College of American Pathologists
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  STATLINE — CAP’s Bi–Weekly Federal and
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December 6, 2012  •  Volume 28, Number 25
Next Issue: December 20, 2012
© 2012 College of American Pathologists

In This Issue:

President Obama Signs PT Referral Bill Into Law

On Dec. 4, President Obama signed the “Taking Essential Steps for Testing Act” into law, giving CMS greater discretion in determining sanctions against laboratories violating CLIA rules on referral of proficiency testing (PT) samples to other labs for analysis.

The Senate passed the TEST Act (S. 339) on November 14, while the House passed a companion bill (H.R. 6118) on Sept. 19. CMS and the College both supported the bills, based on concerns that CMS had no alternative under CLIA but to enact severe mandatory sanctions on laboratories violating CLIA PT referral rules, even in the case of inadvertent violations. Furthermore, the CAP had joined other stakeholders in noting the severity of the mandatory sanctions, which can mean that even inadvertent violations may 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 was sponsored by Sens. John Boozman (R-AR), Amy Klobuchar (D-MN), and Jeanne Shaheen (D-NH), while the companion 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.

Supreme Court to Decide Myriad Gene Patent Eligibility

The final decision on the patent eligibility of human genes will be handed down by the Supreme Court, now that it has granted a writ of certiorari, meaning they will hear the appeal in the Association for Molecular Pathology, et al. v. U.S. Patent and Trademark Office, et al. lawsuit. A decision is expected by June 2013.

The Court granted the plaintiff’s petition filed on behalf of the ACLU requesting review of a Federal Appeals Court’s 2–1 ruling upholding patents on two human genes (BRCA1 & BRCA2) associated with hereditary breast and ovarian cancer. The ACLU represented plaintiffs, including the College and other geneticists, patients, and scientific organizations in a suit challenging Myriad Genetics’ patent claims on BRCA 1 and BRCA 2 genes.

Landmark Case for Pathology

The Supreme Court chose not to consider the Federal Appeals Court’s ruling that the CAP, the Association of Molecular Pathology, and the other plaintiffs lack standing to challenge the validity of the these patents, explained Roger Klein, MD, JD, FCAP, a molecular pathologist and member of the CAP Economic Affairs Committee who has closely followed this case. “The High Court also declined to review the Appeals Court’s decision upholding the validity of a claimed method of screening for potential cancer drugs that utilizes cells bioengineered to contain BRCA1 mutations,” he added.

Of course, of utmost concern to the pathology community is that the United States Supreme Court recognized the significance of this case, which is of enormous importance to patients and the field of molecular pathology, Dr. Klein told Statline. “The essence of DNA is its ability to store the blueprint of the human body’s gene map in its code,” he said. “No one should have the right to limit physicians’ access to this information.”

The question of gene patents in the Myriad case had been brought before the Federal Appeals Court on two occasions. Indeed, the Supreme Court vacated this court’s July 2011 decision following its unanimous ruling in favor of Mayo Collaborative Services in its medical patent suit against Prometheus Laboratories. The Supreme Court then remanded it back to the Federal Appeals Court this summer in light of the Mayo decision. CAP and other medical societies and organizations provided amicus briefs in support of Mayo at various points in the litigation.

Obama Administration’s $400 Billion Budget Includes One-Year SGR Fix

With the fiscal cliff looming less than a month away, the Obama Administration put forth a budget proposal last week that staves off sequestration cuts, but demands $400 billion in Medicare and Medicaid savings in 2013. This proposal includes a one-year “doc fix”—rather than the “repeal and replace” initiative called for by the AMA and physician specialty groups.

Get the Latest Health Care Fiscal Cliff News

  • Follow CAPDCAdvocacy on Twitter for health care-related fiscal cliff updates.
  • For the latest on negotiations between the Obama Administration and House Republicans’ proposals, see the New York TimesFollowing the Debt Talks online feature. This updated graphic is part of the TimesDebt Reckoning blog, which is following the fiscal cliff negotiation developments.

Physicians are currently facing Medicare cuts on two faces of the fiscal cliff: a 26.5% cut under the sustainable growth rate (SGR) as mandated by the Medicare statute, as well as an additional 2% under the budget sequestration process. Congress must act in this lame duck session in order to keep from triggering these cuts in 2013. The SGR fix is being considered as part of broader fiscal cliff negotiations on tax and spending policies. However, these remain up in the air, creating uncertainty over the timing of any SGR relief. The latest estimates from the Congressional Budget Office (CBO) indicate that a one-year patch preventing the SGR cut from taking affect would cost $7 billion. This is somewhat higher than previous estimates, as it includes provisions in the 2013 final physician fee schedule.

