The issue of lab benefits management is often cast as a matter of concern only to providers, payers, and labs, but that leaves out the most important people in healthcare – the patients.
Though patients are generally unaware of lab benefits management (LBM), they still are better off for it. LBM not only saves patients money, it provides a framework that helps ensure they receive the right tests at the right time for the right care. It protects against fraud and abuse that cost patients money. And, in addition to helping individual patient outcomes, LBM can also improve member health at a population level.
Lab tests are an essential part of healthcare. As many as 70% of clinical decisions are guided by a test result, with data from the test informing care and improving patient outcomes. The number and sophistication of tests are on the rise, particularly with the explosion in the number of genetic tests, which makes informed and consistent test management even more important.
Below are the four principal ways LBM helps patients.
LBM improves patient care
Providers order lab tests to learn information that will let them provide better care for patients. The more accurate and relevant the tests, the better informed the clinicians will be when deciding a course of treatment.
But providers can’t keep up with the explosion of tests, particularly genetic tests, and might be unaware of the most appropriate ones to order or how to interpret and apply the results. However, a science-backed LBM partner working with payers can independently evaluate tests and determine which are clinically useful.
That will improve care for patients by eliminating unnecessary tests and ensuring that the results can be integrated into care decisions.
While preventing unnecessary tests, LBM also can make sure the correct tests are performed for the benefit of patients, even if they’re more expensive. For example, mutational analysis in cancers with targeted therapies is significantly underused with the result that chemotherapy selection, overall costs and outcomes may be adversely affected. Effective LBM can improve the use of mutational analysis where appropriate and increase the likelihood of a better outcome.
LBM improves population health
While LBM helps individual patients, it also can benefit entire patient populations.
Health plans using LBM systems which incorporate analytics and machine learning can identify and stage members with chronic conditions. In a recent pilot program, two regional Blue Cross Blue Shield plans shared claims data and lab result values from multiple tests with their LBM partner. The LBM firm was able to identify and stratify thousands of previously unidentified high-risk chronic kidney disease patients across all stages. Armed with this information, the plans were able to follow up with patients and their providers to get them treatment.
Lab value management can help plans and patients with other chronic diseases as well. For example, it can reduce the incidence of drug mismatches and inappropriate use of marker drugs for cancer patients, in addition to increasing genetic testing to determine the targeted treatment. This will result in patients living longer, healthier lives and reducing costs.
Done on a large scale, this can improve population health, a primary goal of value-based care.
LBM controls patient costs
Health plan deductibles are rising and employers are trimming benefits, meaning even patients with private insurance can pay a significant amount for lab tests. Increasingly, patients are forgoing or delaying medical care because of costs, which can hurt their health. Patients often have little control over where tests are performed or how much they cost but still must find a way to pay for them. However, if they knew the wide difference in costs by site of service they almost certainly would push for tests to be done at independent labs.
For example, according to our research, a general health panel performed at an independent laboratory cost $27 in 2023 The same test cost $35 at a physician office and $157 (575% higher) at hospital outpatient services. Similar disparities exist for other common tests, including comprehensive metabolic panels and lipid panels. LBM can steer these tests toward trusted independent labs, saving both patients and payers money. LBM adds much-needed transparency to a system that is often opaque to patients.
LBM can save health plans 10% to 20% on their outpatient lab spending across lines of business. Approximately 25% of these savings benefit member spending and member out-of-pocket costs.
LBM reduces prior authorization
While often necessary, prior authorization (PA) can be a barrier to members receiving tests in a timely manner. This is frustrating for patients and providers and can delay or even prevent patients from receiving critical tests.
An LBM system can identify select providers that demonstrate consistent policy adherence and high performance based on previous PA approval rates and greenlight them for reduced or eliminated PA requirements for many tests. This means tests can be performed more quickly which allows providers to deliver care on an accelerated schedule.
While health plans and providers benefit from LBM, it’s important to keep in mind that the policies also help patients by making it possible for them to receive the right test and the right care for the right costs.
Bill Kerr, MD
Bill Kerr, MD, is CEO of Avalon Healthcare Solutions, the world’s first lab insights company.
