College of American Pathologists
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November 21, 2012  •  Volume 28, Number 24
Next Issue: December 6, 2012
© 2012 College of American Pathologists

In This Issue:

Rep. Schweikert (R-AZ) Tours Arizona Dermatopathology

Rep. Schweikert (R-AZ) recently toured Arizona Dermatopathology, led by CAP’s outgoing PathPAC Chair, Richard Bernert, MD, FCAP.Republican Congressman David Schweikert recently toured Scottsdale-based Arizona Dermatopathology to discuss national issues impacting health care providers, including the SGR and the electronic health record (EHR) safe harbor.

The tour was led by CAP member Richard Bernert, MD, FCAP, who is the outgoing Chair of CAP’s Political Action Committee (PathPAC). “During the tour, I was able to provide a pathologist’s perspective on a number of issues, including why the CAP believes that laboratories should be excluded from the EHR safe harbor,” Dr. Bernert told Statline.

He also outlined the potential impact of these donations with Rep. Schweikert. “We discussed that the financial benefits conferred on the physician practice that receives such EHR donations may effectively influence medical decision-making and choice of laboratory providers,” said Dr. Bernert. “Following the tour, a member of his staff contacted us for more information. I think we’ve started an important dialogue on this issue.”

Senate Passes PT Referral Bill

Soon CMS will have greater discretion in determining sanctions against laboratories violating CLIA rules on referral of proficiency testing (PT) samples to other labs for analysis, now that the Senate has passed the “Taking Essential Steps for Testing Act (TEST Act, S. 339).” The bill now awaits President Obama’s signature, as the House passed the companion bill in September.

“The passage of this bill at the beginning of this lame duck session is significant because it had solid bipartisan support,” CAP’s Federal and State Affairs Committee Chair Kathryn Knight, MD, FCAP, told Statline. “But most importantly, lawmakers really understood the message from CAP and others, including CMS that the agency’s hands were tied. CMS had no leeway under CLIA but to enact severe mandatory sanctions on laboratories violating CLIA PT referral rules, even in the case of inadvertent violations.” The College has long been concerned about the severity of mandatory sanctions, particularly as even inadvertent violations can result in the revocation of a lab’s CLIA certificate as well as a two-year ban on operating or owning a laboratory for laboratory directors and owners.

The Senate TEST Act, passed on Nov. 14, was sponsored by Sens. John Boozman (R-AR), Amy Klobuchar (D-MN), and Jeanne Shaheen (D-NH). The House bill (H.R. 6118) was introduced by Reps. Michael G. Grimm (R-NY), and co-sponsored by a bipartisan group of 13 House members. “The TEST Act tweaks a well-intended law and rids it of the unintended negative consequences imposed by an overzealous regulation,” said Rep. Grimm in a Sept. 19 statement upon the bill’s passage in the House. “While the current regulation was well-intended to ensure reliable lab results from the most basic test to the most life-threatening, it can turn an honest mistake into a disaster for our healthcare providers.”

CMS’s Scrutiny on Costs Intensifies in Final 2013 Fee Schedule

Next year’s final Medicare Physician Fee Schedule (PFS) made clear that CMS’s strategy for lowering health care spending includes rigorously analyzing all costs associated with codes currently under review by the agency, particularly those that haven’t been reviewed in over 10 years, CAP leaders explained at a recent Webinar event.

Webinar Replay Available on CAP PFS Resource Center

A replay of the Nov. 14 Webinar, “Confronting New Medicare Payment Realities: Part 1: How 2013 Reimbursement Changes Will Impact Pathologists” is available online at the CAP 2013 Medicare Fee Schedule Resource Center.

The second part of this Webinar series focused on the Fee Schedule changes to CMS’s Physician Quality Reporting System (PQRS). A replay of this Nov. 15 Webinar will be posted on the CAP PQRS Resource Center in the coming weeks.

Watch for continuing coverage of these important PFS changes in future issues of Statline, as well as Special Statline Reports in the November and December issues of CAP Today.

The most significant change for pathologists in this final rule is that CMS revalued the technical component (TC) costs of CPT codes 88300–88309, resulting in payment changes to pathology services, explained CAP Chair, Council on Government and Political Affairs, Richard C. Friedberg, MD, PhD, FCAP, in opening remarks during the Nov. 14 Webinar, “Confronting New Medicare Payment Realities: How 2013 Reimbursement Changes Will Impact Pathologists”.

