College of American Pathologists
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March 1, 2012  •  Volume 28, Number 5
Next Issue: March 15, 2012
© 2012 College of American Pathologists

2012 CAP Policy MeetingIn This Issue:

CAP Calls on Congress to Reinstate the TC Grandfather

On February 17, Congress voted to discontinue direct payments for the technical component of pathology services for grandfathered hospitals, effective June 30, 2012. The College opposes discontinuing the grandfather, and is exploring all options, including congressional action, for extending the policy. There is still support for the technical component (TC) grandfather within Congress and the College is consulting Congressional allies to chart next steps and assess the willingness of Congress to revisit the issue.

The TC grandfather provision, which costs Medicare an estimated $80 million per year, was one of a number of Medicare cuts enacted to offset the $18 billion SGR patch, including a $2.7 billion cut to the clinical laboratory fee schedule.

Keep Informed on This Issue

Read the new “TC-Grandfather” Q&A, and look in Statline for any additional updates.

Congress was persuaded to discontinue the grandfather based on recommendations from the Centers for Medicare and Medicaid Services (CMS) and the General Accountability Office (GAO). The grandfather has been in the cross hairs of CMS since 1999, for what they believe is a system that has Medicare paying twice for the same service: once to hospitals through DRG payments, and then again to the independent labs. Congress is also concerned that as a result of the grandfather, Medicare beneficiaries are forced to pay an extra co-payment for anatomic lab services in grandfathered hospitals, and that due to minimal CMS oversight, it is not clear which hospitals are taking advantage of the policy exception, making Medicare susceptible to making inappropriate payments.

Neither the CAP nor its Congressional allies agree with this assessment. Earlier this year, CAP worked with Representative Tom Latham (R-IA) and Representative Mike Ross (D-AR) on a letter to Congressional leaders (PDF, 293 K)urging continuation of the TC grandfather, and 30 members of Congress signed on and worked unsuccessfully to save it before the vote on February 17. CAP will work with the members of Congress who support the TC grandfather to explore further options and next steps for persuading Congress to revisit the issue moving forward.

There are currently two bills that, if passed, would allow the grandfather to continue on. H.R 2461, Physician Pathology Services Continuity Act of 2011, is a bill to permanently extend the TC grandfather provision. In addition to this standalone bill, CAP supports a comprehensive rural health care package, H.R. 3859, the Rural Hospital and Provider Equity Act of 2012 which also includes a provision to permanently extend the TC grandfather.

CAP members impacted by this change should contact their members of Congress to register dissatisfaction with this policy change and relate the impact on their communities and patients. They should also contact their hospitals and ask them to weigh in with Congress. CAP has prepared a model letter (Microsoft Word, 27 K) for this use.

CAP members impacted by this change should also be exploring with their hospitals how best to preserve their relationships in order to provide the care necessary to patients. CAP will be providing guidance on how to approach these discussions. Contact us for details.

CMS to Resolve RAC Audit Problems

CAP’s efforts with CMS on behalf of members who have been plagued by ill-founded Recovery Audit Contractor (RAC) audits lately have produced early results. If you have received overpayment requests to recover a site of service differential for providing services in an office setting (-11) rather than a hospital setting (-21 or -22); or if you provided services subject to the technical component “grandfather”, and were told independent laboratories are not permitted to bill for the technical component of pathology services for beneficiaries in an hospital inpatient stay, relief should be in sight.

CAP has received preliminary concurrence from the Centers for Medicare and Medicaid Services (CMS) that the place of service codes involved in the RAC efforts should not have affected payment and also that independent laboratories can indeed bill for the technical component under the grandfather provision. In addition, CMS began working on resolution with the most problematic RAC.

The College contacted CMS when it became clear there was a systemic RAC problem arising from confusion over place of service billing for pathologists and laboratories, and independent laboratory billing for the technical component at hospitals covered under the TC ‘grandfather’ provision. In correspondence with CMS, CAP cited specific instances where labs were improperly audited and the auditors failed to respond to pathologists’ questions or appeals, a continued sending additional audit letters and in some cases, initiated recoupment. CAP also cited the auditors’ lack of clear guidance with respect to billing under the TC ‘grandfather’, and the faulty assumption that independent labs must bill with provider type 21 or 22 regardless of where the pathologist performs the service.

