College of American Pathologists
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April 14, 2011  •  Volume 27, Number 8
Next Issue: April 28, 2011
© 2011 College of American Pathologists

In This Issue:

Breaking News: CMS Abandons Plans to Revise Cytology PT
Pres. Obama’s Deficit Plan Includes Strengthening the IPAB
Rep. Beutler (R-WA) Tours Southwest Wash.’s Pathology Laboratory
CMS’s Blum, FDA’s Gutierrez Added to 2011 Policy Meeting Agenda
CMS’s Proposed ACO Rule Options Include Two Risk Models
MedPAC Approves Payment Reform Recommendations
Federal Appeals Court Hears Gene Patent Oral Arguments
Grassley, Wyden Propose Making Medicare Payment Data Public
CT, RI, NY, and OR Lawmakers Contemplate Result Report Changes
Keep Up with the Latest CAP Advocacy News on Twitter

Breaking News: CMS Abandons Plans to Revise Cytology PT

April 14–The College learned yesterday that CMS officials will withdraw the cytology proficiency testing (PT) notice of proposed rulemaking (NPRM), according to an April 8 letter sent from the agency to state survey agency directors. The CAP had previously commented on the new proposed regulation, noting that while some improvements were made, the proposed changes did not go far enough to fix the flawed PT requirement.

The CAP is concerned that the agency has not modernized the program to keep pace with the latest science and technology since it was initially issued in 1992 as part of the final CLIA regulation. Indeed, the College, along with its over 60 partners in the Cytology PT Coalition, rallied and garnered significant bi-partisan support in the 110th Congress for legislation, the Cytology Proficiency Testing Improvement Act, that would have corrected the major shortcomings of the current regulatory program. While opposed by CMS, this legislation laid the foundation for a more meaningful and effective program for continued quality improvement in screening and interpreting Pap tests. This legislation was widely viewed as a workable solution, as evident by the bill’s passage in the House and the support of 43 Senate co-sponsors before the session closed in January 2009. Despite their opposition to this legislation, CMS officials responded to Congress’ action by pledging to revise the program, prompting the agency to issue the NPRM later that year. The agency is now withdrawing its new proposed regulation claiming lack of consensus and support for the changes it would have made to the program.

More recently, the College emphasized concerns about the current program to President Obama in response to a request from the Administration and Congress to health care stakeholders to identify outdated regulations. “The College provided extensive comments to CMS in response to the Agency’s proposed changes issued in January 2009,” wrote CAP President Stephen N. Bauer, MD, FCAP, in a March 21 letter to the President. “Despite promises to move forward with a new regulatory framework, CMS suggested at a meeting held in Fall 2010 that it would like to rescind the revised proposed cytology regulation. Members of the laboratory community requested further information on current practices be collected before voting on such a recommendation.”

Continuing Education Controversy

In their April 8 withdrawal letter, CMS officials indicated that a majority of comments received in response to the Jan. 15, 2009 NPRM were in conflict with current CLIA statute, as they suggested replacing the current program with a continuing education model. The College, along with its partners in the Cytology PT Coalition, has long advocated for this model, as it would provide laboratory professionals the opportunity to test and improve their screening and interpretation skills, in a constructive learning environment.

However, CMS officials said that cytology continuing education programs do not meet the statutory requirements for the number and frequency of slides to be tested. “Additionally, the evaluation of results performed by the continuing education programs is not sufficient to satisfy the statute and regulations, as participation in continuing education programs is voluntary, and the programs have no oversight authority,” states the letter. “Continuing education credits earned for participation are granted to the participants even when there is a failure to successfully identify the challenge which may disguise poor performers.” CAP maintains that the underlying statutory language would accommodate alternative education-based programs to assess proficiency.

