Better management of routine lab testing can help reduce costs for insurers
Focus on routine testing is the natural next step in payors’ attempts to control health care spending and lab-spending costs.
Reducing the cost of routine lab testing, which account for 90% of overall test expenses, shows promise in helping reduce costs for insurers.
“I think we have known that laboratory testing has been a driver of costs for some time, and exactly the best way to manage that large space with a lot of transactions, at typically a lower average cost than some of our other claims that come in, can be quite problematic,” said Rahul Singal, chief medical officer for Avalon Healthcare Solutions. “We can’t take time and review each and every request for a thorough medical necessity evaluation, yet we know that [lab testing] is not always being applied in a way that leads to better health-care outcomes.”
Related: Most common sources of low-value care: Laboratory testing and prescription drugs
A substantial percentage of lab tests are ordered inappropriately, according to a 2013 analysis. Roughly 21% of lab test orders in that study represented overutilization, meaning they didn’t add information that was useful to patient care. Health systems such as the Cleveland Clinic years ago began implementing test utilization management systems, and more recently a number of outside vendors have moved into the business, with many of them targeting their services to health systems to help them reduce unnecessary lab spending.
One area where Avalon saw a large amount of improper test utilization was when doctors might order a full test panel even though only one or two tests in the panel would be relevant to their patient’s condition. Patient-requested tests are another major source of overutilization. “Many time physicians just order tests because a patient wants them, like a vitamin D or a testosterone for men,” Singal said. “It’s not going to get paid for. It’s not covered. It’s not in the scientific policy.”
Duplicative testing is another major problem, which often stems from poor interoperability between medical record systems, leading to situations where one provider might not be aware that another provider recently ordered a particular test for their patient.
Mick Raich, president of revenue cycle management consulting for Lighthouse Lab Services, said the focus on routine testing is the natural next step in payors’ attempts to control health care spending and lab-spending costs.
“They’re now looking at the small dollar amounts and saying, `listen, the volume is such here, if we decrease costs by 1%, that equals X amount of dollars back to the insurer,’” he said. “It just took a while to get to the small-dollar clinical lab.”
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