CEO SUMMARY: To develop new sources of revenue to offset declining fee-for-service payments, TriCore Reference Labs is collaborating with health insurers in novel ways to improve patient outcomes and lower healthcare costs. To achieve this, TriCore brings together data from lab tests, EHRs, patient demographics, and geography. Analytical tools allow it to assess population health while identifying specific patients with undiagnosed diseases and care gaps. In turn, insurers are paying TriCore for this information.
PART ONE OF A SERIES
IN RECENT YEARS, clinical laboratory leaders have heard plenty about how labs can monetize their clinical laboratory information by using it to help health insurers manage the members they serve. Until now, this enticing idea has been little more than a concept.
Today, however, health insurers are paying some labs for supplying insights—based on their clinical lab test data—that are used to add value for payers and the physicians in their provider networks. One of the nation’s lab pioneers in this trend is TriCore Reference Laboratories of Albuquerque, N.M.
At the Executive War College in New Orleans earlier this month, Rick VanNess, TriCore’s Director of Product Management, gave a presentation in which he explained how TriCore has developed a method that helps health insurers in New Mexico improve patient care, fill gaps in care, and manage population health. The title of his remarks was, “Your Lab Can Do Analytics with Your Payers Today: How We Used Excel Spreadsheets to Engage Health Insurers and Launch Collaborative Care Initiatives.”
Over the past three years, health insurers have expressed interest in paying TriCore for these services and, at some point, may be willing to share the savings with the lab as they collaborate to achieve value-based care, VanNess said. The analytics TriCore provides would generate new sources of revenue for TriCore and would come in addition to the existing fee-for-service payments the clinical laboratory gets for the testing it does due to the additional value the insurers receive.
TriCore is believed to be one of the earliest clinical labs to collaborate with health insurers in ways that meet the clinical lab 2.0 business model. The lab’s collaboration with insurers makes its experience useful to other clinical laboratories seeking to develop new sources of revenue while pursuing value-based care. These new sources of revenue can be used by labs to offset the ongoing cuts to fee-for-service lab prices.
The basis for creating new value and revenue for the lab under the clinical lab 2.0 model is how it contributes to gains in quality measures, improved patient care, and reductions in the overall cost of care.
Conversations with Payers
“This is a very different conversation for our clinical lab to have with health insurers in New Mexico,” VanNess explained. “It means we must come to the negotiating table prepared to document what we know about the payer’s beneficiaries, where gaps in care exist, and where insurers and physicians can use our actionable information to improve outcomes and quality measures.”
The key to this story is a three-step process TriCore used in its negotiations with health insurers. The goal was to convince health insurers that TriCore could contribute to the twin goals of improving health outcomes and estimating the resulting reductions in costs; then persuade those same insurers to pay for those services based on the estimated savings. TriCore’s three-step process involved:
- Collecting, analyzing, and presenting actionable insights from lab test data that health insurers could use to improve quality measures, thus enabling TriCore to receive compensation on a per member per month (PMPM) fee in exchange for providing such valuable information.
- Correlating how much the insurers benefit from increased quality score payments because of helping physicians and other providers avoid adverse health outcomes. For this part of the discussion, VanNess said TriCore’s estimates about improvements in patient outcomes were conservative enough that he was confident TriCore could win the health insurers’ trust.
- Asking insurers to compensate TriCore with a portion of the estimated savings as a result of getting the information they need to improve care in measurable ways, while recognizing the clinical laboratory’s role in adding value to the delivery of patient care.
TriCore’s Proposal Accepted
Some of New Mexico’s largest health insurers reacted positively to TriCore’s PMPM proposal and enabled the lab to augment care coordination processes delivered to their members.
“This was a crucial first step in developing our value proposition with each payer,” VanNess recalled. “And, the fee we offered to provide this service to the health insurer was accepted from the start of these contract negotiations.”
Improving care and lowering costs are two of the most important goals health insurers pursue every day. Those twin goals are almost akin to the Holy Grail of healthcare. “In one collaboration, our actionable information contributed to a 25% increase in the insurers’ efficiencies and more than a 40% reduction in adverse outcomes, such as preterm deliveries,” VanNess said.
