College of American Pathologists
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August 19, 2010  •  Volume 26, Number 17
Next Issue: September 2, 2010
© 2010 College of American Pathologists

In This Issue:

CAP Proposes Risk-Based LDT Oversight Approach to FDA
Eligibility Questions Linger as Meaningful Use Moves Forward
CAP Launches Medicare CAC Coverage Web Resource
Medicare Laboratory Spending Up 11% in 2009 to $8 Billion
Competitive Bidding Data Documents Destroyed
COLA Suspends Pathology Accreditation
Louisiana Law Now Requires Labs to Provide Results to Patients
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CAP Proposes Risk-Based LDT Oversight Approach to FDA

The College recently submitted formal comments to the FDA on the oversight of laboratory-developed tests (LDTs), recommending that the agency use a three-tier, risk-based approach in concert with third-party accreditors, as well as engage in a formal rulemaking process prior to implementing a new regulatory approach to these tests.

The CAP’s proposed framework classifies LDTs into three categories: low risk, moderate risk, and high risk. This approach defines risk according to the potential harm of incorrect or misinterpreted test results.

This proposal also calls for continued oversight by CMS, as well as deemed accreditors under CLIA, such as the CAP. The agency would use accreditors to validate low- and moderate-risk tests. Accrediting organizations would also review and approve these moderate-risk tests before the laboratory may commence with clinical testing. For high-risk tests, the FDA would review and approve clinical claims, with CMS and deemed accreditors overseeing laboratory compliance. The College also recommends establishing coordination between the FDA and CMS, to avoid any oversight duplication, and allowing regulatory flexibility to encourage innovation of new diagnostic tests.

Notice-and-Comment Rulemaking

Prior to implementing a new regulatory approach for LDTs, the CAP believes that the FDA should engage in formal rulemaking, including a notice-and-comment period. The FDA does not appear to agree, however. At the July public hearing, FDA’s Center for Devices and Radiological Health Director Jeffrey Shuren said that rulemaking is not required because regulatory oversight of LDTs is not a new requirement. Rather, the agency is discontinuing its enforcement discretion policy over these types of tests.

Nevertheless, the CAP’s understanding is that rulemaking is appropriate, given the significant shift in policy. “Based on CAP’s understanding of the Administrative Procedure Act, we believe that FDA regulation of LDTs would constitute a substantive regulatory change requiring notice-and-comment rulemaking,” stated the CAP comments.

Eligibility Questions Linger as Meaningful Use Moves Forward

Hospital-based physicians who see 90% or more of their patients in an in-patient or emergency room setting will not be eligible for incentives under HHS’s final meaningful use electronic health record (EHR) rule, CMS officials explained in a question and answer session with stakeholders on Aug. 12. This remains a key concern of the CAP, as it is likely that many pathologists will not be considered eligible providers (EPs) and therefore unlikely to qualify for incentives.

But this eligibility issue becomes more complex, as HHS modified the definition of hospital-based in the final rule. This rule excludes services provided in ambulatory settings, such as outpatient, so more pathologists may potentially be eligible for the program.

While more pathologists may potentially be eligible for incentives, they are also eligible for penalties. EPs and hospitals who fail to meet meaningful use standards will face financial penalties under Medicare beginning in 2015. The College is concerned that even if pathologists qualify, most of the measures are outside pathologists’ current scope of practice so they might not be able to receive any incentive payment and face penalties in 2015.

During the recent Q&A session, CMS officials acknowledged that some measures are not applicable to every provider’s clinical practice, meaning they would not have any eligible patients for that measure or denominator. In many of these cases, CMS is excluding the EP from meeting that measure, which means he or she would still qualify for an incentive payment.

But not all measures have exclusions. Furthermore, it is unclear whether pathologists would be able to access data allowing them to report each of these measures. For example, one of the requirements is that more than 50% of all unique patients seen by EPs have demographics recorded as structured data, but there is concern that pathologists wouldn’t be able to access this data.

