College of American Pathologists
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January 21, 2010  •  Volume 26, Number 2
Next Issue: February 4, 2010
© 2010 College of American Pathologists

In This Issue:

Announcement: AMA Urges Physicians to Contact Senate on SGR
Where to Now With Healthcare Reform
MedPAC Considers Removing Certain Lab Tests From the In-Office Ancillary
Service Exception


Announcement: AMA Urges Physicians to Contact Senate
on SGR

The likelihood of replacing the SGR this year is slipping. AMA is calling on all physicians to contact your Senators and urge them to fix the SGR right away. Make your voice heard!

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Where to Now With Healthcare Reform

After Republican Scott Brown’s stunning victory in Massachusetts this week to take the Senate seat held by the late Ted Kennedy and immediately upset Democratic control of the Senate, the question on everyone’s mind in Washington is “what will become of healthcare reform?”

As of this writing, few facts have emerged and speculation abounds as Democratic leaders consider options that would allow this Congress to deliver a healthcare reform bill to the President. Because the President has made this a cornerstone of his legislative agenda, it is unlikely he or Congressional Democrats will give up on passing healthcare reform of some kind.

The decision lawmakers face now is how to proceed, and Democrats are not yet in agreement. Moderates like Evan Bayh (D-IN) see the vote as a referendum for the Democratic Party to move more toward the center, while more liberal Democrats like Rep Richard Neal (D-MA), a senior member of the Ways and Means Committee, are calling for a sharper leftward tack.

According to the Politico newspaper, the argument over how to remedy the problem could “open up the party’s ideological gulf and vastly complicate Obama’s task of trying to push his signature health care agenda to final passage.”

Can There be Reconciliation Now?

The quickest option to passing reform, if they can get the votes, would be for the House of Representatives to pass the Senate bill, the Patient Protection and Affordable Healthcare Act (HR 3590), and make revisions through the process called “reconciliation.”

Reconciliation is a fast-track budget procedure that can only be applied to provisions with federal budget implications. This process can complicate passage of a healthcare reform measure because only those provisions of the reform bill that have budget implications would be germane. While the tax and revenue provisions of the bill would certainly qualify, other provisions that directly address policy concerns, such as insurance reforms, may still have to be passed outside of the reconciliation process.

Sen. Kent Conrad (D-N.D.), Chairman of the Senate Budget Committee, has already indicated he would be open to applying budget reconciliation to healthcare, an indication, according to The Hill newspaper, that congressional Democratic leaders plan to have the House pass the Senate healthcare reform without changes, then pass a second bill with changes hashed out between the two chambers’ leaders and the White House.

Reconciliation would also allow the bill to be disassembled so that delivery system reform could be considered separate from insurance and physician payment reform. However, there are many cross directional relationships between provisions making it difficult to accomplish.

For example, according to a House staffer, a prohibition on pre-existing conditions can’t work without an individual mandate that everyone buy insurance. The reasoning is as follows: if you prohibit insurances from denying coverage based on pre-existing conditions, more individuals must be in the pool or risk will increase and insurance rates will skyrocket. However, requiring more individuals to have insurance creates the need for government subsidies to help low income citizens pay the insurance premiums. Once healthcare dollars are diverted to subsidies, healthcare delivery costs would then need to be reduced to offset the increased expense.

The links between coverage, financing and delivery system reform complicate the Administration’s options in terms of rethinking a bill while still seeking to significantly expand coverage. In addition, controversial issues such as taxing high cost insurance plans, opposed by the unions, and tensions over the abortion issue, hang over any agreement. The up side for Democrats passing health care reform legislation under reconciliation is that it would be protected from filibusters, requiring a simple majority of 51 votes to pass the Senate. Senate Democrats still have a 59 seat majority.

If Not Reconciliation, What Then?

If Democratic leaders decide against going forward with a House vote on the Senate bill and a reconciliation process, their alternatives are to go back to the drawing board with a scaled back bill or put healthcare reform on the back burner altogether.

According to the Washington Post, one idea for a new bill would be to shelve the expansion of healthcare coverage to millions of uninsured citizens and revert to a bare-bones measure that would include some of the most popular initiatives in the existing bills. A middle-of-the-road approach is thought to be more likely to attract support from conservative Democrats and even some moderate Republicans, making it more likely to garner the 60 votes it would need to pass in the Senate.

Senator Bayh, an Indiana Democrat would likely support such a strategy. Earlier this week he told ABC News, “There’s going to be a tendency on the part of our people to be in denial about all this, but if you lost Massachusetts and that’s not a wakeup call, there’s no hope of waking up.”

Liberal Democrats disagree. An email Wednesday from the ultra-liberal political group urged Democrats to support a more confrontational approach by reintroducing new bills that push reform even further.

Still other Democratic view the Massachusetts loss as a call to address problems with the economy. Senator Bob Casey (D-PA) told Politico, “People want us to be talking about the biggest problem in the country right now, jobs and the economy.”

