A free or reduced-rate test is a clinical test offered by a reference laboratory to some or all patients at no charge or at a reduced charge. A lab might have many reasons to not charge for a test, but the most common involves tests subsidized by a pharmaceutical company. In these cases, a pharmaceutical company pays a laboratory for the cost of performing a test, and the laboratory then passes on those savings to the collecting institution and to the patient. Other reasons include tests performed as research funded by other means (for example, grants) and new clinical tests for which the performing laboratory is trying to raise awareness and drive business.
Clinical laboratories offering free testing in such scenarios need to pay close attention to compliance considerations so that they don’t inadvertently induce providers. Moreover, laboratories should offer patients consistent, high-quality services, and offering free testing raises concerns about how to provide care equitably. For example, when a lab routinely sends a test to one preferred reference laboratory but sends the free/reduced-rate test to an alternate reference laboratory, the originating lab should critically evaluate test quality to support patients in accessing the highest value test—which in the end might not be the “free” test. Similarly, without careful oversight, patients needing the same test might be offered different routes for that testing depending on providers’ awareness of the options.
In truth, “free testing” is a misnomer, because as the adage goes, nothing is actually free. Both sending and receiving labs incur costs from collecting samples, processing, shipping, and managing results documentation. Dealing with billing also adds indirect costs. Healthcare workflows default to billing for a service, typically billing insurance first. Electronic medical record systems are derived from billing systems, and it’s actually rather difficult to not bill for a service. Free testing therefore adds a manual, nonstandard billing process that is cumbersome and inherently error-prone.
Free testing that requires using special kits adds another logistical challenge. Kit storage space, expiration dates, and transport for collecting and shipping samples are unnecessary barriers, particularly when these supplies and workflows are already part of a clinical laboratory’s standard work.
Managing Free Testing
As free testing becomes more available, how should clinical laboratories manage these requests consistently? How can we ensure we are selecting the highest-quality test regardless of cost, and ensure equitable access?
In our experience at a large pediatric tertiary care facility, we have seen a dramatic increase in free and reduced-rate testing requests, largely in the category of pharmaceutical subsidized tests. We requested guidance from our hospital laboratory stewardship committee, which in turn recommended that we collaborate with legal counsel to develop a hospital-wide policy. This policy encompasses scenarios in which free testing is prohibited (such as inducements) and cases outside the scope of the policy (such as quality assurance testing to evaluate an analytical/quality question and compliant research testing addressed by other policies).
The main criteria our policy considers for allowable free and reduced-rate testing include that the testing must be standard of care, performed in a CLIA environment (same as if the test were charged), and offered equitably.
For example, the policy permits pharmaceutical companies to subsidize testing with specific criteria applied such that all patients who meet criteria receive the same test. Importantly, the testing is not completely free—we include a nominal fee to account for our laboratory’s costs and to support best laboratory stewardship practices. Defining these tests in patients’ medical records, with a nominal fee, allows us to keep track of these requests in the overall lab budget and include them in laboratory metrics we report up to hospital administrators. If we do work that can’t be measured, it impacts our ability to grow and provide all lab services.
Case Examples Spending More for Free
A provider requested a “free” pharmaceutically sponsored biomarker test for a rare genetic condition. At first glance, this request was reasonable—we have the same test defined in our system for charge, and it was sponsored in a way that did not raise compliance concerns.
However, a complicated kit using a patented cooling system was required to qualify for the free test. Storing and managing the test kits complicated logistics that had been routine when the exact same test was ordered and charged at the same lab. We evaluated prior test charges for our patients, and not one paid out of pocket as this is a covered insurance benefit. So, in this case “free” wouldn’t help us or the patient—we’d spend more money and time trying to avoid the cost of the inexpensive test. We did not implement this free test.
Accounting for Free
Our gastroenterology clinicians requested that our lab define a “free” pharmaceutically sponsored gene sequencing panel that included specific inclusion criteria, a signed consent, and a requisition. We partnered with the specialists to ensure standard use of this panel. We built the test as a defined orderable in our electronic medical record, which prompts standardized resulting workflows and automatic billing of a nominal processing fee. We built links to the required forms and used our standard shipping/processing devices. We found this test feasible to manage and apply equitably because of the limited scope of providers who order it.
Sending Out a Test Offered In-House
A provider ordered a “free” pharmaceutically sponsored test performed at a reference lab after we had collaborated with clinician stakeholders to develop a very similar test in-house. While the provider was frustrated initially by not being able to avoid charges for one family, he ultimately conceded that sending out this test was undermining our ability to recuperate test development costs, support our lab’s infrastructure, and provide ongoing expert support to our clinicians more broadly.
Disguising Research as a Clinical Test
A reference lab identified a variant of uncertain clinical significance (VUS) in a gene. This lab offered to perform “free” mRNA sequencing to investigate the VUS. Further vetting uncovered that the lab did not offer mRNA sequencing as a clinical test and it was unclear how the result would be reported. We decided to send the test to a different lab that offered it as a clinical test, but we paid for the test using lab quality assurance funds instead of billing insurance because the clinical utility was being evaluated.
A provider ordered a new clinical test after a reference lab offered her “the first five tests for free.” This was deemed an inducement to earn the provider’s business. When a reference lab inequitably offers some patients free testing, this leads to distributing charges unfairly to other patients. We sent this test to another reference laboratory with compliant billing practices.
Even with a policy and review process, we still feel like we are playing a game of whack-a-mole. We’d like to get ahead of these free test requests when possible. To improve the process, we recently implemented a standard test request form to provide a structured way to compile information and assess a request in collaboration with the requesting provider. We’ve also found it helpful to meet with laboratory sales representatives to explain our policy when they visit—too often they contribute to the hype around offering free testing for patients, which misleads our providers.
By being good stewards, we can better ensure high-quality testing and standard care for all our patients and consistent support for our providers.
Darci L. Sternen, MS, LCGC, is a licensed genetic counselor in the department of laboratories and patient-centered laboratory utilization guidance services at Seattle Children’s Hospital. +Email: [email protected]
Jessie Conta, MS, LGC, is a licensed genetic counselor in the department of laboratories at Seattle Children’s Hospital. +Email: [email protected]
Jane Dickerson, PhD, DABCC, is a clinical professor at the University of Washington and co-director for clinical chemistry and reference lab services at Seattle Children’s Hospital. +Email: [email protected]