College of American Pathologists
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January 3, 2013  •  Volume 29, Number 1
Next Issue: Janurary 17, 2013
© 2013 College of American Pathologists

In This Issue:

House Passes Fiscal Cliff Deal; SGR Cuts Averted for One Year

Bill Delays Sequestration Cuts for Two Months
(Update of Jan. 2
Statline Alert)

Medicare physician payments will not be cut by 26.5% now that the House of Representatives passed the American Taxpayer Relief Act (H.R. 8) by a vote of 257-167 on Jan. 1 following contentious debate. The Senate approved this fiscal cliff deal, which delays the Medicare physician fee cuts under the sustainable growth rate (SGR) for a year, by a vote of 89-8 early on the morning of Jan. 1. President Obama signed the bill into law on the morning of Jan. 3.

Under this package to avert tax increases and deep spending cuts in health care as well as defense spending, the sequestration cuts will be deferred for two months. Physicians are facing a 2% cut in Medicare cuts under the budget sequestration process.

The cost to delay the SGR cuts until Jan. 1, 2014, as well as other Medicare extender provisions, is estimated to cost $25 billion. This spending will be offset through a number of provisions, including extending the statute of limitations from 3 to 5 years for recouping overpayments and elimination of unobligated funds for health insurance co-ops authorized by the health care reform law. In addition, payments for advanced imaging services will be reduced based on a change in assumptions regarding the utilization of equipment.

Cuts Averted, Reform Delayed

Even though lawmakers technically breached the fiscal cliff deadline, physicians will likely not see the 26.5% Medicare reimbursement cut, as the House passed the deal on New Year’s Day, a federal holiday. Furthermore, in a Dec. 19 Web posting directed to providers, CMS noted that electronic claims are not paid sooner than 14 calendar days (29 days for paper claims) after the date of receipt. However, it is important to note that while the SGR cut will be delayed for another year, the other payment changes included in the agency’s final 2013 Physician Fee Schedule are effective as of Jan. 1 (Statline, Nov. 21, 2012). This includes individual code changes, such as the payment changes to pathology services as a result of revaluation of the technical component (TC) costs of CPT codes 88300–88309.

While relieved that Congress acted to avert the SGR cut, the AMA is disappointed that the fiscal cliff deal failed to reform this flawed physician payment program, the organization’s President Jeremy Lazarus, MD, said in a statement.

“This last-minute action on the part of Congress is a clear example of how the Medicare program is increasingly unreliable for physicians and patients,” he stated. “Physicians want to work with Congress to move past this ongoing crisis and toward a Medicare program that ensures access to care and the best health outcomes for patients and a stable, rewarding practice environment for physicians.”

Get updates on SGR and sequestration news by following @CAPDCAdvocacy on Twitter.

CAP ’13 Fee Schedule Comments Aim to Curb Reimbursement Cuts; Protect Pathologists’ Role in Molecular Pathology

The College urged the Centers for Medicare and Medicaid Services (CMS) to make changes that would prevent some of the cuts in reimbursement to pathology scheduled for 2013 as well as strengthen the pathologists’ role in molecular pathology in its response to the agency’s final 2013 physician fee schedule rule.

For 2013, CMS estimates that reimbursement to pathologists will decrease 6% primarily due to cuts in the technical component (TC) and global payment for CPT code 88305. CAP’s comments also respond to the agency’s request for additional evidence regarding the appropriate number of blocks assumed for capturing technical component costs for certain anatomic pathology services.

Specifically, the College urged CMS to accept recommendations from the AMA’s Relative Value Update Committee (RUC) regarding certain direct practice expenses not included in the final 2013 Medicare Physician Fee Schedule (PFS) in its Dec. 31 comment letter to the agency on the final rule. The CAP also submitted independent evidence related to current assumptions of the number of blocks for CPT codes 88302-88309, as requested by CMS.

CMS declined to include specimen, solvent, and formalin disposal costs—as well as courier transportation costs—into its direct practice expense (PE) input database in the final 2013 PFS. The CAP disagreed with this decision, noting that these are variable costs unique to specific pathology services and allocable to individual specimens. This position aligns with RUC recommendations. “We urge CMS to accept the RUC recommendations for specimen, solvent, and formalin costs, and courier transportation costs as recognized direct practice expense inputs under its medical supplies category,” stated the comment letter.

