College of American Pathologists

  STATLINE — CAP’s Biweekly Federal and
  State Advocacy E–Newsletter

June 5, 2014  •  Volume 30, Number 12
Next Issue: June 19, 2014
© 2014 College of American Pathologists

In This Issue:

CAP Convinces United Healthcare To Correct an IHC Payment Policy

Following extensive advocacy and engagement by the CAP on behalf of members, the nation’s largest insurer United Healthcare has changed its policy limiting payment for American Medical Association Current Procedural Terminology (AMA CPT) code 88342 for immunohistochemistry (IHC).

The insurer told the CAP on June 3 it would reverse its policy that lowered the number of units pathologists could bill for the code 88342 to one effective January 1, 2014. Based on its understanding of 2014 CPT code changes, United Healthcare’s policy was to allow only one unit of CPT code 88342 per patient, per day, unless claims were submitted with modifiers 59 or 91.

The CAP alerted United Healthcare to the problem earlier in 2014 and has since worked to provide more information to the insurer and its payment policy leadership team on the correct interpretation and application of the 2014 AMA CPT description for the code. AMA CPT states 88342 is billed for each separately identifiable antibody per block, cytologic preparation, or hematologic smear; first separately identifiable antibody per slide.

During its most recent discussion, United Healthcare agreed with the information the CAP presented. United affirmed that it has increased the number of units, or its maximum frequency per day (MFD), for 88342 to 13 in its systems and on its website for all claims processed beginning May 18. Claims adjudicated on or after May 18 do not require modifier 59 to indicate greater than one unit, as medically necessary.

As of this writing, United is working on the process for handling denial of units of 88342 that exceeded one processed before May 1, 2014 and has committed to provide the CAP with a timely response. The CAP will share this process with members as soon as it is available. The CAP and United have agreed to work more closely in the future on payment and other issues.

College Engages With CMS on New Laboratory Requirements

In an effort to ensure a favorable regulatory environment for pathologists, the CAP engaged the CMS as it prepares to implement new Medicare laws that will affect laboratory medicine.

The Congress significantly revised the Medicare clinical laboratory fee schedule (CLFS) and made several other changes in the Protecting Access to Medicare Act (PAMA) of 2014. The law, signed by President Obama on April 1, establishes new reporting requirements for laboratories in order to set clinical laboratory free schedule (CLFS) prices beginning in 2017. The CAP opposed this new law, as it was part of the temporary fix to the broken Medicare sustainable growth rate formula. The CAP, along with the AMA and many other medical societies, had advocated for a permanent fix.

“Given the important roles pathologists play in developing laboratory tests, directing clinical laboratories, and assuring the quality and appropriateness of laboratory testing for their medical communities, the CAP has a significant stake in the outcomes of these new policies,” the CAP stated in a June 2 letter to CMS. “As you begin to work to implement this section of PAMA, we hope that you will keep our recommendations in mind.”

The new statute creates questions of which laboratories will be required to report private payer data to the CMS starting in 2016. In 2017, the Medicare agency will use the data submitted by laboratories to set payment rates on the CLFS.

The CAP recommended that the CMS should include hospital laboratories that provide the majority of their CLFS services for non-patients. Further, the CMS should not rush to promulgate a low expenditure or low volume threshold as provided for in the statue, but should carefully collect data and use a public and transparent process to collect the data. The exception from reporting requirements for capitated payments should only apply to per-member, per-month arrangements, the CAP stated. The more laboratories that report, the resulting weighted median price for a given test is likely to be more accurate for the full range of laboratories.

The CMS also should work with stakeholders like the CAP to identify ways to ease the burden of reporting as much as possible within the scope of the law, the College stated. PAMA suggested that the average sales prices for drugs may serve as a model, but the CAP asserts that the differences between pharmaceutical and laboratory markets is too great.

Finally, the law does not stipulate a requirement for a consideration of the cost of providing a test but whenever possible, the CMS should ensure that costs are accounted for so as to ensure continued patient access to laboratory testing.

