College of American Pathologists
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  STATLINE — CAP’s Bi–Weekly Federal and
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May 27, 2010  •  Volume 26, Number 11
Next Issue: June 10, 2010
© 2010 College of American Pathologists

In This Issue:

Breaking News: Congress Deliberates Two-Year SGR Patch
Premier Launches ACO with 70+ Hospitals
House Committee Investigating DTC Genetic Tests
Physician Advisory Panel Dismantled
Physician Groups Sue Over Red Flags Rule
Medical Groups Ask CMS to Delay Lab PECOS Enrollment Deadline
CMS Announces PQRI Adjustments
Direct Billing Update: Tennessee Law Now Covers AP
NY Assembly Votes to Ease Physician Self-Referral Prohibitions

Breaking News: Congress Deliberates Two-Year SGR Patch

With the deadline for the scheduled 21 percent Medicare physician payment cut only days away on June 1, Congress continues to debate a two-year patch. As Statline goes to press, the situation in the House remains fluid and an alternative patch could be proposed.

A two-year SGR provision is now estimated to cost $23 billion, with a 2.2% update effective on June 1 and a 1% update effective Jan. 1, 2011. Beginning on Jan. 1, 2012, Medicare reimbursement would, once again, be determined through the SGR formula under current law—which could mean a cut of at least 34% for Medicare physician payments.

But the House could consider the tax extender legislation either today or tomorrow before Congress adjourns for an extended Memorial Day recess. The outlook for Senate passage is currently unclear.

Initially, House Democrats had talked about a five-year fix, then three years. However, concerns from Republicans and the fiscally conservative “Blue Dog” Democrats over total spending in the tax extenders bill (H.R. 4213), which includes the SGR provision, has forced the House leadership to agree to a slimmer SGR patch that would reduce the overall bill’s cost by over $40 billion. Eliminating the SGR altogether would be expensive, an estimated $200 billion or more over 10 years. As Statline was going to press, the current two-year SGR provision is now estimated to cost $23 billion.

In addition to the SGR provisions, the unemployment and COBRA provisions have been scaled back. The COBRA benefits subsidy, which pays 65 percent of the insurance premium costs for 15 months for laid-off employees, will extend to November.

The AMA released a statement this morning decrying Congress for applying another patch. “We are expressing disappointment that Congress is approaching another deadline and these short-term interventions grow the problem making it harder to handle in the future,” read the statement. “Congress should not depart for the Memorial Day recess without taking action to avert a 21% cut scheduled for June 1.”

CAP is continuing to work with Congressional leaders to monitor the issue and push a solution to prevent the 21% cut from going into effect on June 1.

Premier Launches ACO with 70+ Hospitals

Designing a new health care delivery model moved from talk to action last week as some of the nation’s largest health systems announced they are participating in an accountable care organization (ACO) pilot program under the direction of Premier, Inc. Premier is a health care network comprised of 2,300 hospitals and 64,000 other health care sites. Given the magnitude and scope of the pilot, which could serve well over 1 million patients, it is thought to be a precursor to the ACO model the Centers for Medicare and Medicaid Services (CMS) has been tasked to launch in 2012, under the new health care reform law.

Nineteen health systems with over 70 hospitals in 15 states are participating in this “implementation” ACO. Participants include North Shore-Long Island Jewish Health System in Long Island, New York; Bon Secours St. Francis Health System in Greenville, South Carolina and Richmond, Va.; Geisinger Health System in Danville, Pa.; and Baystate Health in Springfield, Mass. These systems have participated in Premier’s previous quality initiatives—the Hospital Quality Incentive Demonstration (HQID) and the Quest collaborative project. View the list of participating hospitals.

ACOs and related coordinated care models are an “important move to reimburse providers based on quality and outcomes rather than volume and quantity,” said Sen. Max Baucus (D-Mont.) at a press conference on May 20 announcing Premier’s ACO launch. These models, which need to be patient-focused and cut down on costs, will be a central theme throughout this summer’s confirmation hearings of the new CMS administrator, Donald Berwick, explained the senator.

Measuring, Pay for Quality

Reimbursement under this ACO will depend upon shared savings and meeting quality measures, although not all quality measures are clearly defined. Developing measures is a priority for Premier, and the company is currently working with physicians, scientists, and other experts to define them, said Blair Childs, Premier’s senior vice president. Many will likely be based on measures developed as a result of Premier’s Quest and HQID projects.

It’s not clear, however, what role specialty physicians like pathologists will have in developing measures, and to what extent this model will change reimbursement. The Berkeley Center on Health, Economic and Family Security recently published a policy brief recommending a tiered risk/reward payment model for various types of ACO practice models. It also highlighted the potential legal obstacles ACOs may face. There are significant legal issues related to anti-trust, state corporate practice of medicine, federal anti-kickback, Stark self-referral and civil monetary penalty regulations.

Nevertheless, at the press event earlier this month, several of the CEOs of participating health systems emphasized specialty physicians must now ensure their place in these arrangements. “The sooner we can create models in which specialty physicians can participate, the better off we will be,” said John Hinton, CEO of Presbyterian Healthcare Services in Albuquerque, New Mexico. “The alternative is continued cuts and death by fee-for-service reductions.”

Pathologists could be a visible leader in the movement toward coordinated care models, explained Michael Bryant, CEO of Methodist Medical Center of Illinois. “Pathologists need to get out of the lab and participate in developing measures,” he said. “Everything starts with a lab test.”

If your hospital system is participating in the Premier ACO pilot, please contact CAP Advocacy staff.

House Committee Investigating DTC Genetic Tests

Less than a week after the FDA raised concerns over the availability of a direct-to-consumer (DTC) test at Walgreens, the House of Representatives’ Committee on Energy and Commerce launched an investigation into three test kit manufacturers—23andMe, Navigenics, and Pathway Genomics.

