College of American Pathologists
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  STATLINE — CAP’s Bi–Weekly Federal and
  State Advocacy E–Newsletter

May 24, 2012  •  Volume 28, Number 11
Next Issue: June 7, 2012
© 2012 College of American Pathologists

In This Issue:

TC Grandfather, eRx Exemption, MolDx Reporting Deadlines Loom

CMS sent an advisory this week reminding providers that the technical component (TC) grandfather provision is expiring at the end of June. This means that certain pathologists and independent laboratories providing the TC of physician pathology services furnished to hospital patients may no longer bill for and receive Medicare payment for these services on and after July 1, 2012, according to CMS.

This provision is expiring after more than 10 years of CAP successfully convincing Congress to grant an extension. While the College advocated for the permanent extension of the TC grandfather to rural hospitals, Congress has failed to extend the provision and is not expected to revisit this issue.

The College has prepared several online resources to help members plan for the provision’s expiration. These include an online document, “‘Grandfather – TC’ Anatomic Pathology Services: Contracting With Hospitals Not or No Longer Covered by TC Grandfather, Effective July 1, 2012,” which provides background on the TC Grandfather and a review of options for independent laboratories negotiating with these affected hospitals. In addition, the Advocacy site also features a Sample Technical Anatomic Pathology Services Agreement that members can use as a vehicle for identifying specific contract provisions that may raise issues. There is also a comprehensive listing of laboratory and pathology-specific ambulatory practice classification (APC) codes; a frequently asked questions document; and a listing of firms referred by CAP members on the online Practice Management Directory.

Exemption for eRx Program

Also coming at the end of June is the deadline to submit an exemption request to CMS for the agency’s 2013 e-prescribing (eRx) program. The College believes that most pathologists meet two criteria (see box) that automatically exclude them from the program, outlined by the American Medical Association (AMA).

Exclusion Criteria for CMS’s eRx Program

According to CAP analysis, most pathologists will automatically be excluded from the CMS eRx program because they meet the following criteria, as outlined by the AMA:

  • Office visits and other services listed in the CMS eRx measure specifications represent less than 10 percent of your allowed Medicare Part B charges in the first six months of 2011 (Jan. 1, 2011–June 30, 2011). CMS’s measure specifications are available online, click on “2011 eRx Measure Specifications, Release Notes and Claims-Based Reporting Principles.” As none of the denominator codes appear to be used by pathologists, the measures should not apply.
  • Less than 100 of your claims for Medicare Part B patient services contain visit and service codes that fall within the eRx measure specifications for dates of service between Jan. 1, 2011 and June 30, 2011. Again, pathologists do not appear to use these codes, so the measure should not apply.

However, for those pathologists who are not excluded, CMS may grant an exemption if it determines that compliance with the requirements for becoming a successful electronic prescriber would result in a significant hardship.

There are four significant hardship categories. The one most applicable to pathologists is if the eligible professional has or will prescribe fewer than 100 prescriptions during a 6-month reporting period (January 1 through June 30, 2012). More information can be found on the CMS E-Prescribing Incentive Program webpage and Quality Reporting Communication Support Page.

Under this program, CMS will impose a 1% payment reduction penalty on physicians who fail to comply with the program. The deadline to file for an exemption for 2013 is June 30.

Palmetto to Activate MolDx Edit Program

Early June marks the start date for the Palmetto Molecular Diagnostic (MolDx) reporting program, Palmetto GBA has announced. This means that codes not appropriately identified or coded will be rejected beginning on June 1.

“Palmetto GBA will activate the MolDx edits on June 1, 2012,” states the announcement on the contractor’s website. “All J1 providers, who submit MolDx services, MolDx Exempt Tests, on 837P claims to J1 Part B, must enter the assigned unique identifier on each line of the procedure code(s) used to report the test service. Claims for MolDx services submitted without an identifier will be rejected.”

