College of American Pathologists
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October 21, 2011
© 2011 College of American Pathologists
Special Report
Washington Analysis
Congress Shows Cautious Interest in CAP’s Self-Referral Proposal; TC-Grandfather Faces Scrutiny

October 21—In an atmosphere where federal belt-tightening is the number one priority on Capitol Hill, the CAP’s proposal to cut health care spending by removing anatomic pathology and other certain services from the IOAS exception is being received with interest, but tempered with caution.

This is the second week CAP members have come to Washington urging members of Congress to introduce budget-saving legislation tied to physician self-referral, and the meetings are proving productive. Congress understands the issues, and they are interested in the potential savings. However, they are cautious about the political fallout from making a policy change without more detailed information. Significant potential savings could help ease their concerns, and lawmakers are asking for additional details on specific saving estimates, particularly the results of a GAO self-referral study requested by Congressmen Stark (D-CA), Waxman (D-CA), and Levin (D-MI) that is likely not due out until sometime next year.

CAP and its partners are lobbying Congress to remove the perverse incentives as part of the Super Committee recommendations due by November 23, and will continue to lobby hard on this issue, with Congressional meetings set up through mid-November.

While the Super Committee continues its work, other House and Senate committees and subcommittees are holding hearings and preparing their own recommendations on cuts and savings. The TC-Grandfather provision—one of a number of “extender” programs—came under scrutiny at one such committee meeting in September, where members seemed intent on reducing the cost of these extenders.

Although two different bills have been introduced with provisions to extend the TC-Grandfather, any committee discussion about cutting the extenders raises new cause for concern, and CAP members and staff are responding with renewed vigor about the importance of these Medicare physician provider extenders in these discussions on Capitol Hill.

See below for more details on these Hill meetings and the key issues CAP is pursuing this week.

Week of October 17-21
CAP Meets with Super Committee Co-Chair Staff, Other Congress Leaders on Self-Referral

CAP continued to lobby Congress this week—including meeting with Super Committee Co-Chair Sen. Patty Murray’s (D-WA) staff—about the potential savings from curbing self-referral abuses, specifically by removing anatomic pathology (AP) from the in-office ancillary services (IOAS) exception to the Stark Law. This Super Committee must identify over $1 trillion in savings by Thanksgiving and have the recommendations passed by Congress. If the Committee fails to reach agreement or Congress rejects its plan, automatic cuts are triggered, namely, Medicare physician payment would be cut by 2% beginning in 2013.

This week’s meetings between CAP members and Congress focused on how closing the loophole on AP self-referral—the IOAS exception—will not only result in health care savings, but also eliminate financial incentives to inappropriately increase AP testing volumes without impeding patient access to tests. This fits in with a current goal of Congressional lawmakers: to craft health care delivery reform recommendations for the Joint Select Committee on Deficit Reduction by identifying savings targets that decrease unnecessary utilization.

Indeed, CAP member Joseph Rank, MD, FCAP, from Washington, told Statline that Sen. Murray’s staff appeared receptive to sending a College-supported legislative proposal closing certain self-referral loopholes to the Congressional Budget Office (CBO), where it would be scored for a savings estimate. The proposal is from the Alliance for Integrity in Medicine (AIM) Coalition. AIM’s members include the College, along with other specialty groups, including the American College of Radiology, the American Society of Clinical Pathology, and the American Clinical Laboratory Association. AIM members are pushing to close the self-referral loophole, based on concerns about abuse of four services under the IOAS exception: advanced imaging, anatomic pathology, physical therapy, and radiation therapy.

However, CAP members visiting the Hill continue to encounter hesitation from Congressional staffers to move forward with this proposal, given that it would be a significant policy change and may spark political turmoil, even though they are intrigued by the potential savings. That being said, Dr. Rank also reported to Statline that staffers from other Congressional offices are cautious of passing the issue on to the Super Committee, as the savings is not significant enough when compared to the $1.2 trillion to $1.5 trillion that those lawmakers need to identify. “Many staffers grasp the issue and potential savings, but their focus is on getting the Super Committee ‘big ticket’ recommendations related to massive Medicare reforms, given the amount that these lawmakers have to cut,” Dr. Rank explained.

Nevertheless, the College’s alliance with other physician specialty groups on the self-referral issue appeared to resonate in Hill meetings, CAP Member Richard Eisen, MD, FCAP, from Connecticut told Statline. “In my meeting with Sen. Richard Blumenthal’s (D-CT) staff, our work with the AIM Coalition to close these self-referral loopholes signifies that there is real savings to be realized not just for individual specialties, but for the entire health care system, which is striking a chord on the Hill,” he said.

AMA Turns Up the Heat on SGR Fix; MedPAC Recommends 18% Pay Cut for All Specialties

Last week, AMA members participated in 75 meetings with members of the Joint Select Committee on Deficit Reduction (“Super Committee”), physician members of Congress, and members on key congressional committees to urge repeal of the flawed sustainable growth rate (SGR) formula.

The current SGR “patch” will expire at the end of this year. Unless resolved, this will set physicians up for a 29.5% cut in Medicare payments, beginning Jan. 1.

The Medicare Payment Advisory Commission (MedPAC) also recently recommended that Congress repeal the SGR. However, both the AMA and the College are concerned with MedPAC’s recommendation to replace SGR with a 5.9% payment reduction to specialty physicians, including pathologists, under the Medicare Physician Fee Schedule (PFS) for each of the three initial years, followed by a freeze in payment rates for seven years.

