MLS 350 Final Exam

What does DRG stand for?

Diagnostic related group

Which of the following is NOT a CLIA certificate?

Low complexity

In this rule, if an employee works over 8-hours in a day they get overtime.

8/80 work rule

Which of the following is considered a fixed cost?

Administrative salaries

Which of the following would be considered a billable procedure?

An HIV test

Chapter 15: Compliance Issues: The Regulations

CLIA: The Clinical Laboratory Improvement Amendments of 1988 (CLIA'88) · Regulates all laboratory testing used for diagnosis, monitoring, prevention or treatment · Establishes quality standards for all laboratory testing to ensure accuracy, reliability and timeliness of patient test results. · "Test site neutral" · Same regulations apply regardless of the location of testing The Centers for Medicare and Medicaid Services (CMS): is responsible for registering laboratories for · fee collection · Onsite Inspection Surveys · Surveyor guidelines and training · Approving proficiency testing providers · Deeming professional accreditation organizations and exempting states · Enforcement actions when needed · Laboratory testing requirements are based on the complexity or difficulty to perform a test method CLIA certificates: All laboratory testing must be done under an appropriate CLIA certificate. · CLIA regulations divide test methods into three categories: 1.) Waived (ex: pregnancy test) 2.) Moderate Complexity Provider Performed Microscopy Procedures (PPMP) 3.) High complexity Depending on the test complexity, laboratories will receive one of the following CLIA certificates: ● Waiver - Permits a site to perform only those tests methods identified as waived ● Provider-performed microscopy registration (PPMP) - Certificate issued to a laboratory for physicians, midlevel practitioners, or dentists to perform PPM procedures or those tests on specimens collected during a physical examination and waived tests ● Registration (temporary certificate) - A certificate issued to enable laboratories to conduct waived, moderate, and/or high complexity laboratory testing. ● Compliance - Once the laboratory is inspected and judged in compliance with the requirements, this temporary registration certificate is replaced with a permanent "compliance" certificate. ● Accreditation- Issued to those laboratories seeking accreditation from a CMS-deemed professional organization when found in compliance with the accrediting organizations' requirements. CLIA Testing Categories CLIA defines waived as: · "test cleared by the FDA for home use" · "tests using such simple and accurate methodologies that the likelihood of erroneous results is negligible" · "pose no reasonable risk of harm to the patient if the test is performed incorrectly. CLIA and Moderate and High Complexity Testing: · Each specific laboratory test system or methodology is graded for the level of complexity by assigning scores of 1, 2, or 3 to each of seven criteria: 1. Knowledge 2. Training and experience 3. Reagents and materials preparations 4. Characteristics of operational steps 5. Calibration, quality control, and proficiency testing materials 6. Test system troubleshooting and equipment 7. Interpretation and judgment Personnel for Moderate Complexity Testing: · For sites performing moderate complexity testing, individuals with the proper qualifications must be identified for the four positions of: 1. Director 2. Technical Consultant 3. Clinical Consultant 4. Testing personnel · Director o Can range from a physician to an individual with a bachelor's degree in medical technology/clinical laboratory science or a degree in chemical, physical or biological science AND o Have 2 years of laboratory training/experience AND o Have 2 years of laboratory supervisory experience · Clinical Consultant o serves as the liaison between the laboratory and its customers and must be qualified to consult with clinicians and patients and give opinions concerning the diagnosis, treatment, and management of patient care. o must be a clinician or have a doctorate in chemical, physical, biological, or clinical/medical laboratory science. · Technical consultant o Establishes the quality standards of the laboratory through selecting and monitoring the laboratory's methods/instrumentations, and evaluating and documenting the competency of the personnel annually o Qualifications range from clinician to an individual possessing a bachelor's degree in chemical, physical, biological or clinical /medical laboratory science AND one year of laboratory training or experience in the designates specialty of responsibility · Testing Personnel o are responsible for specimen processing, test performance and reporting test results o Minimum requirements for testing personnel include a high school education (or equivalent), plus appropriate director-approved training, and ongoing competency assessment at least once per year Personnel for High Complexity Testing For sites performing high complexity testing, individuals with the proper qualification must be identified for five positions: 1. Director 2. Clinical Consultant 3. Technical Supervisor 4. General Supervisor 5. Testing Personnel · Director o Responsible for the overall operation and administration of the laboratory o Licensed physician with laboratory training or experience o or have a doctorate in chemical, physical, biological, or clinical / medical laboratory science. For those hired after February 24, 2003 the individual must have Health and Human Services (HHS) approved board certification or be o qualified as a director on or before February 28, 1992. · Clinical Consultant o Qualification is the same as that for moderate complexity testing. · Technical Supervisor o Establishes the quality standards of the laboratory by selecting and monitoring methods and instrumentation and evaluating and documenting the competency of its personnel o Qualification ranges from a clinician to an individual. possessing a