• Article
  • October 27, 2017

Test Utilization Management Program Helps Hospitals Avoid Costs

Put the needle down: A test utilization management program can help children's hospitals reduce lab costs, avoid unnecessary blood draws and improve care.

By Julie Kaylor, M.S., CGC

Waste in health care can lead to increased resource utilization, higher costs, and in some instances, adverse patient outcomes. Lab testing is one area where hospitals can make improvements to reduce waste. Lab costs account for 4 percent of all health care costs—about $60 billion to $70 billion dollars a year, and areas of growing costs include panel testing and genetic testing.

Test utilization management (TUM) programs in hospitals put an emphasis on high-quality, cost-effective care: the right test, for the right patient, at the right time, for the right price. Of the organizations using TUM initiatives, no two programs look alike. Some are driven by clinical pathologists or lab personnel; other programs are driven by physicians who want to see change happen within their organizations.

The first step of implementing a TUM program is to identify a need.  At Arkansas Children's Hospital in Little Rock, the driving force behind implementing a TUM was the sting of increased test costs for genetic testing. Over a period of a few years, the hospital saw its reference lab costs nearly double from $3 million in 2008 to $5.8 million in 2012. In 2011, the clinical lab sent 3,737 genetic tests to 26 different reference labs, ranging in cost from $84 to $11,320 for a single test. Here's how the hospital implemented a TUM program to eventually avoid $550,000 in costs.

Finding the right flow

From 2012-14, the TUM program at Arkansas Children's consisted of a retrospective daily case review. The genetic counselor reviewed a daily list of orders, but there were drawbacks to this method. The genetic counselor was reviewing orders after they had been sent out and not reviewing samples in real time. This wasted time, money and materials by packaging and processing samples that might eventually be canceled. This meant the lab might also have to reroute samples if the courier already picked them up.

Another drawback to the retroactive review was there was no way to ensure insurance pre-authorization. This affected hospital reimbursement, and resulted in patients receiving unexpected bills.

In 2015, the hospital implemented a new process that included insurance pre-authorization as a requirement for review and conducted the review in real time. When a provider approved a genetic test, the send-out lab received the request and held it for the genetic counselor to review. The genetic counselor reviewed the test with a two-prong approach: Is the case clinically appropriate, and does it have insurance pre-authorization if the test is necessary? When a case meets both requirements, the lab processes the sample.

Implementation of this process helped the hospital reduce waste and tech time in the lab, educate clinicians on clinically appropriate testing and insurance pre-authorization strategies, and identified knowledge gaps among clinicians and hospital staff members regarding insurance pre-authorization. At the time, there was confusion among staff members about whose job it was to obtain pre-authorization, and some were passing that job on to the family.

How test utilization management works

Today, Arkansas Children's has a one-half, full-time equivalent devoted to test review—the genetic counselor. If there are red flags about a test, the genetic counselor initiates a discussion with the physician who ordered the test, and only with physician approval are tests modified, canceled or changed. Tests that need modification fall in to three categories: errors of order entry (typos, confusing names); duplicate testing (same test twice, tests that overlap); or clinically inappropriate (wrong test for the wrong patient).

In this example of an error in order entry, a doctor ordered genetic testing for campomelic dysplasia on a 14-year-old girl admitted from the emergency room. This condition is associated with dwarfism, abnormalities of the genitalia and a cleft palate. The patient had a movement disorder, but she had no signs of campomelic dysplasia. Because this discrepancy raised red flags, the genetic counselor contacted the physician and together, they conducted a chart review.

During the discussion, it became apparent there was a handwritten note in the record for a "CMP in the morning." CMP is also known as complete metabolic profile—a common test in any setting. However, in the order entry system at Arkansas Children's, the pneumonic for a complete metabolic profile is similar to campomelic dysplasia, which is CAMP. A quick conversation with the physician resolved the issue, and the provider canceled the test. This prevented an unnecessary expenditure of more than $1,000.

