College of American Pathologists
Printable Version

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

July 22, 2010  •  Volume 26, Number 15
Next Issue: August 5, 2010
© 2010 College of American Pathologists

In This Issue:

FDA Hears Stakeholder Concerns on LDT Risk-Based Oversight Approach
GAO Undercover Probe Reveals Misleading DTC Test Results
Final Meaningful Use IT Rules Prompt Eligibility Concerns
CAP Questions Scope of NIH’s Proposed Genetic Test Registry
CAP Lauds Kennedy Bill’s Personalized Healthcare Office Proposal
CMS Hears CAP’s Recommendations for 2010 Clinical Lab Fee Schedule
Emerging Payment Models Highlight Value of Engaging with Delivery Systems
Follow CAP Advocacy on Twitter

FDA Hears Stakeholder Concerns on LDT Risk-Based Oversight Approach

FDA’s enforcement discretion over laboratory development tests (LDTs) appears to be nearing an end, as the agency plans on releasing an oversight framework over the next few months, officials indicated earlier this week at a public hearing in Hyattsville, Maryland. One approach agency officials are considering is rooted in risk-base classifications. In recent months, Gail H. Vance, MD, FCAP, a member of CAP’s Board of Governors, and the College staff have met with FDA officials to offer recommendations based on the College’s risk-based proposal that was released in September 2009.

An important component of CAP’s proposal is that oversight should be strengthened through a partnership between CMS, FDA, and third party accreditors like the College. Such a partnership is important to address concerns related to FDA’s resource shortage. But it’s also because most laboratories are unfamiliar with FDA’s language and processes, testified Vance, on behalf of the CAP, at the recent public meeting.

Many other in vitro diagnostic (IVD) and laboratory stakeholders also voiced concerns that the FDA does not have the resources to regulate LDTs expeditiously, allowing integration of new technologies and moving new diagnostic tools quickly to market. “You need to have the appropriate staffing in place to take this on,” said Frank Cockerill, MD, chair of the laboratory and pathology departments at the Mayo Clinic in Rochester, Minn. He also added that any oversight should not lead to increased costs of these tests, which would limit access by patients and physicians.

Classification, Validation Controversies

In response to workload concerns, FDA’s Director for Personalized Medicine in the CDRH, Elizabeth Mansfield, PhD, indicated the agency is considering down-classifying some IVDs. More details on this approach could be available when the agency releases a rewrite of its 510(k) rules, slated to be published in September. The Institute of Medicine is also looking at whether the premarket submission process protects patients and promotes innovation in support of public health. A report is expected in mid-2011.

But classification—as well as clinical validation—continues to be a controversial issue. “What is the level of clinical validation that the FDA will impose and what is adequate validation from a clinical perspective?” questioned Mayo’s Cockerill.

While the CAP believes that low and some moderate complexity tests can be adequately regulated under CLIA, it is evident that clinical validation needs to be involved in most moderate and high risk complexity tests, said Vance during a panel discussion following her testimony. “If we are going to propose that there are clinical validation standards, then the development of these standards needs to be evidence-based and there needs to be an education component.”

Another controversy courted by the FDA involves implementing this forthcoming regulation. Several stakeholders, including CAP, testified in favor of rulemaking over guidance. Anna Longwell, an attorney with the food and drug law practice Longwell and Associates (Palo Alto, Calif.), asked the FDA to clearly define what exactly qualifies as an LDT and then move on to the formal process. “It’s unclear why this would be exempt from the requirements of rule making,” she said. “Give us a rule, please.”

Speaking for the College, William Castellani, MD, FCAP, also encouraged the FDA to proceed deliberatively and incrementally through notice and comment rulemaking, following public engagement with affected stakeholders. But FDA officials might have already decided their course. Early in the meeting, FDA’s CDRH Director Jeffrey Shuren, MD, emphasized that he does not believe the agency needs to undertake the rulemaking to implement a new policy.

GAO Undercover Probe Reveals Misleading DTC Test Results

FDA Sends Letters to 14 DTC Genetic Testing Providers

An undercover investigation of direct-to-consumer (DTC) genetic testing providers by the Government Accountability Office (GAO) found that 68% of donor DNA testing by four companies resulted in different risk predictions for the same disease, agency officials told members of a House of Representatives Energy and Commerce Subcommittee at a hearing on July 22.

These findings, reported to the Subcommittee on Oversight and Investigations, underscore the increased scrutiny that DTC genetic testing manufacturers are now under by Congress, as well as regulatory agencies like the FDA. Earlier this week, the FDA sent warning letters to 14 DTC genetic testing providers, informing them that because their tests make medical claims, they need to receive either agency approval or clearance. There is also concern by policymakers and physician groups—including the CAP—that these results are communicated to patients without any medical guidance from a physician.

