College of American Pathologists
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April 1, 2010  •  Volume 26, Number 7
Next Issue: April 15, 2010
© 2010 College of American Pathologists

In This Issue:

Medicare Physician Pay Cut Goes Into Effect Today
Court Strikes Down Patents on BRCA1 and BRCA2 Genes
TC “Grandfather” Payments Resume
Court Issues Critical Ruling For Plaintiffs in Competitive Bidding Case
State Advocacy Update
Obama’s Choice For CMS Chief: Donald Berwick, MD, MPP

Medicare Physician Pay Cut Goes Into Effect Today

CMS Will Hold Claims for 10 Days

Congress failed to extend the 30-day freeze on 2010 Medicare physician payment rates before it adjourned for a two-week recess last week, causing Medicare physicians to face an SGR-mandated 21.3% pay cut beginning today, April 1.

The latest attempt to pass another 30-day SGR fix was contained in H.R. 4851, The Continuing Extension Act of 2010. It passed in the House of Representatives March 17, but was held up in the Senate by Sen. Tom Coburn (R-OK), a practicing obstetrician, who objected to the bill. Now that the Senate has adjourned without addressing the problem, the physician pay cut is guaranteed to be in effect at least until Congress reconvenes on April 12.

Anticipating Congressional action to correct the problem, the Centers for Medicare and Medicaid Services (CMS) instructed its contractors to hold Medicare physician claims for 10 business days, effective April 1 – 14. This will give Congress two days after it returns from recess to extend the update freeze or take other action.

CAP members should contact your Senators and urge them to fix or repeal the sustainable growth rate (SGR) formula once and for all. Call now, using the AMA’s Grassroots Hotline: 1-800-833-6354, or visit the AMA website to send an email.

Court Strikes Down Patents on BRCA1 and BRCA2 Genes

CAP is Among the Plaintiffs

Less than two months after oral arguments were presented in U.S. District Court in New York, Judge Robert Sweet this week delivered a rousing interim victory to the plaintiffs in the gene patent challenge against Myriad Genetics, ruling that patents held by Myriad on the BRCA1 and BRCA2 genes are invalid. CAP is among the plaintiffs in this case.

Myriad has said it will appeal the decision, and legal observers have been quick to point out the ruling doesn’t bind other federal courts to arrive at the same conclusion. Still, the ruling is important for several reasons: it provides a new interpretation of what is patentable based on the unique informational qualities of genes and whether isolated DNA is markedly different with respect to this quality from naturally occurring DNA; it sets a precedent, a lens through which future cases will likely be viewed; and it sets the stage for further litigation to determine whether this new interpretation of the law is acceptable.

According to Judge Sweet, the DNA (and its mutations) patented by Myriad which were isolated from the human body in a lab, are not markedly different from natural DNA that are found in the body. He concluded that even if there are differences in structure and function, it is not markedly different because the “informational quality of DNA is unique among chemical compounds found in our bodies”. Further, the judge wrote that comparing DNA sequences to identify BRCA genes and their mutations is an abstract mental process, and therefore not patentable.

The original lawsuit, Association for Molecular Pathology, et al. v. U.S. Patent and Trademark Office, et al., (in which CAP is a plaintiff), was filed last March by the American Civil Liberties Union and the Public Patent Foundation, joined by cancer victims and medical groups representing over 150,000 pathologists, researchers, and other professionals. Defendants in the case included Myriad Genetics, the University of Utah Research Foundation and the U.S. Patent and Trademark Office.

The issue is Myriad’s refusal to broadly allow others to research the BRCA1 and BRCA2 genes, known to contain important information about breast and ovarian cancer, and critical to developing new and effective treatments. The CAP and ACLU contend the genes are naturally occurring phenomena and therefore cannot be patented, and the patents are unconstitutional restrictions on knowledge.

The lawsuit had also challenged the U.S. Patent and Trademark Office’s (PTO’s) issuance of the patents on constitutional grounds, but Judge Sweet dismissed the PTO, ruling that because the issues in the case could be decided within patent law, the constitutional question would not need to be addressed.

With an appeal likely, Myriad is also likely to seek a stay of the judgment that would prevent laboratories from offering BRCA1 and BRCA2 testing until the issue is resolved in the Federal Circuit Court of Appeals in Washington DC. Laboratories risk being sued for damages by Myriad if these tests are offered before the final decision is rendered.

The judge’s decision provides a wealth of important new information. CAP will analyze the implications for pathologists and report further on this issue in the weeks ahead.

TC “Grandfather” Payments Resume

The Centers for Medicare and Medicaid Services (CMS) this week announced it will resume payment to independent laboratories that submit claims to Medicare for the technical component of physician pathology services furnished to patients at grandfathered hospitals, effective for claims with dates of service on or after January 1, 2010 through December 31, 2010.

The TC grandfather officially expired on December 31, 2009, and has been reinstated retroactively to begin on January 1, 2010. Independent laboratories whose claims were denied for 2010 services covered by this provision are advised to contact their Medicare contractor for further instruction.

The announcement came just days after the Patient Protection and Affordable Care Act (PPACA) was signed into law, bringing sweeping changes to health care, and extending key provisions such as this one, the technical component (TC) “grandfather”.

The “grandfather” provision applies to services delivered to any hospital that used an independent laboratory for TC services as of July 22, 1999, which is the date CMS proposed eliminating this payment arrangement.

To date, this payment change has not been fully implemented because Congress has enacted a series of College-supported “grandfather” exemptions. However, without further congressional action, this protection will expire at year’s end, and independent laboratories will be forced to seek payment from the hospitals.

