College of American Pathologists
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September 1, 2011  •  Volume 27, Number 18
Next Issue: September 15, 2011
© 2011 College of American Pathologists

In This Issue:

Rep. Israel (D-NY) Tours Huntington Hospital Pathology Lab
CAP Details Concerns about CMS’s Efforts to Revalue Codes in Fee Schedule Comments
CAP Launches ACO/Coordinated Care Resource Web Site
Patient Access Tops CAP’s Concerns with FDA RUO Guidance
FDA Sets Personalized Medicine, Innovation as Regulatory Priorities
Pa. Dept. of Health Clarifies State EHR Donation Regulations
Keep Up with the Latest CAP Advocacy News on Twitter

Rep. Israel (D-NY) Tours Huntington Hospital Pathology Lab

Huntington Hospital CEO Kevin Lawlor (third from left) and CAP member Dr. Stone (far right) led Rep. Israel (second from left) on a lab tour last month. Last month New York Congressman Steve Israel (D), the current chair of the Democratic Congressional Campaign Committee, visited Huntington Hospital’s pathology laboratory. The tour was led by CAP member Gary Stone, MD, FCAP, who was joined by Huntington’s CEO, Kevin Lawlor.

Rep. Israel’s tour provided an in-depth view on how the pathologists and laboratory are integral to patient care, explained Dr. Stone. “Our tour with Rep. Israel was important to highlight the role of the pathologist in the overall care of the patient, and particularly to note our role in the care of cancer patients,” said Dr. Stone. “This was also an important opportunity to pull back the curtain on the complexity of the practice of pathology and operations of the laboratory.”

Huntington Hospital is part of the North Shore-Long Island Jewish Health System in New York.

CAP Details Concerns about CMS’s Efforts to Revalue Codes in Fee Schedule Comments

As the Super Committee on Debt Reduction crafts a plan to reduce the federal budget by $1.2 trillion over the next 10 years, entitlement programs such as Medicare and Medicaid are obvious targets for cuts. The impending 29.5% Medicare physician payment cut under the sustainable growth rate (SGR) formula on Jan. 1 is also strengthening the reimbursement squeeze on providers, including pathologists.

However, it’s not only Congress fueling this pressure on physicians. CMS is also scrutinizing physician reimbursement, as evident in plans to revalue certain pathology codes, outlined in the agency’s 2012 proposed Physician Fee Schedule (PFS). Earlier this week, the CAP submitted official comments to the agency on the revaluation plans, as well as concerns about efforts to identify and review potentially misvalued services, a proposal to end the TC “grandfather” provision, and comments related to new pathology quality reporting measures.

Revaluing Codes

In the 2012 proposed PFS, CMS took aim at revaluing potentially misvalued codes, specifically all evaluation and management (E/M) codes identified as potentially undervalued and the highest non-E/M expenditure codes for each specialty as potentially overvalued. For pathology services, these include both the professional and technical component (PC and TC) of CPT codes 88312, Special Stains Group 1; 88342, immunohistochemistry, each antibody; 88305, tissue pathology; and codes related to in situ hybridization multiple probe kits (88365, 88367, and 88368).

Many of these codes have recently been reviewed by the AMA’s Relative Value Scale Update Committee (RUC), noted the CAP’s comments. This is the case with the special stains code, 88312. The CAP urged its removal from this request, along with the entire code family, as the AMA’s RUC reviewed both the work relative value units (RVUs) and practice expense (PE) direct inputs for these codes at its February 2011 meeting. For similar reasons, the College asked that code 88342 be removed from the request, as codes used to establish its value were recently revalidated by the RUC and adopted by CMS in the 2011 PFS final rule. The RUC also recently conducted an extensive review to validate the work RVU for tissue pathology or code 88305. CAP disagreed with the request to review the work RVUs for this code based on the recent extensive review and adoption by CMS in the 2011 PFS final rule.

In terms of the in situ hybridization codes, the CAP worked with CMS and other payers to develop new codes based on physician work RVUs and direct PE inputs to more accurately account for more specific reporting for UroVysion multiple probe kits, since the original valuation for CPT codes 88365, 88367 and 88368 were not developed for these services. As these new codes would replace 88365, 88367 or 88368 for such services, the CAP is urging the removal of the review request.

