College of American Pathologists
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October 2007
Feature Story

bullet In California, a broader direct billing law

The California legislature voted recently to expand the scope of its direct billing law from cytological to anatomic pathology services.

SB 661 passed unanimously in the Senate Sept. 10 and in the Assembly by a 68-2 vote Sept. 4.

The bill, spearheaded by the California Society of Pathologists, or CSP, and supported by the CAP, would prohibit clinicians from billing patients and third-party payers for anatomic pathology services that they did not perform or directly supervise.

The CSP led the push for the legislation for more than two years in the face of opposition from other medical specialties.

Current law in California prohibits clinicians from billing patients or third-party payers for cytological services relating to the examination of gynecological slides. In addition, current California law, which would remain in effect even with the enactment of SB 661, prohibits markups on all other clinical laboratory services.

The definitions of anatomic pathology services that would be covered under the direct billing provisions of SB 661 are consistent with CAP model legislative language. They include histopathology, cytopathology, hematology, subcellular pathology, surgical pathology, and blood banking services as defined in the bill.

The California Society of Dermatology and Dermatologic Surgery originally endorsed SB 661 but later opposed passage of the legislation.

The California chapter of the American College of Obstetricians and Gynecologists also opposes SB 661.

The bill will be enrolled and sent to the governor, who will then have 30 days to sign or veto the legislation. If the governor doesn't act within 30 days, the legislation will automatically become law.

bullet Pursuing a legislative solution to PT problem

The Cytology Proficiency Improvement Coalition says legislation pending in Congress, HR 1237, is a superior alternative to the still pending CLIAC recommendations for revising the existing mandated proficiency testing program.

HR 1237 would suspend the current cytology proficiency testing program and substitute a less punitive approach that requires annual continuing medical education to enhance locator and interpretive skills. The coalition of more than 60 national and state organizations made its view known last month to the Clinical Laboratory Improvement Advisory Committee.

Last year, a working group selected by the CMS and CDC recommended PT program revisions to the advisory committee. The CMS and CDC told the working group to focus on revisions to the regulation, not alternatives.

Testifying Sept. 5 in Atlanta on behalf of the coalition, George G. Birdsong, MD, of Atlanta's Grady Health System, told the advisory committee that the narrow review prevented a consensus from being developed that would satisfy the cytology community and that, as a result, the coalition was pursuing its alternative with Congress.

Dr. Birdsong also explained that despite the advisory committee's recommendations, the regulation would probably not be implemented until 2009—five years after the industry began requesting changes to the regulation that was promulgated in 1992 and implemented in 2004.

"From our vantage point, given the changing nature of medical science, it is highly probable that the revised regulation will suffer the same fate as the current regulation and that soon the profession will find itself again subjected to an outdated testing regime because the regulatory scheme simply cannot keep pace with medicine," Dr. Birdsong said.

Support for HR 1237 continues to grow in the House of Representatives with nearly 80 cosponsors to the legislation as of mid-September. During the August recess, CAP members met in their hometowns with their legislators, securing nine additional cosponsors.

bullet Close loopholes, change payment method

The College has asked the Centers for Medicare and Medicaid Services to further close the loopholes in existing Medicare rules that allow pod labs and other abusive contractual joint ventures to unfairly capture the revenue stream from anatomic pathology services.

The agency's proposed rule on pod labs and other such ventures was part of the CMS' proposed 2008 physician fee schedule published July 12 in the Federal Register.

The College continues to advocate an amendment to the Medicare reassignment rule that would prohibit markups by physician groups that purchase the professional component of pathology services. It also recommends that anatomic pathology be excluded from the protection of the in-office ancillary services exception to the Stark law.

While the College applauded the CMS for considering its recommended changes to stop abuses in billing and payment for pathology services, it continues to urge the CMS to adopt an approach that does not hinder legitimate pathology practice arrangements. An exception should be made for independent laboratories and single specialty pathology physician groups that do not pose the same potential for abuse as they are not in a position to influence the referrals from ordering physicians.

While the pathology and laboratory community is united in its effort to stop these abuses, the American Medical Association has expressed its intent to oppose expansion of the anti-markup rule to the professional component of pathology services.

On the CMS' proposed 2008 physician fee schedule, the CAP is urging that the proposed payment reductions to pathologists be alleviated with a change in the payment method.

The rule includes a 12 percent reduction in reimbursement rates for pathologists. The majority of that decline, 9.9 percent, is due to proposed reductions in the flawed sustainable growth rate formula the CMS uses to calculate Medicare payment to physicians.

The final rule on the Medicare physician fee schedule is expected to be released Nov. 1, with an effective date of Jan. 1, 2008.

bullet Making MUEs public

A CAP recommendation to make medically unlikely edits publicly available was endorsed by the Practicing Physicians Advisory Council and presented to the Centers for Medicare and Medicaid Services during the council's Aug. 27 meeting.

The recommendation, which the CAP had communicated earlier to the CMS, was reiterated in CAP testimony during the council's meeting.

Testifying on behalf of the College was Economic Affairs Committee member Jonathan Myles, MD, of the Cleveland Clinic Foundation, who expressed concerns about conflicting information from the CMS regarding the intent to make MUEs publicly available.

"On the one hand, CMS has previously stated that MUEs will not be published so that providers cannot game the system," Dr. Myles said. "On the other hand, CMS has stated that a modifier -59 can be used for CPT codes that exceed the MUE limit. Without knowing the MUE, how could a physician know to use a modifier?"

The CAP has expressed several concerns since the CMS proposed the medically unlikely edits nearly two years ago. MUEs are being developed to help the agency reduce fraud and abuse by testing claims against a units-of-service limitation or MUE intended to catch typographical errors and unlikely cases submitted to Medicare for payment.

The CMS plans to have MUEs in place for the majority of pathology services and CPT codes for all medical specialties that could potentially result in a denial of valid claims.

The first four releases of MUEs were focused largely on anatomic edits, but phase five will be developed based on clinical judgment, Dr. Myles said.

"Although the CAP supports the agency's effort to reduce fraud and abuse of the Medicare system, it is time to form a working group that would help establish a more transparent process that would include formal participation from the laboratory and pathology communities," Dr. Myles said.

The CMS has agreed to meet with CAP officials to discuss the formation of a working group that would include all stakeholders including CMS officials, the CMS contractor for MUEs, and various others from the laboratory and pathology communities.

Justin Herman is CAP manager, Communications for Advocacy, Washington, DC.