bachelor's degree in clinical / medical laboratory science or chemical, physical, or biological science plus specified training and/or experience. · General Supervisor o Provides day-to-day supervision of testing personnel and reporting of results o Requirements range from individuals who qualify as a clinician to persons possessing an associate degree in a clinical/ medical laboratory science or and two years of laboratory training and experience · Testing Personnel o performing high complexity testing must at least possess an associate degree in clinical/medical laboratory science, or education and training equivalent to an associate degree Proficiency Testing · Under CLIA, regulatory proficiency testing (PT) plays a key role in evaluating test result quality for CLIA-regulated analytes in test sites performing moderate and/or high complexity testing. Quality Systems for Nonwaived Testing · Published by CMS in the final rule to CLIA in 2003 · consolidates most of the moderate and high complexity quality requirements into one set of requirements · Quality requirements are organized to follow the path of patient specimens through the testing process - preanalytical, analytical, and postanalytical. Procedure Manual · Procedures, in written or in electronic form, must be available to all testing personnel for all tests performed. · High quality "standard operating procedures," or SOPs, are essential for each testing site. · Failure to meet applicable analytic systems requirements (procedures) remains one of the top deficiencies identified by inspectors for CLIA compliance. Method Verification of Performance Specifications · Method verification for unmodified, FDA-approved, nonwaived test methods means collecting data that document the method's performance in the test site by the site's analysts. · Performance characteristics that need to be evaluated include: accuracy, precision, reportable range, and identification of appropriate reference intervals. Quality Control (QC) for Nonwaived Testing · For each test system, the laboratory is responsible for having control procedures that monitor the accuracy and precision of the complete analytical process. · The control procedures must: 1) detect immediate errors that occur due to test system failure, adverse environmental conditions, and operator performance; 2) monitor over time the accuracy and precision of test performance CLIA requires test sites to analyze, for most analytes, at least two levels of external, liquid quality control per test per day of testing. Inspection · CLIA requires those sites performing moderate and high complexity tests to be inspected every two years for compliance to the regulation. · These inspections are unannounced and conducted while the laboratory's CLIA certificate is still valid. Voluntary Accreditation · CLIA regulations allow CMS to approve nonprofit, professional organizations having laboratory testing and inspection standards that are essentially equivalent to, or more stringent than, those of CLIA (USDHHS, 2016). · The three largest organizations are: 1.) The Joint Commission (TJC): formerly JCAHO 2.) The Laboratory Accreditation Program of the College of American Pathologists (CAP) 3.) COLA 1.) The Joint Commission · Voluntary organization that accredits more than 80% of US healthcare organization. · The testing standards · Focus on quality improvement · Designed to promote quality outcomes · Inspection for compliance is conducted every two years 2)Laboratory Accreditation Program of the College of American Pathologists (LAP-CAP) · Accredits only laboratory testing sites and not the entire healthcare organization. · All test sites must follow the Laboratory General (GEN) and Common (COM) checklists along with the specific checklists appropriate to the specialty of testing. · The personnel qualifications for all categories of testing are identical to those identified in CLIA'88. · Prefer to see Pathologists as laboratory directors · Labs follow specific QC, procedure manual, method performance specification validation, accuracy assessment, method correlation requirements specified in CAP checklists · Many of these are similar or the same as CLIA's 3)COLA (formerly the Commission of Office Laboratory Accreditation) · COLA's philosophy is one of education and problem solving. · To prepare for the accreditation process, COLA provides sites with an initial, preinspection (self-inspection) checklist. The COLA inspector then uses this same checklist during the on-site inspection. Occupational Safety and Health Administration (OSHA) requirements · The U.S. Department of Labor, under the Occupational Safety and Health Administration (OSHA), is responsible for regulations relating to general workplace safety and protecting the health of US workers. · OSHA's Standard Precautions (Universal Precautions) for the handling of biological specimens, requires that all blood, body fluids, tissue and other potentially infectious materials be treated as equally hazardous. · Facilities must have in place a classification system for each job based on the level of exposure to blood-borne pathogens. · Facility must develop and implement procedures that are in compliance with OSHA regulations to protect workers and minimize the risk of exposure. · Upon employment, employees must participate in an on-the-job training program that minimally covers the facility's exposure control plan, use of personal protective equipment, and procedures to be followed in the event of exposure to a blood-borne pathogen. Health Insurance Portability and Accountability Act (HIPPA) · The primary goal of this "health insurance focused" legislation was to make it easier to detect and prosecute fraud and abuse, and enable workers of all professions, even those with pre-existing medical conditions, to change jobs without loss or interruption of health insurance protection. · Larger institutions are required to have a "HIPAA Privacy Officer" to provide information.