CMS will implement some feedback from the NPRM into the current PT program, including encouraging laboratories to participate in educational programs, in addition to individual testing. CMS officials also believe that quality has improved in this area of testing, explaining that “the number of individuals who scored less than the passing score of 90% has decreased significantly over time.” While the CAP is pleased to hear about efforts to improve the program, it also maintains that the current program is outmoded and fundamentally flawed, and the proposed changes do not go far enough to correct these flaws.

The CAP’s complete statement on CMS’s withdrawal of the cytology PT proposed rulemaking is available for viewing.

Pres. Obama’s Deficit Plan Includes Strengthening the IPAB

President Obama’s proposal to reduce the deficit by $4 trillion includes strengthening the Independent Payment Advisory Board (IPAB). The Administration estimates that this framework, along with other health care proposals, will save $340 billion over ten years and $480 billion by 2023. It is important to note that these are just proposals; in order to be enacted they would likely need to be introduced as legislation and passed by both the House and the Senate, or possibly through an HHS regulation, provided it’s within that agency’s authority.

In presenting his Apr. 13 proposal, Pres. Obama indicated that in addition to responsibilities outlined in the Affordable Care Act (ACA), the IPAB would also act as a “backstop” to other Medicare reforms by ensuring that the program’s spending growth does not outpace the ability to pay for it over the long run. In addition, IPAB would focus on keeping Medicare beneficiaries’ premium growth under control.

The AMA, as well as the College, has been critical of the IPAB provision. The College is concerned that establishing the IPAB would transfer responsibility for Medicare coverage and payment decisions to an unelected body in the Executive Branch, as the CAP detailed in a 2009 letter to Congress prior to passage of the health care reform law, which initially created the IPAB. Furthermore, the fast track legislative approval process for consideration of the board’s recommendations limits the ability of Congress to revise or reverse IPAB’s policy decisions.

The CAP believes that the additional authority granted to the IPAB under the President’s deficit reduction proposal could exacerbate this already troubling approach to controlling the growth of Medicare spending. The IPAB is required to implement its first proposals in 2015 with its first report produced by July 2014. Legislation has been introduced in the House and Senate to repeal the IPAB. In the House, Rep. Phil Roe, MD (R-TN) has introduced The Medicare Decisions Accountability Act (HR 452); in the Senate, Republicans John Cornyn (Texas) and Orrin Hatch (Utah) have introduced S.3653, The Health Care Bureaucrats Elimination Act.

Rep. Beutler (R-WA) Tours Southwest Wash.’s Pathology Laboratory

Washington Rep. Beutler (left) visited CAP member Brad Jensen, MD, FCAP, (third from left, standing) at Southwest Medical’s pathology laboratory. Last month, CAP member Brad Jensen, MD, FCAP, led freshman Congresswoman Jaime Herrera Beutler on a tour of the pathology laboratory at Southwest Washington Medical Center in Vancouver.

A community-owned hospital, Southwest Medical has 360 beds, 3,280 employees, and 545 active medical staff members. Director of Southwest’s pathology laboratory, Dr. Jensen is also the Past President of the Washington State Society of Pathologists.

CMS’s Blum, FDA’s Gutierrez Added to 2011 Policy Meeting Agendal

CMS Deputy Administrator Jonathan Blum and FDA’s Director of the Office of In Vitro Diagnostic Device and Evaluation, Alberto Gutierrez, PhD, will join PBS NewsHour’s health care policy correspondent, Susan Dentzer and Roll Call Editor, Morton Kondracke at this year’s CAP Policy Meeting. Also just added to the agenda is Eric Green, MD, PhD, Director of NIH’s National Human Genome Research Institute. These and other health care leaders will speak on pressing issues facing CAP members, including pathology’s role in ACOs and other proposed health care delivery models, pay-for-performance, and pathology’s challenges regarding HIT.

Online registration is now open for this event, which will be held May 2-4, at Four Points by Sheraton in Washington, DC. Please note that the event is limited to only 100 attendees. Registration is $350 and includes all meeting materials, breakfasts, lunches, breaks and cocktail receptions. For more information on the 2011 Policy Event, please contact or Melissa Stegun at 800-323-4040, x7110.

