College of American Pathologists
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January 6, 2011  •  Volume 27, Number 1
Next Issue: January 20, 2011
© 2011 College of American Pathologists

In This Issue:

CMS Announces 2011 PFS Conversion Factor $33.9764
CMS Delays Requisition Signature Requirement
New Congress Convenes with Rep. Camp Chairing Ways and Means
112th Congress Readies Legislation to Repeal Healthcare Reform
Prometheus Decision Raises Questions for Myriad Gene Patent Case
CMS Will Continue to Delay PECOS Enforcement
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CMS Announces 2011 PFS Conversion Factor $33.9764

After dodging a 25% pay cut resulting from the flawed SGR formula, physicians will face a lesser cut in the 2011 Physician Fee Schedule conversion factor, due to increases in relative value units included in the final rule. In a transmittal issued December 29, 2010, CMS said that although the zero payment update would have called for no change in the conversion factor from 2010 to 2011, other adjustments included in the 2011 final rule caused the conversion factor to dip from $36.8729 in the second half of 2010 to $33.9764 effective January 1, 2011.

The adjustment is a result of rebasing and revising the Medicare Economic Index (MEI), referred to as the rescaling of the relative value unit (RVU) weights, by -8.2%, and a positive budget neutrality adjustment of +0. 4% brought about by the changes in the RVUs.

CY 2011 PFS Conversion Factor Calculation
December 2010 Conversion Factor$36.8729
MMEA “Zero Percent Update”0.0 percent (1.000)
CY 2011 RVU Budget Neutrality Adjustment0.4 percent (1.0043)
CY 2011 Rescaling to Match MEI Weights Budget Neutrality Adjustment-8.3 percent (0.9175)
CY 2011 Conversion Factor$33.9764
CMS periodically rebases and revises the MEI to ensure it more accurately reflects current conditions. In rebasing the MEI, the proportion of the RVUs assigned to physician work, practices expenses and professional liability insurance are adjusted. This adjustment is made in a budget neutral manner, and is accomplished either by a change in the RVUs, a change in the conversion factor, or a combination. For 2011, CMS rebased the MEI using the 2006 Physician Practice Information Survey (PPIS) data to determine the expenditure weights, and made the following changes: decreased physician work from 52.5% to 48.3%; and increased practice expense including professional liability insurance expense from 47.5 to 51.7%. While practice expense and professional liability insurance RVUs were increased, the final rule made no reduction to the work RVUs.

In past years, CMS made budget neutrality adjustments to the work RVU, which comprise the vast majority of the professional component pathology services., The AMA and specialty societies objected because it distorts the work RVUs. CMS’ decision to reduce the conversion factor rather than the work RVU will have less impact on hospital-based pathologists than a reduction in the work RVU.

CMS Delays Requisition Signature Requirement

The Centers for Medicare & Medicaid Services (CMS) announced on Dec. 21 that it will delay implementation of the Physician Fee Schedule (PFS) Final rule provision requiring a physician’s or qualified non-physician practitioner’s (NPP) signature on all requisitions for tests paid on the Clinical Laboratory Fee Schedule (CLFS), formerly scheduled to go into effect Jan. 1, 2011.

It appears that the delay will be through the first quarter of 2011, although the agency did not detail a specific end date for the delay. “Although many physicians, NPPs, and clinical diagnostic laboratories may be aware of, and are able to comply with, this policy, CMS is concerned that some physicians, NPPs, and clinical diagnostic laboratories are not aware of, or do not understand, this policy,” stated the agency on its website. “As such, CMS will focus in the first calendar quarter of 2011 on developing educational and outreach materials to educate those affected by this policy…Once our first quarter of 2011 educational campaign is fully underway, CMS will expect requisitions to be signed.”

In addition to the notice of delay, a CMS official confirmed to the CAP that the signature requirement only applies to test requisitions paid on the CLFS and not the PFS—a source of confusion when the final rule was published in late November. “There have been numerous ongoing questions surrounding the requirement for signature on laboratory tests,” stated the official. “Because of the confusion surrounding this subject, and because the new regulation brought this confusion to the forefront, CMS has decided to develop educational and outreach materials as a teaching tool. We will take into consideration all of the questions presented to us to form the basis for our training material.”