In a follow-up letter to CMS (PDF, 46 K), CAP wrote:

“We appreciate your concurrence via email that neither place of service nor technical component billing by independent labs under the grandfather provision should trigger RAC activities,” CAP wrote. We also wanted to recognize your efforts to remedy the problems we highlighted with RAC auditor, Connelly Healthcare.

Although Connolly appears to be the most problematic, as we mentioned in our email, we have seen significant activity conducted nationwide. We have received confirmation that other RAC auditors are also issuing repayment requests for the same reasons. The purpose of this letter is to request CMS’s intervention on RAC efforts nationwide related to place of service and the technical component grandfather and deployment of systemic solution to stop the inappropriate recovery requests and recoupments prospectively; suspend any requests that may be in queue; and reissue payment for any monies recovered in error.

Statline will continue to follow this issue.

Congress, CMS Propose Meaningful Use Exceptions for Pathologists

The College’s efforts to prevent pathologists from being penalized for non-participation in the Center for Medicare and Medicaid Services’ (CMS’s) Meaningful Use (MU) program are beginning to bear fruit. Both Congress and CMS offered separate solutions recently that would shield pathologists from Medicare payment penalties for failing to participate in the MU program by 2015.

Two weeks ago, a bill introduced by Representatives Tom Price (R-GA) and Ron Kind (D-WI), both members of the powerful House Ways and Means Committee, drew praise from CAP for excluding pathologists from penalties for failing to participate in the program. Then last week, in the proposed rule for Stage 2 of the Meaningful Use (MU) program issued by CMS, the regulator sought input on granting exceptions to eligible providers who meet certain criteria, including lack of face-to-face or telemedicine interaction with patients, lack of follow-up with patients, and lack of control over the availability of a Certified Electronic Health Record (EHR) at their practice locations.

In the proposed rule release last week, CMS invited comment on two different scenarios for administering the exception. One option is to provide a time-limited, two year payment adjustment exception for all eligible providers (EPs) who meet the criteria above. Another option is to provide such an exception with no specific time limit, although no individual eligible provider can receive an exception for more than five years. The rule, which asks additional questions on this topic, also invites comments on whether such an exception should apply to individuals or across-the-board based on specialty or other groupings.

CAP has engaged regulators and Congress on the unique requirements of pathologists since the meaningful use program was first announced in 2009. Pathologist are caught in a catch-22 of meeting the criteria for eligible providers by virtue of being physicians, but are unable to meet the primary-care focused meaningful use criteria. The CAP has met with regulators and laid out obstacles to pathologists’ participation in written comments to the ONC. Although the regulator has expressed hope that pathologists could participate in the future, that remains uncertain.

“Pathologists would welcome an opportunity to be included in the EHR Meaningful Use program,” said CAP President, Stanley M. Robboy, MD, FCAP. “However, the program focuses on office-based primary care practices. To meet some of the requirements, physicians must ensure the EHR for each patient contains their vital signs, medical allergies, smoking status, as well as their communication preferences. It also requires the systems to generate e-prescriptions, update immunization registries, and support drug interaction checks. There is no way for pathologists to participate.”

“Laboratory technology is critical to patient care, and pathologists and their laboratories are indispensible to other physicians’ ability to meet the meaningful use requirements. However, the nature of laboratory medicine precludes the pathologists’ from meeting requirements focused on primary care clinicians offices,” Robboy said. ”We recognize this is an important program, and look forward to working with ONC to continue to improve all patient information systems.”

The legislation introduced by Reps. Price and Kind, recognizes the unique system requirements of pathologists and laboratories by specifically excluding pathologists identified with a Medicare enrollment specialty code of 22 (pathology practice) or 69 (independent laboratory) from meaningful use payment penalties. Since under the bill pathologists would not be subject to payment penalties, the bill also excludes pathologists from EHR funding incentives under ARRA.

The MU program, originated under the American Recovery and Reinvestment Act of 2009 (ARRA), provides federal incentive funding to physicians who meet physician office-based meaningful use standards established by the Office of the National Coordinator for Health Information Technology (ONC). Beginning in 2015 however, physicians who do not meet the prescribed MU standards face penalties in the form of reductions in Medicare payments.