TC Grandfather Under Scrutiny

CAP Supports Finalizing Signature Rule Retraction

This week the College also commented on another CMS proposed rule, one that would finalize retracting the physician signature requirement on test requisitions paid under the Clinical Laboratory Fee Schedule (CLFS).

The CAP strongly opposed this requirement when it was initially proposed in the 2011 Physician Fee Schedule (PFS). Set to go into effect Jan. 1, 2011, it required the signature of a physician or qualified non-physician practitioner (NPP) on requisitions for tests paid under the CLFS.

“The CAP commends the agency and urges finalization of this proposed rule to retract the policy included in the final 2011 Physician Fee Schedule,” stated the comment letter. “We appreciate CMS acknowledging the feedback received from CAP and other stakeholders.”

Upon finding that the policy could negatively impact patient care and would be difficult to implement, CMS officials indefinitely delayed implementation while they prepared this proposed retraction rule. Because the policy was part of the 2011 PFS, the agency had to issue a notice in the Federal Register and request for comment. A final rule will likely be released later this year.

As CMS has done in previous years, its 2012 proposed rule proposes to end the provision allowing independent laboratories to bill Medicare for the technical component (TC) of surgical pathology services for hospital patients.

As CMS is again expected to finalize its proposed termination, Congress will need to extend this provision, as it has since CMS began including the termination in its proposed PFS. The extension allows independent laboratories, under certain conditions, to continue billing Medicare directly for the TC of surgical pathology services provided to hospitals. However, under the proposed rule, independent laboratories will no longer be able to bill Medicare for the TC of pathology services beginning in 2012.

CAP’s comments oppose the agency’s proposal to end the policy as CAP has long advocated that this grandfather policy should be permanent, and will again press Congress to extend the provision.

Quality Reporting Initiatives

Next year’s proposed rule also includes three CAP-developed pathology measures. This means that the number of measures pathologists can report on for the CMS’s Physician Quality Reporting System (PQRS) could increase to five. The measures are related to esophageal biopsies with a diagnosis of Barrett’s esophagus, radical prostatectomy pathology reporting, and immunohistochemical (IHC) evaluation of HER2 for breast cancer patients.

CAP praised CMS for expanding the pathology measures, thus allowing more pathologists to participate in the PQRS. However, the comments noted that many pathologists with sub-specialization still don’t have applicable measures. This is problematic, as CMS will begin to impose penalties on non-PQRS participants in 2015. The CAP has asked that eligible providers such as these sub-specialty pathologists be exempt from penalties, as efforts continue to add more pathology-related measures.

“Laboratory testing provides essential information that influences the delivery of health care and measurement of outcomes; it is crucial that pathologists, as directors of medical laboratories, have a voice in quality initiatives,” stated the comments. “The contributions of pathologists are not easily captured through current performance measurement reporting mechanisms.”

CAP Launches ACO/Coordinated Care Resource Web Site

The College’s online ACO/Coordinated Care Resource Web site is now live. Focused on defining the role of pathologists in these emerging care delivery models, this landing page features a wealth of practical tools, including a customizable Talking Points slide deck to assist CAP members in getting involved in local initiatives. Advice on getting involved in a local efforts is also featured via video from CAP ACO Network Steering Group Chair Donald Karcher, MD, FCAP, as well as a profile of CAP member James Crawford, MD, PhD, FCAP, who is intricately involved in the launch of various coordinated care initiatives at North Shore LIJ Health System in New York. The Web site also features the latest in coordinated care delivery policy news, Frequently Asked Questions (FAQs), a glossary of ACO terms, as well as comments from the CAP and other stakeholders on public policies, including the CMS proposed ACO rule.

Interested in joining the CAP-ACO network? CAP members who work in a facility that is currently—or will be—part of an ACO are encouraged to join the network.

For more information—or if you have a question about ACOs—please email us.

