1. A Brave New World for Reimbursement
Lab Institute
October 26, 2017

2. What is impacting the Health Insurance Industry
Uncertainty in planning for the coming years
Affordable Care Act (repeal and replace)
Proposed changes would impact how Insurers do business
Consolidations
Mergers and Acquisitions
Larger and larger insurance companies

3. What is impacting the Health Insurance Industry
Medicare Advantage
Medicare Advantage now cover about 18M people (1/3 of Medicare beneficiaries)
Medicaid
Represents $1 of every $6 in healthcare spending.
Medicare Advantage
Medicare Advantage now cover about 18M people (1/3 of Medicare beneficiaries)
Growth of 5% between 2015 and 2016
Premiums for Part A and B have increased 25% since 2011 ($5332)
UHC and Humana together make up 39% of MA enrollment in 2016
Medicaid
Represents $1 of every $6 in healthcare spending.
States design their Medicaid program within broad federal rules
Federal matching payments with no pre-set limit.
2/3 of Medicaid spending is on the elderly and those with disabilities, who make up about ¼ of the Medicaid population
¾ of Medicaid enrollees are working families 87%
Continued move to Value Based Contracting
ACO/Medical Homes/Bundled payments
Aetna has long-held a goal to reach 75 to 80 percent of its medical spend in value-based relationships by 2020.
Aetna's medical spend is now 45 percent tied to value.
Optum formed strategic relationships with Walgreens and CVS Health, Quest Diagnostics and technology partner Availity.
Kaiser Family Foundation, 2017

4. What is impacting the Health Insurance Industry: Laboratory Benefit Managers
Preauthorization
Rules far removed from the ordering physician and patient
Laboratory Benefit Managers
Beacon LBS (Beaconlbs.com)—
Avalon Healthcare Solutions--(avalonhcs.com)
AIM Healthcare
EviCore
Beacon LBS (Beaconlbs.com)—
Rolled out in Florida, delayed in Texas.
Front end pre-authorization
Work flow impacts
Entry into system at the end of an office appointment, requires clinical information, thus higher level employee to enter
Large groups pushed back
Avalon Healthcare Solutions--(avalonhcs.com)
Laboratory Benefit Manager
BCBS SC
Hospitals (POS 22 and 19), physician offices (POS 11) and independent laboratories (POS 81).
BCBS NC, effective 3/1/2017
Independent laboratories (POS 81)

5. What is impacting the Health Insurance Industry
Value Based Contracts
Anthem's goal is to have 50 percent of contracts in shared savings programs by next year, 2018.
13% of Health systems offer health plans, covering 18 million members (5% of the total population)
Physician groups want to move beyond MIPS (Merit Based Incentive Payments) to Advanced Alternative Payment Models
Anthem's goal is to have 50 percent of contracts in shared savings programs by next year, 2018.
Anthem has more than 43 percent of payments tied to shared savings programs. 
13% of Health systems offer health plans, covering 18 million members (5% of the total population)
Provider owned health plans are increasing 6% every year.
Physician groups want to move beyond MIPS (Merit Based Incentive Payments) to Advanced Alternative Payment Models
ACO/Medical Homes Medicare Advantage Plans Direct to Employer

6. What is impacting the Health Insurance Industry
Decision making is too far removed from the patient
Current system has created adversarial roles insurers, doctors, pathologists, healthcare systems, commercial labs and patients.
“No coverage” decisions leads to anger and discontentment.
Perceived inappropriate testing makes insurers respond.
Providers want autonomy.
Loss of:
Empathy
Accountability
System control
Increased Silo’s

7. What is impacting the Health Insurance Industry
Lack of transparency regarding
High out-of-pocket expenses
Difficult grievance and appeals procedures
Out of network write offs
Over utilization and redundancy in the system
Lack of transparency
Patient responsibility
Medical policy
Patient Costs of testing
High out-of-pocket expenses
Drive towards higher patient responsibility
Difficult grievance and appeals procedures
Out of network write offs
Misordering tests (right test at the right time)
Rerunning the same test when not clinically necessary
Misinterpreting test results (actionable information)
Failure to retrieve and act on test result
Unnecessary cost to patients and healthcare system

8. Department of HHS Volume to Value Goal, 2018
Source: Department of HHS. Better, Smarter, Healthier: In historic announcement, HHS sets clear goals and timeline for shifting Medicare Reimbursement form volume to value.