Chapter 12: Effective Budgeting in the Laboratory: Practical Tips

Effective Budgeting • Within reason, the laboratory manager must be able to accurately forecast expenses for anticipated patient and test volumes and to a lesser extent, revenues. • The budget is a forecast- a best guess estimate of anticipated volumes, revenues and expenses. • Most test volumes, revenues and expenses should be able to be reasonably estimated by tracking past expenses, reviewing vendor contracts and accurately projecting growth. The Budget Process • A variance is the difference between the actual and projected (budgeted) volume, revenue or expense. • Variances can be positive or negative. • The laboratory manager must be able to investigate & justify any variance from the forecasted budget. Questions for Budget Preparation: • What are the projected test volumes for the upcoming budget period? • How much did the laboratory spend on reagents, consumables, proficiency testing, licensing fees, maintenance contracts, etc., last year? Are there any changes such as changes to the test menu, increased fees, purchase of additional proficiency tests, etc.? • Do increased expenditures for the send-out tests to the reference laboratory warrant investigation of bringing testing in-house? • If any tests are brought in-house, is there an increase in the testing section's budget (reagents, personnel, consumables, etc.) and a corresponding decrease in the send out account? • Resource management is different from resource allocation because it includes accountability for results. Managers are asked to justify resources needed in terms of expected results; therefore, cost accounting is an important tool to accomplish this objective on an on-going basis. • The operating budget is a tool for laboratory managers to use throughout the year. It is the calculated best-guess estimate of revenue and expenditures the laboratory is expected to realize for a 12 month period of time, the fiscal year. Types of Operating Budgets: 1) Fixed Budget (static) • Assumes a single level of activity and the entire budget is built around that level. • A fixed budget is not a tool to monitor and control resources during change. 2) Flexible Budget (variable) • Reflects expected lab revenue and expenses and it anticipates changes. • A tool for controlling costs: points out the priority expenses and its variances. 3) Program Budget • Based on a specific program matrix • Includes related activities, services, staffing, and equipment related to the program • Used for short-term planning (ex: mobile sites for covid tests) 4) Appropriation Budget (ex: grant) • Common in government organizations • Dependent on outside source of funds. • Outside agency reviews the budget in detail & authorizes specific dollars 5) Rolling Budget • A continuous budget that is updated periodically in preparation for the next budget cycle. • A rolling budget for a 12-month period is reviewed & revised quarterly. • This type of budget is used for cash projections and is frequently updated. 6) Incremental Budget • Address only changes such as new equipment, new positions, and new programs. • Based on the assumption that existing operations are essential to the process and are working at peak performance. 7) Zero-Based Budget (used in financial trouble) • Reviewed annually, Re-evaluates all activities to decide whether to eliminate or fund • Project approval is based on fund availability • Funding levels are determined by priorities 8) Historical-Based Budget • Budgeting above 100% of the previous year • Total spent in the previous year is divided by 12. • Number per month plus percentage for inflation is used for the upcoming year. Budgeting: Costs • Costs can behave as fixed or as variable. • Total Costs = Fixed Costs + Variable Costs • Average Cost Per Test = Total Costs/# Tests • The average cost per test decreases as volume increases (up to a certain volume at which point additional staff will need to be hired as the volume will reach a point that exceeds the capacity of the existing staff). The Successful Budget Process • Clear goals and objectives that can guide the resource allocation. • Project volumes or obtain projections from senior administration. • Convert volumes into revenue (mostly for outpatients). • Convert volumes into expense requirements. • Ensure all expenses were accurately captured and accounted for during the last fiscal year and there are no outstanding bills or credits that carry over into the current fiscal year. • Detailed statistical data, economic trends, and accurate information about existing and potential clients. • A defined budget period and procedures for development of the budget. • Reports to identify actual financial and statistical information for comparison with the budget and for variance analysis. • There are three important segments for the complete budget: 1) income forecasting: amount of money bringing in 2) expense budget: spending 3) cash flow projections: where money is going to • The variance analysis will capture changes and trends in the marketplace that affect the operation. • Analyzing variances will improve the quality of the original forecasts, point out changes in operation, and offer a means of asking why goals were not met. Practical Tips for a Successful Budget Process 1. Start early 2. Recognize and utilize resources 3. Review financial reports 4. Predict or obtain predictions of future test volumes 5. Predict or obtain expense increases 6. Provide documentation 7. Compare the proposed budget to the existing one 1) Start Early • Starting early is a bit of a misnomer as the budgeting process does not "end," per se, as expenses are tracked and variances are analyzed on a continual basis. • The organization will usually set deadlines as to when the drafted budget is due to be submitted for review. • There may be many levels of reviews and approvals 2) Recognize and Utilize Resources • There should be past budgets the laboratory manager can use as a guide, as most laboratories have been operating for a number of years. • If you have never prepared a budget before, request assistance from someone familiar with the budgeting process, such as someone in finance or another manager. • The finance department may provide templates and computer applications such as spreadsheets. • Utilize section supervisors & frontline technologists. 3) Review Financial Reports • The organization's finance department should provide reports that can be used for financial analysis throughout the year. • The laboratory manager should properly justify all variances, both negative and positive. • The expense reports should be reviewed periodically. • TABLE 12-3. Common Reasons for Variances 4) Predict or Obtain Predictions • In many cases, predictions of future volumes will be provided by senior management to department managers at the start of the budgeting process. • This is often advantageous, as senior management is aware of all changes in the departments or services in the organization. • In addition, outside factors, such as the state of the economy, will factor into projecting future volumes. 5) Predict or Obtain Expense Increases • Unless under contract for a fixed price, most vendors adjust pricing for inflation on an annual basis. • Price increases are generally in the 2 - 4% range and should be factored into the cost of reagents, consumables, blood and blood products, etc . • The human resources or personnel in the laboratory usually receive an adjustment to pay as well, be it in the form of a cost of living increase, merit raise or combination of both. 6) Provide Documentation • Documentation should accompany all significant adjustments to the budget. • Historically, organizations have tracked and trended data such as volumes, revenues and expenses on an internal basis. • Many organizations are now incorporating external benchmarking into their productivity comparisons. 7) Compare Proposed Budget With Existing • Senior administration realizes emergencies and unexpected occurrences can happen in operating a business, just as in running a household. • Proper planning, including accurate record-keeping and realistic projections, can help minimize the impact these events have in causing variances to a budget. Common Problems Resulting in a Poorly Developed Budget • Using historical information as the only assumption source. • Only examining the accounts that show unfavorable variances. • Looking for solutions not to increase the budget but to enforce realistic spending limits. • Making budget increases automatically. Possible Solutions to Common Budget Problems • Focus decisions toward clear objectives. • Think of the budget as a standard and focus performance against it. • Involve the staff by communicating the goals set forth in the budget and seeking input from the staff • Analyze monthly variances by comparing actual expenses to budget expenses and examining causes (both negative and positive variances need to be explained). • Periodically analyze the services provided by the laboratory and look for ways to reduce expenses & increase income Ensuring Approval for your Budget • Present a strong case based on sound assumptions. • Do not defend a budget that has been changed randomly. • Use discretion in discussing any issue with a superior. Know when to accept their answer, and above all remain composed. How to Explain Variances • Always go back to the assumption when writing a variance explanation, and base it on a comparison. • Realize that some variances are expected (i.e. a variance in workload which should correlate with an increase or decrease in test volumes. • Identify real problems and recommend solutions and recognize that the budgeting process is a tool that monitors process. • The budget is only a guideline and estimate. What to Avoid in Explaining Variances • Don't try to excuse the previous year's excessive variances by referring to a previous period. Confront the problems that exist each year. • Don't ask for a budget increase this year based on not being able to meet last year's budget. • Try not to use weak assumptions. It leads to an inability to identify or explain problems. Surviving Budget Justification Explanation ● Follow the organizational format. ● Ensure the data used to develop the budget is accurate. ● Make sure you have evidence to support your data. ● Review & Practice. The Budget Process • No matter how carefully the budget is analyzed and prepared, it is not possible to prevent a superior from changing the budget. However, proper and sufficient documentation of justification will reduce capricious budget reductions.

