Anticipate Health IT Changes in Order for Labs to Participate in Payment Reform, Coordinated Care

Health care reimbursement is quickly moving from the fee-for-service model to value-based payment and coordinated care among providers. This change may affect labs significantly because to get in on the action they’ll need to be able to share data with other providers and even team up with them. If so, labs will likely need to reassess their current health IT systems and consider upgrading, adding to or replacing them.

HHS value-based goals
Health care has been shifting away from volume based payment for several years, mainly due to the Patient Protection and Affordable Care Act which created the Medicare Shared Savings Program to pay accountable care organizations (ACOs) to better manage patient care as well as funding to explore alternative care and payment models. It’s part of the “triple aim” to improve the patient’s care experience, improve population health, and reduce health care costs—such as duplicative blood tests, which are unnecessary.

In 2015, the Department of Health and Human Services (HHS) took this effort a step further, announcing its goal to move the industry away from traditional fee for service health care and into value, care coordination and quality-focused programs, such as the management of a population or an episode of care. HHS planned to have 30 percent of Medicare fee for service payments tied to quality or value through alternative payment models by the end of 2016 and announced this month it has reached that goal ahead of schedule (see News at a Glance, p. 12). Fully half of Medicare payments will be tied to alternative or population based models by the end of 2018.

This is the first time in history that HHS has set specific goals for alternative payment models and value based payments.

Private payors have followed suit, with at least one coalition of heavy hitters creating a task force committing to put 75 percent of their business into value based arrangements by 2020. Many national payors, including Aetna, Blue Cross and Humana have been actively moving away from fee-for-service care to, and contracting with, ACOs, patient centered medical homes and other coordinated care programs in order to lower their costs and achieve better outcomes.

A large component of these programs is the reduction or elimination of wasteful unnecessary duplicative procedures, such as lab testing, according to consultant Adam Powell, PhD, President of Payer+Provider Syndicate, a management advisory and consulting firm based on Boston Syndicate, in Boston. “Lab utilization is a large part of [reducing costs and improving outcomes],” he says.

What underpins these changes is the need by providers to use electronic health records (EHRs) and other health IT to better coordinate care and share patient data. Many of CMS’ payment models already require or encourage EHR use, even for ancillary providers such as end stage renal disease entities and long term and post-acute care providers.

Options for labs
Many, if not most, labs are already sending test results and other information electronically to other providers in a basic way. With the push away from fee-for-service reimbursement, labs that are not hospital based and have a choice to determine if it’s worth it to take data sharing to a new level, whether to participate in these alternative care models, and how to best share data with them.

“Many alternative payment models are being explored at the moment, with opportunities for labs to be carved in and carved out. Diagnostic utilization is also being included into some bundled payments or case rates,” says Powell.

.However, whether to invest in a full-fledged EHR to participate in data exchange is big decision, and may depend on the types of opportunities labs have in their particular regions to join these different payment programs. For instance, a lab using a different EHR or data sharing module may encounter problems with interoperability, warns Carl Bergman, an EHR consultant in Washington, DC and former managing partner of EHRSelector. com, a free service that enables providers to compare different ambulatory EHR products.

“It’s not enough that the machines talk to each other. There are levels of interoperability. They need to exchange data in compatible formats and the ability to interpret the data in the same way it was sent,” he warns. There’s also still a lot of uncertainty how these programs will work and labs’ role in them. “Things are up in the air with some lab related requirements,” warns Powell.

For instance, the Medicare Access and CHIP Reauthorization Act (MACRA) enacted in 2015 creates a new Merit Based Incentive Payment System (MIPS) for reimbursing physicians in the Medicare program that will include a lab component, says Powell. However, the statute didn’t provide many details about MIPS, and the rules implementing it have not yet been published. “The lab information system requirements are evolving. There may be nitty gritty things coming [that providers will need to comply with] that we don’t know about,” warns Powell.

Take five steps to protect your lab
Before your lab takes the plunge in participating in these programs and investing in expensive health IT systems, consider these five steps:

Explore what kind of new payment programs and ventures are in your area and see if any of them are a good fit for your lab. If so, see what you—compared to your competitors—can bring to that program’s/venture’s table to maximize your chances of being included, says Powell. For instance, if you can demonstrate that you’re more efficient or have prior experience in quality based programs, point that out.

If you’re going to indulge in EHRs or other health IT, make sure it has the clinical and interoperability functionality you need. For instance, see what systems your provider and/or payor partners are using and requiring before buying equipment. You may not need to buy anything new, or simply add a module to your existing system, says attorney Gerald “Jud” E. DeLoss, with Clark Hill in Chicago.

Consider sharing data via your local health information exchange (HIE). HIEs facilitate the sharing of information by servicing as a central repository. If your geographic region has a functional HIE organization, you may be able to share data and participate in these payment models via the HIE without having to purchase any new health IT equipment. This would depend in large part if your other potential partners are part of the HIE and the cost to join it.

Don’t forget data security and compliance with the Health Insurance Portability and Accountability Act (HIPAA), says Bergman. You need to make sure that any data sharing you participate in protects the confidentiality of the patient data. If you’re involved in an HIE or provider arrangement, get assurances— via business associate agreement or organized health care arrangement (OHCA) contract, as applicable—that the others you’re working with will also protect the patient data (for more on what an OHCA is, see sidebar on the left).

Consider holding off a bit to get the lay of the land. Investing may be a bit premature without more definitive information about some of these programs. “When you know a new phone is coming out in three months you’d wait until the new one comes out. 2016 should be viewed as a year of caution,” says Powell.

Takeaway: Labs may need to partner with other providers to reap the benefits of payment reform and not be left out in the cold. This step, however, will likely involve research and investing in health IT in order to participate, share patient information, and coordinate care.