9. The Value Equation Benefit Cost Improve quality
Improve scores (HEDIS, STAR, MIPS, MACRA)
Patient outcomes, safety and satisfaction
Cost
Reduce utilization
Eliminate or reduce redundancy
Unnecessary testing
Increase efficiencies

10. Value Based Loop Feedback Test Orders Quality Measures
Prospective
Realtime
Retrospective
Feedback
Test Menu
Restrictions
Test Orders
Test Selection
Reporting
SOPs
Risk Management
Quality Measures

11. The Value Equation-Cost
Testing protocols
Diagnosis and best practices
Validation of orders
Complex cases with complex orders, validate necessity
Reduce redundancy
High cost or under-reimbursed testing
Obsolete or unproven tests
Contraindicated screening and testing
Inappropriate test by demographic
Review of expensive send-out tests

12. The Value Equation-Benefit
Procedures to improve results retrieval & interpretation
Complex testing has subject matter experts
Early identification
Positive or identifiable disease states
Genetic testing insurance preauthorization policy and process
Every plan has a different set of rules for testing

13. Value Based Drivers Quality Indicators HEDIS Scores Star Ratings
Value based pricing
Evidence based Practice
Benchmark
Patient Registry, MPI or EMPI
Population Health
Decision Support
Utilization monitors
Quality Indicators
HEDIS Scores
Star Ratings
MIPS and MACRA

14. Reimbursement: Three pronged approach
Coding
Payment
Coverage
How will the payers identify your testing?
What is the expected payment amount and is that impacted by the new patient centric plans?
What type of coverage determination does the payer have?

15. Coding New Codes Medical Necessity denials Medical/Plan Denials
Moldx, Tier 1 and 2
Medical Necessity denials
Limiting Units of service
DX code CPT code mismatch
Medical/Plan Denials
Limited units of service per year
Plan limits

16. Payment and Coverage
Payment based on negotiated fee schedule or Out of Network benefit
Limiting units of service
Limiting types of methodology or denying completely
Large out of pocket patient responsibility
43% of large groups offer 1 “high” efficiency network
Coverage determination made after services performed
Lab held holding the bag
Patient not held liable on ROI denials
New pre-authorization programs windows are too tight

17. PAMA Update and Implications
Impact Medicare reimbursement
Most high volume codes could be reduced by 10% or more
Other impacts?
Medicare Advantage plans
Based on current year Medicare rates.
Your reimbursement for those plans will be reduced.
Commercial plans
Most payers have moved to a base fee schedule that uses Medicare.
If based on a current year Medicare, the plan will follow suit with a reduction in your rates.
Some plans will load new fee schedules in Q2 or Q3 of the following year.
Blues typically revisit their baseline every 3-5 years.

18. Proposed PAMA Cuts Test Name Current Reimbursement
Proposed Reimbursement
% Change
CMP(80053)
$14.49
$13.04
10%
CBC(85025)
$10.66
$9.59
PSA(84152)
$25.23
$22.71
CT (87491)
$48.14
$43.33
PAP SMEAR (88142, 143)
$27.29
$25.01
HPV (87623, 624, 625)
Vitamin D(82306)
$40.61
$36.55
No end date listed on 10% change

19. Shipwright Healthcare Group
Questions?
Thank you
Shipwright Healthcare Group
Shipwrighthg.com
Andrew Stimmler
Steve Stonecypher