ACO Luncheon at CAP ’11

If you plan to attend CAP ’11, September 11-14, 2011, plan to attend an informative luncheon, “Risks and Rewards: Lessons Learned from the Front Lines of Accountable Care,” to be held on Tues., Sept. 13 at 11:45 am at the meeting.

There has been a lot of criticism of CMS’s first attempt at a proposed rule on ACOs, but there is little doubt health care is moving to a coordinated care and accountable care delivery model. Although public ACOs have been slow to form, several private payers have already been pursuing ACO-type arrangements for some time. Pathologists must stay abreast of policy developments for public ACOs, and be on the look out for ACOs or other coordinated care initiatives developing locally.

At this panel, ACO policy and pathology experts will discuss and answer questions about national policy objectives, current public and private sector activities, and pathologists’ participation in existing ACOs.

The session moderator will be Dr. Karcher, joined by the following panelists: Larry Kocot, JD, LLM, MPA, Deputy Director, Engelberg Center for Health Care Reform, Brookings Institution; Bryan Loy, MD, MBA, FCAP, Market Medical Officer, Humana-Kentucky Market Office (Participating in Brookings/Dartmouth ACO pilot with Norton Health System); and Conrad Schuerch, MD, FCAP, Chairman, Geisinger Medical Laboratories, Danville, Pa.

Patient Access Tops CAP’s Concerns with FDA RUO Guidance

The College is raising concerns that strict interpretation of the FDA’s recent draft guidance regarding research use only (RUO)/investigational use only (IUO) reagents could disrupt laboratory testing and negatively impact patient care by limiting access to high quality tests, according to comments recently submitted to the agency.

In the draft guidance released earlier this summer, the FDA emphasized that reagents intended for use in clinical diagnosis are not considered RUO or IUO. The draft guidance sent a clear message to manufacturers of these reagents—often used as key components in laboratory developed tests (LDTs)—that if intended for clinical use, they cannot be labeled as RUO/IUO.

But the CAP believes that the agency needs to adopt a flexible approach to regulatory enforcement of these reagents, in order to minimize disruption in patient care and ensure continued patient access to high quality tests. This includes a time window to implement changes. “During that window, these products need to be available to clinical laboratories to avoid a negative impact on patient care,” read the comments. “CAP also emphasizes that the Agency adopt an enforcement discretion policy for RUO/IUOs reagents since it is expected that LDTs, which incorporate these reagents, will soon be subject to enhanced FDA oversight.”

LDT Draft Guidance

This FDA draft guidance is actually not new, but “nearly identical” to the RUO/IUO guidance originally released in 1992, noted Alberto Gutierrez, PhD, Director of the agency’s Office of IVD Device Evaluation and Safety, during an LDT panel discussion on Aug. 24 during the Third Annual Next Generation Diagnostic Summit, held at The Ritz Carlton in Washington, D.C. This recent guidance is also consistent with 2007 draft guidance pertaining to analyte specific reagents (ASR).

Dr. Gutierrez said that the agency released this RUO/IUO draft guidance to remind test manufacturers of the regulations. “Many manufacturers are not in compliance with these regulations, even though the regulatory bar is quite low,” he explained.

In terms of the eagerly awaited LDT draft guidance, Dr. Gutierrez would not comment on the timing of its release. He did, however, confirm that it will employ a risk-based approach to oversight with an initial focus on high-risk or Class III devices. The College continues to assist the FDA in their development of a risk-based model, as the College has already developed a proposed model classifying LDTs based on risk as well as requiring analytic and clinical validation of these tests.

Dr. Gutierrez did indicate, however, that once the guidance is released, the FDA is committed to taking a measured approach to implementation.

“We will allow sufficient time for laboratories and manufacturers to comply through the PMA [pre-market approval application] process, and will need to allow the agency time to review these applications,” he explained. “It will probably be two years before we call in these Class III devices, and we don’t expect to get to the Class II devices for many years.”