“CAP believes that direct-to-consumer testing is clinical laboratory testing and should be subject to appropriate safeguards for health related conditions. Since genetic testing seeks to fully detail an individual’s unique DNA or molecular composition, it can generate a multitude of diagnostic or prognostic information, which is often complex and requires expertise for proper interpretation and clinical application.”
John Scott, the CAP’s Vice President of Advocacy

This most recent GAO investigation involved four high-profile DTC test manufacturers—NaviGenics, 23andMe, deCode Genetics, and Pathway Genomics. Ten tests from each of the four companies—ranging in cost from $299 to $999 per test—evaluated certain conditions such as hypertension and high blood pressure, as well as risk prediction for breast and prostate cancer. The DTC testing market is currently valued at roughly $1 billion, and is growing between 20%—30% a year, according to Gregory Kutz, the GAO’s Managing Director of Forensic Audits and Special Investigations, who presented the investigation’s findings at the hearing.

One DNA, Varying Results

Five donors selected by the GAO submitted DNA samples for the tests. Results of the tests varied across all four companies. One patient was told that he was at below-average, average, and above-average risk for prostate cancer and hypertension, explained Kutz. In addition, results often conflicted with their actual medical conditions. For example, one representative told a donor that he was at decreased risk of developing a condition related to an irregular heartbeat. However, the donor had a pacemaker implanted 13 years ago to treat this exact condition.

Also troubling was the medical advice dispensed by company representatives—none of whom were physicians or medical experts. After comparing risk predictions that the donors received for 15 diseases, GAO made undercover calls to the companies seeking health advice (recordings of some portions of the calls are available on the subcommittee Website). Even though she did not talk to a doctor, but rather a company rep, one donor was informed that test results showed she had an above-average risk prediction for breast cancer. The donor was told this meant she was “in the high risk of pretty much getting” the disease, a statement that experts consulted by GAO found to be “horrifying” because it implies the test is diagnostic.

In response to these findings, FDA’s Director of the Center for Devices and Radiological Health, Jeffrey Shuren, MD, testified at the House hearing that the agency would continue to meet with company officials, informing them that if their tests are making medical claims, they must go through the regulatory process or be taken off the market.

The FDA supports consumers knowing about their genetic makeup, but believes these tests must produce “results that are accurate, supported by sound science, and understandable,” said Shuren.

Testimonies and related statements are available on the Subcommittee on Oversight and Investigations’ Website. The GAO report is also available online. The CAP’s press release is also available online.

Final Meaningful Use IT Rules Prompt Eligibility Concerns

While HHS’s final “meaningful use” electronic health record (EHR) rule is more flexible than the earlier regulations proposed by the Obama administration in January, preliminary analysis indicates that most pathologists are unlikely to qualify for the program’s incentives. Under this program, non-hospital based doctors and hospitals could receive as much as $27 billion in incentive payments over the next 10 years towards equipment to digitize patients’ medical records, but must report quality measures that are largely outside of the scope of pathologists’ practice. Eligible providers and hospitals who fail to qualify will face financial penalties under Medicare beginning in 2015.

In order to qualify for the incentive payments, doctors will have to meet 15 specific requirements, which is down from the 25 requirements outlined in the original proposal. Hospitals will have to meet 14 requirements, down from 23 in the January draft. Meeting these requirements are necessary to comply with the “meaningful use” definition. Both the CAP and the AMA are currently analyzing the impact of these final rules on its members, focusing on how measures that do not fit a physicians’ practice need to be reported or “credited.”

Some stakeholders are likely pleased with less rather than more qualifying requirements. However, there is concern that many specialty physicians—like pathologists—will not meet the “eligible professionals” or “EPs” criteria as outlined in the final rule. For example, Medicare EPs cannot be hospital-based, meaning that 90 percent or more of their services are performed in a hospital in-patient or emergency room setting. These EPs include the following providers, according to the final rule: doctors of medicine or osteopathy, dental surgery or dental medicine, podiatric medicine, optometry, and chiropractors. Hospital-based physicians were excluded from the incentives because hospitals were expected to take care of their health IT needs.

But some specialty physicians groups, such as cardiologists, appear to be eligible for the incentives. A spokesperson from the American College of Cardiologists (ACC) told Statline that their members will not be considered hospital-based physicians, and therefore will be eligible for the incentive payments. The exceptions will be cardiothoracic surgeons and electrophysiologists who do most of their work in the hospital setting or bill for services with global periods. “We would still like to see CMS address the issue of physicians that do office visits with patients, but those office visits are not captured separately as part of claims data because they are included in the global billing period,” noted the ACC spokesperson. “In the rule, CMS stresses the importance of place of service to the definition of hospital-based physicians, and these services clearly fall outside of the inpatient or emergency room settings.”

