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Outreach Labs Brace for Forthcoming Transparency Regulations

The Centers for Medicare and Medicaid Services’ (CMS) new hospital price transparency regulations will go into effect on January 1, 2021. Outreach labs are anticipating new challenges as a result of the rules.

According to Adam Bonislawski’s article in 360DX, “Labs Brace for Potential Plusses, Minuses of Price Transparency Regulations,” the new regulations could:

  • Interfere with a lab’s ability to collect the necessary data for providing required price information
  • Affect a lab’s ability to negotiate with payors and its relationship with customers
  • Reduce the higher pricing that outreach labs have enjoyed vs. large national labs

Causing these concerns may be the expected pressure put on lab prices because customers would flock to lower-priced national labs. The article also points out that insurance companies could increase the regulations’ impact on labs by incentivizing patients to move to lower-priced testing.

A potential upside for labs, however, is that the regulations could make for smoother billing.

"I think even on the hospital outreach laboratory side, it is a net benefit to confirm upfront what the patient's out-of-pocket is going to be," said Kyle Fetter, XIFIN’s executive vice president, and general manager of diagnostic services. "Because one of the biggest issues in laboratory billing, whether you're a hospital outreach lab or an independent lab, is bad debt. This basically gives you the opportunity from a provider perspective to move that process upfront and potentially collect a payment upfront. And that probably outweighs any potential concern over loss of business."

Fetter added that labs often don’t collect copayments or payments against deductibles before rendering the service because they don’t see patients in person.

Jane Hermansen, manager of outreach and network development at Mayo Clinic Laboratories, said that the transparency regulations are necessary and providing patient-focused information is overdue.

She also referenced past research that observed some effects on lab payments with transparent pricing. According to a JAMA 2014 study of patients with employees providing transparent prices, out of 3 million lab claims:

  • Approximately 6% were associated with a search on the transparency platform
  • Lab claim payments associated with a search were about 14% lower than claims not associated with a search
  • An absolute payment difference between a searched and non-searched claim was $3.45

It’s unknown to what extent the regulations will help patients assess out-of-pocket costs. Hermansen suggested an algorithmic flowchart of questions. She also said hospitals have the tools to obtain that information.

Fetter agreed that these tools do exist in some hospitals.

"If hospitals have that tool, it's very easy to roll it out across their entire patient base," he said. "If they don't, they just need to get the capability to do it, or else you're going to be taking a lot of [patient] phone calls."


For more information on how hospital price transparency regulations affect outreach labs read the full 360dx article here. For additional resources on  transparency regulations and patient engagement visit the following sources: 

  1. New Healthcare Price Transparency Rule to Unveil Negotiated Rates
  2. 4 Ways Health IT Can Improve Patient Engagement & Cost Transparency

Published by XIFIN
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