Without this provision, independent laboratories would have to seek payment from already cash-strapped hospitals for these medical services. The burden would fall especially hard on small and rural hospitals, which typically cannot afford in-house pathology services and rely heavily on independent labs.

Because the “grandfather” applies to the hospital rather than the arrangement, any laboratory that contracts with a “grandfathered” hospital would be able to bill and receive payment directly from Medicare for both the professional component (PC) and TC.

Court Issues Critical Ruling For Plaintiffs in Competitive Bidding Case

A US District Court in the Southern District of California has denied a request by the Secretary of Health and Human Services (HHS) to dismiss a 2008 lawsuit challenging the Secretary’s retention and possible use of information contained in competitive bidding applications filed in the now-abandoned Medicare competitive bidding demonstration program for Medicare Part B independent lab services.

CMS initiated the demonstration project in San Diego in 2007, under a Congressional mandate issued in 2003. Under the program’s rules, clinical laboratories were required to submit bids for all 303 lab tests performed in order to remain eligible for Medicare reimbursement. After protests by the CAP and others, the court blocked the project in 2008, and Congress later repealed HHS authority for the project altogether.

This lawsuit, brought by three clinical laboratories in the San Diego area that filed applications, challenges the Secretary’s right to retain the applications or use any of the competitive bidding information contained therein to make recommendations concerning Medicare operations or cut reimbursement to clinical labs.

Legal analysts believe this most recent ruling is an important indication that the HHS Secretary will be compelled to return the bid applications without using the information they contain.

State Advocacy Update

Patient Informed Consent Requirements Must Allow for Unique Role of Pathologists

CAP is working with state pathology and medical societies in several states to ensure pathologists are not limited by new legislation requiring written consent by patients before medical providers can access a patient’s medical record, or perform genetic tests (including somatic tests), or collect, transmit, or use genetic information.

Legislation introduced this year in Tennessee, South Carolina, Iowa, Minnesota and Nebraska would have tightened medical informed consent requirements, sometimes with the unintended outcome of potentially limiting pathologists’ practice of medicine.

CAP’s proposed language includes an exemption from informed consent prohibitions when done by a pathologist in the course of performing a diagnosis or treatment for the patient.

The effort has already begun to bear fruit:

  • Pathologists in South Carolina and Iowa successfully incorporated CAP’s language into the legislation.
  • In Minnesota, new language has been proposed but is still pending.
  • In Nebraska, the bill was not acted upon in Committee after pathologists testified in opposition to the limiting language.
  • In Tennessee, the CAP partnered with the state pathology society, medical society, and hospital association to amend legislation that could have prevented pathologists from accessing a patient’s medical record or make a diagnosis not covered under a patient’s initial informed consent. The exemption was amended to ensure that medical examiners’ dissemination and use of autopsy records in the course of their work continues to be a protected activity.

Direct Billing Campaign Continues in States

The College continues its ongoing collaboration with state pathology societies to advocate for state laws requiring pathologists to bill patients directly for their services rather than rely on the ordering physician to bill the patient. Such a requirement protects patients against “markup” charges by prohibiting an ordering physician from billing patients for anatomic pathology services performed or supervised by another physician.

In Connecticut, CAP and Connecticut Society of Pathologists (CSP) successfully thwarted legislation (HB 5476) in the State’s Public Health Committee that sought to repeal the state’s 2009 direct billing law (Public Act 09-232). Connecticut’s Attorney General Richard Blumenthal stood in agreement with the College and CSP stating in written testimony that patients “need the protections from spurious additional charges that are contained in Public Act 09-232.” Among other groups in opposition to the repeal effort were the Connecticut Hospital Association, Radiological Society of Connecticut, and American Society of Clinical Pathology.

In Washington State, CAP and Washington State Society of Pathologists advocated for the passage of direct billing legislation. The bill passed out of the House and made it out of committee in the Senate, but failed to be brought to a floor vote before the 60-day session closed.

Obama’s Choice For CMS Chief: Donald Berwick, MD, MPP

It was announced last weekend that President Obama will nominate Donald Berwick, a Massachusetts pediatrician, to serve as the first permanent head of the Centers of Medicare and Medicaid Services since 2006.

A professor of pediatrics at Harvard Medical School, Berwick is best known in healthcare circles for founding and running the Institute for Health Care Improvement, a 19-year-old think tank focused on improving healthcare efficiency.

In that role, Berwick has been a blunt critic of the U.S. health care delivery system, declaring that it falls short of being the best in the world because of its inefficiencies and lack of information sharing.

A graduate of Harvard College and Harvard Medical School, served on the Advisory Commission on Consumer Protection and Quality in the Healthcare Industry under Bill Clinton, and he was appointed honorary Knight Commander of the Most Excellent Order of the British Empire—the highest award given to non-British citizens—for his work with the British National Health Service.

In a 2005 poll ranking the 100 most influential people in health care by Modern Healthcare magazine, Berwick ranked third, behind then-HHS Secretary Mike Leavitt and Microsoft’s Bill Gates, and ahead of President George Bush and the late Ted Kennedy.

While most public reaction to the nomination has been positive, it remains unclear whether Senate Republicans will expedite or delay Berwick’s Senate confirmation. Senator Tom Coburn (R-OK), has already voiced concern over Berwick’s stand on comparative effectiveness and the danger it might lead to rationing care.

News of Berwick’s pending appointment is getting a lot of attention in the health blogs and news outlets. Read more for these worthwhile sources:


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