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Health Plans Should Scrutinize Lab, Genetic Testing for Unneeded Expenses

By Gregory A. Freeman  
   January 31, 2018

Kentmere has alerted some health plans to a spike in physician orders for hereditary testing genes predictive of breast cancer, beyond the BRCA1 and BRCA2 that are most commonly ordered for that purpose.

Identifying test spend is key

"Health plans need to understand where the money is going in relation to laboratory and genetic testing, and more than just which tests are ordered. They need to understand things like what percentage of their total spend is on that test, what percentage of their reimbursement that represents, what percentage is rejected," Kaufman says.

"When a health plan understands those numbers, they might realize that a bigger percentage of their total spend than they ever realized is on a certain test. They can use that information to develop internal policies about how they decide which tests to just approve and which tests require internal approval before it is preauthorized," he says.

Internal analytics are one thing, but health plans also can benefit by comparing their laboratory expenditures to those of other insurers, Kaufman says.

He sees trends in ordering patterns from one company to another, but outliers indicate either a plan with the opportunity to reduce costs or a plan that has implemented better approval systems.

"One of the questions they have is how much internal bureaucracy should be devoted to internal review and approval of testing," Kaufman says. "They often don't have a firm grasp on what everyone else in the industry is doing in that regard, hoping their own systems are tight enough to avoid wasting money and appropriate to ensuring their customers get the testing they actually need."

The uncertainly mostly involves testing related to genetics and other advanced areas in which medicine is evolving at a fast pace, Kaufman notes.

Testing policies

The protocols for ordering more routine tests have been established in the medical community and it is easier for health plans to set review and approval policies. Testing standards for the newer and more advanced screening are not as clear, but those tests also can be among the costliest.

"Genetic testing is an emerging area and very few health plans have internal expertise in genetic testing," he says. "So they mostly download policies from the Blue Cross Blue Shield associations and then they internally might modify them a bit to conform to the culture of what the doctors in their region might expect. But we find that in trying to adapt those policies to these new tests, the doctor may have a 65-page policy that must be reviewed before ordering the lab work."

Gregory A. Freeman is a contributing writer for HealthLeaders.

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