To address these issues, CAP is seeking clarification from CMS on what non-hospital-based pathologists should do if there are measures outside their scope of practice without apparent exclusions.

January Registration

During the Q&A session, CMS officials also announced that registration for Medicare and Medicaid EPs would begin in January 2011. Prior to the registration, officials will post the list of certified EHR vendors and technology online by the fall. In order to register, CMS official Michelle Mills explained that EPs will need to have a national provider identifier (NPI), and enroll in PECOS, CMS’s Provider Enrollment, Chain and Ownership System.

Providers can choose to participate in either the Medicare or Medicaid program. The maximum amount of incentive payments to Medicare providers is $44,000 over a five-year period. To get the maximum incentive, providers must initiate participation in 2010, 2011, or 2012, as this portion of the program concludes in 2016. CMS officials have indicated that the incentive payments for Medicaid participants are more than the Medicare program. Specifics on the hospital calculations for both programs, along with additional information on the program’s timeline is located online. CMS’s official website for the EHR incentive program is information is available online.

CAP Launches Medicare CAC Coverage Web Resource

The College has launched a new webpage to assist pathology representatives on Medicare Contractor Advisory Committees (CACs) who are advocating for fair reimbursement policies at the local level. As CMS consolidates and reorganizes from state to regional entities, these CAC representatives work to ensure pathologists are appropriately reimbursed for medically reasonable and necessary services provided to Medicare patients in their regions. The College’s new Local Medicare Coverage webpage supports pathology CAC representatives by providing useful information on the Medicare coverage process, draft policies currently in comment by CAP, and other important coverage related materials. A link to the webpage is featured under the CAP Advocacy and the Reference Resources and Publications tabs. Member login is required to access the materials.

The new site features background information on the Medicare coverage process, draft policies currently under review by the College, and other related information. Links to the coverage page, which is expected to go live within the next week, are featured on the Advocacy page, as well as the Reference Resources and Publications page on the CAP site. Access to the main coverage page is open, but the links from the page are only open to CAP members.

More than 90 percent of Medicare payment policies decisions are made by MACs, who determine limitations on coverage for services that will be considered reasonable and necessary. These contractors rely heavily on physician representatives from each major medical specialty when developing these local coverage determinations (LCDs). Therefore, pathology representatives play a vital role by ensuring that LCDs accurately reflect the practice of pathology. By reviewing and commenting on coverage proposals before they are implemented, pathology representatives can exert considerable influence on reimbursement policies in their local regions.

Local Decisions Could Go National

Providing CAC representatives with the resources they need to do this is now more important than ever, explained W. Stephen Black-Schaffer, MD, FCAP, vice-chair of CAP’s Economic Affairs Committee. Part of the CMS contractor reorganization is to encourage the MACs to adopt the same coverage policies. Therefore, though a policy starts local, it has a good chance of going national.

“What once might have appeared to be a state issue is now everyone’s issue,” said Dr. Black-Schaffer, who practices at Boston’s Massachusetts General Hospital, and is an Associate Professor of Pathology at Harvard Medical School. By advocating for good policies prior to implementation, the CAC representatives help to ensure appropriate coverage of pathology services—both locally and nationally. In addition, these public policies do not remain limited to Medicare, as private payers closely scrutinize these coverage decisions.

The website not only details Medicare’s reimbursement process, but also provides regional Medicare maps and draft LCDs currently being commented on by the CAP. In addition, representatives can also tap into resources from the CAP Council on Scientific Affairs Resource Committees. “The major challenge for our representatives is explaining to Medicare medical directors how the indications for diagnosis differ from those for therapy,” Dr. Black-Schaffer added. “It’s important that the College can now offer our representatives this resource, and access to the expertise they need in each subspecialty area, to ensure Medicare contractors understand the complex services provided by pathologists.”

Medicare Laboratory Spending Up 11% in 2009 to $8 Billion

Total spending on laboratory testing under Part B grew to $8 billion last year, a jump of 11% from 2008, according to the latest data from the annual Medicare Trustees Report. In 2009, Medicare covered approximately 46.3 million people, a slight increase from an estimated 45 million in 2008.

