Clinical laboratories and pathology groups will soon find it important to make it easier for patients to price for medical laboratory tests
Value-based reimbursement is the new frontier for the American healthcare system. Surveys show that employers and insurers are actively pushing the healthcare marketplace to a value-based, competitive paradigm. This means providers—including pathology groups and clinical laboratories—will be asked to deliver greater transparency in both the price and quality of their clinical services.
The Shift to Value-based Reimbursement
In a poll conducted by Modern Healthcare (MH) this summer, 53% of 1,787 respondents said payers are already reimbursing providers based on value, instead of volume. An additional 10% of respondents expect to make the shift within a year.
This spring, the National Business Group on Health and Towers Watson (TW) surveyed 500 employers about changes to their health benefit programs for 2013.
If many employers and private health insurers have their way, patients will soon have more motivation to shop hospitals, physicians, and clinical laboratories by comparing prices and quality/outcomes data. For 2013, a significant proportion of employers payers and employers are developing initiatives to provide employees with price information to better equip them to purchase high-value healthcare services. (Image copyright TowersWatson.com)
According to a synopsis on NBGH’s website, employers are developing innovative strategies to drive value-based healthcare. One strategy is to provide incentives that motivate workers’ to select lower-cost providers. A second strategy is to help employees obtain high quality care.
The NBGH-TW survey showed that nearly one-third of the employers surveyed are considering ways to give workers unit price information on healthcare services in their plans for 2013. The aim is to encourage employees to comparison shop for best value.
“[Currently,] it’s not easy to get [healthcare price information] in a way that makes sense, in a way that is accurate,” observed Amanda Goltz, Senior Manager for the Pacific Business Group on Health (PBGH). PBGH is a healthcare buyer coalition. It periodically tests the marketplace. Its participants include Boeing Company, General Electric Company, and Target Corporation. Goltz is a comparison shopper for the coalition.
First movers include companies such as UnitedHealth Group. In June, the insurance giant launched a website for its beneficiaries. The website allows members to compare individual provider’s contracted rates for more than 100 common procedures, MH reported. Additionally, members can access information on the total cost and out-of-pocket costs for a variety of treatment alternatives.
Another survey, the Modern Healthcare 2011 Healthcare Purchasing Power Survey, showed that workers’ benefit plans continue to shift more of the healthcare financial burden to households. “[Healthcare costs are] eating away at the family standard of living,” observed Helen Darling in the MH story. Darling is President and CEO of NBGH.
Further, the NBGH-TW survey showed that workers’ healthcare costs are growing at a more rapid rate than the health benefit costs of employers. Workers’ healthcare costs increased 40% over a five-year period. This compared to a 34% increase for employers’ costs during the same period.
Employers Opting for More Price-Sensitive Benefit Plans
By reshaping their health benefit plans, employers hope to drive higher value and curb costs. Two strategies are under consideration that would encourage employees to be more price-sensitive in selecting providers. One strategy is to build benefits around lower-cost providers. The second strategy is to use “tiered coverage” for physicians.
According to the NBGH-TW survey, 19% of employers are planning to offer “tiered coverage” in 2013 plans. That’s up from 15% who are already doing so this year.
Health plans commonly use tiered coverage for pharmaceuticals, stated Darling in the MH story. Typically, there is more coverage for generic drugs and less coverage for brand-name medications.
What is different is that employers and insurers now want to apply the tiered coverage concept to physicians. The goal is to encourage patients to be more discriminating in the use of more expensive specialists and emergency room services. Among other things, it is hoped that this approach will increase appropriate use of primary care physicians.
Savvy pathologists and clinical laboratory managers will want to stay ahead of the value shopping trend. Medical laboratory leaders should develop ways to provide clear, objective price information to consumers. At a higher strategic level, laboratory executives may want to reconsider how they price tests and how they “sell” the value of their medical laboratory testing services to both physicians and patients.
—Pamela Scherer McLeod
Related Information:
Modern Healthcare 2011 Healthcare Purchasing Power Survey
HFMA’s Value Project, Phase 1: Values in Health Care: Current State and Future Directions
HFMA’s Value Project, Phase 2: Defining and Delivering Value
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