Incentivizing Quality

Also of concern are the quality measures that all EPs (Medicare and non-Medicare) need to report on to comply with the “meaningful use” definition and receive the incentive payments. EPs must report on six quality measures from a table of 44 measures. A zip file of specifics for each quality measure is available for download from the CMS Website.

On behalf of pathologists, the CAP is concerned that most of the measures are outside pathologists’ current scope of practice so even if the pathologists qualify as EPs, they might not be able to receive any incentive payment due to lack of quality measures. In terms of other physician groups, CMS retained a requirement for use of Computerized-Physician Order Entry (CPOE), but limited it to drug ordering and removed it from the mandatory measure test ordering.

The CAP also previously raised concerns that the definition of meaningful use didn’t recognize differences among physicians and accommodate physicians who do not engage in core functionalities such as eprescribing, exchange of information for the purpose of care coordination, or reporting clinical measures. When it commented on the proposed rule, the College asked CMS to exempt non-hospital based pathologists from the rule so they would not be subject to penalties, given that the required quality measures were outside of pathologists’ normal scope of practice. CMS rejected this request for an exemption.

Compliance with this final rule will be phased in three stages. Stage one (2011 and 2012) includes submission of these quality measures as well as meeting the aforementioned requirements. This initial stage also sets the baseline for electronic data capture and information sharing. The second stage, set for 2013, and stage three (2015) expand this baseline; both stages will be developed through future rulemaking.

First Calendar Year in Which EP Receives an Incentive Payment

The incentive payments are detailed in this table (above); to get the maximum incentive, Medicare EPs need to begin participation by 2012. Beginning in 2015, Medicare EPs who do not successfully demonstrate meaningful use will received a reduced reimbursement—starting at 1% and increasing up to 5% for every year that the EP does not demonstrate meaningful use. Hospital-based providers will not be subject to these payment reductions, however.

A fact sheet has been posted on CMS’s Website. CAP is continuing to analyze this nearly 900-page rule and will provide more information in future issues of Statline.

CAP Questions Scope of NIH’s Proposed Genetic Test Registry

In comments recently submitted to the National Institutes of Health (NIH), the College suggested that the agency clarify its envisioned scope of the proposed genetic testing registry, which is currently open for public comment. The College believes it will be difficult to provide relevant information to all of the targeted stakeholders with a single registry framework. The proposed registry is voluntary and CAP advocates that it remain voluntary.

The proposed elements to be submitted for a particular test for inclusion in the registry will also be difficult for many laboratories to provide. Many laboratories might not have access to the information or the resources to prepare a submission, which could negatively affect small laboratories and financially strapped academic institutions. One unintended result could be an increase in the importance of marketing over quality as assessed by laboratory inspections, according to the comments. “The registry could become a vessel for advertisements of newly developed translational testing rather than a comprehensive, balanced, and verified resource,” said the College.

The comment period on the proposed voluntary test registry has been extended until Aug. 2. More information is available on the NIH’s Genetic Testing Registry Website.

CAP Lauds Kennedy Bill’s Personalized Healthcare Office Proposal

Rep. Patrick Kennedy’s (D-R.I.) proposal to establish an Office of Personalized Healthcare (OPH) within the Department of Health and Human Services (HHS) would be an important step in building consensus for appropriate federal oversight of genetic tests, explained the CAP’s President Stephen N. Bauer, MD, FCAP in a letter to the Congressman. CAP submitted this letter of support to Congressman Kennedy following the introduction of H.R. 5440, the Genomics and Personalized Medicine Act, in late May.

Bauer also praised the OPH proposal for recognizing the need for stakeholder input, including pathologists, and providing grants to accelerate genetic testing research and workforce training. This newly created federal entity was a key component of the bill’s regulatory strategy for genetic tests.

In addition to federal oversight recommendations and workforce training, the bill is focused on promoting research, development and use of genetic tests. Earlier versions of the bill worried many stakeholders in the diagnostic community due to concerns surrounding imposing overly burdensome federal regulations that might hamper innovation and new reimbursement policies that would unfairly hurt pathologists. The CAP has been working closely with Rep. Kennedy’s office, as well as the Personalized Medicine Coalition (PMC), to ensure the legislation is in the best interest of pathologists—an issue Bauer emphasized in his recent letter.