In his presentation, VanNess described TriCore’s challenges in learning what insurers needed and how his lab then brought together the different types of data it would deliver to payers that would give their providers insights they could use to improve care.
What to Expect from Series on Clin Lab 2.0
EDITOR’S NOTE: This special series on the clinical lab 2.0 business model is designed to give clinical laboratory executives and pathologists an inside perspective on how TriCore Reference Laboratories in Albuquerque, N.M., is transitioning to this new arrangement. To explain how TriCore generates new streams of revenue by working with health insurers, the editors have organized this series into several installments.
In this first installment, we address the overall strategy and the steps TriCore took to get the attention of health insurers. Its negotiations with insurers led to collaborations in which TriCore could provide clinical evidence from lab test data. In return, TriCore has asked insurers to pay for that information.
A future story in this series will deal with the process TriCore used to assemble data from multiple sources to identify opportunities to help payers improve patient care and reduce healthcare costs.
Additional stories will provide case studies on how the lab company has collaborated with payers to help physicians and other providers manage the care of patients with a variety of health conditions and disease states.
Simple Excel Spreadsheets
“We started with basic spreadsheets to engage care coordinators,” he said. “Using this approach to product development allowed us to identify the value of the data we had to augment their methods and to change their perception of the clinical laboratory.”
TriCore already had analytics on a substantial proportion of New Mexico’s population. “We knew we needed evidence before asking the insurer to pay TriCore for the data we proposed to deliver,” he added. “And each care coordinator we interacted with verified the accuracy, timeliness, and overall need. At that point, we had a tangible story with data that we could present to insurance executives.”
In the coming weeks, TriCore expects to name a health insurer that is willing to pay for its data and analytics. That approval is pending at the same time that TriCore is preparing to submit an article for publication in a peer-reviewed health journal about the results it achieved from prenatal care coordination. Over the course of the two-day Executive War College, several speakers talked about how labs need to develop alternative payment models and set a dollar value on the data they can share with health insurers.
But unlike those speakers, TriCore is already doing so. “We’ve done that at TriCore, and now certain health insurers are willing to pay our lab differently and invite us to the negotiation table during value-based care arrangements,” said Michael J. Crossey, MD PhD, TriCore’s Chief Executive Officer. “It’s remarkable the shift in perception that we’ve created. TriCore’s data are no longer considered a commodity by health insurers.”
In other words, TriCore is helping health insurers and physicians to achieve the triple aim, as the Institute for Healthcare Improvement defines the term:
- Improve the patient experience of care (including quality and satisfaction),
- Improve the health of populations, and
- Reduce the per capita cost of care.
A focus on the triple aim is an important point for lab administrators and pathologists, because on July 1, UnitedHealthcare will launch a new lab network with seven preferred labs. UHC is asking those labs to help physicians and other providers achieve the triple aim. (See UnitedHealthcare Sets July 1 Launch for New Preferred Laboratory Network,” TDR, April 29, 2019.)
Now that TriCore has as much as three years of clinical outcomes data from its collaboration with some health insurers in New Mexico, other payers are inviting TriCore to discuss similar collaborations and submit proposals.
TriCore’s Rick VanNess: ‘Any Lab Can Do This’
IT DOESN’T REQUIRE MUCH FOR ANY CLINICAL LABORATORY TO DEVELOP an added value lab testing service for a health insurer. During his presentation at the Executive War College, Rick VanNess, Director of Product Management at TriCore Reference Laboratories in Albuquerque, N.M, offered these basic steps to engage a health insurance plan and work with it to create a collaboration that improves patient outcomes while helping the health insurer reduce healthcare costs. TriCore is a founding member of Project Santa Fe.
Steps to Creating Added Value for Health Insurers
- Identify your market’s payer contracts, incentives, and patient needs.
- Start a conversation with your health insurance companies by asking them:
- a) What are your pain points?
- b) What if you could have HEDIS data in near real-time?
- c) Request eligibility file (or perform a 270/272 eligibility bounce).
- With the file, create a HEDIS report while reviewing health insurer’s population.
- a) Identify number of diabetics, location, care-gaps, risk.
- b) Return with a live demonstration of their data and offer to do a “free study.”
- Present results of study, ROI, and the price your lab wants for providing this actionable information.
