Why Better Lab Management Is Key to Value-Based Care

There are 14 billion diagnostic laboratory tests performed each year in the United States—an enormous number that is likely to grow due to the increasing availability of new tests, patient expectations, and provider overordering.

The growth in genetic testing is particularly pronounced, with an estimated 10 new tests introduced each day.¹

Overall, an increasing number of tests can offer more choices in guiding patient care. Lab tests guide up to 70% of clinical decisions,² according to the Centers for Disease Control and Prevention. Testing allows for more accurate and better-informed care, and expanded application of appropriate testing promises even greater results.

However, the burgeoning numbers and growing complexity of tests threaten to overwhelm providers and health plans who are ill-equipped to judge the labs’ necessity and value, let alone know how to incorporate all the results into treatment. In addition, the associated costs of testing threaten to derail the transition to value-based care.

The health care community needs another tool to support its efforts to improve care while still managing testing use and costs. Lab benefit managers (LBMs) can provide the expertise to ensure the right tests are ordered at the right times to optimize patient care and clinical outcomes.

Misused Testing

There is evidence of considerable misuse of diagnostic testing. Up to 30% of lab testing³ might be unnecessary. This is partly due to defensive medicine, providers ordering large batteries of tests for fear of missing something or to reduce the threat of malpractice liability. And failure to order the right test affects about 50% of lab orders.⁴

These problems exist due partly to the result of the country’s largely unsuccessful history of trying to regulate lab testing misuse.

Genetic Testing

Nowhere is the need for better management greater than with genetic testing, which is exploding in use. It grew from 4.2% ($289 million) of Medicare total lab spending in 2015 to 20.4% ($1.9 billion) in 2021,⁵ a compounded annual growth rate of 58.3%. There are more than 175,000 tests now available with new ones entering the market daily, overwhelming the ability of providers and health plans to evaluate their clinical validity and utility, as well as analytical validity. Direct-to-consumer advertising creates expectations among patients for more testing, whether justified or not.

How LBMs Help

Better lab testing management and eliminating inappropriate testing is key to transitioning to value-based care. Leading LBMs have the resources and expertise to keep current on available tests and evaluate their validity and utility. This allows them to develop medical policies that are grounded in science and that leverage technology to improve delivery of the right care for the right individuals. For instance, a new technology that analyzes data in real time and provides decision advice to health plans within their adjudication process to approve, deny, or reduce claims along with references to specific policy detail to support the decisions, is being successfully utilized.

For an example of how this new technology could deliver better results, look at type 2 diabetes (T2D) patients. Providers typically evaluate T2D patients with a biannual or quarterly A1c test, annual lipid profile, and biannual health checkups. Each of these process measures is a quality-of-care indicator, typically performed during patient visits.

LBMs view quality of care indicators to see whether providers are performing all 3 process measures for T2D, or just one or two. There is a remarkable difference in cost per member, slightly more than twice as much, when only one of these quality process measures is followed.

By drilling down into lab data, LBMs can examine patient-provider patterns and how care is being delivered. They can see whether the provider adjusts treatment decisions based on lab values and the impact on the patient. That sort of actionable data leads to insights that establish a better basis for alignment of goals in value-based contracts. 

Benion S. Horton, MD, MHA, is Vice President, Senior Medical Director at Avalon Healthcare Solutions. Michael G. Lemieux, PhD, is Medical Policy Manager at Avalon Healthcare Solutions.

References:

1. Phillips KA, Deverka PA, Hooker GW, Douglas MP. Genetic test availability and spending: Where are we now? Where Are We Going?. Health Aff (Millwood). 2018;37(5):710-716. doi:10.1377/hlthaff.2017.1427

2. Centers for Disease Control and Prevention. Strengthening Clinical Laboratories. Accessed June 2023. https://www.cdc.gov/csels/dls/strengthening-clinical-labs.html

3. Zhi M, Ding EL, Theisen-Toupal J, Whelan J, Arnaout R. The landscape of inappropriate laboratory testing: a 15-year meta-analysis. PLoS One. 2013;8(11):e78962.
doi:10.1371/journal.pone.0078962

4. Cadamuro J, Ibarz M, Cornes M, et al. Managing inappropriate utilization of laboratory resources. Diagnosis (Berl). 2019;6(1):5-13. doi:10.1515/dx-2018-0029

5. Office of Inspector General. Medicare part B spending on lab tests increased in 2021, driven by higher volume of COVID-19 tests, genetic tests, and chemistry tests. Accessed June 2023. https://oig.hhs.gov/oei/reports/OEI-09-22-00400.asp

Disclaimer: The views and opinions expressed are those of the author(s) and do not necessarily reflect the official policy or position of the Population Health Learning Network or HMP Global, their employees, and affiliates. Any content provided by our bloggers or authors are of their opinion and are not intended to malign any religion, ethnic group, club, association, organization, company, individual, or anyone or anything.