Advocacy Efforts

The decision to delay the requirement comes after the College—along with other clinical laboratory organizations—wrote to CMS Administrator Donald Berwick, MD, in mid-December, urging a delay and requesting a meeting to discuss the potential negative implications of this new requirement. The Dec. 12 letter also noted the CAP’s concern about this requirement in comments submitted to CMS prior to the final PFS rule.

In addition to this letter, the CAP joined with fellow members of the Clinical Laboratory Coalition (CLC) in expressing opposition earlier last month. Writing to CMS Deputy Administrator Marilyn Tavenner on Dec. 3, the groups asked for a delay until at least the beginning of 2012.

The CAP continues to work with other provider groups and engaging with CMS to make them aware of the potential negative impact that this new requirement could have on health care providers, as well as the confusion resulting from this requirement.

New Congress Convenes with Rep. Camp Chairing Ways and Means

The 112th Congress which convened yesterday will bring new leaders to several key health care committees—some of whom have established relationships with the College.

The CAP enjoys a long-standing relationship with new House Speaker John Boehner (R-OH). In addition, CAP members Phil L. Perkins, MD, FCAP, and John C. Keep, MD, FCAP, recently met with Rep. Dave Camp (R-MI), now chair of the House Committee on Ways and Means. This marks a position-switch, as Camp was the former ranking minority member; former Chair Sander Levin (D-MI) will now assume that post. Rep. Wally Herger (R-CA) now chairs the Ways and Means Health Subcommittee, while Rep. Pete Stark (D-CA) is now the ranking Democrat on the subcommittee.

During the meeting with Rep. Camp, Dr. Keep said he found the congressman very knowledgeable about the likely impact of health care reform legislation on physicians, including pathologists. “We emphasized our main concern, which was that the the focus of health care must to be centered on strengthening the individual patient-physician relationship,” said Dr. Keep, who is with Grand Traverse Pathology (Traverse, MI). “Governments, health care systems, and insurers interfering with this relationship could irreparably harm the practice of medicine in America. It was quite clear from our discussions that Rep. Camp is a friend of The College of American Pathologists.”

CAP member John Yelcick, MD, FCAP, leads Rep. Joseph R. Pitts (R-PA) on a tour of Lancaster General Hospital’s pathology laboratory in Lancaster, PA. Below are some other notable leadership changes:

  • House Committee on Energy and Commerce: Rep. Fred Upton (R-MI) is now chairman, Rep. Henry Waxman (D-CA) assumes the position of the committee’s ranking member.
  • House Energy and Commerce Subcommittee on Health: Rep. Joseph R. Pitts (R-PA) now chairs this subcommittee. Congressman Pitts toured Lancaster General Hospital’s pathology laboratory in 2008. The tour was led by CAP member John Yelcick, MD, FCAP (see photo above).
  • Senate Finance Committee: Sen. Max Baucus (D-MT) will continue to chair this committee. However, Sen. Orrin Hatch (R-UT) will replace Sen. Charles Grassley (R-IA) as ranking member due to term limits imposed by the Republican party. Sen. Hatch has worked with the College over the years on various issues impacting the practice of pathology and he is currently drafting legislation to regulate laboratory tests. While legislation has yet to be formally introduced, CAP is closely monitoring this potential bill.
  • Senate Committee on Health, Education, Labor, and Pensions: Sen. Tom Harkin (D-IA) remains the chair; Sen. Mike Enzi (R-WY) remains the ranking member.

112th Congress Readies Legislation to Repeal Healthcare Reform

Republicans in the House say they will introduce legislation to repeal and replace Healthcare Reform law, starting with a two-page bill introduced by Rep. Eric Cantor (R-VA), to repeal the Patient Protection and Affordable Care Act and the healthcare related provisions in the Health Care and Education Reconciliation Act of 2010. Rules governing debate of the bill are expected to be considered on the House floor tomorrow, Friday, January 7, with a vote scheduled for Wednesday, January 12.

Also next week (Jan 10-14), lawmakers are expected to consider a resolution that instructs four House committees to report alternative healthcare legislation. The committees include House Committee on Education and Workforce, Energy and Commerce Committee, Judiciary Committee, and Ways and Means Committee.