More Payers Now Interested
“In the conversations we are having with different payers, these arrangements will be that TriCore will be paid in two ways for adding value,” VanNess explained. “First, the insurer will pay our lab for traditional laboratory testing. Second, they will provide a per-member-per-month payment for these insights and include TriCore in the risk-sharing and gain-sharing models these insurers have.”
In this way, TriCore is bridging the gap between the volume-based fee-for-service payment model that dominates healthcare today and the value-based model being developed nationwide. It can bridge that gap because it will earn a separate source of revenue in exchange for offering clinical insights based on the lab test data it provides to health insurers.
“Success as a clinical lab 2.0 organization requires our lab team to be more involved in understanding why each particular patient needs the test the physician is ordering and how the test result will affect the patient’s outcome,” Crossey said.
Specific Patient Outcomes
“We want to know how our lab can tie that specific lab test result to an actual outcome,” he added. “This allows us to produce actionable interpretive results that physicians and other providers can use to coordinate care for their patients.
“Right now, at TriCore, we are measuring the effect of producing actionable results in real time,” he added. “Payers recognize that we no longer simply sell tests.”
Under the direction of David G. Grenache, PhD, TriCore’s Chief Scientific Officer, TriCore has a division whose sole mission is to reposition the clinical laboratory in healthcare by developing actionable insights. “We have employed clinical pharmacists who help developers create algorithms,” he said. “Then they work with payers and providers to measure better outcomes and increase quality scores.
“For TriCore—and for any lab—this is an entirely new product that needs to be marketed in a new way,” he explained. “But doing so can definitely change how consumers view the clinical laboratory.” Grenache also is the President-elect of the American Association for Clinical Chemistry.
Each year, TriCore learned lessons in how to bring together different sets of data. Besides its lab test data, TriCore is getting patient health records, diagnosis codes, and demographic and geographic data. After starting with Excel spreadsheets, it later acquired analytics software from the Rhodes Group that allows it to analyze and present data in many more useful ways.
Better Analytics than Payers
“Today, TriCore has better analytics than the insurers have,” VanNess said. “We just need the chance to prove it to them. It took several years for us to convince the first health insurers. However, now we are racing to keep up their demand for new insights.”
While VanNess did not want to name its health insurance customers, he did say that one insurer is a fully-integrated health system. It also is one of the largest employers in the state and serves a significant percentage of the state’s residents. It manages a physician group with more than 100 clinics and nine hospitals and provides health insurance to more than 25,000 state residents. Also, it’s one of three health insurers serving the state’s Medicaid population.
“Clearly, they are a gorilla in our region,” VanNess said. “When our team looks at any potential customer, we must understand their pain points. We ask ourselves: How do we approach them in a new fashion with a new product to help them eliminate those pain points?
“For its electronic health record, this payer has a delivery-system-wide installation of an EMR,” he said. “That might be considered a disadvantage for us, but we immediately provided a useful fact: There are many beneficiaries not accessing your health system and the test-ordering location of these specific beneficiaries was the first piece of data we presented to them.
“New Mexico is a rural state and its population of two million people is diverse,” he added. “Because they live all over the state, there is a high likelihood not all of them are in the MCO’s system. Knowing that fact alone was an opportunity for us.”
Risk Stratification Method for Using Lab Data to Create Actionable Intelligence for Payers
CLINICAL LABORATORIES KNOW A GREAT DEAL ABOUT PATIENTS by simply looking at patients’ current and past test results. At TriCore Reference Laboratories, the goal was to add value to lab test data in ways that would allow a health insurer to assess a patient’s risk for different diseases and chronic conditions. The payer could also use this knowledge to work with patients to close care gaps and reduce risk in an appropriate and proactive manner.
That led TriCore to create the quadrant table below. It uses the colors of blue for elevated risk factors, green for optimal, yellow for care gaps, and red for elevated risk factors AND care gaps. It can identify specific patients that fall within each category and do that in near real-time for the insurer.
Claims Data Is Not Enough
There was another advantage that TriCore’s data provided, Grenache said. “Health insurers’ claims data doesn’t necessarily reflect the patient’s actual diagnosis,” he added. “The insurer may have lab orders for the glomerular filtration rate, for example. But that data does not necessarily include the calculations needed to show the difference between two eGFRs more than 90 days apart.”
