We have a test utilization management system that includes working committees, policies and procedures, dedicated sendouts staff, a pathologist and clinical laboratory professional on call, and a laboratory genetic counselor. The system is intended to help patients. Why are some of our providers and clinics sending out testing on their own and bypassing our sendouts department and system?

There are three main reasons providers and patients go outside of a hospital or lab’s utilization management system—now more often known as the clinical laboratory stewardship system. I list three of the most common reasons below, along with counterarguments laboratorians might make to help convince providers and patients to stay within the system.

The Test Is Not Medically Necessary

Sometimes the test stewardship program of a hospital or clinical lab determines that a test is not medically necessary, either through policy—such as a policy banning the use of a certain reference lab or a specific test—or through an ad hoc decision on a particular case. Patients and providers who disagree with the decision may choose to go outside the system to have testing performed. In many cases, reference labs make this process easier by providing an insurance preauthorization process and a financial inducement.


Solid test stewardship programs are based on evidence and experience. Laboratory medical directors usually have a good reason for prohibiting sendouts to certain reference labs, and medical directors are obligated under CLIA to act in patients’ interests. Similarly, a hospital’s laboratory test stewardship committee weighs available medical evidence before banning a test. Laboratories must urge providers to work within the system and encourage them to use evidence and reasonable arguments to change policies they disagree with, rather than driving providers or patients to leave the system.

Avoiding Delays

Some providers and patients do not want laboratories to review their test selection because it introduces a delay in testing. They also may perceive that the review is blocking them and not adding value. 


While case review does introduce short delays in testing, it is worth the wait. Laboratorians can demonstrate this fact by showing providers relevant data about the frequency with which the process corrects errors, improves orders, and protects patients financially.

Aggressive Billing Practices

A small set of reference labs, especially in genetics, have aggressive billing practices that eliminate or reduce patient financial responsibility for copays or deductibles. These are sometimes referred to as patient forgiveness programs.


For entities that bill Medicare or Medicaid, this practice is considered illegal by many, if not most, experts. The Federal Register (67 FR 72896, December 9, 2002) states that a patient (“individual”) cannot receive remuneration from a healthcare provider of service that “is likely to influence such individual to order or receive from a particular provider, practitioner or supplier any item or service from which payment may be made, in whole or in part, under [Medicare or Medicaid],” where remuneration is defined as “waiver of co-insurance and deductible amounts (or other part thereof), and transfers of items or services for free or for other than fair market value.” 

It makes sense that the law bans this practice because the reference lab is unilaterally making a decision to have the patient break his or her contract with the insurance company. The contract between patient and insurer—and not the desire of a reference lab with a financial incentive to break that contract—determines what a covered benefit is for the patient. It also makes sense that the law would try to block the obvious incentive for lab overutilization created by removing a patient’s financial responsibility.

Finally, patient forgiveness programs have exceptions in fine print and are not what they seem. Patients are often surprised by a large bill that is the result of their not meeting the inclusion criteria for the patient forgiveness program. Furthermore, these patient forgiveness programs are not charity care policies, as such policies are based on financial need and do not require breaking the contract between patient and insurance company. Charity care is consistent with, and not contrary to, these contracts because it aims to help patients with the copay or deductible determined by their insurance policy. Charity care and insurance contracts are the two pillars of patient financial protection. Patient forgiveness programs are simply cost-shifting, transferring financial responsibility from the patient receiving forgiveness to the population of patients (“members” in insurance parlance) under the same insurance contract. The cost-shifting occurs without the permission of the member population, and in violation of their contract. One fortunate patient gains by having his or her payment forgiven, and all the other members pay for that privilege.

More Good Reasons to Keep Testing Within the System

In addition to the three specific counterarguments above, there are three other good reasons to keep the testing within the hospital system. Laboratorians should emphasize these reasons to providers and patients and stress they apply to all testing. They involve discontinuities in care, loss of charity care, and problems in system-wide quality improvement.

Discontinuity of Care

Testing outside the system is suboptimal because it introduces a discontinuity in the medical record. When the patient stays in a healthcare system, lab results are returned to the medical record, and all actions related to those results are documented. Testing outside the system leads to a gap in documentation and often increases the risk for a gap in care, such as the failure to retrieve and act on a result.

Loss of Financial Assistance

When patients go outside of a hospital system, they lose the benefit of the hospital’s financial assistance program, which often is quite generous. Patients who are unaware of this face an unpleasant surprise when they try to apply for assistance with expensive testing performed outside the hospital’s lab test stewardship program.

Hindering Quality Improvement That Benefits All Patients

Test coordination through the hospital laboratory enables quality improvement. By capturing all the data, labs and hospital test stewardship committees are able to identify opportunities for systemic improvement in both test selection and financial protection for patients. 

The Bottom Line

These are all strong arguments—based on quality of care, ethics, and the law—for laboratorians to make when convincing providers and patients to keep testing within a hospital system. It is incumbent on labs to ensure that their test stewardship programs are excellent and continuously improving, as this is the foundation for building credibility with providers and patients so that they listen to the lab’s arguments in favor of proper medical practice.

Michael Astion, MD, PhD, is clinical professor of laboratory medicine at the University of Washington department of laboratory medicine, and medical director of the department of laboratories, Seattle Children’s Hospital. +Email: [email protected]

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