Questions Health Plans must ask before selecting a Lab Benefit Management Program

Some laboratory benefit managers try to win health plans by implying that genetic lab test costs will be out of control. In reality, genetic test costs make up a small percentage of total outpatient lab costs. National labs offer more than 99% of all covered genetic tests available, and separate genetic lab networks are unneeded as best pricing and utilization management are achieved by leveraging total lab volume from primary labs.

Some genetic lab networks and test ordering programs receive fees from laboratories, limiting lab choices and thereby opening plan access to labs that can’t otherwise get into a network. They may also appoint a portion of savings to the network manager, in addition to the network manager’s charges to the plan.

Managing testing costs for genetics is best accomplished by a full LBMP and easily managed through the proper medical and reimbursement policies. The full service LBMP can also assist by establishing medical and reimbursement policy guidance specific to your plan.

Plans should consider whether an LBMP offers lab contracting negotiation services for their network, including monitoring quality measures of lab services and technical quality with performance standards and guarantees. Some LBMPs only offer one-size-fits-all or piecemeal programs. High-quality LBMPs will support ad hoc plan needs related to outpatient laboratory issues such as hospital lab contracting, utilization management, test mix and fee schedule analytics, benefit design, and leakage and redirection programs, plus provide advice for the plan’s market fee schedules. Kentmere uses refined databases and proprietary claims analytics programs and services to save health plans millions of dollars while improving quality and service.

Plans should consider the number and longevity of chief medical officers and how long key executives have been with the firm. How many failed business models have they offered through the years? Do they require constant equity or debt infusion to stay in business? Kentmere’s team, for example, includes former senior executive level professionals from medical, pharmaceutical, laboratory, managed care industries and CPA firms, with most bringing more than 30-plus years of experience.

Plans should avoid LBMPs whose owners or partners include health plans and venture capital firms looking for an exit strategy, as well as those that receive payments or licensing fees from laboratories or hospitals.

It is best to work with a completely independent, privately owned LBMP that answers only to the plan. They should check the firm’s references and make sure those references have an established and long-lasting relationship with the LBMP but are not investors, stockholders or partners. It’s important to know which of the LBMP’s programs the reference plans are using and how they may match or differ from the services a plan is considering.

A plan should be able to recapture all initial costs after year one, and each year after should yield a documented ROI of 10-20+/1. Plans should be able to exit the contract for lack of measurable results or if they do not receive the guaranteed ROI, without added costs or disruption to the plan.An LBMP should provide short-, intermediate and long-term savings programs. In addition, all quality measures should improve, and ROI and savings should be easily documented by auditors and actuaries in real dollars. Trend reduction and non-hard dollar savings should be excluded. Kentmere guarantees a 10-20+ ROI by year two that covers year-one costs, as well as subsequent costs, while providing a sustained ROI of 10-20+/1.

Kentmere provides plans with unlimited access to daily updated lab test technical and financial information, network and medical policy guidelines, and updated technical and business information on the laboratory industry. This saves health plans many hours of research and dollars, and it allows them to react quickly to changes in the requirements for managing outpatient lab testing. Plans that choose the right LBMP will not only save time and money, they will consistently provide the right test at the right time for their members.