Chairman Henry A. Waxman (D-CA) and other Committee members sent letters to the companies, requesting by June 4, information on how test results are analyzed to determine genetic predisposition to diseases, drug responses, and adverse reactions. The letters also request information on how the manufacturers collect, store, and process genetic samples from customers. A hearing to review the investigation’s findings will likely occur sometime this summer, although no hearing date has been announced.

Physician Advisory Panel Dismantled

The Practicing Physicians Advisory Council (PPAC) has been quietly disbanded by the health care reform law, according to a CMS announcement. Over the past 18 years, the 15-member advisory board met quarterly with CMS officials to discuss Medicare fee-for-service issues. The new law repeals the provision that established PPAC in 1992.

While pathologists were not represented on PPAC, CAP had testified before the board, most recently on issues related to medically unnecessary edits (MUEs). PPAC had direct contact with CMS, and the dissolution of this body is likely a disappointment to many medical societies, who are preparing for sweeping changes in the way physicians are paid under Medicare fee-for-service.

Physician Groups Sue Over Red Flags Rule

The AMA, American Osteopathic Association, and the Medical Society of the District of Columbia have filed a lawsuit to block the Federal Trade Commission (FTC) from applying its “red flags rule” to physicians. The rule aims to prevent, detect, and mitigate identity theft.

Under current law, the FTC will require businesses that they deem as “creditors”—banks, credit card companies, and mortgage lenders—to implement an identity-theft prevention and detection plan by June 1. But the law also applies to physicians who don’t receive full payment at the time of service.

The complaint argues, however, that physicians are legally bound to protect the identity of patient information. Therefore, the red flags rule adds an unnecessary burden. “In applying the Red Flags Rule to physicians who do not require payment in full at the time of providing care to patients, the FTC is exceeding its statutory authority and acting arbitrarily and capriciously,” states the filing.

Update: The FTC has delayed enforcement of the red flags rule until Jan. 1, 2011, to allow Congress to consider a physician exemption. The Senate introduced a bill (S. 3416) that would exclude health care practices—among other businesses—with 20 or fewer employees from the red flags rule. A similar bill was introduced in the House (H.R. 3763) in October 2009.

Medical Groups Ask CMS to Delay Lab PECOS Enrollment Deadline

CAP, the AMA, and other medical societies are asking CMS to reconsider the July 6 deadline for physicians who order or refer imaging, laboratory, and specialist services to enroll in the agency’s Internet-based provider system. The date to enroll in the system—Provider Enrollment, Chain and Ownership System (PECOS)—was set for Jan. 3, 2011. However, this date was moved up to early July under the new health care law.

In a letter scheduled to be submitted to CMS today, the groups requested that the early July deadline be applied only to physicians who refer durable medical equipment (DMEPOS) and home health services. Federal officials are under pressure to combat fraud in these areas, but including lab and radiology service providers in this deadline does not provide sufficient time for implementation, say critics. “With an implementation date that is just over five weeks away, we are deeply concerned that implementing this policy to include anything more than physicians who order or refer DMEPOS and home health services will create significant confusion and bottleneck contractor customer service lines,” reads the letter.

CMS Announces PQRI Adjustments

Payment adjustments to participants who received funds from the 2008 physician quality reporting initiative (PQRI) have recently been completed, a CMS representative confirmed to Statline. The agency reported it had issued the adjustments after identifying inaccuracies in its calculation of incentive payments. CMS is also reviewing data on participants who did not receive PQRI payments based on these inaccuracies. This review is expected to be completed in June.

“In the vast majority of cases the resultant incentive payment adjustment is very small,” reads the announcement. “In a few cases, the incentive payment adjustment is substantial, based on a large portion of an eligible professional’s claims being submitted for reconsideration or with Medicare as a secondary payer.”

Direct Billing Update: Tennessee Law Now Covers AP

Tennessee Gov. Phil Bredesen (D) recently signed into law more expansive direct billing regulations that include AP services. This law follows enactment of a direct billing law for cytopathology services in 2006, and passage of a disclosure law for AP services in 2004.

“I think it’s important to note that the effect of this bill, if it passes, is simply to prevent surcharges and therefore ensure that you don’t have added costs imposed on cancer patients and other patients who are facing critical medical decisions and are at a very vulnerable moment in their lives,” explained bill sponsor State Rep. Mike Stewart (D-Nashville), during a Tennessee Senate hearing on the bill in March.

The law goes into effect on July 1. However, gastroenterologists in the state have four years to comply. Following a negotiated compromise, these specialists have until July 1, 2014, to comply with the new direct billing law for AP services.

CAP and the Tennessee Society of Pathology have been advocating for direct billing legislation for AP services for the past seven years. Since 2003, CAP’s state-by-state direct billing campaign has impacted AP billing covering over 100 million patients.

NY Assembly Votes to Ease Physician Self-Referral Prohibitions

The New York State Senate will now consider a bill (AB 9933/SB 6955) that would weaken restrictions on physician self referrals after the legislation passed the state Assembly yesterday. This move follows the State Assembly Health Committee’s favorable reporting on the legislation on April 13th.

In addition to repealing provisions of the New York State physician anti-self referral law, this legislation would void certain protections against financial abuse and inducements for improper laboratory test ordering and referrals. Because there is no language in this legislation to ensure the continued applicability of these provisions, the federal Stark law reliance in this bill may safe harbor practices that would otherwise be banned in New York under these other statutes.

CAP and the New York State Society of Pathologists, along with the New York State Clinical Laboratory Association and the American Clinical Laboratory Association, issued memorandums in opposition to the legislation.


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