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The Dichotomy of Lab Test Reimbursement for U.S. Nationwide Patients
Arthur F Rosenthal, PhD
Why would anyone want to interfere with the access of dialysis patients to laboratory tests? In order to understand the answer to this question with its required degree of depth, we must first follow the labyrinthine trail of organization and disorganization of the reimbursement system that exists for the payment of dialysis treatment in the United States.
Although the system may have been instituted with the best of intentions, it has been so distorted by subsequent developments, so bedeviled by perverse incentives, that in some aspects it barely functions. In the treatment arena, many readers of this journal can supply their own examples of this dismal phenomenon. However, for purposes of the present discussion the subject of focus will be reimbursement of laboratory tests. Indeed, this arena possesses some peculiarities that do not even arise elsewhere.
Carrier Venue Billing Rule
Perhaps foremost is the carrier venue billing rule. According to this amazingly obtuse requirement, all tests billed from the laboratory must be processed through the local carrier where the laboratory not the patient, is located. Now of course that would be fine, and even a convenience, if all local carriers performed their function in the same way. But of course they do not. Each one functions differently, allowing or disallowing certain claims for certain tests according to its own ideas of processing correctness.
For - national laboratories, and particularly for dialysis-specialized ones (which tend to have fewer local branches distributed throughout the country), this anomaly exposes them to the pernicious effects of the Local Medical Review Policies (LMRPs) created by the individual carriers. The fact that the majority of the patients may actually reside, and have their treatments performed, in other states makes these LMRPs lose any rational purpose for existence. Why, for example, should a carrier in State A make policies affecting patients in States B, C, D, etc. just because the laboratory to which their blood specimens are sent is located in State A? What public purpose is served by such an absurdity? Now suppose the carrier in State A decides to be especially restrictive with regard to laboratory tests for dialysis patients. The consequence will be that a very large number of dialysis patients all around the U.S. will have difficulty in getting certain lab tests. But why should a carrier do such a thing? Consider the following possible scenarios:
- The carrier might wish to tout itself as unusually effective in protecting the "Medicare Trust Fund" as a means of ingratiating itself to the Centers for Medicare & Medicaid Services (CMS). When the next contract comes up for renewal somewhere in the country, State A's carrier can claim that it is demonstrably able to save a significant amount of money compared to other bidders. If this seems a little farfetched, consider the fact that there exists a so far unfulfilled legal mandate1 for the number of Part B carriers to be reduced to five or less. If and when this actually starts to be implemented, many carriers will begin to compete for the small number of very large contracts.
- A less self-serving and perhaps less intelligent possibility arises from a mandate given by CMS to its contractors (Part A Fiscal Intermediaries and Part B carriers). This is the outlier scenario, under which a contractor, upon seeing that the number of claims for a specific service significantly exceeds the national average (in numbers per unit volume of beneficiaries, or total claims), must investigate and put an end to this situation. However, the contractor might do this without considering why it happens. For example, dialysis-specific or dialysis-selective tests would certainly account for many more claims than average if there were a concentration of dialysis-specific laboratories in State A. Therefore, a perfectly normal and expected situation would be the subject of investigation, claims denials, appeals, and other forms of grief and travail-all for no good reason.
- Another critical issue might be the State A carrier's concept that as far as lab test ordering and utilization of results are concerned, a dialysis clinic is like a doctor's office. In this erroneous model, it is expected that the patient comes in, sees a doctor, has his/her history and physical and simple in-office lab testing done, and then if warranted the physician orders more elaborate lab tests at an outside lab. When these results come back, the physician makes notes in the patient's chart, explaining how the test results have been utilized for diagnosing the patient and prescribing a course of treatment.
Far from the Truth
The readers of this journal do not need to be told how far from the practical truth this physician's office model is when applied to dialysis treatment. All segments of this model are in error, from the idea that most tests are ordered by physicians de novo, patient by patient, to the idea that test results are generally reviewed by physicians every day on each patient.
If we look into how tests are actually ordered on dialysis patients, we can see that at the heart of the process are two sets of standing orders. The "official" set is that given to the laboratory, typically at the beginning of the treatment year, which authorizes the repetitive orders for specific tests at specific intervals. It is actually a "passive" or minimal standing order that is not dependent on any feedback mechanism to alter it.
What are the consequences?
Simply that the laboratory will not get reimbursed.
Then there is the "active" standing order, which is kept as a protocol, or ordering template, to supplement the laboratory's standing order when certain conditions require it. An example is the adjustment of dosage of a calcitriol analog. Even though the laboratory's standing order might specify PTH testing at a quarterly frequency, the clinic protocol typically would override this by specifying that if the PTH level is "x," change the dosage of drug to "q" and repeat the PTH at "y" intervals until the PTH level is "z." If all goes well, acute intervention by the physician will not be required.
The Consequences
What are the consequences of this misapprehension by the State A Medicare carrier? Simply that the provider of service, the laboratory, will not get reimbursed. This is another example of the egregious unfairness inherent in the reimbursement structure: The people who have the least knowledge of the process are the ones who wield the club. Lost in the shuffle is the fact that among the marching orders given to the carriers is the stricture that they must not attempt to change normal medical practice through their power over the Medicare purse.
Lost, too, are the interests of the dialysis patients, who need the lab data for successful treatment. Their access to essential testing is being put in jeopardy. Given the perversities of the laboratory reimbursement system, it is not difficult to believe that it probably makes its fair contribution to the overall U.S. Nationwide mortality rate, currently among the worst in the industrialized world.
Incidentally, it may not surprise readers to discover that the State A contractor actually exists. Question: What state and what provider is it? No CEUs are offered for the answer, but nonetheless it is given in the footnote2 below.
Reference & Footnote:
1. Balanced Budget Act of 1997; Sec. 4554: Improvements in Administration of Laboratory Tests Benefit.
2. State A is Florida, and its Medicare contractor is an agency of Blue Cross/Blue Shield of Florida.
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