College of American Pathologists
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July 19, 2013  •  Volume 29, Number 15
Next Issue: August 1, 2013
© 2013 College of American Pathologists

In This Issue:

2014 Physician Fee Schedule Proposed Rule Targets Misvalued Codes

On July 8, 2013, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would update payment policies and payment rates for services furnished under the Medicare Physician Fee Schedule (PFS) on or after Jan. 1, 2014. In it, CMS proposed reductions in the technical component (TC) of 40 pathology codes it described as misvalued. If adopted, some of the reductions would be significant, as much as 80%.

According to CMS, the proposed policy change accounts for a 6 percent reduction in overall Medicare PFS payment to pathologists and a corresponding 25% cut to Independent laboratory PFS payments (which represents less than 17% of Medicare payment to independent laboratories).

For physicians, the cuts included in the proposed 2014 PFS rule primarily impact technical component payment and global payment for pathology services performed on non-hospital patients. TC and global payment for hospital in- and out-patients will not be impacted since those services are not paid on the physician fee schedule. CMS considers those technical component costs to be part of the Diagnosis Related Group (DRG) payment for hospital inpatients, and for the outpatients, those costs are paid to the hospital through the hospital outpatient ambulatory payment classification (APC) fee schedule.

Because the proposed cuts largely impact payment for TC and global billing, CAP members who bill only the professional component will not be impacted. However, those who bill for the technical component or global would see a reduction in payment for a number of services.

The codes with the greatest dollar loss to pathology and laboratory medicine based on volume of services, along with the corresponding proposed cut in reimbursement per code are:

88307Tissue exam by Pathologist- 50%
88342Immunohistochemistry- 27%
88312Special Stains group 1- 46%
88813Special Stains group 2- 45%
88120Cypt urne 3-5 probes ea spec- 64%
88112Cytopath cell enhance tech- 22% add in- 75%
88309Tissue Exam by pathologist- 30%
88173Cytopath eval fna report- 25%
88120 TCCypt urne 3-5 probes ea spec- 71%

CAP is concerned that the proposed rates fail to take into consideration supply costs incorporated in the technical component for many of these codes. CAP is working, together with the AMA, to identify these costs as part of our response to this proposed rule. CAP is scheduled to meet with CMS in August to discuss some of the changes that have been proposed.

CMS proposed new values for over 1000 codes in 2014. Pathology is not the only specialty singled out for pay cuts. CMS has been slashing payment each year in order to reduce Medicare spending. Radiologists were dealt similar cuts in recent years and radiation oncologists also face potential reductions in 2014.

CMS secured a greater role in revaluing physician service codes in ACA which gave the Secretary the power to determine new methods for independently valuing physician services and expanding its “misvalued code initiative”, and they are determined to exercise that authority.

CAP opposes this new round of cuts to pathologists and pathology practices, and does not support CMS’s proposal to link payment for pathology services to hospital outpatient rates. Rather, CAP supports the AMA-RUC process for valuing physician service codes. The AMA-RUC has shown itself to be accurate and fair, and has been thoroughly vetted over many years.

Other Changes in the Rule

The rule also proposes changes to quality reporting initiatives that are associated with PFS payments, including the Physician Quality Reporting System (PQRS), as well as changes to the Physician Compare tool on the website. It also includes proposals for implementing the value-based payment modifier (VMB) required by the Affordable Care Act that would affect payment rates to certain groups based on the quality and cost of care they furnish to beneficiaries enrolled in the traditional Medicare Fee-for-Service program.

PQRS Measures for 2014 and Beyond Announced

CMS retained the five quality measures developed by CAP; however, three new measures for lung cancer and melanoma were not included for use by pathologists. In addition, CMS proposes to raise the criteria for successful reporting for the incentive to reporting on 50% of patients for nine measures. The criteria for avoiding the penalty have also been raised.

Value Based Payment Modifier

CMS proposes several changes to the value-based payment modifier program which impact pathologists. Specifically, the agency would apply the value-based payment modifier to groups of physicians with 10 or more eligible professionals starting in 2016 based on their participation in the 2014 PQRS and increase the amount of payment at risk under the value-based payment modifier from 1.0 percent to 2.0 percent. CMS would also make quality-tiering mandatory for groups within Category 1 for the CY 2016 value-based payment modifier, except groups of physicians with between 10 and 99 eligible professionals would be subject only to any upward or neutral adjustment determined under the quality-tiering methodology, and groups of physicians with 100 or more eligible professionals would be subject to upward, neutral, or downward adjustments determined under the quality-tiering methodology. Category 1 includes groups of physicians that either (a) self-nominate for the PQRS as a group and report at least one measure or (b) elect the PQRS Administrative Claims option as a group.

