Three Major Challenges Facing POLs -- Two Down,
One To Go
(Part 1 of a 2-part series)
by Dr. Sheila Dunn
Reprinted with Permission from Washington G-2 Reports,
Physician Office Testing, December 1996
First Hurdle Down
Despite initial fear and frustration, physician office laboratories
(POLs) that chose to keep operating under the CLIA regulatory program
have fared well. Most certified labs now admit that CLIA quality standards
and inspections are reasonable. Moreover, CLIA fees account for only
a few cents per test and the number of waivers for tests commonly performed
in POLs has been growing steadily (Physicians Office Testing, Aug.
1996, p.4). One down, two to go!
Second Hurdle Adds Hassles, But...
This year, Medicare began discouraging doctors from ordering large test
panels by either downcoding to lower payment or denying payment altogether.
Like all other labs, POLs must comply with more stringent medical necessity
documentation rules for automated test profiles (CPT 80002-80019); plus,
many carriers have limited coverage of many individual tests to specific
diagnosis codes. This hassle exists whether tests are run in-office
or at a referral lab. Still, Medicare reimbursement of lab tests remains
an important part of your revenue mix. Two down, one to go!
The Final Hurdle: Managed Care
POLs across the country report that managed care organizations (MCOs)
either slash typical test fees, or worse, steer lab services to "preferred
labs" which accept rock-bottom capitated rates in exchange for
How can you surmount this hurdle? One phone call to the
MCO medical director or provider representative will do the trick, right?
Wrong. To win this battle, you must marshal the facts, state your case
in a way the MCO can understand, be persistent and don't expect to succeed
on your first try.
The near-patient (or point-of-care) testing your POL
offers has unique value in the healthcare system and to MCOs, but managed
care officials need to be persuaded of this. Here are key arguments
you can use to prepare your case prior to MCO contract negotiations.
"Set In Stone"?
MCOs often imply that their contract terms are "Take it or leave
it!" A good example is an April 25 Aetna memo to mid-Atlantic providers
regarding its "preferred vendor" policy. It exempts only four
tests (CBC with differential, glucose, quick strep, urinalysis) performed
by primary care doctors on a stat basis: "Pursuant to your contract,
you have 30 days to advise [us], in writing, if you object...and wish
to pursue termination of your contract."
Most providers have, up to now, accepted MCO contract
terms without question, but physician practices that do will see their
POLs erode in direct proportion to their managed care payer mix. Don't
be intimidated--MCO restrictions on POL testing can be negotiated (see
box, p. 3)!
The Worth Of Near-Patient Testing
Getting test results during patients' office visits has noticeably improved
healthcare. Patients and front-line providers need no convincing; in
fact, in support of this value, many POLs offer labor-intensive services
like weekend or evening coverage and stat testing (a good point to make
Near-patient testing meets key goals sought by MCOs and
the rest of the healthcare system: it lowers costs and increases quality
of care, as evidenced by improved patient outcomes and better patient
satisfaction. Industries across America know that in today's competitive
environment, the key to success is excellent customer service. Healthcare
is no exception. Patients may be disappointed with the decline in services
mandated by an MCO. Patients who once enjoyed the convenience of on-the-spot
test results in your office won't look kindly on a plan that requires
them to make an extra trip to a drawing station, another lab or a pharmacy!
If you doubt that testing in ambulatory care settings
will be encouraged (and reimbursed) in the near future, consider that
in most hospital labs, a significant number of tests have been relocated
to patient rooms, emergency rooms and intensive care units. Initially
skeptical, hospital-based laboratorians now agree that certain testing
at the point of care provides faster turnaround time which expedites
treatment, reduces patient morbidity, cuts length of stay and lowers
total cost of care per patient.
Why then aren't managed care contracts being written
with provisions for office lab payments? Because the lab community has
yet to convince MCOs of the worth of near-patient testing. Put yourself
in their shoes and assume that, as the MCO contract negotiator, you
don't know the difference between a CBC and a glucose test. If shown
two fee schedules, one from a mega-lab bidding $2 and $1 respectively,
and one from a POL for $12 and $6 respectively, you'd likely pick the
seemingly less expensive bid.
While price is a crucial element in MCO contract awards,
it's not the only one. Along with economic benefits, managed care plans
also realize that in competing for members and meeting quality standards,
they must assure key clinical and psychosocial benefits.
Accordingly, you can point out the following:
Clinical benefits: On-site
test results are used as an extension of the physical exam to more confidently
classify patients as "well" or "sick." For patients,
seeing, discussing and understanding these results helps motivate them
to comply with a treatment plan. For many tests, when results are delayed,
the consequences will undoubtedly be misdiagnoses, improper therapy
and increased patient morbidity.
Near-patient testing virtually eliminates preanalytic
errors for tests requiring fresh specimens for accurate results (see
above table). Specimen loss or mix-up can be a problem with some referral
labs. Finally, errors may arise when physicians have difficulty interpreting
different reference ranges from a variety of referral labs.
Psychosocial benefits: Patient
anxiety is allayed by eliminating 2-3 days of uncertainty about test
results. Productivity at home and at work is enhanced if the person
is treated during the office visit and his/her clinical condition improves.
Travel to specimen drawing stations is a terrible inconvenience for
Economic benefits: Though
cost per test at the point of care is higher than for mega-labs, overall
savings in total cost per patient episode often far exceed the initial
expense. Because of prolonged turnaround time, some patients will receive
inappropriate or delayed therapy, adding up to additional costs for
repeat visits or visits to other providers or emergency treatment facilities.
POL testing saves money by maximizing physicians' efficiency.
Lab results that appear 1-2 days after the patient has left the office
require providers to recall why the tests were ordered, check results
against prior ones, decide how to act on the results, and possibly,
discuss the results with the patient. Notifying patients of all test
results is now mandatory for most managed care plans. The 10-15 minutes
per patient this takes a physician is costly for a practice.
In-office testing streamlines workflow for the office
staff, eliminating the need to log, package, track and post results
for referred tests, as well as the possibility of error that accompanies
each of these steps. Not to mention the hassles associated with up to
10 specimen boxes for each particular health plan!
Time lost from work for health reasons, whether due to
less than optimal patient outcomes or from playing telephone tag to
get test results, is beginning to draw attention from major MCO customers--namely,
employers. As a healthcare information manager for Massachusetts-based
phone giant GTE observed: "We're getting smart. We realize that
value costs less. GTE spends $600 million yearly on direct healthcare
costs. But lost time from work and lower productivity because of health
problems costs much more, well over $1 billion a year."
In today's volatile healthcare environment, POL managers
must learn myriad new skills, one of which is managed care contract
negotiations. The status quo is no longer an option!
>> Go to Part 2: Negotiating With Managed Care: Ready, Aim, Fire!