Speakers Predict Testing Growth Despite Major Reimbursement Cuts

January 27, 2017

6 Themes From HIDA’s Laboratory & Diagnostics Market Conference

Alexandria, Va. – Diagnostic testing is more important than ever as healthcare moves toward value-based payment, according to speakers at HIDA’s recent Laboratory & Diagnostics Market Conference in Coral Gables, Florida.

Here are six trend outlooks expressed by leaders at the event:

1. The power of lab testing to reduce downstream costs has never been greater. Speakers pointed to examples such as helping physicians appropriately use HbA1C testing to reduce complications and hospitalizations for diabetic patients, testing for medication adherence, and testing for opioid use. “Opioid overdoses kill more people than car accidents, and we have found a 40% discrepancy gap between what doctors think patients are taking and what they are actually taking,” reported Ran Whitehead, President & CEO of PeaceHealth Labs.
   
   “Downstream impact counts more than immediate impact,” added Brian Jackson, MD, ARUP Laboratories. Jackson noted that even though molecular testing for enterovirus is expensive, for example, the test is cost-effective. In the long run, the test saves money since it can be used to rule out meningitis and help avoid expensive hospitalizations.
2. Value-based reimbursement will lead to more careful test utilization. According to Robert Michel, publisher of The Dark Report, “Payers are starting to focus on unnecessary procedures, and that includes a lot of lab testing.” Lab tests by themselves “have no intrinsic value unless they affect an action by the clinician,” noted Brian Jackson, MD.
3. However, that same emphasis on value could increase demand for point-of-care (POC) testing. One forecast predicts the use of POC tests will triple over the next eight years because of the emphasis on proactive care, total costs, and patient satisfaction, Robert Michel reported. “Patient expectations are not met by a lab system that collects a sample on Tuesday and provides results to the patient on Wednesday or Thursday,” he said.
4. Reimbursements for lab tests will drop dramatically. PAMA implementation will result in fee schedule cuts of up to 20%, Ran Whitehead predicted. Robert Michel added that the program is projected to reduce spending by $5.5 billion over 10 years, including $400 million in 2018.
5. Eventually lab fee schedule may be completely replaced by bundled payment or capitation models. Brian Jackson, MD predicted this shift could result in doctors ordering tests because they need the information to make specific patient care decisions, rather than because they want the information to confirm a decision or provide an additional confidence measure. Michel noted new payment models that don’t reward volume mean more opportunity for smaller labs.
6. MACRA will have a broad impact. This new physician payment program has important implications for customers, speakers said. “Every office you sell to is going to be affected by MACRA, and most are still clueless on what the impact is going to be. You can be ahead of your customers and help prepare them for what’s down the road,” concluded Robert Michel.

For more information on these and upcoming HIDA Market Conferences, please visit www.HIDA.org/Events.