College of American Pathologists
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February 14, 2013  •  Volume 29, Number 4
Next Issue: February 28, 2013
© 2013 College of American Pathologists

In This Issue:

March 1 Sequestration Deadline Approaches

Congress has just two weeks to develop an alternative set of cuts to the federal budget totaling $1.2 trillion in order to avert sequestration cuts that will dramatically impact programs throughout the federal government, including Medicare pay cuts for physicians, laboratories, and hospitals. Physicians face a 2% reduction in Medicare payments.

If budget sequestration is allowed to go into effect on March 1, it will cut $100 billion from the Medicare program over 10 years, with $11 billion in 2013, according to an Office of Management and Budget (OMB) report released in September 2012. The reductions in Medicare spending would come from program reductions and lower payments to various health care providers rather than beneficiaries. However, beneficiaries could feel the effects if the payment cuts lead physicians to stop treating Medicare patients.

Of the $11 billion in Medicare cuts, the CBO reported that hospital Medicare reimbursements would be reduced by more than $5.8 billion, and other health related programs would also be impacted. Prescription drug benefits would be cut by $591 million; FDA’s budget would be cut by $317 million, and NIH by $2.5 billion.

There are few details on specific program cuts impacting pathologists, but a July 2013 report from Senator Tom Harkin (D-IA) estimated 659,476 fewer people would receive breast and cervical cancer screenings each year as a result of the federal and state program cuts.

CMS would also see its program management budget cut by $63 million. Select programs including the Meaningful Use program and the Independent Payment Advisory Board would be shielded from cuts.

No Signs of a Deal for Now

When the Budget Control Act was passed in 2011, the prospect of sequestration seemed unthinkable given the deep cuts it mandated for Defense budgets and entitlement programs, including Medicare. However, it is now just weeks away from the deadline with no agreement in sight.

The latest Democratic proposal would avert sequestration for 10 months through December 31, paid for with new tax revenues and spending cuts. Republicans have dismissed the proposal as not serious, and offered a different approach, preserving defense budgets by imposing reforms and cuts to entitlement programs and reducing the federal employee workforce. In his State of the Union speech earlier this week, the President chided Republicans for proposing to avert the cut aimed at defense budgets by increasing cuts to entitlements.

By Washington standards two weeks is more than enough time to work out a compromise to avoid sequestration, either permanently or temporarily. Statline will closely follow this issue as the March 1 deadline nears.

SGR Repeal a Priority as Projected Cost Drops 30%

There is finally some good news on the SGR front. Last week the Congressional Budget Office released updated Budget and Economic projections for 2013-2023 showing that the cost of repealing the SGR had dropped by over 30% due to lower than expected growth in Medicare physician spending. The new cost of freezing payments for ten years is $138 billion, $100 billion less than the previous projection.

The announcement was followed by the release of two proposals in the House to permanently repeal and replace the SGR and a Congressional hearing is scheduled for today to hear comments on the plans. The first proposal, introduced on Wednesday last week by Reps. Joe Heck (R-Nev.) and Allyson Schwartz (D-Pa.), would maintain current physician reimbursement levels through next year while CMS develops and tests new payment models for the following five years. From 2015 to 2018, reimbursement rates would increase by 2.5% annually for primary care physicians and 0.5% for all other doctors. Physicians then would be called to adopt a replacement payment model approved by CMS.

Last Thursday, House Republicans from two committees released their own three-phase framework to permanently repeal the SGR formula and develop a replacement. Leaders from the House Energy and Commerce and Ways and Means committees outlined the three phases: repeal the SGR and provide fixed payment rates for a still-to-be-determined period; move away from the current fee-for-service system to one that rewards physicians for quality care; and after a number of years, build upon improvements by rewarding efficiency through bonus payments for doctors who deliver efficient care. The committees are seeking comment on the proposal by February 25, 2013.

The Energy and Commerce Committee’s Subcommittee on Health will hold a hearing today, February 14, 2013, on SGR repeal. Witnesses will include Glenn M. Hackbarth, J.D., Chairman of the Medicare Payment Advisory Commission; Harold D. Miller, President and CEO of Network for Regional Healthcare Improvement; Elizabeth Mitchell, CEO of Maine Health Management Coalition; Robert Berenson, M.D., Institute Fellow at the Urban Institute; and Cheryl L. Damberg, Ph.D., Senior Policy Researcher; Professor at Pardee RAND Graduate School.

Statline will continue following and reporting on this important issue.