In another example, providers ordered testing for the CDKL5 gene in a pair of siblings. This gene is associated with developmental delay, which the siblings did not have upon chart review. The genetic counselor noticed the siblings were admitted for tuberculosis, and a large panel of cluster of differentiation (CD) antigens had been ordered at same time as the genetic test. It became clear that among the CD antigens, CDKL5 had been selected because it started with CD. After canceling the inappropriate test, the hospital avoided almost $6,000 in costs.

Sometimes the lab notices testing has already been performed for a patient. For example, the lab noticed a provider ordered RET gene testing for a child with a neuroendocrine tumor. This was a clinically appropriate test, but during chart review, the genetic counselor noticed this test had been competed in 2004 and was positive. The genetic counselor identified the results for the physician and canceled the order, avoiding $600 in costs.

Avoiding unnecessary lab tests

Clinically inappropriate tests can be intimidating to approach, but are the most significant type of testing error in patient care. In one example, a GI doctor ordered genetic testing for colon cancer for a specific type of tumor, and upon chart review, the lab noticed the pathology for this tumor had not been returned. After a discussion with the physician, she agreed to wait a day for the report. It confirmed the tumor type was not what the doctor initially suspected, and the lab changed the genetic test order.

If the initial order had gone out as directed, the hospital would have conducted an unnecessary test, which would have created a delay in diagnosing this pediatric cancer patient. In the effort to provide the most clinically accurate testing for this patient, the hospital avoided more than $1,700 in costs.

A closer look at the hospital's savings

When Arkansas Children's started taking a closer look at reducing lab costs in 2012, the hospital avoided costs of more than $100,000 just by canceling orders. In 2013, the hospital avoided $150,000 in costs by canceling orders and bringing the highest volume order in house. And a year later, with the highest volume test in house, the hospital avoided costs of almost $100,000.

In 2014, the hospital hit a turning point. A reduction of canceled orders meant providers were on the right track, and the hospital avoided unnecessary blood draws for a significant number of patients. In 2015, when the hospital implemented insurance pre-authorization for genetic tests, savings increased to more than $140,000 a year. From July 2015 to the end of that year, the TUM program at Arkansas Children's avoided costs of more than $500,000.

Cost-saving strategies

In addition to the case review process, there are other ways to cut lab costs, such as negotiating prices with a vendor. Consider negotiating contracts with current vendors, or switch vendors to get a better price. Arkansas Children's looked at a single genetic test that the lab sent a volume of 17 tests per year. The hospital cut costs by using two different vendors and eventually reduced costs for this test by $60,000.

Another cost-cutting strategy is to review contracts with reference labs. Because genetic testing is rapidly changing, the prices change often, so review contracts annually. Ask preferred reference labs to match a reasonable, competitive market price. They will often negotiate to keep a hospital's business.

Tips for communicating with providers

The relationship between lab and provider is vital. Lab team members can partner with providers to make sure patients get the care they need, and they can also provide checks and balances. When it comes to working with providers, labs must work within parameters, such as

  • Value providers' input
  • Question processes more than orders
  • Reflect, don't reprimand
  • Remember the provider is the one caring for the patient

And for providers who are interested in working with lab TUM groups, here are some tips:

  • Participate; don't patronize
  • Set an example
  • Get appropriate consent when asked
  • Consider your case thoughtfully
  • Be conscious of the benefit of testing
  • Provide clinical information for complex testing

TUM programs are an important part of clinical care, but there is no one-size-fits-all model. To see the biggest costs avoided, be flexible when implementing a program. It can be an overwhelming process, so it helps to know where to start. A small pilot study can help with data collection to justify additional expenses or initiatives. Constantly evaluate and analyze the approach, efficacy, provider satisfaction and the quality of patient care.

Julie Kaylor, M.S., CGC, was the laboratory genetic counselor at Arkansas Children's Hospital in Little Rock. Learn more about the hospital's efforts to streamline its process. Send questions or comments to magazine@childrenshospitals.org.