From Cost Driver to Care Driver: How Lab Benefits Management Transforms Healthcare

Delivering better outcomes for health plans, providers, and members 

No single technology or policy will solve all the problems of the U.S. healthcare system. Achieving the Quadruple Aim requires ongoing improvement and innovation across all sectors to enhance patient experience, improve population health, lower costs, and boost provider experience.

Lab benefits management (LBM) exemplifies this incremental yet effective approach. As an evolving field, LBM has brought much-needed scrutiny to a previously neglected segment of healthcare that is vital for improving care and controlling costs. Healthcare spent over $90 billion on testing in 2024, and lab results influenced as many as 70% of treatment decisions.

In many cases, the wrong test was performed at the wrong time, or it was duplicative, unnecessary, or costly. By establishing proper standards and usage policies for routine and genetic lab testing, health plans and providers can enhance member care while managing costs. Plans are increasingly partnering with experts to gain the necessary expertise for effective LBM. 

Here are six ways LBM improves healthcare:  

Cost control and transparency – Like other aspects of healthcare, the cost of lab testing is increasing. The surge in genetic testing and emphasis on personalized medicine drive much of this growth. The increasing number of tests makes it challenging for plans to evaluate their reliability and clinical usefulness. LBM helps by confirming tests are medically necessary before approval and reducing redundant or inappropriate testing.

LBM also addresses costs by steering providers and patients toward in-network or lower-cost, high-quality labs that perform the same tests for less than hospital labs.

Evidence-based test utilization – LBM partners collaborate with plans to guide coverage decisions using evidence-based guidelines grounded in the latest research. By ensuring the right patient receives the right test at the right time, they help reduce the overuse of costly, unnecessary, and low-value tests. Their unique position allows them to identify tests that add expense without meaningfully improving care. Eliminating unnecessary or misleading test results leads to better-informed treatment plans and promotes precision in diagnosis and treatment.

Improved access and equity – Managing lab networks consumes resources and can lead to prior authorization (PA) delays, which impact care and frustrate providers and members. LBM programs that streamline PA processes and oversee networks can reduce care delays and improve access to quality lab services, especially in under-resourced areas. 

Without LBM programs, lab networks often face limitations, and genetic test policies may miss essential diagnostics. These gaps not only reduce coverage — they also increase disparities by preventing some members from getting timely access to crucial testing.

Equally important, however, is the commitment to keeping networks and policies aligned with rapidly evolving science. The pace of diagnostic innovation means that what is considered standard today may quickly become outdated tomorrow. Without plans to continually update test coverage, members risk falling behind. By adopting flexible policies that adapt as new evidence emerges, health plans can expand access now and promote equity in the future — providing members with timely access to the latest testing and building trust in the healthcare system.

Data-driven decision making – Lab testing science and best practices are constantly evolving with new evidence and testing advances. It is difficult, if not impossible, for providers to stay updated on the latest developments. LBM partners that rely on evidence to inform policies help providers select the most effective tests and guide personalized treatment decisions.

Additionally, partners with analytics capabilities can use lab values and member data to improve care on a larger scale. They can identify populations at risk of specific diseases and even categorize members by risk level to ensure that those in greatest need of treatment receive it. For example, plans overwhelmed with demand for expensive GLP-1 medications can leverage analytics to prioritize those with a clear need.   

Greater transparency – Plans working with LBM partners benefit from a stronger relationship with providers and labs, which provides clarity into ordering patterns and coverage policies. A management system can remove bottlenecks and confusion caused by inconsistent test coding and provider actions.

Patient safety and outcomes – By reducing unnecessary or nonindicated tests, LBM helps prevent misdiagnoses caused by inaccurate values. Misdiagnoses can result in harmful, unnecessary treatments and can also delay or prevent correct treatment. Conversely, timely and accurate diagnoses from appropriate tests lead to better care and improved outcomes. Feedback through denied claims also helps educate providers and encourage adherence to testing policies.

LBM also drives the shift toward value-based care by making it easier to spot and tackle trends across populations, provide more accurate personalized treatment, manage costs, and cut down on unnecessary and non-indicated tests. 

Increasingly advanced lab testing, both routine and genetic, offers the promise of better healthcare for everyone. However, these benefits will only be achieved if there are programs in place to ensure testing is appropriately used.

Unlocking the full potential of testing presents a major challenge for health plans. Their internal policies and review processes cannot keep pace with the increasing volume of new tests or properly evaluate their usefulness. LBM helps plans, providers, and members get the most benefits from testing while managing costs.