CMS Proposes PT Referral Changes

CMS proposed a number of changes to laboratory proficiency testing (PT) requirements under CLIA last week that would increase the Agency’s discretion in prosecuting improper PT referral cases, and clarify key definitions and provisions.

The proposed rule includes welcome changes in a regulation with ambiguous language that has ensnared laboratories for unintentional PT referral violations and levied draconian mandatory sanctions, including revocation of a lab’s CLIA license and suspension of Medicare reimbursements. CAP advocated for improvements that would increase the Agency’s discretion and help laboratories avoid severe sanctions for such violations.

Key clarifications and changes in the rule include regulatory language as prescribed by the Taking Essential Steps for Testing Act of 2012 signed into law in December 2012; a statement to not refer PT specimens as you would a patient specimen; a narrow exception to CMS’s interpretation of “intentional” referral; and new definitions for reflex testing, confirmatory testing, and repeat PT referral.

With regard to the narrow exception, the Agency retains its long standing interpretation for intentional referrals (ie, general intent to act standard) but institutes a very narrow exception that would consider a referral improper not intentional if the referral meets the following criteria: a result of reflex or confirmatory testing, not a repeat referral, and in full conformance with written laboratory protocols. Laboratories that meet these criteria are no longer subject to automatic revocation but will be subject to alternative sanctions (eg, civil monetary penalties, directed plan of corrections, etc).

The proposed PT referral changes are part of a broader CMS initiative designed to help health care providers operate more efficiently by getting rid of regulations that the agency claims are out of date or no longer needed. Reforms included in the proposed rule are together projected to save $3.4 billion over five years. The CLIA revisions are projected to save an estimated $2 million annually.

Drug/Device Manufacturers to Report Payments to Physicians

CMS last week released the final rule implementing the Physician Payment Sunshine Act that requires most manufacturers of drugs, devices, biologics or medical supplies to annually report payments and other remuneration to physicians and teaching hospitals. The Act also requires manufacturers, as well as group purchasing organizations (GPOs), to disclose physician (including immediate family members) ownership or investment interests. The data collection period begins August 1, 2013, with reporting slated to begin March 31, 2014. CMS will release the data on a public website by September 30, 2014.

The Sunshine Act was passed as part of the Affordable Care Act in 2010. CMS issued a proposed rule to address implementation questions in December 2011, and issued this long-awaited final rule about a year past its expected implementation based on the comments it received.

Most notably, the final rule:

  • Excludes many foreign entities from reporting;
  • Excludes certain medical education programs from the disclosure requirements;
  • Creates separate reporting and publishing procedures for payments related to research; and
  • Excludes from reporting large group meals where recipients are difficult to identify and establishes a reporting process for smaller group meals.

CMS stated in the final rule that it will provide more information and guidance on the reporting requirements and timing of data review and correction. Read the Final Rule.

CMS Innovation Center Official to Speak at CAP Policy Meeting

Sean CavanaughSean Cavanaugh, acting deputy director for programs and policy at the CMS Center for Medicare and Medicaid Innovation (CMS Innovation Center) will be a featured speaker at the CAP Policy Meeting on May 6, 2013, CAP announced this week. The CMS Innovation Center, with CMS, supports the development and testing of innovative health care payment and service delivery models.

Previously, Mr. Cavanaugh was director of health care finance at the United Hospital Fund in New York City. He has also served in senior positions at Lutheran Healthcare (Brooklyn, NY), the New York City Mayor’s Office of Health Insurance Access, and the Maryland Health Services Cost Review Commission. He started his career on Capitol Hill working for a member of the Ways and Means Health Subcommittee. He attended the University of Pennsylvania and the Johns Hopkins School of Hygiene and Public Health.

Register to attend the meeting today.

AMA Members: Designate CAP as Your Specialty Society

The American Medical Association (AMA) is asking all of its members to vote now for the national medical specialty society that best represents your specialty in the AMA House of Delegates. CAP urges every pathologist to cast a vote for CAP, as your support is vital to assuring pathologists have a strong voice in the House of Medicine.

The AMA HOD has over 500 voting members and includes representatives from 116 national medical specialties. Voting for CAP as your specialty society not only ensures the College’s ability to lead the delegation of pathology organizations in the AMA House of Delegates, it also helps increase the number of pathologists in our delegation. For every 1,000 votes CAP receives, the specialty is allowed one additional delegate in the AMA HOD.

The AMA HOD is the policy-making arm of the AMA and additional delegates mean a stronger voice for your specialty. Once you cast your initial vote, your ballot will remain in AMA records unless you choose to vote for another society. Cast your ballot now.

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