The letter also addresses new coverage and coding provisions in PAMA for laboratories.

Medicare Contractor Palmetto Posts Article on GI Special Stains

The Medicare Administrative Contractor Palmetto GBA posted an article to its website that appears to establish payment restrictions on the number of special stains and IHC indications that can be performed and billed by pathologists.

The CAP strongly objects to Palmetto’s continuing practice of using its website to post articles that appear to establish new payment restrictions on pathology services without those restrictions being vetted through the required local coverage determination process. The CAP will continue to advocate strongly with the CMS that its administrative contractors adhere to the established requirements of the local coverage determination process to implement changes to existing Medicare payment policy.

On May 30, the Medicare Administrative Contractor Palmetto stated on its website that: “Only the pathologist may determine the medical necessity of a special stain. The vast majority of conditions of the stomach on biopsy can be diagnosed by the use of the routine hematoxylin and eosin (H&E) stain alone. There is potential for either over-utilization or under-utilization of these ancillary special stains. In most cases it is NOT reasonable or necessary to perform ‘special stains’ such as alcian blue (AB)—periodic acid schiff (PAS) to determine if clinically meaningful intestinal metaplasia is present. In addition it is not usually reasonable or necessary to perform special stains or immunostains (IHC) to determine the presence of H. pylori.”

Palmetto—the Medicare contractor for North Carolina, South Carolina, Virginia, and West Virginia—further states that “ordering special stains or immunostains prior to review of the H&E stain is not reasonable and necessary.” The contractor cites data showing the combined number of gastric biopsies requiring special stains should be equal to or less than 20% of biopsies received and examined in a practice, laboratory, or hospital.

“Providers that exceed the 20% criteria may be subject to additional action,” Palmetto stated.

Palmetto has posted similar statements regarding coverage on its website in the past. On October 30, 2013, the CAP, American College of Medical Genetics and Genomics, American Society of Clinical Laboratory Science, American Society for Histocompatibility and Immunogenetics, and Association for Molecular Pathologists sent the CMS a letter strongly objecting to Palmetto’s use of website statements instead of developing local coverage determinations to set policy.

STATLINE will publish more information about this issue as it becomes available.

GAO: Financial Incentives Drive Referral Patterns

Federal lawmakers again raised concerns about the link between self-referral of services and increased medical spending following the release of Government Accountability Office (GAO) report that examined self-referral of physical therapy services.

The GAO report represents the fourth and final report in a series examining physician self-referral. The CAP supports closing a loophole protecting physicians who self refer anatomic pathology (AP) services to laboratories in which they have a financial interest. Legislation introduced by Rep. Jackie Speier (D-CA) (HR 2914) would remove AP and several other services including physical therapy from the in-office ancillary services (IOAS) exception to the Stark Law. The law bans physician self referral of Medicare services except for those covered by the IOAS and other exceptions.

The June 2 report on physical therapy services was not as conclusive as previous reports, but it found a relationship between self-referring providers and the overall number of individuals referred for physical therapy. Self-referring providers referred more individual patients for physical therapy than non-self-referring providers.

“The report does show that we need to continue to monitor this area to be sure doctors aren’t unnecessarily referring patients for physical therapy when they have a financial interest,” said Senate Judiciary Committee Ranking Member Charles Grassley (R-IA). “Medicare dollars should be spent appropriately, not wasted on unnecessary services.”

In August 2013, the GAO published a report that examined referring AP services to laboratories where physicians have a financial interest. The report found significant overutilization and increased costs due to unnecessary services provided to Medicare patients. The GAO also published reports on self-referral of advanced imaging and radiation therapy services that produced similar findings.

“Viewed collectively, the four GAO reports show substantial evidence that financial incentives, not patients’ needs, are driving some referral patterns,” said House Ways and Means Committee Ranking Member Sander Levin (D-MI).

Last Chance to Complete CAP’s 2014 Practice Characteristics Survey

The week of June 2 is the final opportunity for members of the CAP to participate in the 2014 Practice Characteristics Survey. Over 1,300 CAP members have already completed the survey, and four of your colleagues have been awarded great prizes for their participation.

