College of American Pathologists
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February 17, 2011  •  Volume 27, Number 4
Next Issue: March 3, 2011
© 2011 College of American Pathologists

In This Issue:

CMS to Rescind Physician Signature Requirement
Obama’s Budget Proposes Two-Year, $62 Billion Doc Fix
CAP Looks to Congress to Halt TC Grandfather Payment Changes
Mass. Gov. Patrick Announces Health Care Payment Reforms
CAP, PA Pathology Assoc Push to Ease Autopsy Image Restrictions
CAP, NY State Path Society Oppose Weakening of Self Referral Law
New IL Out-of-Network Billing Law Effective June 1
Save-the-Date: CAP 2011 Annual Policy Meeting in D.C., May 2-4, 2011
In Brief...

CMS to Rescind Physician Signature Requirement

CMS officials indicated in early February that they are planning to withdraw the provision of the Physician Fee Schedule (PFS) Final rule 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). Originally slated to take effect on Jan. 1, CMS had already delayed the requirement through the first quarter of 2011.

CMS’s decision to rescind the requirement comes days after the agency’s Deputy Administrator Jonathan Blum acknowledged concerns expressed by physician and laboratory stakeholders about the potential negative impact of this new requirement. At an AMA-convened meeting on Feb. 9, which was attended by the CAP, he also acknowledged that agency officials were taking a “fresh look” at the requirement, which was intended to streamline the auditing process.

Since the rule was first proposed last year, the CAP has led steady efforts to raise concern about the risk of increased administrative burden to practices and health care providers—including pathologists—and the potential delay in testing due to lack of signed requisitions. Most recently, this included engaging members of Congress. As a result, Reps. Michael Burgess (R-TX) and Bill Pascrell (D-NJ), along with Sens. Robert Menendez (D-NJ) and Pat Roberts (R-KS) wrote to CMS last week, asking the agency to further delay implementing the rule. A total of 89 members of the House and at least 26 members of the Senate co-signed these letters urging CMS to reconsider the regulation.

Prior to the Congressional effort, the College and members of the Clinical Laboratory Coalition met with CMS’s Blum in mid-January to emphasize concerns with the regulation and educate the agency about the problems it would present. This meeting followed the CAP’s support of an AMA House of Delegates proposal, as well as a letter from the College to CMS officials in December asking to delay implementation.

Obama’s Budget Proposes Two-Year, $62 Billion Doc Fix

The proposed 2012 federal budget released earlier this week calls for $62 billion to prevent the Medicare cuts to physician payments, at least for the next two years. When the current one-year fix to the Sustainable Growth Rate (SGR) formula expires at the end of this year, physicians face an approximate 28% cut in Medicare reimbursement.

HHS Secretary Kathleen Sebelius noted that a 10-year fix is estimated to cost $370 billion at a Feb. 14 press conference announcing the health care aspects of President Obama’s $3.7 trillion 2012 budget. However, only SGR payment offsets for the first two years—at $62 billion—are detailed in the budget.

Specifically, the two-year offset will come from savings from reducing fraud and abuse as well negotiating for better drug prices, explained HHS Assistant Secretary for Financial Resources Ellen Murray. “There are a number of proposals to offset the first two years of SGR,” she explained at the press conference. “About 50% are fraud and abuse items; the [remainder involve] specific drug proposals to ensure that Medicare and Medicaid get the best prices for drugs from pharmaceutical companies.”

Other SGR Offset Proposals

Other proposals to pay for SGR over the next 10 years include reducing the threshold for taxing Medicaid providers starting in 2015, a maneuver expected to result in almost $19 billion in savings. This would reduce the amount that states could tax Medicaid providers—including hospitals. Since the federal government must “match” all revenue raised by states to cover the cost of Medicaid enrollees, including revenue raised through the provider tax, these restrictions would reduce the total amount of money states get from federal coffers to finance Medicaid. However, at the press conference, CMS Administrator Donald M. Berwick, MD, reassured states nervous about declining federal revenues, pointing out that the health care reform law provides increased Medicaid funding before states are restricted from taxing providers.

In addition to this proposal, HHS officials propose to push generic drugs to market faster by decreasing the exclusivity time for brand name manufacturers from 12 to seven years for an estimated savings of $2.34 billion. The Federal Trade Commission (FTC) would also prohibit generic and brand drug manufacturers from making agreements to delay the availability of generic drugs, resulting in an estimated savings of $8.79 billion.