While this last increase is significant compared to the 2% increase between 2007 and 2008 (see figure below), the report’s authors are optimistic about long-range savings from the health care reform law. However, the analysts stop short of detailing cost savings estimates.

“The financial outlook for the Medicare program is substantially improved as a result of the far-reaching changes in the Patient Protection and Affordable Care Act,” states the report. “In the long range, however, much of this improvement depends on the feasibility of the ACA’s [Affordable Care Act] downward adjustments to future increases in Medicare prices for most categories of health care providers. The development and implementation of new models for delivering and paying for health care have the potential to reduce cost growth rates to the level established by the statutory price updates, but specific outcomes cannot be assessed at this time.”

Total Part B outlays comprised 1.5% of the United States’ gross domestic product. By 2084, the report estimates this percentage will increase to about 2.5%. However, since total Part B reimbursements also include the physician fee schedule, the report understates these cost projects due to the reductions in physician payments under the current sustained growth reimbursement (SGR) formula. Currently, there is a six-month SGR patch with a 2.2% update in effect through Nov. 30. However, next year’s SGR cut will total and estimated 27%, based on the current formula as well as the accumulation of delayed cuts.

Competitive Bidding Data Documents Destroyed

CMS has destroyed all bid documents relating to the now-defunct competitive bidding demonstration project, according to a Certificate of Data Destruction obtained by Statline. This marks the end of CMS’s 2006 demonstration project for laboratory services, which the CAP opposed as a member of the Clinical Laboratory Coalition.

The demonstration project was barred from moving forward following a 2008 ruling from the U.S. District Court in the Southern District of California. However, there was concern that the HHS Secretary would retain the applications or use the competitive bidding information contained therein to make recommendations concerning Medicare operations or cut reimbursement to clinical labs. A lawsuit brought by three clinical laboratories in the San Diego area challenged the HHS Secretary on the right to retention and ultimately prevailed earlier this year.

COLA Suspends Pathology Accreditation

The accrediting body COLA is voluntarily withdrawing from the specialty of pathology because too few labs participated in the program. The move appears to be strictly a business decision on COLA’s part, as organization spokesman James Liggins explained that there were no quality complaints from CMS, nor was there any pressure from the agency to withdraw from the pathology specialty due to any quality issues.

Formerly the Commission on Office Laboratory Accreditation, COLA accredited only 300 pathology labs, which comprised only 3% of its total business of over 7,500 labs in the United States, said Liggins. “Because it was only 3% of the business, in order for our staff to maintain proficiency, we would have wanted more labs enrolled in our pathology program,” he explained, adding that the low number of labs enrolled made accreditation activities like inspections cost-prohibitive without raising fees.

Moving forward, COLA-accredited labs have 60 days from August 27 for CMS or another accrediting organization to accredit the lab for pathology services. A certificate of compliance from CMS or another approved accrediting organization is also acceptable. Any questions can be directed to Liggins by calling 410-381-6581 or via email.

Louisiana Law Now Requires Labs to Provide Results to Patients

A new law now in effect in Louisiana requires laboratories to release test results to patients upon request. Approval of the ordering health care practitioner is not required for the release of these results. In addition, laboratories are now legally obligated to report test results to the patient only when the patient or appropriate payer has fully covered the cost of the tests. The law went into effect on Aug. 15.

The law, Louisiana Public Act 614, also includes language pertaining to the laboratory’s legal standing. It states that a patient “shall not have a right or cause of action against a clinical laboratory or medical facility for the release of test results in accordance with the law.”

While initially opposed by the Louisiana Medical Society, the state pathology society was neutral on the legislation. Currently, seven states—Virginia, California, Connecticut, Florida, Michigan, Massachusetts, and New York—explicitly prohibit the release of laboratory test results to patients without the expressed written authorization of the ordering health care provider.

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