Gary Garshfield, MD, FCAP, Carl Minami, MD, FCAP, Elizabeth N. Pavlisko, MD, FCAP, and Sandy Imperial, MD, FCAP, were our prize winners after completing the survey. So far, just 10% of actively practicing pathologists in the US have entered the contest by filling out the survey. If you haven’t yet completed this survey, please do so right away.

The data that we collect helps the CAP to better serve our members by providing vital practice member characteristic data and information on the challenges you and your fellow pathologists face. The survey also captures compensation data, including salary and benefits, and practice related data relevant to all CAP members. Results from the survey will help influence the CAP’s advocacy priorities and outline regional market pressures and environmental changes impacting the individual pathologist.

The survey is confidential and can be completed in approximately 15-20 minutes. The CAP will share the survey findings with its members and staff. Like data obtained from prior surveys, the CAP will use the 2014 data in its advocacy efforts with policymakers, health care leaders, and other stakeholders to increase understanding of the significant role of the pathologist in the delivery of patient care.

In appreciation of your participation, participants who have completed the survey are entered in a weekly prize drawing. Prize winners will have the choice of: 1) a global fee registration (valued at $950) for CAP ’14, 2) a $500 credit for CAP Press publications, or 3) an Amazon gift card valued at $150. The CAP will hold drawings every week until June 8. Those who complete the survey will be entered in drawings for subsequent weeks.

Note: Some surveys are getting stuck in spam filters. The email to the CAP members arrived from the email address of To ensure that your institution’s firewall did not block the survey, members are encouraged to ask their information technology departments to specify that mail from “” should be allowed to pass through their spam filters. If you have questions about the survey, please email

CAP to Represent Pathologists at the AMA HOD

The CAP will represent pathologists on policy issues affecting the specialty during the AMA House of Delegates (HOD) June 7-11 in Chicago.

The issues include new HOD policy on the recent release of Medicare claims data and alternatives to the Medicare value-based modifier (VBM). In addition, the pathology section council will comment on proposed revisions to the AMA code of ethics.

The AMA is updating the code of ethics with more than 200 changes. Among the changes is the removal of sections addressing laboratory billing and services, and direct billing and self-referral of pathology services. The CAP will oppose any changes to the code of ethics that are contrary to the CAP’s established positions on direct billing and self-referral.

The CAP will support a resolution condemning the release of the Medicare payment data as it unfairly identifies individual physicians, including pathologists, based on their reimbursement levels without providing adequate context for those payments. In addition, pathologists have not had the opportunity to review the data prior to publication.

The CAP also will support new policy to advocate for alternative mechanisms for calculating the Medicare VBM. This advocacy is important to pathologists as current VBM structure does not fit the specialty.

Tennessee Expands Its Laboratory Anti-Kickback Prohibition

Legislation, backed by the CAP and the Tennessee Society of Pathologists, which tightens state prohibitions on inducements for laboratory referrals by applying prohibitions on unlawful business practices to out-of-state laboratories serving Tennessee patients, has been enacted into law. Tennessee Gov. Bill Haslam (R) on May 22 signed the bill into law, which will take effect July 1.

The legislation (SB 2434 ), would ensure that out-of-state laboratories serving Tennessee patients cannot engage in business conduct that is currently unlawful for clinical laboratories in Tennessee. These unlawful business activities include offering gifts, rebates, kickbacks, and other improper practices to induce referrals.

In a memorandum of support, TSP President J. Cameron Hall, MD, FCAP, wrote that out-of-state laboratories should not be exempt from laws that apply to laboratory practices in the state. The legislation levels the playing field for laboratories to compete for referrals, thereby helping to ensure physicians select laboratories that are best for their patients.

“In sum, this legislation will help protect Tennessee patients, ensure universal compliance with Tennessee laws governing improper business practices by laboratories, and deny out-of state laboratories a competitive advantage in the competition for Tennessee patient specimen referrals, thus helping to keep laboratory jobs and business in the state,” Dr. Hall stated.