Palmetto also recently posted additional information on its website on the program’s timeline and when a Z-code/PTI is pending and/or a practice’s information technology (IT) system is not yet operational by June 1st. Below are some updated details from contractor’s website:

  • Effective for claims received on or after May 7, 2012
    Palmetto GBA will issue only an information notice to providers who have not applied the required MolDx test identifier (Palmetto Test Identifier [PTI] /Z-Code Identifier) to the claim.
  • Effective for claims received on or after June 1, 2012
    Palmetto GBA will reject all claims for MolDx services that are submitted without the required MolDx test identifier (PTI/Z-Code Identifier)
  • Note: If a PTI/Z-Code is pending or the laboratory provider is unable to update internal systems for claims submission, Palmetto GBA will accept a fax and a completed Palmetto GBA Test Identifier Application Form with each claim.
  • Effective for claims received on or after September 1, 2012
    The Palmetto GBA Test Identifier Application Form will no longer be available and providers must submit required information in its entirety attached to each submitted MolDx service.
  • Avoid Claim Rejections: Providers are advised that the test registration process takes approximately 30 days. To avoid claim rejections, providers are encouraged to register now.

Palmetto has also published a comprehensive listing of FAQs on its website.

Statline readers are advised to visit the contractor’s website for any potential changes or delays to the scheduled June 1 program launch.

House SGR Bill Moves Away From Traditional Fee-for-Service

Bipartisan physician payment legislation recently introduced in the House repeals the current sustainable growth rate (SGR) formula in favor of reimbursing physicians based on quality and efficiency under a revamped, value-driven fee-for-service (FFS) system.

The current SGR “patch” is set to expire on Jan. 1, 2013, meaning that Medicare physician payments will be cut by approximately 30% without an intervention from Congress. The College has long supported the efforts of the American Medical Association (AMA) and other stakeholders to press Congress to repeal this flawed system.

Introduced by Reps. Joe Heck, DO (R-NV) and Allyson Schwartz (D-PA) on May 9, the Medicare Physician Payment Innovation Act of 2012 (H.R. 5707) pays for the estimated $300 billion to repeal SGR through reductions in military spending in Iraq and Afghanistan. The bill would increase Medicare physician payments by 0.5% annually for four years. Primary care would get an annual 2.5% bump between 2014-2017. These are only interim payments, however, while new payment and delivery models are tested. Beginning in 2019, traditional FFS payments would be reduced in an effort to move physicians to bundled payments (for more details, see box).

SGR Legislative Proposal Highlights
  • $300 Billion from Iraq, Afghanistan operations to pay for repeal
  • Annual updates of .5% for all physician services for four years
  • Annual 2.5% increase for primary care physicians for 2014-2017
  • CMS to “aggressively” test and evaluate new payment and delivery models
  • By 2016, CMS will offer a menu of no fewer than four delivery and payment model options
  • Beginning in 2018, physicians in CMS-approved models will receive stable reimbursements (according to their primary care/non-primary care payment system), with an opportunity to earn more for achieving quality, cost, effectiveness
  • In 2019, annual updates (to both primary and non-primary care services) will be -2%, -3% in 2020, -4% in 2021, and -5% in 2022.

But many physician groups, including the CAP and the AMA, have noted the lack of clarity surrounding physicians’ roles in these emerging models. “We have concerns about potentially limited options in this legislation for physicians who are not able to participate in new delivery models, but we believe this bill takes an important step in the right direction,” said President Peter Carmel, MD. “We look forward to continuing to work with Representatives Schwartz and Heck, and all their colleagues in Congress, to fix the Medicare physician payment problem once and for all.”

In addition to this legislation, the House Ways and Means Committee is looking for input from physician stakeholders, including the College, on how to best reform the Medicare physician payment system. Specifically, committee members have asked for feedback on quality-enhancing FFS alternatives and on how quality, efficiency, and patient outcomes should be incorporated in the Medicare physician payment system. The CAP is planning on submitting comments to committee members.

Senate Hearings

The Senate is also focusing on how to repeal and replace the SGR. In the first of a planned series of bipartisan hearings on the issue, the Senate Finance Committee heard from former CMS administrators, all of whom stated that the SGR must be repealed and replaced.

