Using Lab Data to Generate New Sources of Revenue

CEO SUMMARY: For pathologists and clinical, molecular, and genetic testing labs, appropriate reuses of lab data can provide a new source of revenue. Labs that serve as preferred providers of diagnostic testing data can help health systems, ordering physicians, pharmaceutical companies, and other organizations when they reuse lab test data to support evidence-based care and clinical utility for reimbursement and payer contracting. Reusing lab data also can help pharmaceutical companies evaluate medications for effectiveness, safety, and to support research.

IN RECENT YEARS forward-looking clinical laboratories, pathology groups, and molecular and genetic labs have recognized that the lab test data they produce from patients has a value that can be tapped in ways that generate new streams of revenue.

Finding new sources of revenue is essential if clinical laboratories are to remain financially viable and have the resources needed to deliver high-quality lab testing services. That’s because the government and private payers continue to make deep cuts in what they pay for laboratory tests. Also, corrosive to lab revenue are the trends of narrow networks and the use of lab test prior-authorization rules.

Probably more significant than these factors is the reality that many health plans are steadily moving away from fee-for-service payment for clinical services. Instead, these payers want to reimburse providers—including labs—with new forms of value-based payment. As that trend spreads, more hospitals and physicians get larger portions of their income from bundled payments and capitated or per-member-per-month fees.

Another powerful trend is genetic medicine. New insights into the human genome and new technologies that make gene sequencing faster, cheaper, and more accurate are fueling an explosion in precision medicine. The number of clinical services that now can benefit from a molecular or genetic analysis grows almost monthly.

Moving forward, these two powerful trends will have a tremendous influence on how clinical laboratory and anatomic pathology services are organized, delivered, and reimbursed. And it is precisely these developments that create opportunities for innovative labs and pathologists to develop new streams of revenue.

Why Labs Are Well-Positioned

Why labs are well-positioned to deliver value to healthcare stakeholders? There are different ways labs can use their lab test data to improve patient care, for which the lab can be appropriately reimbursed. These strategies and approaches include:

1) Labs stepping into the role of diagnostic experts and diagnostic collaborators.

2) Labs providing hospitals, physicians, and payers with support for healthcare big data/population management at the macro level, and precision medicine at the micro-level.

3) Labs helping providers and payers with quality metrics (MACRA/MIPS, HEDIS, Medicare Star ratings).

4) Labs protecting and increasing their own revenue by using lab data with other clinical data to increase collected revenue, appeal denied claims, obtain prior-authorization for key tests, and more.

5) Labs helping both providers and payers in their risk-sharing arrangements by improving diagnostic accuracy, identifying patients at risk or with gaps in care, and similar.

6) Labs collaborating with pharmaceutical companies in the development of new therapies and clinical services.

Inherent Value of Lab Data

It is important for lab administrators and pathologists to understand the inherent value of diagnostic data, especially when the data are combined with clinical and financial data. Laboratory testing is the highest-volume medical activity that generates large volumes of data that provide value in different ways. Lab data has a value that is more than money because diagnostic information from lab tests can be used to save money as well.

This can be seen with first-mover labs. As they partner with their ordering physicians, laboratories and pathologists begin to understand that, when used appropriately, high-quality diagnostic data can also be reused in many ways for health systems, health insurers, pharmaceutical companies, and contract research organizations.

New Era in Lab Medicine

This new era will emphasize producing an accurate lab test result within an acceptable turnaround time that provides a clear interpretation of the results with reasonable clinical judgment.

The emphasis on helping caregivers use accurate lab test results to guide effective care will be the foundation for all the collaborations between laboratory clinicians and ordering physicians in addition to value-based reimbursement arrangements that involve the lab,

Lab medicine’s new era will be firmly rooted in how all labs leverage the value of the lab test data they produce to the benefit of patients, physicians, and payers, Health insurers, government health programs, and employers are willing to pay labs for the value they deliver—but only if labs learn how to convert raw lab test data into actionable clinical intelligence.

In this new era, healthcare’s transformation to value-based payment creates opportunities for clinical labs and pathology groups, Providers are forming integrated health networks. Healthcare big data, population management, and personalized medicine are evolving as service lines designed to improve clinical care. The goal is to give physicians new tools to improve patient care and control costs.