Calculating the difference between two eGFRs is a critical piece of analysis that labs can provide. “This is an opportunity to enhance information the MCO has on diabetics who have chronic kidney disease,” Grenache explained.
Understand the Pain Points
“Of course, there also are more typical pain points that any healthcare system faces. Such as, how does the system provide prenatal care?” he asked. “That’s a huge problem in many states and it certainly is in New Mexico.
“In addition, hepatitis C is a big problem because there are complexities associated with not treating those patients,” Grenache continued. “These are just some of the pain points we know they have under their contractual obligations to provide care to Medicaid recipients.”
TriCore also knew that, with regard to prenatal care, New Mexico lagged behind other states in terms of timeliness of delivering prenatal care, Grenache said. “To provide that care in a timely manner, a health system needs to find women in the first trimester of their pregnancies and then alert the health system so that it can provide the prenatal care they need,” he explained.
Gaining such insights about insurers’ members affords TriCore an opportunity to approach payers about the value of clinical laboratory data. One way to gain these insights is to ask a health insurer to provide its eligibility file. Getting an insurer to provide this file is no easy task. Payers guard that data closely, VanNess said. Instead, they will want to know that a clinical lab has a significant purpose in requesting the file and a way to use that data to serve the health insurer’s needs.
“If our lab has the eligibility file, then we can extract the insurer’s members from TriCore’s immense patient registry to offer insights that could serve those patients better,” VanNess said. “One payer’s initial response was, ‘No thank you.’”
When he got this answer VanNess was prepared with a reply: “What if we identify the exact percentage of your health plan beneficiaries who are not accessing your health system?” he asked. “The problem is you don’t have that data because you’re just looking at what’s in your data.”
At that point, VanNess offered to provide the MCO with data on its patients from HEDIS, which is the Healthcare Effectiveness Data Information Set from the National Committee for Quality Assurance.
“We already provide HEDIS data to all of our customers,” he said. “Once we knew the insurer’s members, we could match our lab test data with the MCO’s eligibility file and change the conversation. Over 60% of their members don’t access their delivery system, which confirmed for us that we had a significant opportunity to enhance their care delivery processes.”
Eligibility Data Is Valuable
Getting the eligibility data was the key to starting TriCore’s three-step process. This makes it possible for the lab to then collect and analyze the data needed to demonstrate ways it could provide actionable information that health insurers could use to actually improve patient care.
“Once our lab has the eligibility data, we know who the insurer’s members are, where they live, and what health conditions they have,” VanNess said. “Possessing that information means that we will have a completely different conversation when we return for the next discussion because then we can start talking about improving patient outcomes.
“Right now, this MCO sends us their eligibility file every day,” he said. “Some insurers send us that file once a month. However, this MCO is more engaged and that allows our lab to match our data to the MCO’s data every day. Now we can look at this insurer’s hepatitis C rates and its pregnancy rates and, when we go back to them, we will have the background information we need to take the conversation to the next level,” he said.
This first installment on how labs can succeed with the clinical lab 2.0 business model will be followed by additional stories about how TriCore is working with health plans on specific diseases and chronic conditions.
Contact Rick VanNess at 505-938-8906 or Rick.VanNess@tricore.org.
Why a Clinical Lab Knows More about Patients with HCV than Health Insurers and Even Doctors
FOR MANY DISEASES AND CHRONIC CONDITIONS, A CLINICAL LABORATORY has test results from a variety of assays that provide a fuller picture of a patient’s condition than would come from a single lab test result. During his presentation at the Executive War College, Rick VanNess, Director of Product Management at TriCore Reference Laboratories used the example of hepatitis C (HCV) to make this point.
He showed the slide reproduced below. It identifies each type of lab test and its role in identifying different aspects of how an HCV infection could be active within a patient. Tricore, like other labs, can use these test results to identify patients who are undiagnosed for HCV, who may be undiagnosed for the other types of complications for the disease, or who have care gaps. This information is actionable by health insurers and the providers in their networks. This is a powerful way that a laboratory can add value for payers, helping them produce better patient outcomes while lowering the overall cost of care by a substantial amount. Health insurers will pay for this type of actionable information.