“CMS is taking a hard look at high volume codes, which for pathology, meant a close look at 88305, which hadn’t been valued in over 10 years,” he said. “The agency initially flagged both the TC and the professional component (PC) of this code for review, but the College successfully argued to CMS that the 88305 PC was reviewed as recently as April 2010. We were therefore able to mitigate the impact on pathologists by limiting the review to the 88305 TC, which was ultimately reduced by 52% in the final rule.” The CAP was also successful in limiting the size of the cut, as $18 was originally put forth by CMS in last year’s proposed rule.

The final rule also cut the global payment of the 88305 code by 33%, while increasing the PC by 2%. The TC of the other codes in the surgical pathology level I – level VI code family were also revalued. The TC of 88307 and 88309 increased while 88300 and 88304 also decreased.

Changes in the TC also have a slight impact on all pathology codes based on CMS’ practice expense methodology to capture indirect costs. For example, the PC of special stain CPT codes 88312 and 88313 increased 3% and the global payment increased by 5% and 3% respectively. The TC increased by 6% for 88312 and 3% for 88313. To see the impact for next year on other higher volume pathology codes, as well as the entire surgical pathology codes level I – level VI (88300-88309), download the attached chart.

RUC Process

Indeed, while 88305’s TC revaluation is disappointing, the College was relieved that the code was not valued at $18 as CMS initially set forth in the proposed rule as the typical cost of performing the test. “The agency indicated it had received comments from the laboratory community that the true value of this TC was $18,” said another Webinar presenter, Jonathan Myles, MD, FCAP, Chair, CAP Economic Affairs Committee. “However, through our participation in the AMA/Specialty Society RVS Update Committee—also known as the RUC—we submitted data on direct medical inputs to defend this code family. This data included clinical labor time, medical supplies, and medical equipment, which is used by CMS to formulate TC payment rates.” This data is part of the agency’s practice expense methodology and rate-setting formula to create the practice expense relative value units, which are then used to determine payment for the TC.

It’s important to note that the College does not provide pricing for the TC, said Dr. Myles. “What we submit to the RUC is information related to the components necessary to produce the TC for that code in terms of technical time, reagents, etc., and make a recommendation for each code. The RUC then approves or modifies these recommendations, and sends to CMS for their evaluation.”

Evaluating Inputs

When CMS evaluates codes, it only considers direct inputs. Further, the agency can reject some direct inputs that it considers indirect, which is what happened with the 88300–88309 code family valuation for 2013. The agency rejected specimen solvent and formalin disposal costs; courier transportation costs; and laboratory information system, software, and maintenance costs.

“CMS did not accept these components as direct inputs, even after our determination and approval from the RUC,” explained Dr. Myles. “However, CMS also indicated in the final rule they were looking for comment on this decision, and the CAP will work with stakeholders and the RUC to address these issues.” The agency also wants to review the number of paraffin blocks used to create some of the direct inputs. CMS is looking closely at the quantities and accepted the RUC’s recommendation for 2013; however, they are requesting additional evidence which could impact payment for 2014 and beyond. The CAP will gather objective evidence to verify the number of blocks submitted for direct inputs, he added.

The impact of these changes will vary, depending on the individual pathologists and practices’ model and service mix. While this valuation will only impact those billing the TC, the payment for all code families continues to be under great pressure, with Medicare physician payments under the sustainable growth rate (SGR) set to be cut by almost 27% on Jan. 1, unless Congress intervenes (see story below).

“If you only bill the PC for 88305, your reimbursement will increase by 2% or more, depending on your case mix, assuming the SGR is fixed or delayed. However, the pressure to constrain fee-for-service continues to grow, and will lead to additional reductions as well as intense scrutiny over payment for new services,” explained Dr. Myles. “The CAP remains committed to advocating for fair reimbursement for all pathologists. This is most effectively done through capturing data and evidence that reflects every component of our professional work, and then working through the RUC process.”

SGR Tops Health Care Agenda as Lame Duck Congress Gets Underway

The current SGR patch—set to expire at the end of the year, resulting in a 26.5% cut to Medicare physician payments—figures largely into the combination of tax hikes and spending cuts known as the “fiscal cliff” that are scheduled to take effect on Jan. 1, 2013. While Congress is likely to act to avert these cuts, as it has done for the past 12 years, it’s unlikely that lawmakers will be able to fix the SGR, given that would cost over $200 billion, according to Congressional Budget Office estimates released on Nov. 20.