CMS’s Proposed ACO Rule Options Include Two Risk Models

While the College and other provider groups analyze CMS’s recently released proposed rule for accountable care organizations (ACOs), focus is turning to the two models that will be open to participants in the initial three years of the implementation, beginning in 2012.

Details in the over 400-page rule include proposals for two models for ACO participants: a one-sided risk model (sharing of savings only for the first two years and sharing of savings and losses in the third year) and a two-sided risk model (sharing of savings and losses for all three years). If an ACO adopts the two-sided risk model, they are eligible for a maximum sharing percentage of 60%, compared to 50% in the one-sided model.

It’s important to note, however, that aside from any earned shared savings, CMS would continue to pay providers under the current fee-for-service system (FFS). For ACO participants, CMS would establish a per capita benchmark based on Medicare expenditures against which performance is measured. Performance on quality and financial measures would be assessed to determine whether the ACO qualifies to receive shared savings or be held accountable for losses. Incentive payments based on savings are only issued if the ACO meets the quality requirements.

Concerns over Start-Up Costs

One issue of concern for providers appears to be the significant investment costs and uncertain—return on investment—that will be required to launch an ACO.

In one of several information calls with providers about the rule last week, CMS officials responded to questions about whether the agency would provide any funding to help groups launch ACOs. While indicating that the agency is cognizant of the issue, CMS officials did not propose any upfront payments. Rather, they indicated that the investment could be funded by a revenue stream driven by incentive programs. These include shared savings and quality measures outlined in the proposed rule, as well as from other incentives, including the HHS “Meaningful Use” of EHR program.

However, the adequacy and the timing of the revenue stream are uncertain. In fact, it could be years before ACOs receive these incentive payments, according to Steven Lieberman, a consultant and visiting scholar with the Brookings Institution’s Engelberg Center for Health Care Reform. He recently analyzed the financial implications of the proposed rule in an Apr. 6 Health Affairs blog posting entitled, “Proposed CMS Regulation Kills ACOs Softly.”

Investment = Nearly $2M

CMS estimates start-up costs will average approximately $1.76 million, with approximately $500,000 for investment and $1.25 million for first year operating costs. These costs are based on estimates from CMS’s Physician Group Practice (PGP) Demonstration. However, Lieberman noted in his blog that CMS regards these estimates as understated, because they do not necessarily take into account the cost of an EHR system, which was present in most PGP sites, but may not be in many ACO sites.

In addition, because CMS estimates that it will take months to collect data and evaluate how ACOs perform on financial and quality measures, it could be the third year before incentive checks are cut. “Money won’t flow until after quality measures are known, and many ACOs will be lucky if they are paid for year one by year three,” he explained. “In addition, CMS will withhold 25% of any shared savings the ACO is entitled to until the end of the agreement period. It will be quite a while before providers will recoup that initial investment, even under the best of circumstances.“

Another potential problem raised by the proposed rule is CMS’s proposed retrospective attribution of beneficiaries, said Lieberman. Providers will know neither their assigned patients nor how they are doing from year-to-year until it is too late to make adjustments. “The numbers and timelines just do not work, compounding the proposed regulation’s complicated, expensive structural factors,” he explained. “People won’t know how they are doing in terms of finances and quality until year three, which is when ACOs initially in the one-sided model must begin the two-sided model, and when they start sharing in the risk.”

CMS will be holding regional meetings in San Francisco and Philadelphia in May to solicit stakeholder feedback on the proposed rule. Comments, due June 6, can be submitted online.

MedPAC Approves Payment Reform Recommendations

Last week, Medicare Payment Advisory Commission (MedPAC) Commissioners voted nearly unanimously to approve four recommendations to reform physician payments for in-office ancillary services (IOAS). MedPAC, an independent Congressional agency that advises both the Senate and House on issues affecting the Medicare program, approved these recommendations in a public meeting last week.

