Listed above are the top 20 tests for which the Medicare program spent the most money during 2015.
  • The table shows how the “private payer weighted average rate” compares to the Medicare National Limit for each test.
  • The variance, in dollars, and the percentage increase or decrease over the Medicare National Limit is shown in the far right column.
  • XIFIN’s calculations, based on real price data to be reported by hospital labs with NPI numbers, indicate that CMS would get price data for this group of tests that would show private payers pay labs a cumulative 25.6% more than the Medicare National Limit.

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