Rep. Stark Departs House After Almost 40 Years

The recent Presidential election marked the end Rep. F. Pete Stark’s (D-CA) career on Capitol Hill, when he lost his re-election bid after having served in Congress since 1973.

As Chairman of the Ways and Means Health Subcommittee, he presided over major Medicare reforms, particularly in the areas of fraud, waste, and abuse. Most notably, he was the primary force behind a series of landmark physician self-referral laws that collectively became known as the Stark law.

“After nearly 40 years in Congress, we are losing a sincere advocate for health care reform,” said CAP CGPA Chair Richard C. Friedberg. “The College is grateful for his support over the years, particularly in fighting inappropriate physician self-referral business arrangements that result in increased utilization of diagnostic testing, resulting in higher Medicare spending and potentially harming patients.”

“Because it would cost $244 billion to fix this problem, it’s far from clear where this money would come from, especially given the current political environment on Capitol Hill,” explained Richard C. Friedberg, MD, PhD, FCAP, who is Chair of the CAP’s Council on Government and Political Affairs. Dr. Friedberg addressed the SGR issue during the Nov. 14 CAP Webinar event, “Confronting New Medicare Payment Realities; Part 1: How 2013 Reimbursement Changes Will Impact Pathologists” (see story above for more details from this Webinar). “But it’s such a significant cut that Congress will have to do something,” he added.

Of course, one potential scenario is another patch. Indeed, last week, Rep. Phil Gingrey (R-GA), Co-Chair of the GOP Doctors’ Caucus, reportedly indicated that he was confident that Congress would approve a one-year freeze in Medicare physician payment rates. Rep. Gingrey rejected using savings gleaned from the winding-down of Middle East military operations, as has been suggested by other lawmakers. Rather, he suggested funding the patch through savings from cutting programs included in the recently released Wastebook—an annual report on wasteful government spending by physician Sen. Tom Coburn (R-OK).

Of course the $1.2 trillion in sequestration also impacts Medicare. Capped at 2% per year, Medicare cuts—including those to providers—are estimated to result in $126 billion in savings over 10 years (Medicare beneficiaries, as well as Social Security, Medicaid, and other low-income programs are exempt).

However, in terms of SGR, the CAP is joining with a strong offense to fight this cut, noted Jonathan Myles, MD, FCAP, Chair of the CAP Economic Affairs Committee during the recent Webinar. “It’s important to remember that the SGR cuts are not a pathology-specific issue, we have the entire House of Medicine on our side,” he explained. “The American Medical Association (AMA) is taking the lead on reforming the SGR, and CAP is supporting and assisting them in this effort.”

Center for American Progress Supports Tightening of Self-Referral Restrictions

The Center for American Progress is calling for expansion of the Stark law, as well as removing pathology, in office imaging, and radiation therapy from the in-office ancillary services (IOAS) exception, to rein in physician self-referral, estimating this would result in $1.5 billion in health care savings over 10 years.

The nonpartisan independent policy think tank outlined these recommendations in a report released last week called The Senior Protection Plan. The report focuses on lowering health care spending without harming beneficiaries. “When physicians self-refer patients to facilities in which they have a financial interest, they drive up costs and adversely affect the quality of care,” stated the report’s authors.

The report called for the Stark Law to be expanded to prohibit self-referrals for services that are paid for by private insurers. In addition, the report’s authors also called for closing the IOAS loophole, citing findings from CAP-funded research by Georgetown economist Jean Mitchell, PhD, published earlier this year in Health Affairs and Medicare and Medicaid Research Review. Dr. Mitchell’s analysis on the self-referral of anatomic pathology services associated with prostate biopsies found evidence of increased utilization, higher Medicare spending, and lower cancer detection.

Both as a member of the Alliance for Integrity in Medicare (AIM) and through its own efforts, the College has been calling on lawmakers to end the practice of inappropriate physician self-referral by closing the IOAS loophole. For more information, visit the CAP Self-Referral Resource Center.

Keep Up with the Latest CAP Advocacy News on Twitter

CAP Advocacy is now on Twitter. Follow CAP Advocacy’s daily “tweets” to keep pace with regulatory and legislative news affecting pathology. For the latest health care news, be sure to check out what we are following on Twitter.


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