Chapter 14: Healthcare Reimbursement

Elements Contributing to Increased Healthcare Costs · Increase in technology · Increase in skilled personnel · Aging population · Consumer awareness and expectations · the uninsured/underinsured Terms - premiums: amount charged by the insurer to insure against specific risks. - deductibles: represent the amount the insured must pay before benefits are payable. - co-payments: the proportion of total medical costs that the insured must pay out of pocket each time health service are received after the deductible has been paid. Federal and State Reimbursement Systems · Medicare came into being as an amendment to the Social Security Act (SSA) in 1965. - federally ran - eligible at 65 years old, if you have been working and paying into it. o Part A: hospital expenses (no premium), ambulance, hospice, in-stays and hospital. o Part B: outpatient services, doctor visits, labs, premium is deducted from social security. o Part C: private health insurance companies (dental, vision, hearing). o Part D: prescription coverage · Medicaid, also created by the SSA of 1965, is a state-run healthcare plan for individuals with low incomes. It is state and federally funded. Managed-care Organizations · Health Maintenance Organization (HMO) · Preferred Provider Organization (PPO) · Exclusive Provider Organization · Point of Service Diagnostic Related Groups (DRGs) · DRGs are used to reimburse hospital costs for Medicare inpatients only. (Part A services) · Once a hospital's base rate has been established, the CMS (Center for Medicare Services) accounts for several variables to adjust payment to the hospital. · Using PPS (Prospective Payment System), hospitals are now able to determine how much reimbursement they will receive for Medicare patients. · DRGs are not used for physician services. How it works 1. Patients are assigned a code (ICD-10) 2. Grouped into a certain DRG 3. CMS assigns a weight to each DRG based on severity of diagnosis, type of procedure, number of lab and diagnostic tests, number and type of drugs prescribed, complications, etc. 4. CMS weight x hospital rate determines how much the hospital will be reimbursed for care of patients Summary of Medicare Payment Systems · The federal government has adopted three payment methodologies (DRGs, RBRVS, APCs) to help control the rate of growth in healthcare expenditures. · CMS evaluates and adjusts the programs on a continual basis to ensure that they remain viable mechanisms for healthcare payment. Payment Methodologies Adopted By The Federal Government · DRGs: used to pay hospitals for inpatient services. · RBRVS: used to calculate payments to physicians for inpatient and outpatient visits or services. · APCs: used to pay hospitals for outpatient services and emergency room care. · PAMA: Protecting Access Medicare Act; reduces payment in lab (a lot less reimbursement for tests in labs). Types of Reimbursement · Capitation · Per Diem · Per Case · Carve Out (Carved Out) Capitation o Capitation is a prospective payment agreement between an insurance plan and a provider. o Physician is paid a certain amount of dollars per member per month (PMPM). From this amount, the physician agrees to provide services to all of their patients covered by the plan. Per Diem o The hospital negotiates with the HMO to a set amount of reimbursement per day that the patient spends in house. Per Case o The provider and the managed care plan or private insurer agree on a per case reimbursement rate for specific diagnoses or procedures. Carved Out o This is when certain procedures or tests are carved out of the set reimbursement amount. Future of Reimbursement · Shift in philosophy from paying a provider per service to bundled payments. · CMS Acute Care Episode Demonstration Project · PROMETHEUS Payment model What is PAMA?

What does CLIA 88' do?

Ensures accuracy, reliability and timeliness of patient results

Which of the following is specific to The Joint Commission?