The College is supporting the AMA’s SGR repeal efforts on Capitol Hill. More details about how physicians can participate in AMA’s grassroots efforts to repeal SGR can be found online.

While Sen. Blumenthal’s staff also emphasized the need for concrete saving estimates on closing these loopholes, Dr. Eisen said that the issue also appears to be gaining traction because of the potential negative impact on patients. “Sen. Blumenthal’s staff appeared especially interested in how overutilization of tests and procedures—in terms of potential complications—is really a patient safety issue, and has an adverse impact on the quality of medicine received by patients,” he explained.

TC-Grandfather Extension Under Scrutiny

While self-referral remains a lobbying priority, the CAP Members and staff have also been on the Hill urging lawmakers to extend the Medicare “TC-grandfather” provision. This provision, which allows independent laboratories to bill Medicare for the technical component (TC) of surgical pathology services for hospital patients, is one of a number of “extenders” set to expire at the end of this year, unless extended by Congress.

Given the current environment of fiscal austerity, however, some lawmakers may be inclined against extending any of these Medicare provisions. Indeed, at a September House Ways and Means Subcommittee on Health hearing on these provisions, lawmakers noted that as the extenders package costs $2 billion annually, any extension will be subject to intense scrutiny. “History shows that Congress has continued to blindly extend these policies year in and year out, which raises the question: Given that these additional payments do not appear to be ‘temporary,’ isn’t the true cost of the annual $2 billion extenders package actually $25 billion, when measured over Congress’ standard 10-year budget window?” said Subcommittee Chairman Wally Herger (R-CA) at the hearing.

However, there are some legislative options currently in play that would address this provision. A one-year TC-grandfather extension was included in the Rural Hospital and Provider Equity Act (R-HoPE; S. 1680) introduced on Oct. 12 by Sen. Pat Roberts (R-KS), co-chairman of the Senate Rural Health Care Caucus, and Sen. John Barrasso (R-WY). Sens. Kent Conrad (D-ND) and Sen. Tom Harkin (D-IA) are also co-sponsors on this legislation. The College, however, continues to advocate for a permanent solution, as outlined in legislation introduced by Rep. Geoff Davis (R-KY) and co-sponsored by Rep. Mike Ross (D-AK) in early July. This bill, “The Physician Pathology Services Continuity Act of 2011”, would make the TC grandfather policy permanent.

CAP members are urged to visit the PathNET Legislative Action Center to sign up for the Self-Referral Action List and find out more about the current Grassroots Fly-In, when CAP members travel to Washington, DC, to meet with their Members of Congress on this issue.

CMS’s Final ACO Rule Aims for More Flexibility to Increase Participation

CMS officials have released the final Accountable Care Organization (ACO) rule, which will establish the agency’s Shared Savings Program beginning Jan. 1, 2012. The Department of Justice and the Federal Trade Commission also released a final policy regarding ACOs, in its Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program.

At a briefing on Oct. 20, CMS officials said that the final rule reflects the call for more flexibility that the agency heard from the more than 1,300 submitted comments and stakeholder meetings held around the country following the release of the proposed rule in March 2010. Agency officials are hoping that this flexibility allows more organizations and providers to participate in ACOs. They currently estimate that there will be between 50 to 270 organizations participating in this Shared Savings Program during its initial phase, which will be approximately three years. If the number of participants reaches 270, this will be twice the number of participating organizations that CMS had previously estimated upon the release of the proposed rule.

Another initiative to encourage participation is the agency’s Advanced Payment Model that officials announced would be tested with certain ACO providers, specifically physician-owned and rural providers. This program will provide funding support in the form of advance payments to be recovered from shared savings achieved by the ACO. The agency is expected to invest $170 million in the initial three years of this program, officials announced at the briefing.

Risk Model, Quality Measure Changes

The major differences between the proposed and the final rule primarily involve the two risk models open to participants, quality measures that participants will need to report (including EHR requirements), and beneficiary assignment.

In the final rule, there are still two “tracks” open to providers, based on their different levels of readiness, each entailing a 3-year agreement. However, in Track 1—designed for providers needing a longer “on-ramp” to a coordinated care model—the two-sided risk element outlined in the proposed rule has been removed. Track 2 will provide higher sharing rates as these ACOs are risking a share in losses.

Quality measures were also reworked in the final rule. The proposed rule included 65 measures, the final rule includes 33. As outlined in the proposed rule, a number of these measures are clinical pathology-related, including measures assessing diabetes management (HbA1c control and low density lipoprotein) and ischemic vascular disease management (complete lipid profile and LDL control).

Also related to quality measures is EHR use. In the proposed rule, 50% of primary care physicians had to be defined as “meaningful users” by the start of the second performance year. In the final rule, however, meaningful use is no longer a condition of participation. EHR use is now a quality measure, and one that is weighted higher than other measures for quality-scoring purposes.

Another key difference between the proposed and final rule involves beneficiary assignment. The proposed rule employed retrospective assignment based on utilization of primary care services. However, the final rule relies on a “preliminary” prospective assignment method that assigns beneficiaries quarterly. Following each performance year, there will be a final reconciliation of the beneficiary assignments, based on patients served by the ACO.

The CAP is currently analyzing details of the final rule. Watch for continuing in-depth coverage of how this final rule will impact pathologists in forthcoming issues of Statline.

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