One of these former leaders, Mark McClellan, MD, PhD, is optimistic that this may be the year when “real” alternatives to SGR emerge. But they must be lead by the physician community, he said, adding that payment reforms have to better support high-quality, patient-centered care. “This means identifying the current payment rules in the fee-for-service/RBRVS [Resource Based Relative Value Scale] system that, however well-meaning, don’t do as much as they could to help promote the kind of efficient, high-quality care that physicians would like to provide,” said Dr. McClellan, who is now the Director, Brookings-Engelberg Center for Health Care Reform, at the May 10 hearing. “By starting now, and by working on a bipartisan basis to avoid another cycle of short-term SGR patches, it is possible to turn these opportunities into real Medicare reform.”

House Ways and Means Members Back CAP-Supported HIT Bill

There are now 13 co-sponsors for a bill (H.R. 4066) that would exclude pathologists from penalties under the current federal electronic health record incentive (EHR) program, including three members of the House Ways and Means committee: Jim Gerlach (R-PA), Earl Blumenauer (D-OR), Mike Thompson (D-CA).

This bill is supported by the College, based on concerns that the regulation’s Meaningful Use requirements for office-based physicians do not apply to pathology practices who generally can’t meet them.

The bill’s sponsor, Rep. Tom Price, MD (R-GA), told attendees at the recent CAP 2012 Policy Meeting that these Meaningful Use requirements are the “poster child” for the disconnect between medicine and lawmakers. “Pathologists work with patients differently, and should not be penalized for not checking a box as outlined in the Meaningful Use program,” he said.

NY Pathologists Push for Uniform Personnel Licensure Standards; Oppose Proposed Self-Referral Changes

The New York State Society of Pathologists (NYSSPATH), with the support of the CAP, is backing legislation ensuring that all out-of-state laboratory personnel working with patient specimens originating in the state are licensed by the state of New York.

Since 2006, out-of-state laboratory personnel have been exempt from certain qualification standards for New York-based laboratories under regulations issued by the New York State Education Department. During this time, the amount of patient laboratory work flowing to out-of-state laboratories has increased from an estimated $794 million in 2005 to $1.395 billion dollars this fiscal year, according to recently released information from the New York State Department of Health.

These qualification concerns are prompting the NYSSPATH and the College to support Assembly Bill 598/Senate Bill 3442 that would remove this exemption and require laboratory personnel to be licensed by the New York Department of Health. Sponsored by Assemblywoman Ellen Jaffe (D-Suffern) and state Senator Kenneth LaValle (R-Port Jefferson), the bill is also supported by the Service Employees International Union (SEIU -1199), which represents many laboratory workers in New York.

“Over 30% of New York patient laboratory work is now being sent outside of the state,” said NYSSPATH President David M. Crossland, MD, FCAP. “These numbers confirm that the exemption of out-state clinical laboratories from the personnel quality standards of New York State makes no sense and should be modified to ensure consistency in quality for all New York State patients.”

Efforts to Weaken Self-Referral

Also in New York, the College and NYSSPATH are ramping up efforts with other state laboratory and pathology organizations to oppose legislation to weaken the state’s current self-referral law. Endorsed last year by the New York State Bar Association, the legislation has passed the Assembly and was advanced by the Senate Health Committee on May 15. The legislation is currently awaiting consideration on the Senate floor.

The legislation (NY AB3551/SB4660) would defer New York State law to federal laws against self-referral and inducements (such as the donation of electronic health record systems) and allow referral arrangements that are currently unlawful under state laws. “In enacting this anti-self referral law in 1992, the New York Legislature affirmed that the ordering of laboratory tests should be based exclusively on the patients’ medical need and not on any financial incentives between the laboratory and the ordering health care practitioner,” stated the CAP, NYSSPATH, along with the New York State Clinical Laboratory Association, the American Society for Clinical Pathology, and the American Clinical Laboratory Association, the National Independent Laboratory Association, and the American Association of Bioanalysts in a March 5 Coalition Statement.

