1. Health Plan Contracting: Are Labs Becoming Expendable?
Intel and Solutions for Lab Contracting
Mike Snyder

3. Lab Networks are Shrinking
Medicaid
Shift to commercial managed care
Exclusive networks
Bluecard
Confusion for both plans and providers
Aetna
Lab terminations
‘freestanding clinical labs’ need not apply!

4. ‘Managing’ Laboratory Diagnostics
BCBS Association
Consultant study
Participation in a GPO
For Profit Hospital Network Models
Regional Diagnostic Labs
aLabs (Accretive Health)
Quest Blueprint for Wellness
LCA: Beacon Lab Benefit Solution

5. Key Drivers for Health Plan Behavior
National lab influence?
Healthcare Environment in the US:
Healthcare Reform
Increasing Costs

6. Healthcare Cost Trend

7. Lab Industry Revenue Trend
G2 Intelligence

8. Average Annual Worker and Employer Contributions to Premiums and Total Premiums for Family Coverage,
$5,791
$6,438*
$7,061*
$8,003*
$9,068*
$9,950*
$10,880*
$11,480*
$12,106*
$12,680*
$13,375*
$13,770*
* Estimate is statistically different from estimate for the previous year shown (p<.05).
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits,

9. Among All Large Firms (200 or More Workers) Offering Health Benefits to Active Workers, Percentage of Firms Offering Retiree Health Benefits, *
*Tests found no statistical difference from estimate for the previous year shown (p<.05). No statistical tests are conducted for years prior to 1999.
Note: Data have been edited to include the less than 1% of large firms who report “yes, but no retiree” responses in Historical numbers have been recalculated so that the results are comparable.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, ; KPMG Survey of Employer-Sponsored Health Benefits, 1991, 1993, 1995, 1998; The Health Insurance Association of America (HIAA), 1988.

10. Employer Pressure for Cost Containment
25% shift to ‘High Performance’ networks
22% demand for cost ‘transparency’
1/3 require that health plans provide data that exposes high cost providers
Towers Watson 2012 Employer Survey

12. Payors: Contracting ‘Constants’
Trend and Leakage
Trend rises due to new technology and utilization increases
Out of Network or non-contracted providers
Lowest costs
Competitive bidding:
Price
Services
Preferred agreements (perception of value)
New services, same price
HIE participation

13. What Do the Plans Want from Labs Today?
Broad menu that incorporates AP and other esoteric testing (one stop care)
Generous access to services (locations)
Electronic interface (orders and reporting) to physicians
Submission of member lab results to the plan
Participation in managed networks
Electronic claims submission (clearinghouse)
Strong marketing program (Leakage management)
Tech advisory council

14. What are the Expectations for Tomorrow?
Participation in Utilization Management
Synchronization of Test Menu to Medical Policy
Notification of Test Identity (no code or generic stack codes)
Expanded Credentialing: demonstrate proficiency of testing against standards
Participation in Preauthorization
Ability to meet employer demands for member transparency to healthcare costs

15. Needs and Weaknesses of the Health Plans
Medical Loss Ratio (MLR)
Utilization Management
Resources for Technical Assessment
Coding and Reimbursement
Physician Education
Data Transformation:
Data Information Knowledge

16. Solutions: Short Term Bill “Intelligently”
Use the data
Utilization by plan: Know Your Numbers
Mode of communication
Messages to Patients and Employers
Seek Employer Collaboration:
Education (Dx connection to health mgmt)
Direct services (e.g. Biometrics)
“Healthcare is Local!”

17. Evolve! From Tests to Technology Service
“Total Solution” approach to contracting:
Consider the customer’s customer
Offer demonstration projects
Collaborate (Power of the Pie!)
Form networks and affiliations
Plans are willing to accept lab ‘aggregation’
Laboratory Association and Buying Service (“LABS”)

18. BENEFITS FOR LABS AND INSURERS
Why a Network Model?
BENEFITS FOR LABS AND INSURERS
LABS
INSURERS
Creates standard requirements for participation in health plan contracts
Offers a 'managed' network of independent labs
Emphasizes valuation of requirements beyond testing services
Assures the fulfillment of requirements necessary to manage the benefits of the plan membership
Leverages the purchasing power of membership
Allows the plans an alternative to increasing admin cost; instead, addresses a positive impact to MLR calculation
Assures the ability of the membership to compete for lab contracts
 Reduces ‘lab leakage’ by fielding a broad network of qualified labs

19. Model for Lab Association
Primary Functions
Messenger model for lab contracting
GPO to accomplish ‘required’ services
Value to Member Labs
Channel for health plan participation
Change the ‘Value’ conversation
Negotiates services for association under a GPO-type model
Manages the requirements of the plans for network management (plan by plan basis)

20. Organizational Characteristics
Not For Profit; DE corporation (McDonald Hopkins)
Staff Model Management:
No employment relationship to any member
Manager responsible for recruitment of new members and engagement of health plans
Board of Directors leadership
Guide for Participation
Member fees
Participation in lab credentialing process
Must follow requirements for participation in select plans
Receive education re: Messenger Model

21. The Game is Changing Plans have the leverage: Technology Reimbursement
Employers and consumers demand lower costs and price transparency
Enrollment is increasing (‘Caid, ‘Care, and Self Funded)
Competition: Becoming a “Beige” industry!
Technology
Demand for integration (EMR, eligibility, transparency, etc)
New applications (evidenced-based, coding, etc)
Collaboration: Diagnostics and Therapeutics
Reimbursement
Coding
FFS Bundling
Greater incorporation of required services

22. Mike Snyder msnyder@clbslab.com