Switching the U.S. healthcare system from the traditional fee-for-service model to value-based care is an enormous undertaking. It requires no less than changing how healthcare is thought of, delivered, measured, and paid for.
Cue the old saying about how long it takes to turn a supertanker. The VBC transition is such a huge task that it's important to take advantage of all reforms that will allow the goal to be accomplished more quickly and easily. Though often overlooked for broader and more visible initiatives, lab benefits management (LBM) is one way to accelerate the transition.
Consider how essential lab testing is to healthcare. According to the CDC, 14 billion clinical lab tests are performed annually in the U.S., making them the most utilized medical benefit. Lab results drive roughly 70% of clinical decisions. Despite its ubiquity and importance, as reported in “Current State of Laboratory Test Utilization Practices in the Clinical Laboratory” (pubmed.ncbi.nlm.nih.gov), lab spending is under-scrutinized, resulting in 20% to 30% of lab testing potentially being unnecessary.
And lab testing is expensive. In 2021, Medicare spent $9.3 billion on tests, a record 17% increase from the previous year. The fastest-growing sector of lab testing is genetic testing, which accounts for 10% of testing, but 30% of the cost. Biomarker legislation recently passed by states will only increase the volume and cost of testing.
Medicare and Medicaid have been leading the shift to VBC, but private health insurers are ramping up their efforts. In light of lab testing's cost, criticality, and ubiquity, it stands to reason that LBM must be part of their efforts. Let's see how it helps health plans achieve the three primary goals of VBC.
LBM Improves Care
With test results informing most clinical decisions, it's essential that providers order the right tests and be assured that they are clinically valid and performed correctly. An LBM partner guided by evidence-based medicine, independent review, and robust quality control measures can help plans ensure the utility of the tests.
This is particularly important for genetic testing. There are more than 175,000 tests on the market, and the number is growing at a rate of more than 10 new tests daily. Health plans and providers do not have the resources to determine the utility of each test and need the help of an LBM partner with the ability to independently evaluate them.
Also, by preventing the misuse and overuse of tests, LBM reduces the number of false-positive and false-negative results and subsequent harm to patients. Failure to order the right test affects over 30% of genetic lab orders, which might lead to an incorrect or missed diagnosis. For example, the mismatch of biomarker test results with the recommended oncology treatment, which in Non-Small Cell Lung Cancer (NSCLC), as reported in “Diagnosis, Testing, Treatment, and Outcomes Among Patients With Advanced Non - Small Cell Lung Cancer in the United States” (ncbi.nlm.nih.gov), has been found to be 44%, leads to lower quality outcomes and waste in drug spend.
LBM has benefits for population health, as well.
Advanced LBM incorporating analytics and machine learning can help health plans identify and stage members with chronic conditions. In a recent pilot program, two regional Blue Cross Blue Shield plans working with an LBM partner with access to claims data and lab result values from multiple tests were able to identify and stratify high-risk chronic kidney disease patients across all stages. Armed with this information, the plans were able to follow up with patients and their providers to get them treatment.
This analysis could be expanded to other diseases with the result that patients are identified and staged sooner so providers can treat them earlier. This will result in patients living longer, healthier lives and reducing their care costs.
LBM Controls Cost
Controlling and reducing runaway healthcare costs is another goal of VBC. While lab testing is a relatively small part of overall healthcare spending, it is growing, partially fueled by the rise in genetic testing and precision medicine.
Historically, lab testing has been prone to overcharging and misuse, such as labs adding unnecessary assays, partly due to a lack of oversight, poor coding and tracking, and inadequate regulation. The growth in genetic testing has worsened these problems. An LBM program with strict quality control, precise tracking, and clinically validated reviews can reduce the amount of fraud, waste, and abuse.
LBM also controls costs by routing testing to a network of trusted independent labs. Data shows that employer-based insurance typically pays three times more for clinical lab tests when billed by hospital outpatient departments compared to identical tests at physician offices and independent labs.
LBM Improves the Healthcare Experience
The third goal of VBC, improving the healthcare experience, is the hardest to measure, but no less important than the other two. Here, again, LBM can help.
By ensuring that lab testing is necessary, accurate, and applicable, an LBM partner can ease workloads on providers, insurers, and labs.
Providers, who are often caught in the middle between labs and plans, can proceed more confidently knowing that the tests they order are clinically validated and will be performed correctly. And prior authorization requests can be reduced or eliminated for qualified providers. For patients, quality control in testing means fewer errors, unnecessary tests, and procedures, which saves them money and improves their outcomes.
A proven LBM system reduces conflict between providers and plans, saving both parties time and money.
We've seen how LBM helps healthcare achieve the triple aims of value-based care: improving the healthcare experience, improving the health of individuals and populations, and reducing costs. As the healthcare supertanker continues turning toward VBC, LBM can provide a necessary thrust in the right direction.
Bill Kerr, MD, MBA, is the founder and CEO of Avalon Healthcare Solutions, the world's first lab insights company.
We Are Avalon
The world's first Lab Insights company. Lab testing is the gateway for appropriate diagnosis and treatment care planning. That's why if you want to find value-driven care success, you need to start at the source. We generate actionable lab-driven insights in real time to proactively ensure appropriate care and enhance clinical outcomes. This is more than data. It's actionable lab-driven insights. As a result, we all save. Not just dollars. But we save time, waste, and uncertainty. We also build momentum for value-driven care.
Together, we can shape the healthcare of tomorrow with the digitized lab values we have today.
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