029 - Money Tree Series #7 - Laboratories

In this Money Tree Series Episode #7, Coach JPMD talks about the role played by laboratories and their influence on the Money Tree. He discusses how they impact the flow of money from insurance companies and care providers. The Money Tree Series episodes are geared to helping physicians and other healthcare providers learn the ins and outs of running a successful Medicare Advantage practice.  You can download the money tree diagram at www.coachjpmd.com/moneytree.

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Transcript

Intro  0:00  
Welcome to the practice impossible podcast. We're your host, Jude Pierre MD, also known as Coach JPMD discusses medical practice topics that will guide you through the maze that is the business of medicine, and teach you how to increase profits and help populations live long. Your mission should you choose to accept is to listen and be transformed. Now, here's your host, Coach JPMD.

Coach JPMD  0:25  
Hello out there, my friends. Welcome to the practice impossible podcast with your host, Coach JPMD. And today's episode was actually recorded in a hotel room. There's a backstory to that, of course, and we are actually spending some time in a hotel room with two bedrooms, two baths, waiting for our home to finish construction. And it's been a little challenging finding place to record and to prepare for a podcast series. But I wanted to stay true to releasing an episode every two weeks. And so here we are, we're here with the money tree series. This is the seventh episode in the money tree series where we discuss things that affect your payment tree. And if you haven't had a chance to download the money tree diagram to kind of see and follow where we're going and what we've done, you can do so at www.coachjpmd.com/money tree. And in addition, if you're in an area that has a high Medicare Advantage penetration, I want to offer you an opportunity to speak to me by booking the call and following the link at the bottom of the show notes where we can discuss things that might be pertinent to your move or your practice or the patients that you see is really where your focus should lie. So if you're going to be in Michigan, or Connecticut, Alabama, Georgia, or even Rhode Island, these areas have almost a 50% penetration or 50% of patients that are enrolled in Medicare are enrolled in a Medicare Advantage plan. 

So if you are going to be practicing those areas, you really need to understand that demographic and those insurances. So that's what I've been doing with the money tree is kind of bringing awareness to that. We recently had a doctor from Michigan who worked at the University of Michigan and on our last episode, who stated that she didn't have a lot of patients with Medicare Advantage because she was working in an academic setting, and she was out of network with them. So if you're an academic setting, that may not apply to you. But if you are going into the community in these 4-5 states that you kind of have to know that this is what you're going to be seeing and this is what you need to understand. So I encourage you to book a call with me, follow the link at the bottom of the show notes to kind of describe or let me help you understand where your knowledge gaps may be and where I may be able to help you understand Medicare Advantage better and give you the resources that would help you succeed in your practice. So today's money tree series is on labs, and it's just another branch of the money tree. And just like episodes 13, 14, 16, 20, 24 and 27. 14, we talked about Medicare Advantage plans, Episode 20, we talked about specialists and episode 24, we talked about diagnostic centers. 27. we talked about ambulatory surgery centers. 

And all these things affect the payment tree and how a primary care doctor receives payment from a pool of money. But there's also the fee for service providers, like the specialist and now like labs. So laboratories like LabCorp, Quest, or other independent labs around the country will contract with a Medicare Advantage company to be able to provide laboratory services for their patient population. Many of the services are provided on a capitation basis. And we touched on capitation in our llama course as well as some other episodes where a laboratory company will receive a set amount of money per month per member to be able to provide services. So if you have a population of a million people under Medicare Advantage plan, then that capitation payments will be based on that population and the demographics of that population how sick that population is. And they will provide services like lipid panels, CBC CMP, and other routine testing where patients can go as many times a year and they will get the insurance company will reimburse the laboratory the same amount regardless of how many times they'd go. Now, if it's a specialty test, like a vitamin D 25, hydroxy level, or an ionized calcium level, or specific pathology services, or even urine drug tests, those tests are usually not covered under a capitation plan. So every time you send the patient for those tests, then they will affect that payment tree. 

So they will remove monies from the pool of money that you have to take care of those patients. So if you know anything about insurance, contracting and getting payments from insurance companies, it's a volume game. It's about making money on the volume of patients that you're going to see because if you can see a large volume of patients, then your cost may go down for taking care of that patient population. But also it's about exclusivity. So if you're a company like LabCorp or quest, most insurance companies will not come contract with both of those major payers, most of the insurance companies will not contract with both of those lab companies, I should say, they'll contract with one for that exclusivity, they'll maybe get a discount for that patient population that they're going to be guaranteed to make money on. And it's a win win for both parties, usually, whereas the lab company knows that if they have a population, like I said, of a million patients, or 5 million patients, and they're charging them $1 per member per month, or a 50 cents per member per month, whatever that contracted rate is, they know that that income will be studied based on the patient population. 

Now on the insurance company side, the insurance company will then know every month based on their population of patients, they're going to pay that lab Company X amount of dollars per month, and they don't have to worry about fluctuation of expenses. And that's why a capitated model sometimes works better than a fee for service model. And obviously, you can have carve outs you can have things that can be paid extra and negotiated for at a higher amount in order to make that agreement, even a better financial arrangement for both parties. So this is a relatively short episode on laboratories and how they receive payments and how it affects the payment tree. And if you'd like these money tree series, leave a review for me, let me know what you think. If there's other things that you want me to talk about, for sure that I'll be open and willing to insert them into the queue of episodes to come. Don't forget to download the money tree diagram at www.coach jpmd.com/moneytree and those links will be at the bottom of the show notes and we thank you for listening and I hope you enjoyed this episode. And like I said, leave a review and we'll see you soon.