These recommendations—outlined below—will be included in the agency’s June report to Congress:

  • Option 1: The HHS Secretary should request the AMA’s Relative Value Scale Update Committee (RUC) and CPT editorial panel to accelerate and expand their efforts to combine discrete services into comprehensive codes, as well as develop bundled payments that include multiple ambulatory services furnished during an episode of care.
  • Option 2: Congress should direct the Secretary to apply the multiple procedure payment reduction to the professional component (PC) of diagnostic imaging services provided in a single session.
  • Option 3: Congress should direct the Secretary to reduce the physician work component of imaging and other diagnostic tests that are ordered and performed by the same physician.
  • Option 4: Congress should direct the Secretary to establish a prior authorization program for physicians who order substantially more advanced imaging services (MRI, CT, nuclear medicine) than their peers.

All recommendations were unanimously approved by the Commissioners, with the exception of option 4 dealing with prior authorization. For that recommendation, a urologist, Commissioner Ronald D. Castellanos, MD, was the lone dissent vote.

While these recommendations do not directly affect pathologists or reimbursement for AP services, the College remains concerned that they fail to address the root of the problem—the IOAS exception for AP services. By not removing AP services from the IOAS exception to the Stark law or applying a time-based approach, the CAP asserts that self-referral arrangements will continue to proliferate. In late April, CAP members and staff met with MedPAC staff to discuss these and other concerns related to the payment proposals (Statline, 3/31/11).

Although MedPAC will not include closing this IOAS “loophole” in their upcoming recommendations to Congress, it is clear that self-referral of ancillary services—including pathology testing—will continue to be under scrutiny by the agency, as the agency’s Principal Analyst Ariel Winter, stated at the most recent public meeting. “In particular we’re concerned about physical therapy, radiation therapy…and anatomic pathology services,” he explained. “We plan to continue tracking volume changes and evidence of inappropriate use. And we may revisit options in the future to narrow the in-office ancillary services exception.”

A transcript of the public meeting is available on the MedPAC website.

Federal Appeals Court Hears Gene Patent Oral Arguments

A three-judge panel heard oral arguments in the Myriad gene patent appeal case before the U.S. Court of Appeals for the Federal Circuit on April 4. The CAP, represented by the American Civil Liberties Union (ACLU), is a co-plaintiff in the trial case challenging gene patents on human DNA.

Last March, a federal court issued a ruling invalidating patent claims on BRCA1 and BRCA2 genes, which Myriad appealed. Both sides presented their arguments before the Federal Court of Appeals, joined by the U.S. Solicitor General arguing on the plaintiff’s side. For over an hour, the judges heard testimony and questioned attorneys on issues central to the case, including whether isolated DNA can be patented or whether patent claims on any form of DNA are invalid because it is a product of nature.

ACLU senior attorney Chris Hansen told Statline that he anticipates the judges will issue a decision within the next 4-6 months. He also said that it is impossible to draw any conclusions about the judges’ leanings based on their questioning.

Regardless of this forthcoming decision, many predict that ultimately the U.S. Supreme Court will decide this case. But expect both parties to appeal, irrespective of the outcome of the April hearing, explained Daniel Vorhaus, an attorney with Robinson Bradshaw & Hinson, P.A. (New York City) and editor of the Genomics Law Report.

“The absolute earliest this case could be fully wrapped up is probably late 2011 or early 2012, but if one or more appeals are granted it will be at least another year, possibly significantly longer,” Vorhaus told Statline. “In all likelihood we’re probably closer to the halfway point than the finish line at this point.”

Grassley, Wyden Propose Making Medicare Payment Data Public

Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-OR) have introduced a bill requiring that Medicare make claims and payment data available to the public. The data would be listed by providers’ National Provider Identification (NPI) number.

Citing fraud as the reason for the bill, Sen. Grassley said in a statement issued on April 7 that more transparency about billing and payments increases public understanding of tax dollar spending. “The bad actors might be dissuaded if they knew their actions were subject to the light of day,” he said. While volume alone does not automatically signify fraud, waste, or abuse, accountability and transparency are powerful preventive tools, Grassley and Wyden said in the statement.