Last year, Pennsylvania enacted a similar measure into law with the backing of the CAP and the Pennsylvania Association of Pathologists.

Pathologists May Now Register to Review Physician Sunshine Act Industry Reports

As part of the implementation of the Physician Payment Sunshine Act, physicians may now create an account to review data on payments and transfers of value from pharmaceutical and device manufacturers submitted by industry groups.

On June 1, manufacturers and group purchasing organizations (GPOs) began sending data on payments to physicians and teaching hospitals for the last five months of 2013 to the CMS. Industry groups are required to disclose certain payments under the Physician Sunshine Act. The submission period for 2013 data ends on June 30.

The payments to physicians and teaching hospitals often are for research, consulting or speaking fees, travel expenses, and gifts. The CMS is required to collect payment data to physicians and make it publicly available and searchable online annually.

Physicians have the opportunity to review and appeal reports they believe to be inaccurate or incomplete. They can review the data by registering for the CMS Enterprise Portal in June and the Open Payments System starting in July. An account in the Enterprise Portal is required for a physician to review data reported about them. An account in the Open Payments System allows a physician to dispute reports from industry groups.

“Those registered will be notified when data has been submitted about them, allowing them to review and dispute data submitted by health care manufacturing companies and GPOs prior to public data posting,” according to the CMS.

The review period will be open for 45 days. Any data that is disputed but not corrected by industry before the resolution period closes will remain public but will be marked as disputed, the CMS states.

Every year the CMS will release the reported financial relationship information between physicians and the industry as it becomes available about the prior year. For instance, 2014 data will be available by June 30, 2015.

CDC Report Recommends Pathologists Be Involved In Development of EHR Systems

A CDC report highlighted challenges laboratories have when sending test data to physician offices and hospital EHRs, and displaying the data correctly when physicians view patient electronic medical records.

The CDC included recommendations to improve interoperability and how EHRs display laboratory test data from a workgroup comprised of key stakeholders, including several pathologists. The CAP had advocated for pathologists to be included on panels where health information technology and laboratory medicine is discussed.

Variations in EHR system design and the ability to exchange data accurately can cause safety risks, according to the May 2014 report “The Essential Role of Laboratory Professionals: Ensuring the Safety and Effectiveness of Laboratory Data in Electronic Health Record Systems .” The report proposed focusing on engagement, data integrity and usability, and innovation for action by laboratory professionals and organizations to support development of the health information technology infrastructure.

Recommendations in those focus areas include:

  • Providing laboratory expertise for health information technology decision-making in the design, development, and implementation of EHR systems
  • Guiding and maintaining data integrity and usability to ensure that laboratory data are accurately presented in the EHR and available at the point of care
  • Partnering with stakeholders to stimulate innovation in EHR technology and usability to reduce laboratory data–related errors attributed to the use of EHR systems

Pennsylvania Will Curb Laboratory Self-Referral and Markups

[Editor’s note: This article was updated on June 23 to add information about potential fines.]

The Pennsylvania Department of Health responded to questions posed by the Pennsylvania Association of Pathologists (PAP), with CAP support, about how it plans to implement new law addressing laboratory self-referral and markups.

The May 28 response issued by the agency appeared favorable to PAP and CAP positions. In December 2013, legislation supported by CAP and PAP overhauled state law regulating clinical laboratory business practices.

Under the law, for the first time in Pennsylvania, client billing involving markup business practices by ordering clinicians and self referral arrangements facilitated by histological processing or external pathology services provided on ordering clinician premises would now be subject to state standards and oversight.

Specifically, the state Department of Health has now clarified the application of the law in response to PAP questions .

The application of the new Pennsylvania state law regarding ordering clinician markups on anatomic pathology services is facilitated by the Anatomic Pathology Service Disclosure Act, enacted in 2010 with the support of PAP and CAP, compelling disclosure of the actual cost of the service.

Fining Authority

The state Department of Health now has the authority to impose fines of up to $500 per day for violations of the department regulations, including violations relating to specimen collection, handling, and acceptance services.


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