The resolution sets 12 goals for the legislation produced by the committees:

  • eliminate job-killing policies and regulations
  • lower healthcare premiums through increased competition
  • Preserve a patient’s ability to keep his or her health plan
  • Access to affordable health coverage for people with pre-existing conditions
  • Reform medical liability system to reduce unnecessary and wasteful healthcare spending
  • increase the number of insured Americans
  • Protect the doctor-patient relationship
  • provide states greater flexibility to administer Medicaid programs
  • expand incentives to encourage personal responsibility
  • prohibit taxpayer funded abortions
  • eliminate duplicative government programs and wasteful spending
  • do not accelerate the insolvency of entitlement program or increase the tax burden on Americans.

The vote to repeal healthcare reform, though likely to pass in the House where Republicans are in the majority, is unlikely to pass in the Senate where Democrats are in the majority; and it faces even less chance that President Obama would sign it. The real work ahead for House Republicans will be scrutinizing the law to scale back and cut spending on provisions they feel don’t help patients and are overreaching and costly.

Statline will keep you apprised of further developments.

Prometheus Decision Raises Questions for Myriad Gene Patent Case

The battle over gene patents took another turn last month when a Federal Circuit Court affirmed its decision in Prometheus v. Mayo, ruling that Prometheus’s patents for optimizing drug therapy efficacy meet the patentable subject matter standard of §101 of the Patent Act.

The claims asserted by Prometheus are not on gene patents but rather directed toward a method of “optimizing therapeutic efficacy” by first administering an active drug to a patient and then using the patient’s metabolite blood-level to adjust future doses of the drug. Most of the claims are centered around three ordered-steps of: administering the drug to the patient; determining the amount of drug in the patient’s blood; and re-calibrating the drug dosage based on the amount of drug in the patient’s blood.

The District Court initially found the patent claims invalid, lacking patentable subject matter. On appeal, the Federal Circuit reversed—holding that the steps of “administering a drug” and “determining the level of drug” were both sufficiently transformative of “a particular article into a different state or thing.”

However, in 2010, the Supreme Court issued a landmark ruling in Bilski v. Kappos, ruling against Bilski, the writing in its decision that the machine-or-transformation test is not the sole test for determining the patent eligibility of a process, but rather “a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under §101.”

In the wake of its Bilski decision, the Supreme Court vacated the Federal Circuit’s Prometheus decision and remanded it for a new opinion “in light of Bilski”.

In its most recent ruling, the Federal Circuit again reversed the District Court’s grant of summary judgment of invalidity, and held that the Prometheus patent claims are drawn on statutory subject matter.

This decision has renewed speculation about the outcome of the Myriad gene patent case, of which CAP is a co-plaintiff. In this case, the ACLU is representing CAP, AMP and others challenging the patentability of human DNA, specifically the BCRA1 and BCRA2 genes.

Last March, a federal district court invalidated Myriad’s patent claim, ruling it had not met the requirements for patentability. Myriad has already filed an appeal, and the case is likely to be heard in the Court of Appeals for the Federal Circuit sometime this year. Many believe the Myriad case will ultimately be decided in the US Supreme Court.

CMS Will Continue to Delay PECOS Enforcement

CMS has announced that it will not enforce the expected January 2011 enrollment deadline by rejecting claims of those providers who receive orders from referring/ordering practitioners who are not enrolled in the agency’s Provider Enrollment, Chain and Ownership System (PECOS).

In an agency transmittal, officials indicated that the system’s automated edits to reject claims would not be “turned on” in the near future. These edits automatically deny claims for services that were ordered or referred by a physician or other eligible professional who do not have an approved file in PECOS. &38220;CMS is working diligently to resolve backlog and other system issues and will provide ample advance notice to the provider and beneficiary communities before CMS begins any such automatic denials,” stated the transmittal.

CMS originally anticipated that the PECOS enrollment date would be in early January 2011. This date was moved up six months to early July 2010 under the new health care law. However, the July implementation date was delayed amidst enrollment problems and concern from physicians that that their claims would be rejected if the referring or ordering physician listed on the claim was not enrolled in PECOS.

Despite this most recent announcement, CMS is encouraging physicians to enroll in PECOS “sooner rather than later”. To verify an enrollment record in the system, visit the agency’s PECOS website.

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