Initial reaction from the American Medical Association (AMA) was positive. However, the AMA, along with the College, are advocating for a permanent means to reforming the SGR. “The President’s budget includes a renewed commitment to permanently fix the broken Medicare physician payment system, which the AMA strongly supports,” said AMA President Cecil B. Wilson, MD. “It also contains funding to delay the devastating cuts scheduled to occur January 1, 2012 for another two years, which is important for providing stability in the Medicare system while a permanent solution is enacted.”

It appears as if federal officials are taking physician group calls for a permanent fix seriously, although reform depends on Congress. “The President is completely committed to fixing the SGR,” said Dr. Berwick at the press event. “These first two years are covered and that is an important first step. The main idea here is to work hard with Congress to get a solid fix in place.”

The CAP continues to analyze these and other SGR reform proposals.

CAP Looks to Congress to Halt TC Grandfather Payment Changes

The College is seeking help from Congress to stop CMS from changing its current technical component (TC) “grandfather” payment policies. As of April 1, CMS will only pay those providers designated as “specialty 69” for the TC component under the grandfather provision, according to a Transmittal Notice 795 published on Oct. 29, 2010.

Action Alert

The College is interested in learning how this TC grandfather payment change will impact members. This information will help inform meetings with members of Congress.

Please e-mail feedback to CAP’s Assistant Director of Federal Legislative Affairs, Chris Donnellan.

Not all laboratories with hospitals arrangements covered under the TC grandfather have this specialty 69 designation. Many are enrolled in Medicare as specialty code 22—physician/pathology practice—or specialty code 70—clinic or group practice.

Although the CAP has sought clarification from CMS, it is unclear to the College why CMS made this change, as there does not appear to have been a transmittal or change request requiring laboratories that provide these services to a covered hospital to be designated as specialty 69. More specifically, when Congress approved a one-year grandfather extension in December 2010, lawmakers did not change the provision or limit the types of pathology practices providing these services.

At press time, CMS officials had yet to respond to CAP’s repeated requests for clarification. With the clock ticking, the College is taking the issue to the Hill.

Keep watching Statline and @CAPDCAdvocacy on Twitter for continuing coverage of this developing story.

Update: CMS announced it was rescinding this previously announced change in a transmittal made public on Feb. 18. For more information, see this Statline special alert.

Mass. Gov. Patrick Announces Health Care Payment Reforms

Gov. Deval Patrick (D-MA) announced a comprehensive overhaul of the state’s health care payment and delivery system through a new bill introduced on Feb. 17.

According to a statement from the Governor’s office, the legislation focuses on the use of integrated care delivery systems like accountable care organizations (ACOs) as a means to control costs. It also provides benchmarks, as well as standard criteria and guidance for transitioning to integrated and global payments, with a goal of reducing fee-for service payments by 2015, although this reduction amount was not specified. In addition, it allows the state’s Division of Insurance (DOI) to consider more criteria when making the decision to either approve or reject rate increase requests from both carriers and providers.

The legislation goes on to outline proposals regarding the structure of ACOs. This is significant, as similar proposals are expected when CMS announces their final regulations for ACOs. The federal regulations are currently under review by the Office of Management and Budget (see related story below); the agency’s typical review time is 60-90 days.

Some of Massachusetts’ proposals include requiring certification by the Division of Health Care Finance and Policy (DHCFP), with financial oversight by the DOI, while directing the DHCFP to standardize alternative payment methodologies; requiring contracts between payers and ACOs to include shared savings that must also be shared with consumers; and providing the state attorney general with authority to monitor ACOs to ensure no anti-trust violations occur.

The College is currently analyzing the impact that this legislation would have on pathologists in the state.

CAP, PA Pathology Assoc Push to Ease Autopsy Image Restrictions

The College and the Pennsylvania Association of Pathologists (PAP) are working with state lawmakers to amend legislation restricting the use of autopsy images—even to physicians who would use these images for medical education or training purposes.

The restrictive aspects of the recently introduced bill, PA HB298, are in conflict with the CAP’s policy on this issue, and would pose a legal impediment to physicians. While the current House Bill provides an exemption for medical examiner and coroners to use autopsy images for teaching and training, it does not extend this exemption to physicians who perform hospital autopsies with the consent from the next-of-kin.