Focuses on quality improvement in testing standards

What type of budget is based solely on last year's finances?

Historical-based budget

Which of the following can be used to compile revenue projections?

Patient volume forecasts Regulatory changes Growth projections All of the above

Which of the following is NOT used to grade complexity in labs?

Size of laboratory and number of testing personnel

Chapter 18: Laboratory Information Systems: Flexibility Is the Key to Modernization

System Components All computer systems are composed of hardware, software, and tools for data entry and retrieval. Software and Networks o Computer networks: a group of connected computers, which share data by employing a standard set of specifications for the data transmitted. o Local area network (LAN): indicates a geographically small area. o Wide area network (WAN): indicates a large geographic area. o Routers: connect area networks to national networks that make up the internet, or worldwide web. Hardware Central processing unit (CPU): memory for storing data. Random access memory (RAM): where data is stored while it is being processed or waiting to be processed. Disc array: several linked hard discs. Interface Software o Interface software allows communication between servers for different data management systems and between laboratory instruments and the LIS software. o Interfacing may be accomplished through software imbedded in the LIS or through a dedicated computer known as an interface engine. Definition Tables o LIS software is structured around definition tables which contain the data entered by laboratorians, as well as other tables which manage technologist access, provide normal values, and record quality control data. o Definition tables are essentially spreadsheets which are defined or customized by the laboratory. Electronic Medical Record (EMR) (ex: MyChart) o The electronic medical record (EMR), also referred to as the electronic health record (EHR), is essentially an electronic form of the patient medical record. o The electronic medical record operates under the Health Level Seven International (HL7) standards for compatibility of health information systems. o Application to Public Health - Until recently, public health departments have relied on physician or laboratory initiated manual report submission to track reportable diseases and outbreaks. - States are slowly switching to electronic reporting through direct networking with patient electronic medical records. Functions of the Electronic Medical Record o Maintain patient records o Analyze patient demographics o Compile data on errors in patient care o Manage patient medications o Organize patient history o Manage physician notes o Manage external reports from laboratory, radiology, physical therapy, etc. o Record care plans and monitor progress o Record patient instructions and patient mediated care plans o Rapid and automatic reporting of infectious disease to public health agencies o Tracking infectious diseases and nosocomial infections Hospital Based Records o The need to integrate electronic data management systems into the EMR is met by an additional piece of software known as the health information exchange (HIE) hub. o This technology provides an additional interface which allows users to view a consolidated electronic medical record including all lab and pathology test results. Improved Laboratory Efficiency and Reducing Errors Through the LIS o Electronic data management offers a quicker turnaround time, and reduces errors associated with filing faxed paper reports. o Medical centers that do not offer LIS interfacing with various data management systems are at a disadvantage in recruiting physician clients. Information Processing and Workflow o If the goal of implementing a new LIS is to improve efficiency, workflow within the laboratory must be considered when evaluating LIS software. o The LIS is one way to increase this efficiency by incorporating interfaces for instruments and external electronic data management systems which will streamline laboratory workflow. Quality Initiatives o One function of the LIS, that should be utilized more often, is generating quality control reports. o LIS searches can be set up to further identify recurring patterns; such as those occurring with a particular analytical method, or during a particular time of day. LIS Acquisition o Acquiring and implementing a new laboratory information system is a huge process which takes several months to a year or more to complete. o Due to the inconvenience and risk in changing to a new LIS, most laboratories make the switch only every 10-20 years. o There are several steps in completing the process of LIS acquisition; from choosing a system, to ensuring the security of patient data. LEAN Data Management: - Value: LIS must support work of lab. - Flow: many steps involved in data management. - Pull: manufacturers of LIS should only design and produce systems that are desirable to consumers during appropriate time period. - Improvement: final component of LIS. Steps in LIS Acquisition 1.) Define System Requirements 2.) Request Bids 3.) Request Demonstrations 4.) Assign Staffing Roles 5.) Standard Operating Procedures 6.) Implementation 7.) Data Security 8.) Data Retention 1.) Define System Requirements o This step involves construction of a workflow diagram and consideration of the data management requirements for each step in the workflow. 2.) Request Bids o Laboratory managers and the LIS selection team evaluate several vendors with systems that may meet the requirements detailed in the acquisition process. o Laboratories may solicit bids from various vendors using a Request for Proposal (RFP). o This document includes specific requirements and questions concerning each vendor's product capabilities. 3.) Request Demonstrations o Laboratory managers will want to see the top two to four products in action before making a decision. o The laboratory manager will also contact other sites using the LIS to ascertain certain details. 4.) Assign Staffing Roles o A major challenge during the transition from old to new software is proper staffing to maintain regular laboratory operations. o Managers should expect data management tasks to take longer during the transitional period, until staff become accustomed to the new system. 5.) Standard Operating Procedures o These procedures will be helpful in training staff to use the new system. o Scheduled maintenance should be carried out at times that are least disruptive to laboratory operations. o Scheduled Maintenance: - Hardware repair or replacement - Software updates - Backup of data - Restoration of lost data - Data retrieval - Security updates 6.) Implementation This is the process of putting the new LIS into use. Plans should be made to accommodate as many "planned" risks as possible because other problems will certainly arise. All laboratorians will be trained in the use of the new system. 7.) Data Security o Whenever electronic data management is employed, care must be taken to guard against the inappropriate release of information and access by unauthorized individuals. o Federal regulations, under the Health Insurance Portability and Accountability Act (HIPPA) mandate that patient health records must be kept confidential. 8.) Data Retention o Archives of all laboratory data must be kept for a period of time determined by applicable regulatory agencies and facility protocol. o Care must be taken to ensure that data can be retrieved when adopting new LIS.