“We believe this legislation and similar initiatives will benefit from vigorous discussion and careful consideration to ensure that personalized medicine is advanced in a regulatory framework that protects patients without producing unintended consequences that will limit access to testing, create unnecessary burdens for laboratories and impede the kind of innovation that is ultimately in the patients’ best interest,” he wrote.

CMS Hears CAP’s Recommendations for 2010 Clinical Lab Fee Schedule

This week, the College is making payment recommendations for new and revised CPT codes for the 2011 Clinical Laboratory Fee Schedule (CLFS) at a CMS meeting in Baltimore July 22.

There are 22 new codes up for consideration by CMS. These include 11 new codes, five additional codes, and five reconsideration requests. Each year the College and other organizations representing pathology and clinical laboratories develop recommendations that are each presented at the open forum. This is the ninth meeting held since a 2000 budget law required the agency to annually solicit and receive public comment on payment for new CPT codes on the CLFS.

Stephen Black-Schaffer, MD, vice chair of CAP’s Economic Affairs Committee, joined a list of 17 presenters from pathology, laboratories and industry. His statements provided background on each new code and College-recommended payment cross-walks and rationale for each test.

CMS sought input on new test codes and comment on whether payment for new codes should be established by using a “cross-walk” or “gap-fill” method, which the College recommended be cross-walked. The cross-walk method is used when a new test is similar to an existing code, multiple codes or a portion of an existing test code. The gap-fill method is used when no comparable existing test is available and allows carriers to set rates for a year and evaluate those rates to set national limitation amounts.

CMS officials are expected to announce their preliminary payment determinations in September. The agency will then take comments on these determinations from stakeholders and other interested parties. The 2011 clinical laboratory fee schedule will be effective for services delivered Jan. 1 to Dec. 31, 2011. CMS will issue instructions and fees to Medicare carriers for its implementation during or after the last week of October.

Emerging Payment Models Highlight Value of Engaging with Delivery Systems

With new payment models such as Accountable Care Organizations (ACOs) and medical homes moving from the demonstration phase into implementation over the next few years, physicians like pathologists should engage with independent physician associations (IPAs) to ensure they have a voice in the development of these new systems. This advice was repeated by speakers at a recent AMA seminar, “Pathways for Physician Success Under Health Care Payment and Delivery Reforms,” held in mid-July in Chicago. The workshop also focused on organizations similar to IPAs, such as physician hospital organizations (PHOs), integrated delivery systems (IDSs) or hospital systems.

Groups such as the Mesa County Physicians IPA in Grand Junction, Colo., have long contracted with Medicare and Medicaid, both directly and through managed care payers, as well as national and regional private payers, explained speaker Greg Reicks, MD, a family practitioner and president of this IPA. With a 35-year history in risk contracting, the Mesa County IPA is an ACO-like delivery model, providing services to an estimated 40,000 patients.

It’s important to note that each IPA’s payment model may vary depending on the type of payer. For example, 18 months ago, the IPA approached the Colorado Medicaid program and implemented a program that includes performance incentives such as reductions in readmission and other cost-saving measures. As a result of these and similar efforts, the Grand Junction area is one of the lowest-cost markets in the country in terms of health care spending, while boasting some of Medicare’s highest quality-of-care scores. These findings were featured in the landmark June 2009 article, “The Cost Conundrum: What a Texas Town Can Teach Us about Health Care,” by Atul Gawande, MD, in the New Yorker magazine. The article compared Grand Junction with McAllen, Texas—the most expensive health care market in the U.S.

Gain sharing incentives can provide hospital-based physicians like pathologists an opportunity to participate in models such as ACOs, noted another presenter, Harold D. Miller, executive director of the Center for Healthcare Quality and Payment Reform. One example is inappropriate testing. In a gain sharing environment, pathologists could demonstrate to hospital and other coordinated care model administrators a concept or program in which savings outweigh the expenditures and delivery outcomes, said Miller, who is also on the National Quality Forum’s Board of Directors. In most cases, the hospital or administrator will not know how to formulate without the physicians suggesting specifics, he added.

Of course, all of these new delivery and payment models rely on quality measures. Miller called on the physician groups to take a lead in developing these measures. However, he cautioned that groups shouldn’t get delayed by the quest for perfection. “Measures won’t be perfect, and don’t let that stand in the way of developing measures,” he explained. “Doctors know best how to develop measures and they know quality.”

Follow CAP Advocacy on Twitter

To keep pace with regulatory and legislative news impacting the pathology industry, follow CAP Advocacy on Twitter. For the latest health care news, be sure to check out the what we are following on Twitter.


202-354-7100  •  202-354-7155 (fax)  •  800-392-9994


Related Links Related Links




Customize CAP Ads with your laboratory’s logo