College of American Pathologists
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  STATLINE — CAP’s Bi–Weekly Federal and
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March 17, 2011  •  Volume 27, Number 6
Next Issue: March 31, 2011
© 2011 College of American Pathologists

In This Issue:

Rep. Bilbray Tours San Diego’s Pacific Rim Pathology Laboratorys
Registration Now Open for CAP 2011 Annual Policy Meeting
AMA Seeking Pathology Input on Proposed Molecular Pathology CPT Codes
IOAS Coalition Continues Self-Referral Discussions with CMS
MedPAC Calls for 1% SGR Update; Cut to Climb to 30% in 2012
CAP Details DTC Genetic Testing Concerns to FDA Panel
Appeals Court Ruling to End AMA Red Flags Suit
Oral Arguments in Myriad Patent Appeal Case Scheduled for April 4
N.J.’s DOH Provides Additional Guidance on EMR Donation Regulations
Keep Up with the Latest CAP Advocacy News on Twitter

Rep. Bilbray Tours San Diego’s Pacific Rim Pathology Laboratory

Bilbray Lab TourCAP members Arturo Mendoza, MD, FCAP, and Susan Detwiler, MD, FCAP, led Congressman Brian Bilbray (R-CA) on a tour of Pacific Rim Pathology Laboratory in San Diego in early March. Pacific Rim Laboratory is part of Sharp HealthCare.

Dr. Mendoza is the laboratory’s Medical Director, as well as the Chief of Pathology at Sharp Memorial Hospital in San Diego. Dr. Detwiler is a dermatologist and dermatopathologist, and also an Assistant Clinical Professor at the University of California San Diego.

Registration Now Open for CAP 2011 Annual Policy Meeting

Online registration is now open for CAP’s 2011 Annual Policy Meeting, which will be held May 2-4, at Four Points by Sheraton in Washington, DC. If you’re involved in local, state or national healthcare issues, or are new to politics and looking to learn more, the CAP 2011 Annual Policy Meeting is for you.

This year’s confirmed speakers include PBS NewsHour’s healthcare and Health Policy correspondent, Susan Dentzer and Roll Call Editor, Morton Kondracke. Please note that the event is limited to only only 100 attendees. Registration is only $350 and includes all meeting materials, breakfasts, lunches, breaks and cocktail receptions. For more information on the 2011 Annual Policy Event, contact or Melissa Stegun at 800-323-4040, x7110.

AMA Seeking Pathology Input on Proposed Molecular Pathology CPT Codes

The American Medical Association (AMA) released for comment on March 11 two sets of proposed CPT codes covering over 90% of the volume of current molecular pathology procedures. The CAP’s Advocacy Office in Washington, DC sent out a special e-Alert late last week to both Statline and CAP Today readers, as the AMA is seeking broad stakeholder input on these codes (see box to submit comments online).

Submitting Code Comments

Feedback should be submitted through the AMA Website. Comments are due by April 15, 2011.

Any questions should be sent to AMA staff by April 15 at

This new proposed code set represents the biggest change in pathology and laboratory CPT coding in the last 20 years, explained CAP member Mark Synovec, MD, who is co-chair of the AMA Molecular Pathology Coding Workgroup (MPWG). The workgroup was convened by the AMA CPT Editorial Panel in December 2009 to address issues for coding molecular assays in cancer, genetics, and histocompatibility. “Our goal is to have a specific CPT code for a large majority of the clinically useful molecular pathology procedures performed,” he added.

The release of these codes for stakeholder feedback marks a departure from how AMA traditionally conducts the coding review process. “To have these codes open for review at this stage is really unprecedented, but is indicative of a more open CPT system,” said Dr. Synovec. The AMA plans to ultimately publish these codes in the CPT 2012 code set.

It is important to note that these codes and descriptors are not yet available for reporting and not yet recognized by payers. Furthermore, inclusion of an analyte in this CPT code set does not imply any health insurance coverage or reimbursement policy. While these descriptors describe a service, payment policy will determine appropriate payment for these services, according to the AMA document accompanying the feedback request.

Tier 1,2 Codes

There are two categories of codes: Tier 1 and Tier 2. Tier 1 includes the most commonly-performed services; each will have an analyte specific CPT code. The less common services are categorized in Tier 2. These services have been assigned to nine resource level codes determined by level of resources required for their performance and interpretation.

For tests not considered Tier 1 or Tier 2, the current coding method—using “stacking codes” (83890-83914)—will apply for 2012. Moving forward, these stacking codes will be retired at the conclusion of the MPWG work.

IOAS Coalition Continues Self-Referral Discussions with CMS

The In-Office Ancillary Services (IOAS) Coalition met with CMS officials in early March to continue discussions about increases in cost and utilization to Medicare due to self-referral of anatomic pathology (AP) testing services without significant benefit to patient care.