The Coalition is also concerned that this legislation may supersede other statutes that apply to the provision of laboratory services. These include referring physician markups on laboratory services that they do not perform or supervise, fee-splitting, kick-back incentives, and unnecessary over-utilization of laboratory services. “There is no language in this legislation to ensure the continued applicability of these provisions. Thus, the reliance on the federal Stark law in this bill will provide a safe harbor for practices that would otherwise be banned in New York under these other statutes,” according to the statement. “Deference to federal exceptions may void or displace New York State direct billing requirements for pathology/laboratory services.”

Watch for continuing coverage of this and related self-referral news in Statline.

CAP, NJ Pathologists Fighting Out-of-Network Bill

The College is working with the New Jersey Society of Pathologists (NJSP) to oppose legislation (AB 2751) recently introduced in the state that would hold out-of-network hospital-based physicians to the maximum allowed reimbursement for services when provided in-network.

Under current state Department of Banking and Insurance regulations, patients are not financially liable for out-of network costs in excess of what a patient pays in-network. However, if passed, this legislation would effectively alter the health care market in New Jersey and create a barrier for pathologists to negotiate fair compensation with health insurers for out-of network services.

In addition, there is concern about a provision requiring hospital-based physicians to provide a written estimate of charges to a patient prior to the service being delivered. Both the CAP and the NJSP maintain that the inherent nature of pathology work makes it impossible to provide patients with a meaningful estimate of charges in advance of the service.

CMS’s 2010 Quality Resource Use Reports Available Until June 6

Reports from CMS’s Physician Feedback Program for Medicare fee-for-service physicians in Iowa, Kansas, Missouri, and Nebraska are only available until June 6. The reports, called Quality and Resource Use Reports (QRURs), can be downloaded online.

The QRURs are generated for all physicians participating in Medicare in the four states. The reports compare performance in 2010 on 28 claims-based Physician Quality Reporting System (PQRS) measures, whether or not the individual physician was responsible for the measure, the cost of care provided to the patient and the individual physician performance on the reported PQRS measures. Reports for 2011 will be issued in the fall.

CMS is also looking for feedback on how to make these reports meaningful and actionable to physicians. The College is working with an American Medical Association (AMA) workgroup to provide input. These reports are important as CMS will build on their experience with the QRURs to develop the value-based modifier (VBM) mandated by the Affordable Care Act (ACA). The law mandated that the modifier apply to all physicians by 2017; the modifier will adjust provider payments upward or downward based on the quality and efficiency of the care they provide.

More information can be found on CMS’s Physician Feedback Program website.

In Brief

USPSTF Recommends Against PSA Screening

The U.S. Preventive Services Task Force (USPSTF) is recommending against PSA-based screening for prostate cancer for men of any age. This is an update to 2008 recommendations from the Task Force. Now available online, the recommendations will be published in the July 17 issue of the Annals of Internal Medicine.

Physician-Ownership of ASCs Linked to Increased Surgeries

A recent study by the Workers Compensation Research found that orthopedic surgeons who owned ambulatory surgical centers (ASCs) in Florida did between 52%–111% more surgery compared to those without ownership interest. These findings are consistent with a long line of studies demonstrating increased utilization as a result of financial incentives, including recent research by prominent health care economist Jean M. Mitchell, PhD, published in Health Affairs and co-sponsored by CAP and ACLA. The CAP has been advocating Congress to close the in-office ancillary services (IOAS) exception loophole for pathology services to combat these business arrangements that drive up Medicare costs, and in the case of the Mitchell study, detect less cancer.

CMS Delays Implementation of Physician Payment Sunshine Act to Jan. 1, 2013

After receiving over 300 comments on this proposed rule on reporting physician ownership and investment interests and payments or gifts to physicians by certain drug, biologics and device manufacturers, the agency announced it would delay implementation until next year. The CAP joined AMA and over 50 national and state physician groups in a joint letter urging the agency to make significant changes to the proposed rule and delay the reporting requirement until modifications are made, and ample time is allowed to notify physicians and manufacturers of final transparency reporting requirements. The proposed rule implements the Physician Sunshine Payment Act which was part of health care reform legislation.

Keep Up with the Latest CAP Advocacy News on Twitter

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


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