CAP Requests Fraud Alert on Contractual Joint Ventures

Citing the need for two recent advisory opinions to be issued by the Office of the Inspector General (OIG) of HHS on proposed laboratory arrangements, heightened proliferation in the number of in-office pathology arrangements, and their effect on utilization, the CAP requested that OIG (PDF, 635 K) issue a special fraud alert focusing on anatomic pathology laboratory contractual joint venture arrangements. The OIG last issued a fraud alert on the topic in 1989 followed by a bulletin in 2003.

One of the recent arrangements referenced by CAP (OIG Advisory Opinion No. 11-15 issued in October 2011) involved a physician-owned company’s proposal to contract with a third party to operate an anatomic pathology lab, providing laboratory services, space, equipment, marketing, and other essential non-physician services and pay a usage fee based on a percentage of the lab’s income over a 12-month period; and offer investment opportunities for urologists. The other recent arrangement (OIG Advisory Opinion No. 11-17 issued in November 2011), involved a management company providing in-office allergy and immunotherapy under exclusive arrangements with primary care physicians and physician practices and marketing services by reviewing charts to identify candidates to receive services. The physicians would provide office space, administrative staff, insurance, physician supervision, and interpretation and billing. The physicians would bill for laboratory services and pay the management company based on a percentage of the gross collections. In both cases, OIG found the arrangements could violate the anti-kickback statute and result in administrative sanctions.

“These arrangements are illustrative, although clearly nowhere near exhaustive of the continued creativity in laboratory arrangements that abounds motivated by potential financial benefit despite existing OIG guidance,” CAP wrote in its request. “In this environment, advisory opinions have some effect, but a more systemic solution afforded by a special fraud alert will have greater deterrent effect on the expansive and ongoing operation of abusive ventures.”

Each year, the OIG is required under HIPAA to solicit input on the development of new or revised special fraud alerts under the Federal anti-kickback statute. OIG is not required to respond to these requests. However, with OIG’s recent advisory opinions in which laboratory arrangements could violate the anti-kickback statute and focus of late of MedPAC, GAO and others on in-office ancillary service utilization, CAP’s submission is timely.

Supreme Court Adds Time for Health Care Law Debate; No Decision on Hearing Gene Patent Case

The Supreme Court last week announced it will extend oral arguments on the health care reform law by another 30 minutes, bringing the total time allotted for arguments to six hours, and making it the longest argument in the court’s modern history. The latest extension will allow the justices to hear from all sides on whether they have the authority to hear the case at all.

Before it can render a decision on the constitutionality of the individual insurance mandate in the health care reform law, the court will first determine whether the Anti-Injunction Act (AIA) would pre-empt any lawsuit until the law takes effect. This federal law bars lawsuits over new taxes until those taxes take effect. All of the parties in the case, including 26 states, the National Federation of Independent Businesses, and the Obama administration say the AIA should not prevent the court from ruling on the individual mandate, however court procedure requires that it be considered.

The court is schedule to hear the case in March, allotting 90 minutes to the AIA; 120 minutes to the constitutionality of the individual mandate; and 150 minutes on whether other provisions of the healthcare law would fall if the individual mandate is declared unconstitutional.

No Word on Gene Patent Case

Meanwhile, in a separate matter of interest to pathologists, the Supreme Court on February 21st was expected to determine whether it would grant certiorari and agree to subsequently hear the Myriad Genetics gene patent case. The case, though, did not appear on the Orders List for that day offering no new information on whether the court will ultimately hear the case this year. The case, Association of Molecular Pathology (AMP) et. al. vs. Myriad Genetics, in which CAP is a co-plaintiff, addresses the constitutionality of patenting genes, in this case, BRCA1 and BRCA2. Court watchers had expected the Supreme Court to announce its decision on considering the case last week, but instead the parties’ petitions remain pending with the Court for now.

Statline will continue to cover this issue.

Arizona Senate Adopts CAP Language in Certified Registered Nurse Anesthetists Bill

In Arizona, CAP collaborated with the Arizona Society of Pathologists and Arizona Medical Association to reach an agreement with state Certified Registered Nurse Anesthetists (CRNAs) to amend a legislative proposal to allow CRNAs to order, perform and interpret clinical laboratory tests. The agreed upon amendment replaced the CRNA’s authority to “interpret” tests with “evaluating” test results. The agreement also limited a CRNA’s testing authority to point-of-care testing and made explicit that their activity is only conducted in conjunction with a surgical procedure.

The legislation, (SB 1362), is now in the Arizona House of Representatives after unanimously passing the Arizona Senate (30-0) on February 28th.


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