Specifically, members of the IOAS Coalition, including CAP member Jeff A. Welsh, MD, FCAP, met with officials from the CMS Technical Payment Division to discuss removing AP testing services from the IOAS exception to the Stark law. “CMS officials appear to be increasing their scrutiny of these types of business arrangements,” said Dr. Welsh. “They are concerned about their proliferation because of the potential for abuse.”

In addition to the CAP, IOAS Coalition members include the American Clinical Laboratory Association and the American Society for Clinical Pathology. The Coalition is focused on removing AP testing services from the IOAS exception.

Concerns about Payment Reform

Payment reform is another approach that CMS is considering to tamp down on the growth of abusive business practices under the IOAS exception. In February, the Medicare Payment Advisory Commission (MedPAC) discussed several options related primarily to advanced imaging services and other designated health services. These draft recommendations included packaging and/or bundling payment, reducing payment for the professional component of multiple imaging studies done in the same session, reducing payment for imaging and other diagnostic tests done by self-referring physicians, and requiring prior authorization for physicians who order significantly more advanced imaging than their peers (Statline, 3/3/2011).

At this most recent meeting with CMS payment officials, the IOAS Coalition recommended against adopting these recommendations from MedPAC, an independent Congressional advisory board. Among the concerns noted by the Coalition was that any packaging and/or bundling of ancillary services was not a long-term solution. These approaches fail to address the root of the problem, because they do not remove the incentive to overutilize testing services. In fact, efforts to reduce payment could result in more providers performing more services.

“The coalition stressed there is no patient or payer value, only continued incentive for financial gain and abuse if these payment reforms do not remove AP testing from the in-office ancillary services exception,” said Dr. Welsh.

MedPAC Calls for 1% SGR Update; Cut to Climb to 30% in 2012

Medicare payments to physicians should be increased 1% next year, members of the Medicare Payment Advisory Commission (MedPAC) recommended in their recent report to Congress. Nevertheless, these payments are set to be slashed almost 30% next year without Congressional intervention, estimated CMS Deputy Administrator Jonathan Blum in a recent letter to MedPAC Chair Glenn Hackbarth.

This 1% update is estimated to increase federal spending by more than $2 billion in 2012, and by more than $10 billion over five years, according to MedPAC’s March report. Because the current law calls for negative updates under the Sustainable Growth Rate formula (SGR), any positive update for 2012 means a substantial increase in Medicare spending.

Unless Congress intervenes, however, physician payments will be cut by 29.5% on Jan. 1, 2012, according to Blum. But one health care expert interviewed by Statline predicted that Congress will take action, even amidst the partisanship on Capitol Hill. “Neither party wants to be held responsible for encouraging physicians to withdraw from Medicare,” explained Henry J. Aaron, a senior fellow at The Brookings Institution. “Most observers expect that one way or another, Congress will keep pushing off these cuts and make small payment increases in the near future.”

CMS Leadership in Flux?

Not only does the future of physician payments under Medicare appear far from certain. The outlook for the agency’s head—Donald M. Berwick, MD—does not look promising.

Many lawmakers were angered when Pres. Obama appointed Dr. Berwick to head the agency last summer while Congress was in recess, thus bypassing confirmation hearings. Without confirmation, the recess appointment will expire at the end of the year. Earlier this month, news reports surfaced that 42 Republican senators wrote to President Obama imploring him to withdraw the nomination.

Brookings’ Aaron called this uncertainty about Dr. Berwick’s future “regrettable,” adding that during this time of reform implementation, the Obama Administration needs a solid appointment in place. Nevertheless, the Administration likely will not allow a confirmation vote with such little support in the Senate. “The Administration will have to come to terms with this situation,” said Aaron. “However, Administration officials can deal with most aspects of the health care reform law by bringing to bear leaders from the various agencies—including HHS and Treasury—to push the implementation forward. That in the end is the most important.”

CAP Details DTC Genetic Testing Concerns to FDA Panel

Patients are best served when a physician directs the course of diagnostic care, especially when it comes to ordering genetic tests, the College outlined in its March 1 comments to the FDA. The College submitted this and related positions in response to the agency’s call for comments prior to the Molecular & Clinical Genetics (MCG) Panel Meeting on March 8-9, held in Gaithersburg, Md. The meeting focused on scientific issues concerning direct-to-consumer (DTC) genetic tests that make medical claims.

The FDA continues to gather stakeholder input related to the oversight of laboratory developed tests (LDTs), a category that includes DTC genetic tests. The MCG panel is comprised of non-voting members who will make recommendations to the FDA leadership on the various issues involved in regulating these tests.

The panelists heard from different industry stakeholders, including test manufacturers, patient safety advocates, and representatives from health care provider organizations. One concern for many panelists was the consumer’s direct access to these tests without the involvement of a clinician. The College addressed this concern in its remarks, specifically outlining some risks of incorrect, miscommunicated, or misunderstood results.

