Cash-Pay Practices 

Functional medicine practices that offer specialty labs can be divided into two categories: Practices that do not participate with insurance companies and practices that do participate with insurance companies. Practices that do not participate with insurance companies generally set their price for each specialty lab and collect it from the patient or submit the patient payment with each specialty lab. Some practices generate substantial revenue by marking up specialty labs from several hundred to several thousand dollars. For example, these practices will collect $2,000 from the patient for a specialty test that they have contracted a price of $1,200–netting the practice $800 a test.

While these practices do not have the same regulatory issues as practices that participate with insurance companies, it is important to remember that all providers are bound by ethical obligations that may be addressed by licensing boards and can face charges of malpractice from patients. Exploiting specialty labs margins may not be unethical or constitute malpractice, but large specialty lab margins may be used against providers to show that their duty to the patient was compromised by pursuit of profit. Even though cash-pay functional medicine providers can set their own price point for specialty labs, prices for specialty labs should be set to be fair, reasonable and consistent with the overall market.

Insurance Participating Practices

Practices that do participate with insurance companies have to be much more cautious with specialty labs. While practices that do not participate with insurance companies can simply tell their patients, “This is the price,” the introduction of insurance complicates the price patients pay for specialty labs. There could be a “cash price” that the patient could pay for the specialty lab up front. There could be a patient portion that the patient could be responsible for if it is covered by insurance. And there could be the charged price that the patient could be charged if coverage for the specialty test is denied.

Each specialty lab seems to have their own practices regarding billing. It is important that the functional medicine practice offering specialty labs to their patients with insurance have a grasp of which insurance companies offer coverage for which specialty labs, understand the payment options for patients and clearly communicate this information to patients with documentation. Specialty lab costs can add up quickly, so patients should understand their options and their financial exposure before the specialty test is ordered.

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