Under the President’s proposal, approximately $364 billion would be cut from Medicare, Medicaid, as well as other health care programs. This would be paid for primarily by extending Medicaid drug rebates to dual eligibles (Medicaid beneficiaries who are also eligible for Medicare) in Part D. These rebates, from the pharmaceutical industry to Medicare and Medicaid beneficiaries, is estimated to save over $150 billion. Another $56 billion would come from cuts to post-acute facilities, including nursing homes. House Republicans have also proposed a one-year doc patch. This would be paid in part through spending cuts to hospital outpatient evaluation and management services (E&M) as well as eliminating a two-year pay increase for primary care providers, as defined in the health care reform law.

AMA Pushes Back

The AMA, with the support of the House of Medicine including the College, continues to call on Congress to eliminate the program, and provide a transition to a new system that rewards physicians for quality and cost-savings. Such a system would recognize a variety of new payment models that move from a volume to value-driven payment system.

The latest CBO calculations estimate that it would cost $200 billion to replace the SGR program, down from previous estimates of $300 billion. This fluctuation, together with the increasing cost of temporary patches as outlined by the CBO, underscores the SGR’s systemic problems, according to AMA President Jeremy A. Lazarus, MD.

Given that the estimated costs for a one-year fix is now $7 billion, the costs for these temporary patches are becoming larger as Congress continues to delay a long-term fix, even with lower health care spending, he has said. “When lower rates of spending growth lead to a higher cost for reform, it is clear that the SGR does not work,” Dr. Lazarus recently stated. “It is time to stop this broken cycle in Medicare and move toward a program that ensures the best health outcomes for patients and a stable, rewarding practice environment for physicians.”

The CAP is actively partnering with the AMA in urging Congress to halt the SGR and sequestration cuts to providers and pave the way for a permanent solution. To make your voice heard, CAP members are encouraged to visit AMA’s Get Involved site online to get involved in grassroots advocacy efforts to combat SGR cuts.

Meaningful Use Update: CMS Officials Clarify How Pathologists Can Qualify for Incentives

Through recent discussions with the College, CMS officials have clarified that by relying on data entered by others into the ambulatory certified electronic health record (EHR), pathologists may qualify for incentives under the federal Meaningful Use program. Officials also explained that pathologists, like other eligible providers, need to meet the required objectives by using the data in the certified EHR or an applicable exclusion in order to earn an incentive.

This is expected to impact pathologists primarily at academic medical centers, several of whom have already reported to the CAP that they have attested to Meaningful Use and received incentives through this pathway.

In addition, CMS officials indicated that the agency is developing a guidance on specialists and Meaningful Use, and will continue to clarify what a patient encounter means in the context of this federal program if a provider doesn’t have face-to-face contact with patients.

CAP is reviewing this new development and its impact on the College’s HIT strategy; watch for continuing coverage in future issues of Statline.

Washington State Clarifies EHR Donation Regulations

A clinical laboratory’s donations of electronic health records (EHRs) to physicians in order to create or maintain referral business violates certain Washington State provisions, the attorney general clarified in an opinion letter to State Representative Eileen Cody (D-West Seattle).

“A clinical laboratory’s donating money to a physician to be used for a portion of the cost of an electronic health record, when the donations are made only to those physicians who maintain or create arrangements for the physician’s referral of specimens to the laboratory, would violate the anti-rebate provisions in RCW [Revised Code of Washington] 19.68.010,” stated Washington Attorney General Robert M. McKenna in the Nov. 20 letter.

Rep. Cody’s request for clarification was made at the behest of the CAP and the Washington State Society of Pathologists (WSSP). The CAP has worked with state pathology societies to elicit similar opinions on EHR donations from five other states: New York, New Jersey, Missouri, Pennsylvania, and West Virginia.

As outlined in the Advocacy Issue Brief on EHR donations, the College believes that these donations are often made as an improper inducement for physician practices to refer patients. Furthermore, the financial benefits conferred on the physician practice receiving such donations may effectively influence medical decision-making and choice of laboratory providers.