The College collaborated with the organizers of the Next Generation Diagnostic Summit, Cambridge Healthtech Institute, on two pre-conference short courses on the latest advances in molecular pathology. Course instructors included the following CAP members: CAP Governor Gail H. Vance, MD, FCAP, from the Indiana University School of Medicine’s Department of Medical and Molecular Genomics; Karen Weck, MD, FCAP, Professor of Pathology & Laboratory Medicine and Genetics and Director, Molecular Genetics, the University of North Carolina at Chapel Hill; Wayne Grody, MD, PhD, FCAP, Professor in the Departments of Pathology & Laboratory Medicine, Pediatrics and Human Genetics at the UCLA School of Medicine; Jeffrey A. Kant, MD, PhD, FCAP, Director, Division of Molecular Diagnostics, University of Pittsburgh Medical Center Health System; David Wilbur, MD, FCAP, Director, Clinical Imaging, Massachusetts General Hospital, and CAP’s Director of Molecular Medicine, Nazneen Aziz, PhD.

FDA Sets Personalized Medicine, Innovation as Regulatory Priorities

Stimulating innovation in clinical evaluations as well as personalized medicine emerged as one of the eight priorities identified by the FDA in its recently released Strategic Plan for Regulatory Science.

The plan provides a broad overview of the agency’s approach to developing new tools, standards, and approaches in its oversight of FDA-regulated products. It builds upon two previous white papers: October 2010’s Advancing Regulatory Science for Public Health and FDA Strategic Priorities 2011-2015, released in April.

The FDA’s approach is an ambitious plan, yet it’s unclear how the goals will be accomplished, whether through enhancing the FDA’s current infrastructure or utilizing expertise from other agencies like the CDC or NIH, commented Gail H. Vance, MD, FCAP, a CAP Governor who is with the Indiana University Medical School’s Department of Medical and Molecular Genetics. “As their goal is to provide expertise in oversight, I would think that they would lean heavily on agencies like the NIH for the science and discovery phase of technology, where there is a lot of work going on regarding cancer, particularly within the field of gene therapy and biomarker research,” she told Statline.

In fact, biomarkers are included in the personalized medicine goals of improving product development and patient outcomes. Specifically, the agency is focused on increasing the accuracy and consistency, as well as reducing the inter-platform variability of analytical methods to measure biomarkers. “There’s an opportunity here for the FDA to design a specific pathway to achieve goals, such as those involving biomarkers and personalized medicine, that leverage the different agencies and third parties to fill in the regulatory gaps,” said Dr. Vance.

Pa. Dept. of Health Clarifies State EHR Donation Regulations

Pennsylvania state health regulations related to donation of electronic health record (EHR) software systems follow closely with federal safe harbor standards; however, donations made in order to obtain referral business from physicians could be violating these regulations, and could result in an investigation under certain circumstances. This clarification was recently included in a letter from the state department of health’s Deputy Secretary Health Planning and Assessment Martin Raniowski in response to an inquiry made by the Pennsylvania Association of Pathologists, with the support of the College.

The August 18th letter indicated that the state regulations governing clinical laboratory practices do not prohibit a clinical laboratory from covering the costs of 85% of EHR software to a physician who refers specimens to that laboratory in all cases. However, donations made to obtain more business could be found violating state regulations in certain instances, such as when the donation in question is made in order to get more business from the referring physician.

Furthermore, the letter indicates that the increase in referrals to the laboratory could—but may not—be considered violations of the law, as there are varying reasons why a particular laboratory receives an increase in referrals, noted the letter. “If this situation were to occur, the Bureau [of Laboratories] would investigate this matter and if it found that the referrals were directly or indirectly a result of the donation made by the clinical laboratory, then the prohibition...would be implicated and the Department would take appropriate action,” stated Raniowski. Violations could result in possible sanctions against the laboratory, referral to the Pennsylvania Department of State concerning the physician involved, and referral to the Federal government for possible violations of the Stark Law and Safe Harbor provisions.

The College is continuing to work with interested State Pathology Societies to obtain clarification on the application of state anti-kickback law to EHR donations. This letter, as well as other state guidance and opinion letters are posted on the CAP Advocacy site.

Keep Up with the Latest CAP Advocacy News on Twitter

CAP Advocacy is now on on Twitter. Follow CAP Advocacy’s daily “tweets” to keep pace with regulatory and legislative news affecting the pathology industry. For the latest health care news, be sure to check out what we are following on Twitter.


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