Further, the Rule sought comment on reviewing all of the services listed on the Clinical Laboratory Fee Schedule. CMS proposes a new process to review laboratory tests paid on the CLFS to determine if the payments should be adjusted due to technological changes. While the agency acknowledges that adjustments could be made both to increase and reduce fee schedule amounts, the agency expects most payments will decrease due to changes in technology that have occurred since the payment amounts were established. The new process is proposed to begin in 2015.

CAP staff is continuing to analyze the rule’s impact on pathologists. Statline will provide more information about proposed changes and new initiatives as soon as it is available.

The CAP believes members will have an important role in advocating for changes in the proposed rule. CAP members are asked to be on the alert for an email from CAP encouraging you to get involved on this issue. Check Statline or the Advocacy landing page for updates.

CAP members are encouraged to register for an exclusive webinar to learn more about the proposed rule from Jonathan Myles, MD, FCAP, Chair of CAP’s Economic Affairs Committee, and Dr. Emily Volk, Chair of CAP’s Quality Reporting work group. The panel will be held on Wednesday, August 14, 2013 at 3:00–4:30 p.m. Eastern Time.

GAO Reports Millions Wasted by Self-Referring Docs Ordering AP Services

Taxpayers are footing the bill for nearly a million unnecessary anatomic pathology tests that likely would not have been ordered if the referring clinician hadn’t been allowed to bill Medicare for those services under a self-referral arrangement, so says a new report from the Government Accountability Office (GAO).

Pathologists are already well aware of the problems caused by physicians who exploit the IOAS exception loophole and self-refer anatomic pathology services. However, this is the first government-sponsored report to document the millions of dollars physicians who self-refer anatomic pathology services cost Medicare with no added benefit to patients. CAP is calling on Congress again to take immediate action outlawing this business practice.

“GAO issued a report today with irrefutable evidence that physician self-referral is a national problem that invites abuse. Congress’s refusal to fix the problem has cost Medicare millions. Through GAO’s analysis of Medicare data, we now know it is a driver of increased medical spending and over utilization,” said CAP President-Elect Gene Herbek, MD, FCAP.

The GAO study found that financial incentives for self-referring providers were likely “a major factor driving the increase in anatomic pathology referrals”, and in 2010, providers who self-referred made an estimated 918,000 more referrals for anatomic pathology services than they likely would have if they were not self referring. CMS estimated these additional referrals cost Medicare about $69 million in 2010 alone.

CAP welcomed the GAO’s findings but said it did not believe the report’s recommendations would fix the problem. GAO called on HHS to flag claims for self-referred anatomic pathology services, and create policies to ensure appropriateness of biopsy procedures performed by self-referring physicians. In addition, GAO recommended HHS develop and implement a payment approach for AP services that would limit the financial incentives for referring a higher number of AP services per biopsy procedure.

“These recommendations will not get at the root of the problem, but cutting payment will definitely punish providers who are not exploiting the loophole or pursuing a profits-at-all costs business model,” Herbek said.

CAP believes the only correct course of action to put an end to self-referral abuses is to remove anatomic pathology from the In-Office Ancillary Services (IOAS) exception as quickly as possible.

There is already a wealth of research documenting wasteful Medicare spending by self-referring physicians. It has become a widely acknowledged problem in Washington over the past year, with a diverse group of bi-partisan, public and private organizations such as the Simpson-Bowles Commission, AARP, the Center for American Progress, and the Bi-Partisan Policy Group calling for tighter restrictions and elimination of the loophole. The President’s 2014 budget proposal estimated over six billion dollars would be saved from the federal budget by closing the IOAS loophole for a number of services.

CAP was instrumental in drawing attention to the problem in anatomic pathology by co-sponsoring the first independent research published last year on the impact of self-referral of anatomic pathology (AP) services on utilization, patient care, and health care costs.

The research was conducted by well-known health care economist, Jean Mitchell, PhD, and published in the leading peer-reviewed health policy journal, Health Affairs as well as CMS’s Medicare and Medicaid Research Review. It compared Medicare billing practices for anatomic pathology services related to prostate biopsies by self-referring and non self-referring urologists, and using Medicare’s own data showed that self-referring urologists billed Medicare for 72% more prostate biopsy specimens compared to non self-referring physicians, with no increase in cancer detection. In fact, self-referring urologists had a 52% lower cancer detection rate than those who did not self refer despite billing for nearly twice as many specimens.

