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The Emerging Use By Commercial Payers Of Third-Party Lab Benefit Managers For Genetic Testing

This was originally published on Health Affairs on October 23rd, 2019, written by Kathryn A. Phillips, Patricia A. Deverka.

Our newly released study examines the increasingly important but poorly understood role of Lab Benefit Managers (LBMs).Pharmaceutical Benefit Managers (PBMs) have generated widespread attention (often negative), but little attention has been paid to the rapid growth of LBMs. LBMs now manage genetic test benefits for hundreds of millions of enrollees and three of the four largest health plans in the U.S. use LBMs to manage genetic testing. These third party benefit managers are changing clinical and lab practice in significant ways. For example, some LBMs require prior authorization for all genetic tests, which has important implications for patients and providers, and some develop coverage policies on behalf of payers, thus changing the nature of coverage policy development in the U.S. 

This is the first study to our knowledge to examine the growth and role of LBMs. We describe the LBM landscape including the major players as well as the types of services LBMs offer to providers and labs on behalf of payers. Next, we attempt to apply lessons learned from recent observations regarding PBMs to LBMs in the hopes of avoiding some of the potential negative consequences of introducing misaligned incentives among patients, clinicians, labs and insurers. While the LBM business model is distinct from PBMs, it is instructive to look more closely at the current reach of LBMs to see how the use of intermediaries might affect genetic test access, costs, and utilization over time. Finally, we outline trends to watch to develop transparent, objective evidence about the impact of LBMs on patient outcomes, and to assess trade-offs between benefits and harms from tighter utilization management practices.

This article was from the Health Affairs Blog: https://www.healthaffairs.org/do/10.1377/hblog20191021.563154/full/

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