CAP Leaders Outline 2013 PQRS Changes for Pathologists in Webinar

CMS’s 2013 Physician Quality Reporting System (PQRS) features several key changes that will impact pathologists, most notably a 0.5% incentive payment on Part B allowable charges for successful reporting. However, eligible professionals (EP), including pathologists, who do not report on at least one measure in 2013 are subject to a 1.5% penalty on Part B allowable charges in 2015, which would be based on data obtained from the 2013 program, Emily E. Volk, MD, FCAP, told over 500 attendees at the Nov. 15 Webinar event, “Confronting New Medicare Payment Realities Part 2: What CAP Members Need to Know about 2013 PQRS Changes”.

Webinar Replay Now Available

A replay of this Nov. 15 Webinar, “What CAP Members need to Know about 2013 PQRS Changes,” is available online on the CAP 2013 PQRS Resource Center.

These significant changes for 2013 will also be detailed in a Special Statline Report, featured in the December issue of CAP Today, scheduled to be released the week of Dec. 17.

These are some of the program’s significant changes that will impact all providers, including pathologists, explained the Webinar’s second speaker and moderator, CAP EAC Chair Jonathan L. Myles, MD, FCAP. “The changes underscore the agency’s commitment to shift from a fee-for-service environment to one that incentivizes cost savings and quality of care,” he explained. “In this current health care and economic environment, downward pressure on reimbursement will only increase as the reimbursement becomes more based on quality and cost containment measures. While this program is currently voluntary, we encourage pathologists to participate, especially in light of the 2015 -1.5% penalty on eligible providers who do not participate and the direction that reimbursement is headed.”

Key Changes in 2013

While the incentive and penalty provisions are new, the criteria and individual EP satisfactory reporting for the 2013 PQRS incentive are the same as for 2012, explained Dr. Volk, who is also a CAP EAC member. Specifically, if an EP is participating through claims-based reporting, they need to report on three measures with a 50% success rate on their Medicare Part B patients to which the measures apply. If fewer than three measures apply, EPs should report on the one or two measures that apply. For EPs reporting through a registry, they need to report on three measures with an 80% success rate on their Part B patients to which the measures apply.

Other important changes are the new group reporting options. Beginning next year, group practices with two or more members may report as a group through registries, explained Dr. Volk. “This is different from the 2012 program, which only allows individuals to report via registries,” she added. By using the group reporting options, the entire group practice (under one tax identification number [TIN]) receives PQRS credit when the group reports on 80% of the group’s patients to whom the chosen measures apply.

In addition to the PQRS claims and registry reporting options, individuals or groups may elect an Administrative Claims option by Oct. 15, 2013, to avoid the 2015 penalty. Providers will need to notify CMS that they are choosing a Group Reporting option via a forthcoming CMS Web interface (watch for future communications for specifics on electing group reporting options). “This is one of the ways the CMS is trying to minimize the burden of reporting in the 2013 PQRS to ease the transition from carrot to a stick,” explained Dr. Volk.

Also new in 2013 is the value-based payment modifier (VBM). “This is a new program linked to the PQRS, although it is an independent program,” explained Dr. Volk.

The VBM will be applied in 2015 to physicians in group practices with 100 or more members billing under the same TIN. For physicians in group practices with 100 or more members who do not participate in the 2013, the VBM will be set at a downward adjustment of 1% of all Medicare Part B allowable charges.

Dr. Volk also explained that it’s not too late to participate in the 2012 PQRS program. “EPs who are not yet participating in this year’s PQRS may still participate as individuals in the 2012 program through a registry,” she said. “By participating successfully in 2012, providers will be eligible for a 0.5% incentive payment on Part B allowed charges, and gain experience reporting with the PQRS registry without risk of penalty. This is a benefit, as registries are such an integral part of the program beginning in 2013.”

The CAP 2013 PQRS Resource Center features a comprehensive list of CMS-approved registries, and a listing of these registries that include pathology measures. This Resource Center also features a replay of this Webinar, FAQs, and Decision Tree Flow Charts to assist CAP members in determining appropriate reporting options.

CMS Announces Bundled Payment Initiative’s 48 Episodes of Care

CMS’s Center for Medicare and Medicaid Innovation (CMMI) has revealed 48 “episodes of care” to be used by providers participating in the agency’s Bundled Payment Initiative. Under this initiative, CMS will link payments for multiple services patients receive during an episode of care.