For more information on CAP’s position on physician self-referral of anatomic pathology services, visit our Self-Referral Resource Center. We will be adding new content to the Resource Center over the next week, so please check back for the latest information available from CAP.

CAP members are invited to CAP’s Expert Panel Discussion “GAO Calls For Action to End Physician Self-Referral: A Panel Discussion”, featuring CAP representatives, health policy researcher Jean Mitchell, and Susan Dentzer, former editor of Health Affairs, which published Dr. Mitchell’s research in 2012. The panel will be held on Thursday, August 8, 2013 at 3:00 p.m. Eastern Time.

CAP Urges HHS to Reconsider Decisions on Molecular Code Placement and Pricing

CAP submitted comments to the CMS Administrator last week urging the agency to reconsider CLFS placement of the molecular pathology services; provide greater transparency in the price determination process by utilizing RUC-approved data; and provide Medicare coverage for molecular pathology tests necessary for diagnosis and patient management.

CAP has consistently sought to have the molecular codes placed on the physician fee schedule, and to determine pricing using RUC-approved data.

“To date the gapfill process for establishing payment for the molecular pathology services has illustrated the difficulty in gathering accurate information,” the CAP letter stated. “In contrast, the AMA/Specialty Society RVS Update Committee (RUC) provided utilization data, practice expense inputs as well as comparisons on the relative value scale. These data submitted to CMS by the RUC provided the necessary data to establish national payment rates reflecting the resources utilized for the new CPT codes. It is unlikely that individual carriers can duplicate the extensive, detailed and highly accurate process that the RUC used to value each molecular pathology code,” CAP added. “Moreover, carrier pricing adds unnecessary administrative complexities and unnecessary costs to providers and beneficiaries.”

The College also expressed concern for tests that have been denied coverage, and cited patient access problems reported by the American Medical Association in Indiana, Texas, Tennessee, Ohio, Kentucky, and Wisconsin. CAP’s letter included a chart citing specific problematic coverage decisions.

“As coverage and access are directly related, attached please find a chart listing the proposed coverage determinations as well as CAP’s concern regarding specific molecular pathology test determination. We are extremely concerned with the proposed lack of coverage for many of these tests, which are already in use today in real time patient management and are supported by established literature and practice guidelines.”

Read CAP’s letter to the CMS Administrator.

CAP Presents CLFS Payment Recommendations at CMS Meeting

The CAP presented payment recommendations this week on a number of codes listed on the Clinical Laboratory Fee Schedule, including several non-molecular pathology codes, at CMS’s annual public meeting for new and reconsidered Clinical Laboratory Fee Schedule services.

CMS accepts public comments, then determines the basis of payment (either crosswalk or gap-fill) and posts the preliminary determinations on its web site in early September. The public can comment on these preliminary determinations through September 27. The basis of payment and the amount of payment becomes final at the same time as the annual CMS instruction for CY 2014 (approximately early November). The public has 60 days from the date the annual instruction is issued to request reconsideration of either the basis of payment or the amount of payment for these new test codes.

See CAP’s recommendations presented at the CLFS meeting on July 10, 2013.

PQRS Registration Is Now Open for Individuals and Groups

PQRS registration for the Group Practice Reporting Option (GPRO), the Administrative Claims Option and for the Value-Based Modifier (VBM) Quality Tiering Option opened July 15 and physicians have until October 15, 2013 to register.

Registration is required for those who plan to report on PQRS measures as a group using any of the reporting options available: claims, registries, the GPRO web-interface reporting option tool or the administrative claims option. Group practices with more than 100 eligible professionals must also either sign up to avoid the -1.0% value- modifier payment adjustment or sign up for the VBM quality tiering option in order to be considered for a potential positive value- modifier payment adjustment.

In addition, individual physicians who do not wish to report measures as a group or as an individual or do not have any applicable measures in the PQRS program must register for the Administrative Claims option during the open registration period in order to avoid a -1.5% payment adjustment in 2015.

Who does not need to register? Eligible professionals who are participating in the PQRS as individuals through claims or registries, or those who are in one of the excluded categories (e.g. a participant in an ACO in the Medicare Shared Savings Program,) do not need to register on the PQRS website.

An active IACS account, which stands for Individuals Authorized Access to the CMS computer System, is needed to register for these PQRS and VBM options. CMS is urging representatives of group practices and EPs to request a new IACS account or modify an existing account on the CMS Applications Portal to name a PQRS representative as soon as possible. In order to register, the practice’s representative will need the group’s Tax ID number (TIN), the eligible professionals (EP) National Provider Identification (NPI) and Provider Transaction Access Numbers (PTANs).

Specific instructions for becoming a PQRS representative are available.


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