The use of these images are integral to medical education, noted the CAP’s Federal and State Affairs Committee Chair Kathryn Knight, MD, FCAP, in a letter to the bill’s sponsor, state Representative Robert W. Godshall (R). “To that end, we urge the Legislature to amend the bill in order to permit continued use of such visual materials, provided that these materials conceal the identity of decedents through redaction of facial features and of other identifying characteristics of the decedent,” she wrote.

CAP, NY State Path Society Oppose Weakening of Self Referral Law

The New York State Society of Pathologists (NYSSP), along with the CAP, are opposing legislation that would weaken New York State’s restrictions on physician self-referral. The legislation passed the state Assembly on Feb. 14.

If the bill (AB3551) is enacted, then a number of New York State prohibitions against self-referral and kickbacks will be overturned. “This legislation would legalize a form of business arrangement, currently considered an unlawful kick-back under New York law, whereby clinical laboratories may be susceptible to being coerced or otherwise impelled to offer electronic health records (EHR) systems to physicians that order clinical laboratory services,” wrote NYSSPATH President David Crossland, MD, in a Feb. 10 letter to Richard Gottfried, chair of the New York State Assembly Health Committee.

The letter goes on to note that in September 2010, the New York State Department of Health identified the risks associated with these business arrangements, including an adverse impact on competition, reduction in quality of services, and the potential overutilization of services. The CAP and NYSSPATH concurred with these conclusions. Therefore, the state should keep the current anti-kickback protections in place, explained Dr. Crossland in his letter. “Given that the federal safe harbor for EHR donations by clinical laboratories does not displace or preempt state anti-kickback law (See: 71 FR 45114), we believe that New York should retain its robust protections against business abuses in the billing for pathology services,” he explained.

New IL Out-of-Network Billing Law Effective June 1

Now that Illinois Gov. Pat Quinn (D) has signed bill HB 5085, the state will require insurers and out-of-network providers to negotiate reimbursement rates for services provided when a patient has made a good faith effort to use an in-network provider. If the parties fail to agree on a rate, then arbitration may be initiated by either party through the state’s Department of Insurance. Effective June 1, this is a significant shift from the current law requiring the insurer to reimburse an out-of-network provider in full for services provided in these situations.

This new out-of-network billing law was opposed by a coalition led by the Illinois State Medical Society (ISMS), including the CAP and the Illinois Society of Pathologists (ISP). The ISMS asked Gov. Quinn to veto the legislation, as it would provide a strong disincentive for insurers to reimburse fairly or to offer fair contracts to physicians, Chair, ISMS Board of Trustees Craig A. Backs, MD, wrote in a letter to Gov. Quinn last year.

Moving forward, the ISMS coalition, ISP and the College are working to ameliorate the new law and address some of the physician groups’ concerns through a recently introduced state Senate bill (SB0072).

Save-the-Date: CAP 2011 Annual Policy Meeting in D.C., May 2-4, 2011

The College’s Annual Policy Meeting will be held on May 2-4 at the Four Points by Sheraton in Washington, D.C. Don’t miss this unique opportunity for CAP members to get “up close and personal” with a variety of influential Washington, D.C., officials and legislators who are impacting health policy and the practice of medicine. Registration details to follow.

In Brief...

  • CMS Sends Accountable Care Organization (ACO) Regulation to OMB. It appears unlikely that the final CMS ACO regulation will be released this month, as agency officials had indicated. However, the regulation is now being reviewed by the Office of Management and Budget (OMB), according to that agency’s Web site. OMB’s review is the final step for a regulation prior to publication. OMB’s typical review time is between 60-90 days, so the final regulation should be published in late spring.
  • FDA Holding March 8-9 Public Advisory Committee Meeting on DTC Genetic Tests. The Molecular and Clinical Genetics Panel of the FDA’s Medical Devices Advisory Committee is meeting on March 8-9 to discuss recommendations to the FDA on scientific issues related to regulating direct-to-consumer genetic tests. The meeting’s focus will include the risks and benefits of direct access by the consumer without involving a clinician, as well as different regulatory approaches based on the risk category of tests. The FDA is accepting public comments until March 1.
  • CMS’s Lab Demo Set to Start July 1. As mandated under the Patient Protection and Affordable Care Act, CMS will be launching a demonstration for certain complex diagnostic tests. Under this two-year, $100 million demonstration, certain molecular tests will be subjected to a separate payment method with a Date of Service (DOS) that would—under standard Medicare rules—be bundled into the payment for an associated hospital inpatient stay.


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