Price Transparency Initiative for Lab Tests Moderately Successful

The notion of price transparency in health care delivery has been gaining purchase in recent years. It’s been driven by relentless cost-shifting to patients over the past decade, as well as providers that have come under scrutiny for inflating even the price of aspirin far beyond its actual cost. Although transparency efforts have mostly been on the consumer end, they have been limited in scope. Providers don’t want to disclose such information and have often lobbied state and federal lawmakers to keep such data under wraps. And when a transparency initiative is placed on the provider side—as it was for lab test ordering involving a large Massachusetts medical group—it didn’t nudge the needle all that much either, according to a study recently published in the Journal of General Internal Medicine. The effort involved Atrius Health, a group practice of more than 1,000 physicians serving much of the Bay State. Atrius is gaining nationwide attention for its transparency efforts in other realms—it’s one of the handful of providers in the nation where its doctors will meet with and apologize to patients after serious medical errors occur. And Massachusetts itself is on the leading edge of price transparency: Its hospitals, doctors, and insurers will all have to immediately disclose the cost of specific procedures to patients on request by the fall of 2014. Atrius was a little ahead of the curve for transparency involving its own doctors: It placed the prices of 27 common laboratory tests in front of a group of doctors when they summoned the patient’s electronic medical record (EMR). Twenty-one of the tests were considered lower cost ($3 to $40). They included a basic metabolic panel, strep throat screening, Pap smear, lipid profile, glucose, and urinalysis. Six others were considered higher cost ($40 to $100) and included chlamydia urine and genital screenings, B-type natriuretic peptide, parathyroid hormone, 25-OH vitamin D, and alph-fetoprotein. The prices were based on 2010 Medicare rates. Tests Routinely Reordered These tests are administered in such high volumes that they’re often reordered when a patient is referred to a specialist—as opposed to that doctor merely perusing the original test results, according to M. Susan Stegall, a laboratory industry consultant in Salem, Ohio. “This happens even at places like the Cleveland Clinic,” Stegall said, noting that she has experienced it personally as well. Between May and November 2011, 153 Atrius primary care physicians were told the price range of the tests on an ongoing basis whenever they accessed their patient’s EMR. They were compared to a control group of 62 primary care doctors who were not given any price information. “Our study demonstrates that electronic health records can serve as a tool to promote cost transparency, educate physicians and reduce the use of potentially unnecessary laboratory tests by integrating the relative cost of care into providers’ decision-making processes,” Thomas D. Sequist, M.D., an Atrius Health physician and senior author on the study, wrote in an introduction to the study. However, test ordering was only modestly impacted. Ordering patterns for only four assays demonstrated what the study’s authors called a statistically significant reduction in their monthly ordering rate. Most were low-cost tests. They included glucose, which dropped 2.6 percent; alanine aminotransferase, better known as ALT, which dropped 2.3 percent; lipid profiles, which dropped 2.1 percent; and creatinine, which dropped 1.2 percent. Only one high-cost test, the chlamydia urine screening, dropped 2.5 percent. By contrast, testing volumes for that assay increased 12.7 percent among the control group. Orders for creatinine tests also increased among the control group 3.8 percent during the period when the initiative was in place. The control group’s patients were about 2.2 years older on average than the study group and were about 10 percent more likely to be enrolled in Medicare, although the study did not mention whether these differences may have had an impact on ordering volume. Altogether, the reduction in test orders represented a cut of 0.4 to 5.6 fewer lab orders per 1,000 patient visits per month, a decrease the study’s authors termed as modest. Less Dramatic Than Johns Hopkins Study The findings were actually less dramatic than what was experienced by Johns Hopkins physicians, who also had a six-month window when they were presented with the Medicare cost of 61 different tests at the time of order. According to a study published in the Journal of the American Medical Association last April, lab ordering among physicians in the group exposed to the prices dropped about 9 percent. By contrast, volumes in the control group rose about 5.6 percent during the six-month period. Nevertheless, Johns Hopkins saved about $400,000 during the time when the test volumes dropped. And while that study’s authors also called the results modest, the monetary gain is hard to ignore, even in a multibillion-dollar health care system. The Atrius study did not cite any specific cost savings. And while it is one of the largest multispeciality practices on the eastern seaboard, it is still a much smaller organization than Johns Hopkins. Dilemma for Labs Cutting the number of tests performed by a significant amount could prove troubling to some laboratories, which are already struggling with flat volumes. But Stegall noted that labs are slowly being prodded to prove their value, meaning ignoring or fighting efforts to move toward price transparency will hurt their bottom lines in the long term. At the same time, Stegall also believes that showing prices to doctors isn’t a cure-all for cutting down on unnecessary testing. “A hard stop works,” she said, referring to a feature of an EMR system that blocks physicians from ordering duplicate tests within a narrow period of time. Physicians can often override such a feature but may be prompted to put their clinical reasons why into the patient’s medical record. And in terms of price transparency that may be truly transformative, Stegall noted that Theranos, a laboratory venture that is providing draw services through Walgreens pharmacies, may be a future indicator. Theranos charges consumers only 50 percent of Medicare charges for its entire test menu. However, the California-based lab has only recently commenced operations and is operating in only a handful of locations, making it unclear what kind of success the company might eventually enjoy. An Atrius spokesperson was unable to make any of the physicians who authored the study available for comment. Takeaway: Price transparency on the provider end may not make a significant dent in testing volumes.