While Democrats continue to debate a new course for healthcare reform, CAP staff believes many of the delivery system and physician payment provisions that impact pathologists are likely to move forward regardless of the status of more controversial issues such as a public insurance plan, abortion, and immigration.

Impact on Physician Issues

The less controversial reforms, including those CAP believes will have significant impact on physicians, such as plans to expand quality reporting, implement health information technology, expand comparative effectiveness, and give the HHS Secretary more authority over payment and other issues like fraud and abuse, seem more likely to move forward with little public or political resistance.

Movement on comparative effectiveness research and standards setting for health information technology are likely to continue uninterrupted as both initiatives were initially funded through the American Recovery and Reinvestment Act of 2009 (ARRA).

Other initiatives, such as creating incentives for primary care physicians, expansion of the PQRI and Value Based Purchasing programs, as well as adding more teeth to fraud and abuse laws are likely to progress with relative ease.

Impact on SGR and the TC “Grandfather”

While Congress decides its next moves, physicians must be concerned about the Sustainable Growth Rate (SGR) for 2010. The clock is ticking on the 60-day extension of the 2009 SGR which expires on March 1, 2010. On that day, if Congress does not step in, physicians will face a cut of 21.5% in 2010 and cuts of 40% over the next decade.

Despite support from Senate and House leaders to repeal the SGR and establish a new formula that more closely reflects the cost of care, the uncertainty over the path forward on health care reform has also created uncertainty about the path forward on the SGR. The worst case scenario is that Congress will pass a short-term fix, which could include a multi-year halt to anticipated payments cuts. However, since the House has already passed separate legislation to permanently replace the SGR with updates based on the medical economic index, some in Congress continue to push for the Senate to act on the House-passed measure. Unfortunately, late last year, the Senate failed to muster the votes necessary to pass similar legislation. The CAP, partnering with the AMA and other physician specialties continue to advocate for a permanent solution.

Similarly, the Technical Component (TC) “Grandfather,” which expired at the end of 2009, will need to be extended. An extension of the “grandfather” was included in both the House and Senate healthcare reform bills and a retroactive extension was seen as likely. Although the CAP expects Congress to extend the “grandfather” this year, timing of an extension is uncertain as health care reform is on hold.

CAP will continue to follow this important issue and advocate on the provisions impacting pathologists. Look for follow-up reports in upcoming issues of Statline.

MedPAC Considers Removing Certain Lab Tests From the
In-Office Ancillary Service Exception

At the January meeting of the Medicare Payment Advisory Commission last week, MedPAC staff unveiled three options to address problems resulting from the in-office ancillary services (IOAS) exception, most notably excluding certain services from the exception such as diagnostic tests that are not usually provided at the same time as the office visit.

CAP leaders and staff have long advocated for such an exclusion and recently met with policymakers at the Centers for Medicare and Medicaid Services (CMS) and MedPAC, to educate them about the need to tighten the IOAS exception to remove anatomic pathology tests.

As recently as October 2009, MedPAC staff focused only on imaging when it posed these three options for modifying the IOAS exception.

  • Exclude all imaging services from the exception
  • Exclude imaging services not generally performed on the same day as an office visit
  • Exclude practices from performing imaging unless they are paid on a fully- or partially capitated basis (i.e., bundled payment).

Commissioners expressed interest in the time-based approach and sought to have it tightened even further. The staff presentation last week incorporated that feedback into the development of new options. In addition to excluding certain services from the exception, other options include:

  • Adjusting payment—reduce payment rates for tests performed by self-referring physicians, or require the fee be packaged or bundled.
  • Requiring prior authorization—for physicians who self-refer for advanced imaging.

MedPAC staff cited evidence that self-referral of imaging and lab tests is associated with increased volume. Yet, certain tests are rarely used by physicians to make rapid diagnosis. Their recommendation includes only tests that are frequently provided on the same day as the visit (based on numeric threshold) or tests that do not require advance patient preparation.

The Medicare Payment Advisory Commission (MedPAC) is an independent Congressional agency established by the Balanced Budget Act of 1997 (P.L. 105-33) to advise the U.S. Congress on issues affecting the Medicare program. The Commission’s statutory mandate is to advise Congress on payments to private health plans participating in Medicare, and providers in Medicare’s traditional fee-for-service program. MedPAC is also tasked with analyzing access to care, quality of care, and other issues affecting Medicare.

MedPAC meets publicly to discuss policy issues and formulate its recommendations to the Congress. In the course of these meetings, Commissioners consider the results of staff research, presentations by policy experts, and comments from interested parties.

While MedPAC’s recommendations are not binding, it does wield considerable influence on policymaking. CAP believes a recommendation on this issue from MedPAC would be a great step forward to closing the loopholes in the IOAS exception.


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