What is microcosting?

The process of determining actual cost of a billable procedure

Which of the following is considered a semi-variable cost?

Utilities

Chapter 19: Marketing Concepts

· The key to achieving the goals of the organization consists of being more effective than the competition in satisfying the needs, wants, and demands of the customer. · The primary focus of a market-oriented organization is the customer. · Integration of customer needs improves customer satisfaction. Organizational Structure of a Marketing-Oriented Laboratory Business: (TOP) 1- customers, physicians, caregivers, patients 2- front line employees 3- middle management 4- upper management (BOTTOM) Production Concept • Customers will buy goods in adequate volume at a low enough price. • HMOs could be considered an example of a production concept for health care Sales Concept • Factory products sold by aggressive selling and promotions. • GM selling high volumes of automobiles • Rebates • Premiums Marketing · A process by which individuals and groups obtain what they want through creating, offering, and exchanging products or services of value with others. Market • A market is a web of interactions among those who have commercial relationships, or the potential for such relationships, with other buyers and sellers of similar commodities. • This exchange of goods and services for something of value takes place in a market. • M=qnp Market Segmentation · A legitimate business strategy used by companies to create a competitive advantage. · Allows marketing manager to break up markets into smaller, more manageable pieces. o possible because occupants of the market have similar wants, needs, and demands. o respond similarly to market stimuli, such as advertising and distribution. · "Niching" is focusing on a specific subsection of a market Marketing Mix: • Is set of tools that the firm uses to pursue their marketing objectives. Includes: • Product • Price • Place • Promotion Product • What the firm offers to the public for sale. • Product or service is the cornerstone of the marketing mix. Price · The amount of money a customer pays for a product or service. · Price is part of the total marketing package offered to the customer referred to as value. · Pricing strategy may also be determined by the profit margin imposed on the laboratory by hospital administration. · Products or services that are purchased strictly on the basis of price are called commodities. Place • How and where the product is offered to the buying public. • Most companies now offer their products via the Internet. • Place also includes the use of marketing to make its product available to its customers. • Place includes how laboratory results are transmitted to the customers. Promotion • The means by which a company communicates and promotes its products to its target market. • Promotion includes: • Sales and marketing personnel • Advertising • Public relations • Direct marketing, • Telemarketing/on-line marketing The Marketing Environment 1.) Demographics 2.) Economics 3.) Politics & Regulatory Agencies 4.) Technological Environment 5.) Natural Resources 1.) Demographics - Age. - Gender. - Educational levels. - Ethnic backgrounds. - Growth rates. 2.) Economics - Savings rate - Debt load - Interest rates - Money supply - Inflation - Availability of credit - Employment levels 3.) Politics & Regulatory Agencies · CLIA · OSHA · CMS · FDA · HITECH · HIPAA 4.) Technological Environment - New markets exist for telehealth and telemedicine. - DNA technology has created new markets for new assays. - Human genome project has lead to new genetic tests. 5.) Natural Environment - Natural resources can influence the success of a business. - The market must continually adjust to fluctuations of both the availability and cost of natural resources. Marketing Research - Technical and systematic approach to obtain data relevant to a specific market. - A systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation. Market Analysis · Continuous process of analyzing market opportunity. · Market Research is foundation to identify market opportunities and develop research plans for data collection Market Demand · Total number of laboratory tests performed in a particular market. · Assessment must be made of how much of this total market demand the organization desires to capture. · How much you capture may be a direct result of how many resources the organization is willing to expend, and how aggressively this market opportunity is pursued. SWOT Analysis • Strengths - Internal Factor • Weaknesses - Internal Factor • Opportunities - External Factor • Threats - External Factor Marketing Strategies 1.) Cost leadership o Tight cost control o Efficiencies of scale o A structured organization 2.) Product differentiation o Strong research and development function o Skilled marketing o Highly skilled labor 3.) Focus o Combination of both cost leadership and differentiation The Marketing Plan • An action plan or a roadmap to guide the company from one place to the next. • Describes products or services and their benefits and features; target markets and its buying habits; defines competing products or services; and the customer problem that the product or service solves. • The Marketing Plan: What It Includes: • Goals • Objectives • Marketing and Sales Strategy • Distribution channels • Advertising/Promotions/Budgets • Mission • Vision

Which of the following is evaluated in method verification?

Accuracy Precision Sensitivity and specificity All of the above

What is a variance in a budget?

