College of American Pathologists
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Casting A Wary But Hopeful Eye On The Capitol

March 2001
Mary Jane Gore

Reinventing HCFA

Though there is a "fresh look" at health care in Washington, and a "new attitude" at HCFA, says David Sundwall, MD, president of the American Clinical Laboratory Association, no one knows exactly what this will mean for laboratories. Still, he says, "I think laboratories stand a good chance of getting their issues before Congress."

Because Tommy Thompson was only recently named head of the Department of Health and Human Services, top administrators and agendas for HCFA, FDA, and CDC were in limbo at CAP TODAY press time. The fates of many regulations also were uncertain because the new agency heads will have to review any proposed or recently finalized rules.

But Dr. Sundwall isn’t the only one who is optimistic that laboratory issues will catch Congress’ attention. Donald Lavanty, legislative counsel to the American Society for Clinical Laboratory Science, sees Medicare reform as a vehicle for laboratory provisions. "If they get around to prescription drugs and look at structural reform of Medicare, or they look at any bits and pieces of the Medicare program, perhaps again in the form of givebacks, these bills might be the product that we would be able to attach to." Lavanty is referring to the Medicare giveback bills of 1999 and 2000, the latter of which gave $30 billion to Medicare over five years.

Denise Bell, CAP director of federal and state legislative affairs, cautions that vigilance is critical. "With Medicare reform, we’ll want to watch out for proposals that may include competitive-bidding requirements and beneficiary copayments for laboratory tests," she says. Copayments would require patients to pay 10 to 20 percent of their lab bills and burden labs with billing for small sums.

Dr. Sundwall says a budget bill also provides an opportunity for laboratories to see legislative action. "We need to be prepared for any budget bill, because we will likely get agreement on a budget, even if Medicare reform fails to get passed," he says.

Other efforts may spill over from the 106th Congress. For example, the CAP supported legislation last year, introduced by Reps. E. Clay Shaw Jr. (R-Fla.) and Karen Thurman (D-Fla.), that would have required Medicare to cover annual Pap tests. In enacting the Medicare, Medicaid and S-CHIP Benefits Improvement and Protection Act of 2000, or BIPA, Congress took a first step toward annual coverage by requiring Medicare to cover a screening Pap test (including a pelvic and clinical breast exam) once every two years, rather than once every three.

"This year, the CAP will again back legislation to require coverage for annual Pap tests under the Medicare program," Bell says. A legislative assistant in Thurman’s office says the congresswoman probably would give a "positive response" to backing such legislation in 2001.

And bigger wins may be born of small wins. Congress enacted a two-year grandfather for certain TC arrangements with hospitals, which went into effect Jan. 1. In doing so, Congress acknowledged that imposing the new HCFA billing requirements for pathology technical component services (in which independent labs must seek payment from hospitals rather than Medicare) could disrupt existing relationships and create significant hardship. "That we won a two-year grandfather period is a victory," Bell says, but "we will be seeking a final remedy in the form of a permanent grandfather."

TC arrangements in place between independent labs and hospitals "serve an important community service and are especially critical in rural areas," Bell says. "They were begun in good faith based on regulations in effect at the time and should not be jeopardized by a change in regulation."

Laboratory groups recognize the potential value of employing select recommendations from the Institute of Medicine report on reforming the outpatient fee schedule for lab payments under Medicare.

ACLA leaders view working on national limitation amounts as one of the most constructive ways to leverage the IOM report, Dr. Sundwall says. "To get uniform payment policies, along with negotiated rulemaking, you also need a uniform rate." But "we think that getting from here to there could be problematic," he adds.

ACLA is in talks with the consulting firm Pricewaterhouse Coopers. The plan, Dr. Sundwall says, is to invest in an analysis that would show how to determine increases for the national fee schedule and that the share is fair to laboratories.

ACLA will push for a consumer price index update in the fee schedule. "It is due to be frozen again next year, and we think that is indefensible, given all of the testimony given by HCFA and others," Dr. Sundwall says. ACLA is also asking for an increase in the fee for blood collection, which he calls "defensible" given the time and effort blood collection takes.

"After the cuts labs have undergone," Dr. Sundwall says, "budget is our top priority-to make some restitution."

Vince Stine, director of government affairs for the American Association for Clinical Chemistry, says the Laboratory Budget Coalition, which includes the CAPand other laboratory groups, is dividing its efforts three ways: "raising payment rates for tests reimbursed under the national limitation amount and getting an increase in the consumer price index for the Medicare fee schedule for 2002; following the usual payment issues, such as copayments and/or competitive-bidding plans; and examining new technology coverage and payment issues."

For all laboratory groups, negotiated rulemaking is a priority. The rule, which includes national coverage policies for about 20 tests, could significantly change the way laboratories bill for tests performed on Medicare Part B recipients.

The goal of negotiated rulemaking is to simplify administrative procedures so laboratories will know what Medicare carriers will reimburse. Under the Bush administration, Dr. Sundwall says, "There may be more sympathy with the intent of simplification."

The patients’ bill of rights and Medicare reform will be "up front and center" on Congress’ agenda, though both sides don’t necessarily agree on the final form these bills will take, says Robert Laszewski, health policy expert with Health Policy and Strategy Associates, Washington, DC.

"The patients’ bill of rights could be important to labs to the extent that patients have more freedom in which providers they choose," Laszewski says. He and others predict the bill of rights could be signed into law by summer.

President Bush, many Republicans, and moderate Democrats have said there should not be prescription drug benefits without fundamental reform of the Medicare program, says Laszewski. "On the other hand, liberal Democrats are concluding that fundamental reform of Medicare is another way of saying ’end the Medicare entitlement,’" he adds. "Those are fighting words."

A compromise would be for President Bush to move a prescription drug benefit alone, and "he will want to get that because it was such a big part of the election year promises," Laszewski says. Several versions of a reform bill could come into play, key among them a bipartisan bill introduced Feb. 15 by Sens. John Breaux (D-La.) and William Frist (R-Tenn.).

President Bush showed support for Medicare reform in a closed-door meeting at the White House in February with tax committee members, Bell reports. Senate Finance Committee chair Chuck Grassley (R-Iowa) said the committee should be working on Medicare by June.

Senate committees agreed this year to work with a shared power structure rather than one party leader on each committee. Dr. Sundwall, who worked for years as the health staff director for Sen. Orrin Hatch (R-Utah), predicts this will be tough.

"Someone has to be in charge for things to get done, and you can be paralyzed through too much comity," he says.

At the start of each Congress, Bell notes, there is often talk of bipartisan spirit and compromise. "What remains to be seen is whether the rhetoric becomes a reality," she says.

Mary Jane Gore is a freelance writer in Charlottesville, Va.