Labs as Diagnostic Experts

Increasingly, health systems rely on pathologists and labs as strategic partners because they have become preferred providers of diagnostic testing, Developing a strategic partnership with ordering physicians in the integrated health network allows labs to develop their own data strategy to extract the most value from lab test data.

In their role as preferred diagnostic data providers, labs can assist all healthcare organizations in multiple ways, For example, lab data can support clinical utility for reimbursement and payer contracting.

Also, lab data are essential to support evidence-based care, and lab data also are used as a source of subject matter expertise to guide decision-making for test ordering,” she said. As most laboratory clinicians know, getting the right treatment to the right patient at the right time is not possible without knowing the results of the right laboratory test, That’s why combining diagnostic and clinical data can help hospitals and health systems negotiate favorable managed care contracts.

Demand Grows for Real-World Data

Pathologists and clinical laboratory administrators will see increased demand for real-world data (RWD) to support claims adjudication, coverage decisions, and regulatory submissions, the survey showed. Survey respondents expect to see a continuing demand for RWD to support clinical utility, drug safety and efficacy testing, disease insights, and the development of patient registries.

The problem for medical laboratory professionals is that the current status of information technology systems does not always meet the needs of clinicians engaged in precision medicine (PM), the survey respondents reported. Asked if electronic health record (EHR) systems are meeting the needs of PM users, 26% of survey respondents said no; 33% said somewhat; and only 24% said yes. The other 17% did not know.

One reason EHRs fail to provide what oncologists and other ordering physicians need is that much of the data from clinical laboratories is unstructured, making that data difficult to find in a patient’s EHR,

Also, many lab results are provided as PDFs, which are difficult for physicians to use at the point of care, she added. For health systems, the survey revealed that the most pressing challenges in implementing IT systems to support PM included analytics tools for clinical and diagnostic claims and financial data, integrating data for interoperability, reporting on clinical improvements, and curating and annotating structured and unstructured data.

Boosting Lab Revenue

Labs should keep in mind that they can and should develop strategies to reuse their own lab test data to appeal denied claims, Part of the lab data strategy involves developing collaborative relationships with ordering physicians and health systems to exchange diagnostic and clinical information to improve reimbursement when health insurers are concerned about clinical utility.

All labs know that uncertainty about clinical utility leads to denial of claims. Often, these denied claims end up in appeal, a process that can be lengthy, costly, and time-consuming, yet may or may not result in payment.

If labs can adopt strategies with physician partners to integrate diagnostic, clinical, and financial data, they can then start to streamline the claims adjudication process, In that way, integrated data can be used to simplify the reimbursement, improve lab revenue, and reduce the cost required to bill and collect that revenue.

Pharmaceutical manufacturers have long looked to the diagnostic industry to improve the development of and regulatory approvals for new tests and companion diagnostics by linking lab test results to defined treatment.

For example, pharmaceutical companies want to use diagnostic information for clinical trials, to evaluate safety and effectiveness, to support research and development, and to analyze how genomic and biomarker testing can be used to assess the effectiveness of new medications, Therefore, laboratories need to develop data strategies by developing partnerships with pharmaceutical manufacturers.

New Lab Revenue Sources

Clinical laboratories and anatomic pathology groups become masters of their lab test data. This is consistent with the Clinical Lab 2.0 business model developed by the Project Santa Fe labs in recent years.

Stated differently, the clinical lab profession is seeing a radical shift. Since the 1950s, the economic model of labs was based on increasing volume to lower average cost per test and maximize profits from fee-for-service payments. In this world, to be paid, labs simply needed to provide an accurate, reproductible test result within the targeted turnaround time.

That is no longer the case. The change in how payers reimburse providers and the need for providers to deliver personlized care, tailored to each patient’s unique needs, is creating a once-in-a-lifetime opportunity for labs. It is why Goede predicts that the laboratory medicine profession is on the verge of a new era.

In this new era, healthcare big data and precision medicine both will heavily rely on lab data. Consequently, labs are positioned to be the perfect collaborators—and be paid for those collaborations.

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