Difference between projected and actual dollar amount

The laboratory manager controls/manages department finances by using:

Financial ratios and budgets

Chapter 11: Cost/Benefit Analysis:

For Profit Entity • privately held (i.e. a corporation) • Profits are distributed to the owners (individuals or shareholders) • Primary purpose is to generate revenues • Any profits are taxed Not-For-Profit Entity • Profits are held by the entity to further its cause (i.e. most community-based hospitals) • Exist to provide a service • Profits are not taxed and are retained by the entity and used for purchase of capital equipment or other goods and services required to sustain the business entity. Management Accounting: Analysis of cost and revenue data that provides information on operations and budgeting for managers. • Also called "cost accounting" • Management Accounting includes: • Microcosting: The process of determining the actual cost of performing a billable procedure. • Performing analysis of services and equipment in order to evaluate their profitability • Budgeting: Compilation of expected expenses and revenue into a financial plan Evaluating Expenses: • Expenses: cost of providing a billable procedure. • Billable procedure: test that is billed to payer, may be an individual or private or Gov. • Nonbillable procedure: contributes to the generation of a billable test result, but which is not directly reimbursible (ex: running standards, QC, specimen repeats). • The most effective method for determining the actual cost for a billable procedure is microcost analysis. - Direct expenses (cost): all costs directly related to performing a test (ex: reagents, consumables, labor and benefit). - Indirect expenses (cost): expenses that are part of doing business, but are not directly related to the cost of test being evaluated. Calculating Direct Costs - Line-by-line approach • Cost of consumables • Cost per volume for reagent costs • Cost of calibrators (standards) & controls • Cost of equipment - Cost per reportable-the cost of the reagents and the equipment used to run the test is a set, pre-determined amount contracted with the vendor for each test reported. Calculating Labor Costs - Labor Cost Calculations: usually uses the number of minutes required to perform the test, multiplied by an average hourly rate, plus 35% of the rate to cover benefits. Example: 3 min. x [$25/hr (salary) + (.35 x $25 for benefits)] 60 minutes 3 x $33.75 = $1.6875 Cost of tech labor/test 60 Costs - Fixed: remains constant despite any change in volume of tests performed (ex: salaries, depreciation on piece of equipment). - Variable: vary proportional to the change in test volume (ex: pipette tips, cups). - Semi-variable: vary with volume, but not in direct proportion (utilities). Evaluating Revenue - Revenue is defined as the price of services rendered. It is the amount charged for a test or service. • The charges billed for a test are attached to a specific CPT (current procedural terminology) code. • Codes for laboratory tests are in the range of 80000 to 89999. - Revenue projections for the laboratory are compiled using a number of means including the following: • Historical data • Patient day forecasts • Regulatory changes • Growth projections based on new markets and changing technologies • Posted fee schedules • Evaluating Revenue - For tests to get reimbursed: • All work reimbursed by Medicare must be authenticated as "medically necessary" by the person ordering the test. • There must be a physician signature with the order or an indication in the patient's chart that a physician ordered the test. • There must be a valid ICD-9CM code, which is a numerical code indicating a specific diagnosis for which the test is ordered. Pricing Formulas - Surcharge/cost plus method: • Actual cost of performing the test is determined using the microcosting method • Total cost is then multiplied by a factor (e.g., 2.5 times cost) or a dollar amount is added to the cost (surcharge) to arrived at the final price. - Weighted value/RVU's (relative value units) method: • Performed by assigning an RVU to the test • RVUs are generally based on the complexity and time required to perform the test • The RVU is then multiplied by a fixed dollar amount to determine the pricing for the test - Historical data method: • May be modified to reflect current market trends and expected adjustments. Making Business Decisions - Break-even point • Point at which there is no profit or loss from performing a test: the total of all fixed and variable costs equals the amount of revenue generated by the test. • Reasons for performing a break-even analysis • To determine where to price the test • To determine the volume of test required to meet the break-even point - Break-Even Point V=(FC+I)/(R-VC) • V= the volume of tests needed to break even • R= the expected revenue generated by the test • VC= the total variable cost per test • FC= the fixed costs per test • I= the net income • The break-even analysis formula is based on several assumptions: ● When costs increase, profits decrease. ● When costs decrease, profits increase. ● When volumes increase, costs and profits increase. ● When volumes decrease, costs and profits decrease. Capital Acquisitions • Capital Purchase • Leasing • Reagent Rental Financial Considerations for Capital Acquisitions: • Cash Flow- Amount of money and schedule of when it is paid. Purchase requires large outlay of cash; lease and rental spread payments over time. • Commitment-Buy-in of the parent organization to the capital equipment, with purchase being the most committed, and rental the least committed. • Cost-Time value of money must be used for final cost. • Tax Impact- Depreciable or deductible expense. • Obsolescence Risk- Expected life cycle of product versus newer equipment with advances in technology. • Depreciation • Amount of depreciation is determined by the number of years over which the equipment is accounted for on the general ledger. • Return on investment (ROI) • ROI=profit margin (x) asset turnover • Factors that increase profit margins: • Automation • Decreasing discretionary costs • Eliminating obsolete and redundant services or testing • Increasing collections of billed revenue • Decreasing direct costs • Payback period- the number of years it will take to pay back the original instrument's purchase cost. Eg. Instrument costs = $150,000 Estimated annual cash flow = $30,000/year Payback period for the instrument = 5 years ($150,000/$30,000) Leasing Equipment Advantages • Offers 100% financing at fixed rates • No money down • Protection for the laboratory against inflation • Equipment in the laboratory is more likely to remain current Disadvantages • Locking the laboratory into a long-term relationship with one vendor • Lack of ownership • Higher reagent costs • Higher consumables prices Reagent Rental Agreement • The cost of the instrument is included in the reagent cost charged by the vendor. • The equipment in the laboratory is more likely to remain current. • Reagent rental requires no capital money. • The laboratory signs an agreement, which usually commits it to a minimum volume of reagent, purchased over a specified period at a set price. Capital Business Plan • Business Plan for the capital acquisition to include: • Executive summary focused on finance, fit, and function • Benefits • Data • Financials and Interpretation

Which of the following is an indirect cost for a glucose test?