Block Assumptions

The College also replied to CMS’s request for feedback on the number of blocks assumed in calculating the valuation for CPT codes 88302-88309. The agency noted in the proposed rule its concern that the number of blocks may be inaccurate. It also requested that the RUC and interested medical specialty societies provide corroborating independent evidence that the number of assumed blocks in the current PE recommendations.

In response, the CAP worked with four other medical specialty societies to collect data on the number of blocks typically used for these codes. Evidence collected by the College, in partnership with the American Academy of Dermatology, the American Clinical Laboratory Association, the Association of Pathology Chairs, and the American Society of Dermatopathology, confirmed the estimated appropriate typical number of blocks associated with these services. These estimates also aligned with RUC recommendations, based on data presented and their own clinical knowledge.

“In January 2013, CAP will discuss the methodology of this study with the AMA RUC and in April 2013 CAP is scheduled to present its data,” stated the CAP in the comment letter. “We look forward to CMS representatives’ participation in these discussions.”

Molecular Pathology Code Placement

In its comment letter, the College once again asserted its position that the molecular pathology procedure codes should be on the PFS, and advocated for additional measures regarding pathologist’s interpretation of molecular services. In the 2013 final PFS, CMS placed them on the CLFS.

While it disagreed with CMS’s placement decision, the CAP appreciated CMS’s efforts to establish the 2013 HCPCS Level II G-code to ensure that pathologists are recognized for their professional work associated with performing these services. However, rather than the G code, the CAP requested that the agency consider a modifier (-26) for reporting professional services, and therefore to allow CMS to monitor and collect the specific procedure data of these services.

This modifier would also assist with reimbursement, as it achieves several of the benefits of the PFS, such as assigning services requiring lower levels of professional work lower relative value units (RVUs), while those associated with greater levels of professional work have higher RVUs assigned.

“Rather than paying relatively higher and lower value services using the same RVU, recognizing the RUC recommended RVUs associated with -26 modifier for each molecular pathology CPT code will allow the most specific and accurate 2013 data capture by the agency,” noted the CAP letter.

The letter also acknowledged the agency’s publication of the RUC’s recommended physician work values and PE inputs for these services, which “will assist other payers with their payment determinations.”

Federal District Court Rejects Bostwick’s Request to Dismiss False Claims Suit

A federal District Court in Ohio denied Bostwick Laboratories’ motion to dismiss a False Claims Act (FCA) lawsuit on Dec. 18.

This lawsuit alleges that the defendants, David Bostwick, MD, founder and chief medical officer of Bostwick Laboratories, and his company submitted false claims to Medicare and Medicaid for testing services performed without a physician’s order. The suit also alleges that Bostwick billed Medicare and Medicaid and other federally-funded health care services for services unlawfully referred to in violation of the federal Anti-Kickback Statute and the Stark Laws.

The defendants requested dismissal, arguing that the party making the allegations, known as the relator, failed to specify any single allegedly false claim submitted to CMS. Furthermore, they asserted that the testing services performed and billed to federal programs were medically necessary and are not required to have physician’s orders under existing requirements. Bostwick also argued that the suit should be dismissed because the matter of whether physicians are allowed to mark up the technical component (TC) of laboratory tests has been publicly debated for years. This was a jurisdictional argument for dismissal related to public disclosure under the FCA.

Nevertheless, the court found the mark-up argument inapplicable. It also rejected Bostwick’s argument that the plaintiff failed to specify a single case where it billed a medically unnecessary testing service to federal health care programs.

“Tests billed without a physician’s order under the circumstances alleged in the complaint could plausibly be found to be medically unnecessary and thus fraudulent under the FCA, and that is the only question before the Court at this stage,” stated the court’s decision. “Through the discovery process, it will become clearer whether and to what extent the pathologist exception to the rule that tests must be ordered by the treating physician might apply to the any, all or none of the allegedly fraudulent claims.”

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