While none of these episodes appear directly related to pathology, it’s important that pathologists are aware of these bundled payment models, W. Stephen Black-Schaffer, MD, FCAP, Vice Chairman of CAP’s Economic Affairs Committee told Statline. “While pathology is not the primary focus of these bundles, their scopes are expanding and the College is closely tracking CMS’s bundled payment initiatives,” he explained. “It is clear the agency is shifting away from fee-for-service reimbursement and toward ‘value-based’ payment models that will be structured around episodes of care, with quality incentives and cost containment central to their formulation of value.”

This initiative currently has three payment models: Model 2, retrospective acute care hospital stay plus post-acute care; Model 3, retrospective post-acute care only; and Model 4, acute care hospital stay only (prospective payment). In October, CMMI announced suspension of Model 1 involving retrospective reimbursement for acute hospital stays. While the industry interest in the program’s other models (2-4) has been positive and robust, model 1 had fewer prospective participants and less diversity than originally anticipated when the model was designed, an agency spokesperson explained to Statline at the time. As a result, the agency is planning to review how the prospective participants might fit into the other three models.

More information is available on CMMI’s Bundled Payment Initiative website.

OIG to Study Laboratory-Developed Test Oversight in 2013

Next year, the Department of Health and Human Services’ (HHS) Office of the Inspector General (OIG) will study the challenges related to regulating laboratory-developed tests (LDT), as well as the nature and extent of their use in clinical decision making, according to the 2013 Public Health Review’s Work Plan. The study will be conducted by the OIG’s Office of Evaluation and Inspections (OEI), which evaluates HHS programs and recommends ways to improve efficiency and effectiveness, with a focus on preventing fraud, waste, and abuse.

Currently, LDTs fall under the regulatory purview of two federal agencies: the FDA and CMS. The FDA regulates LDTs under authority of Food, Drug and Cosmetic Act and considers LDTs to be manufactured “medical devices”. CMS regulates LDTs under the authority of the Clinical Laboratory Improvement Amendments of 1988 (CLIA) and considers LDTs to be “clinical laboratory tests.”

In July 2010, the FDA asserted its statutory authority to regulate LDTs, which the Agency believes it has always had but until now has exercised discretion not to enforce. The Agency has said that it has completed a proposed regulatory framework for LDT oversight but the framework is under review within the Administration.

The CAP believes that any regulatory framework should employ a three-tiered, stratified schema that utilizes third party accreditors. CAP’s oversight proposal also classifies LDTs based on their complexity and potential risk to patients based upon three categories: low, moderate, and high risk. More information is available in the LDT Advocacy Issue Brief.

Master Political Observer, Charlie Cook, to Speak at CAP Policy Meeting

Get ready for an insider’s look at Washington when political pundit, NBC News analyst and publisher of the Cook Political Report, Charlie Cook takes the stage at the CAP 2013 Policy Meeting, May 6-8 at The Fairmont in Washington, DC.

Charlie CookCook is the editor and a political analyst for the National Journal Group. Once deemed “the Picasso of election analysis” by The Wall Street Journal, Cook produces sharp political handicapping, serving as the one-man, go-to-source for political analysis. His talk will focus on the broad implications for this year’s elections, and future Congressional, gubernatorial and presidential elections.

He has encyclopedic knowledge of all sorts of political races, memorable stories, quick wit, and meaningful insights. Using poll numbers, economic indicators, and historical data, Cook frequently forecasts the fortunes of each party in a balanced, non-partisan manner and provides concrete information regarding today’s political and legislative environments.

CAP 2013 Policy Meeting

Register now online for the CAP 2013 Policy Meeting.

The New York Times has called Cook “one of the best political handicappers in the nation” and noted that The Cook Political Report is “a newsletter that both parties regard as authoritative.” Bob Schieffer of CBS News calls it “the bible of the political community,” and David Broder of The Washington Post said Cook is “perhaps the best non-partisan tracker of Congressional races.” In its feature “The Top 50 Journalists in Washington,” The Washingtonian called him a “master observer” and “the man who knows more about politics than anyone else.” In 2010, Cook was a co-recipient of the American Political Science Association’s prestigious Carey McWilliams Award to honor “a major journalistic contribution to our understanding of politics.”

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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