Marketing

Which of the following is NOT a category of Ethical Principles

Integrity of Conduct Respect for persons Social Responsibility They are all categories of Ethical Principles

Chapter 20: Ethical Issues in Laboratory Management

Laboratory Management Activities Where Ethics Plays a Role • Confidentiality of the information • Fraud and abuse of charges • Fraud and misconduct of data • Marketing and advertising • Quality of services • Profits • Human resource issues: workers' salaries, working conditions, drug testing, etc. • Conflict of interest • Regulatory compliance Ethical Theories • Most Ethical theories, concepts, and principles deal with one or more of the three most important parameters or categories: 1. Actor 2. Act 3. Outcome 1) Actor: Virtue Ethics 2) Act: • Categorical Imperative (CI): "What if everyone does it?" • Golden Rule: "you treat others as you want them to treat you." • Natural Rights 3) Outcome • Utilitarianism Theory • Social Contract Theory Categories of Ethical Principle • Integrity of Conduct • Respect for Persons • Social Responsibility 1.) Integrity of Conduct • Honesty • Objectivity • Openness 2.) Respect For Persons • Respect and the protection of autonomy • Fairness • Loyalty • Respect for subordinates and colleagues 3.) Social Responsibility • Do good and do no harm • Public responsibility • Obeying the laws and regulation • Efficiency Ethical Principles are Conceptualized as Three Broad Principles 1. Autonomy 2. Beneficence/Nonmaleficence (do good/ do not harm) 3. Justice Ethical Decision-Making 1. State the problem 2. Collect and verify information 3. Identify primary stakeholders 4. Determine any violation of laws 5. Delineate harm 6. Delineate options 7. Make a decision 8. Defend the decision Ethical Challenges in Laboratory Management The laboratory manager must comply with: • Continuous training and education; • Apply standards of performance and quality; • Provide sufficient resources for the performance of the task.

Which of the following describes care that's reimbursed on a per day basis?

Per Case

Which of the following corresponds to Medicare part B?

Physician office visit reimbursement

Chapter 17: Process Design - Workflow and Staffing

Process Design · Must be cost-effective · Realistic and within organizational needs and budgets · Be customer friendly · Produce quality results Flowchart (ex: fishbone) · May be a picture or diagram of a process. · Can be simple or complicated and of various designs, depending on the work · Developed to present all possible factors that can influence a process design. · Global in nature. Global factors that influence process design 1.) size and setting of the lab 2.) design of the lab 3.) equipment 4.) test methodology 5.) regulations 6.) staffing 7.) receipt of work 8.) test priority Workflow · Pre-Analytical o Everything that occurs before actual testing o Collecting the right specimen at the right time and under the right set of circumstances o Hardest to control o Many people are involved with the process could result in the greatest number of errors - ordering, collecting, transporting, processing. · Analytical o Actual testing of the sample - testing · Post-Analytical o Reporting the results after testing is complete - interpreting, recording, reporting Process Management · A systematic data-based approach to monitoring and improving the performance of a business. · A management strategy that identifies opportunities for improvement using proven problem-solving methods. Process Management Tools • Six Sigma • Lean/ Lean Tooling • FOCUS-PDSA (find, organize, clarify, understand, select, plan, do, check, act) Staffing: 1.) Hiring 2.) Training 3.) Scheduling 4.) Retaining 1.) Hiring · Application - A written document that lists the prospective employee's education, qualifications, and work experience. · Interview - The interview is the oral process used to confirm the information in the application and to fill in any gaps. 2.) Training Orientation - the initial training period. Competency Assessment 3.) Scheduling · 8/80 work rule o Used by most hospitals. o Employees scheduled to work 8 hr days. o Each day = 3 eight hour periods. o Covers a 2-week time frame. o Employee works an 8-hour day and any number of days up to 10 within 2 weeks. o Limit the number of hours in the day that can be worked, but more days in a row are allowed. · 40-hour work rule o Employee is allowed to work any number of hours per shift as long as the total hours worked in a week does not exceed 40. o Employee can work longer shifts but limits the number of days in a week to a max of 5. o The Week is defined as Sunday through Saturday. · .9 = 9 days in a 2 week period Staffing Laboratories are open 24/7 and must be staffed appropriately. In any pay period fourteen 24-hour days need to be staffed. · Staffing for the Average Workload: · Self-Scheduling o Generational studies have shown that inflexible scheduling is considered poor working conditions by the newest to the work world. Guidelines: o No one is guaranteed a specific schedule. o The needs of the department must be covered. o Retention o Retention of team members is well worth putting forth a good effort, as the number of people entering the workforce decreases. o Retention may be as simple as recognizing each of your team members every day, giving praise where due, and treating the team fairly when making assignments or counseling them.

What type of budget is based on a specific program and is used short term?

Program Budget

Which of the following is considered a variable cost?

Reagents