Market Price Data Sample From: Independent Clinical Labs

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

EDITOR: When XIFIN analyzed the actual private payer price data that its independent clinical laboratory clients would report to CMS under the PAMA market price reporting rule, why did it select the 20 tests listed in the table below?

WHITE: The goal was simple. Both CMS and the OIG have identified the small number of lab tests that make up the largest cost for lab testing in the Medicare Part B program. CMS officials regularly state that they intend to make cuts to those tests, which are typically the high-volume, highly-automated assays that make up a large proportion of every independent lab’s test volume.

EDITOR: What did your analysis of the actual data your client labs would submit to CMS tell you?

WHITE: When we looked at what private payers had paid independent labs for the 20 types of test, we determined that they were significantly lower prices. The weighted average was 19.6% less than the Medicare National Limit.

EDITOR: What types of lab clients does XIFIN have that are independent labs?

WHITE: Currently XIFIN has more than 200 lab clients and handles between 200 million and 300 million lab test claims per year. XIFIN has electronic interfaces with every health insurer in the United States. This is relevant because it means that XIFIN is capturing all the claims informa- tion electronically, in a form that allows us to do these types of analyses.

EDITOR: What is the range in size for XIFIN’s independent lab clients?

WHITE: We serve most of the nation’s largest independent labs. For some of the bigger lab clients, we handle only a portion of their claims. Collectively, we believe that the lab data that was part of the analysis shows a good mix of what CMS will see when all of the independent labs submit their full sets of market price data.

EDITOR: I’d like to drill down farther on that point. Since the nation’s largest independent labs—whether it’s the two biggest or the 10 biggest—perform such a substantial proportion of the total volume of test claims, do you believe that the actual claims data that XIFIN analyzed represents what CMS will see from the independent lab marketplace?

WHITE: We think that is correct. It shows that the private health insurers are paying a weighted average of 19.6% less than Medicare for this list of 20 tests. This is relevant when you look at the OIG report. The authors of the report say that “new payment rates for lab tests will be based on data provided by a projected 5% of labs; these labs received 69% of Medicare payments in 2015.”

EDITOR: Your point is that CMS will use this handful of very large labs—that have the economies of scale to offer a low price per test to payers—as the basis to reset the Medicare CLFS. Thus, every lab in the nation will be stuck with Medicare lab test prices that do not allow them—with their smaller volume and higher costs—to sur- vive. That would further concentrate market share held by the largest lab companies.

WHITE: That is certainly the common belief, but the mix of hospital labs in the data set will be the primary factor in the degree of the cuts. Many will be watching to see how those fee cuts affect the access Medicare patients have to lab testing in their communities.

Screenshot 2016-11-15 10.26.29

  • This private payer price data was gathered from XIFIN’s database, for payments between Jan. 1, 2016 and June 30, 2016.
  • Data comes from approximately 200 labs and between 200 million and 300 million 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 independent clinical laboratories, indicate that CMS would get price data for this group of tests that would show private payers pay labs a cumulative 19.6% less than the Medicare National Limit.

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