Price transparency key to containing $226B in unnecessary lab orders

Utilization of laboratory diagnostic tests can be lowered if clinicians are presented with test fees at order entry, according to a study published online April 15 in JAMA Internal Medicine.

“Our findings suggest that simply displaying the Medicare allowable fee of diagnostic laboratory tests at the time of order entry can affect physician ordering behavior, even without any additional educational interventions,” wrote Leonard S. Feldman, MD, of Johns Hopkins University School of Medicine in Baltimore, and colleagues. They added that previous studies have shown more than two-thirds of inpatient lab tests don’t contribute to patient care, resulting in over $226 billion in waste in the U.S.

The study was in the same vein as another cost transparency study published online earlier this year in the Journal of the American College of Radiology. That study looked at presenting the cost of imaging exams at the point of order entry, but found it did little to sway utilization.

In the laboratory test study, Feldman and colleagues looked at data from all clinicians at Johns Hopkins Hospital who ordered lab tests through the facility’s computerized order entry system. A total of 61 tests were randomly assigned to an active group, in which the Medicare allowable fees were displayed, or a control group without displayed fees. A baseline was established between November 2008 and May 2009 when no fees were displayed. One year later the researchers began a 6-month intervention period.

Test ordering rates in the active group fell from 3.72 tests per patient-day during baseline to 3.40 tests per patient-day in the intervention period, approximately a 9 percent drop. The drop was partially offset by a 5.6 percent increase in ordering in the control group.

Overall, the hospital saw a net charge reduction of more than $400,000 during the intervention, according to Feldman and colleagues.

“Although the overall financial impact is modest, our study offers evidence that presenting providers with associated test fees as they order is a simple and unobtrusive way to alter behavior,” wrote the authors.