“Testing ordered by clinicians, performed in CLIA-certified and CAP-accredited laboratories, and interpreted by trained, licensed physicians in a clinical context carries multiple safeguards to prevent erroneous test results, and to recognize and address them when they occur,” stated the CAP’s comments. “The responsibility and liability for an erroneous result falls completely on the laboratory and the physicians who interpret the testing information.”

Appeals Court Ruling to End AMA Red Flags Suit

A pending lawsuit brought by the American Medical Association (AMA) challenging certain aspects of the Federal Trade Commission’s (FTC) “red flags” rule will not go forward, due to a recent ruling by the U.S. Court of Appeals for the District of Columbia.

Slated for Jan. 1 implementation, this FTC rule aimed to mitigate identity theft by requiring businesses deemed as creditors to implement an identity-theft prevention and detection plan. In its definition of creditors, the FTC included attorneys and physicians who do not receive full payment at the time of service. In response, the American Medical Association (AMA) and a coalition of health care groups filed a lawsuit in May 2010 to exempt physicians from the rule. The American Bar Association (ABA) filed a similar lawsuit in 2009 to exempt its members.

The District court sided with the ABA last year, but the FTC appealed the ruling. In the meantime, however, Congress had passed the Red Flag Program Clarification Act of 2010 (S. 3987). Signed into law last December, the law attempts to address this issue by narrowing the definition of a creditor. Under this definition, the bill’s sponsors have stated that physicians, dentists, and other professionals would not generally meet the creditor definition and are therefore exempt them from the rule’s requirements. However, the bill does leave open the possibility that the FTC may revisit the issue in the future through the rulemaking process.

Given this new law, the Appeals Court dismissed the ABA suit as moot, as under longstanding judicial procedure, courts do not decide cases in which there is no longer any controversy. In its opinion, the Court said that the FTC’s definition of lawyers or health care providers who bill their clients after services are rendered as creditors was no longer viable.

In response to the ruling, the AMA announced its legal efforts would formally end. “The court’s decision reinforces the intent of a new law clarifying the scope of the red flag rule and helps eliminate any further confusion about the rule’s application to physicians,” said AMA President Cecil B. Wilson, MD. “The AMA will remain vigilant that the FTC respects the meaning and intent of the Clarification Act.”

Oral Arguments in Myriad Patent Appeal Case Scheduled for April 4

The Myriad gene patent case is moving forward, with the Court of Appeals for the Federal Circuit set to hear oral arguments on April 4. Represented by the American Civil Liberties Union (ACLU), the College is a co-plaintiff in the trial case challenging the patentability of human DNA.

Of significance to this appeal is that the U.S. Solicitor General, Neal Katyal, will personally argue on the plaintiffs’ side on behalf of the Department of Justice (DOJ). Late last year, the DOJ argued that isolated human genes are not patent eligible. “The Solicitor General typically only argues in the U.S. Supreme Court, so the fact that he is arguing our case sends a strong signal to the Court that the Justice Department feels strongly about this argument,” ACLU senior attorney Chris Hansen told Statline.

The ACLU and Public Patent Foundation sued Myriad Genetics (Salt Lake City, Utah) in March 2009 on behalf of cancer patients and medical groups including CAP. In March 2010, a federal court invalidated the company’s patent claims on BCRA1 and BCRA2 genes, stating that they had not met patentability requirements. While Myriad appealed the ruling, many believe the case will ultimately be decided in the U.S. Supreme Court, regardless of the outcome at the appellate court.

N.J.’s DOH Provides Additional Guidance on EMR Donation Regulations

A recent communication to the College from the New Jersey’s Department of Health and Senior Services clarified that the state’s anti-kickback rules were developed to prohibit business arrangements between clinical laboratories and physician offices that serve as an inappropriate incentive to do business with the laboratory.

This communication was in response to the College’s request for clarification following new regulations and subsequent guidance governing EMR donations that state legislators passed last summer.

In his letter to the CAP, the state’s director of Clinical Laboratory Improvement Service, Dennis P. McDonough, stated that a clinical laboratory with no referral arrangement with a physician can donate an EMR system under the Safe Harbor provisions. However, if such donation is determined to be contingent upon the referral of specimens as evidenced by a significant shift in prior referral patterns, the laboratory may be determined to be in violation of state regulations (N.J.S.A. 45:9-42.42).

In addition, McDonough stated that if a laboratory, pursuant to the federal Safe Harbor provisions and New Jersey state law, donates an EMR system to a physician office, with which the laboratory has a referral arrangement and the physician’s laboratory referral pattern shifts significantly in favor of the donating laboratory, the Department would consider this donation an incentive to the physician to refer specimens in violation of state regulations (N.J.S.A. 45:9-42.42) unless the shift can be demonstrated to be beyond the control of the physician.

Keep Up with the Latest CAP Advocacy News on Twitter

CAP Advocacy is now on on Twitter. Follow CAP Advocacy’s daily “tweets” to keep pace with regulatory and legislative news affecting the pathology industry. For the latest health care news, be sure to check out the what we are following on Twitter.


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