Wall Street Journal Pursuing Suit to Open Medicare Database

In addition to Sen. Grassley’s bill to make Medicare payment and claim data public, Wall Street Journal publisher Dow Jones & Co. and the Center for Public Integrity are trying to access this information through litigation. This legal move followed a series of articles by the Journal, called “Secrets of the System” scrutinizing various aspects of Medicare reimbursement.

In January, both parties filed a suit in the U.S. District Court for the Middle District of Florida to overturn a 1979 injunction by the AMA preventing public access to this Medicare data.

In a statement to Statline, AMA’s Past President J. James Rohack, MD said, “The AMA intends to vigorously defend the current injunction, which allows the agencies working to identify fraud continued access to Medicare claims data without the public release of potentially harmful or misleading information.”

The bill, S. 765, The Medicare Data Access for Transparency and Accountability Act, also clarifies that data on Medicare payments to physicians and suppliers do not fall under a Freedom of Information Act exemption. The data would be posted online, similar to how federal spending is posted on The bill also provides the government more time to pay Medicare providers when fraud, waste, and abuse are suspected, as compared to the current process, which Grassley called the “pay-and-chase” model.

However, the AMA contends that releasing Medicare claims data to the public will not help combat Medicare fraud, as those responsible for tracking fraud already have access to this data. “The AMA abhors Medicare fraud, which threatens our entire health care system, and we support vigorous efforts by the Department of Justice, Office of Inspector General and others to identify perpetrators of fraud–the vast majority of whom are not physicians,” said the organization’s past president J. James Rohack, MD, in a statement to Statline.

In fact, Dr. Rohack said that release of a physician’s NPI could actually increase fraud. “Physician identity theft resulting from publication of these numbers is already a problem, similar to the publication of an individual’s Social Security number, and release of these numbers in conjunction with detailed billing information will significantly increase the risk of fraud,” he explained.

CT, RI, NY, and OR Lawmakers Contemplate Result Report Changes

The College is closely monitoring proposals that would significantly alter laboratory test reporting requirements in four states: Connecticut, Rhode Island, New York, and Oregon. Current Connecticut state law requires that laboratories report results directly to the ordering provider. However, a bill (Raised Bill 1201) introduced in January in the state’s General Assembly would require that the provider authorize the laboratory to communicate results directly to the patient unless it would be detrimental to the physical or emotional health of the patient. The Connecticut Society of Pathologists is seeking to clarify this legislation, however, as it is unclear whether a pathologist—as a provider—would need to determine the patient’s mental health.

New York is similar to Connecticut in that its current law prohibits clinical laboratories from communicating results directly to patients. However, there are also legislative efforts in that state’s Senate to revamp this restriction. In January and February, SB261 and SB3607 were introduced in this chamber, calling for laboratories to report test results directly to patients, upon request, as well as the ordering provider. Along with these results, the laboratory would be required to inform the patient that this medical report should not be viewed as medical advice nor should it replace direct communication with the patient’s physician.

In contrast, some lawmakers in Rhode Island are looking to tighten restrictions on test result reporting. Legislation proposed in that state’s Senate (SB62) in January would prohibit laboratories or physicians from reporting results to anyone other than the ordering physician, unless the ordering physician directly authorizes reporting the results to another party. An exception is also made if the testing involves the accuracy of the laboratory’s equipment or procedures.

Proposed legislation (HB 2967) in Oregon requires the laboratory to release the results to the patient immediately if the results have been available to the laboratory at least 24 hours, or within one working day of the results becoming available. Current law provides the laboratory must report the results to the patient within seven days of receiving the request, or immediately upon receiving authorization from the ordering physician.

In addition to assisting impacted state pathology societies with their responses to the legislation, the College is currently developing public policy recommendations on this issue.

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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