College of American Pathologists
October 1, 2003 Volume 19, Number 20
© 2003 College of American Pathologists

This month's stories:

Top House Lawmaker Confident Congress Will Improve Payments
OIG Attempts to Define Excessive Charges
HIPAA Compliance Contingency Plan in Effect
College to Meet with CMS Chief on NCCI Issue
CAP Calls for Limits on Use of ICD-10-PCS
College Unveils New State Society Web Area

Top House Lawmaker Confident Congress Will Improve Payments

Saying further Medicare payment cuts would be "catastrophic" to physicians' morale and willingness to participate, a prominent House lawmaker told CAP members she expects Congress to pass a Medicare reform bill that improves payment rates.

Rep. Nancy Johnson, R-Conn., made her comments during a lunch speech at the CAP Advocacy School, in Washington, D.C., this week. The two-and-a-half day school trains College members to serve as grassroots advocates in the federal legislative arena.

"I would say there's an 85 percent chance the president will have a bill on his desk" by year's end, said Johnson, who chairs the Health Subcommittee of the House Committee on Ways and Means. Ways and Means and the Energy and Commerce Committee hold jurisdiction over Medicare in the House.

Johnson said Congress must act to avert a predicted 4.2 percent cut in Medicare physician payment rates in 2004. "It would be catastrophic to morale and catastrophic to willingness to participate" in Medicare, she said of the predicted payment rate cut. A House Medicare prescription drug and modernization bill would boost physician payments by at least 1.5 percent in 2004 and 2005. A Senate bill, now in conference with the House version, includes no payment increase.

Johnson predicted the House payment language would prevail in a final reform bill. "I do know that while the Senate did not fund physician payments, it will be done," she said. Beyond short-term payment increases, Johnson said, Congress must fix the fundamentally flawed formula behind annual payment updates. "The current system of how we pay for physicians is totally inadequate for the future," she said.

Johnson also made clear her strong opposition to a Senate reform proposal to impose a 20 percent co-payment requirement on Medicare beneficiaries for laboratory tests. She, like the College, warned that imposing the co-payment requirement on seniors would harm access to necessary testing. She noted that while a co-payment for an inexpensive test might be small, $1.50, for example, "that $1.50 to an older person who's from a time when a nickel meant a lot might be enough to discourage them from getting a needed test."

The College has worked closely with Johnson in recent years on various issues. She encouraged Advocacy School participants to make their concerns known to lawmakers and draw on resources, such as those provided by the school, to become effective advocates.

The Advocacy School, which opened Monday and culminated today with Capitol Hill meetings between participants and their lawmakers, drew 23 College members, including four from previous schools who served as mentors. Also speaking at the school was Andrew Shore, policy director for Rep. Deborah Pryce, R-Ohio, who chairs the House Republican Conference. Shore, who has extensive congressional experience, provided school participants with numerous tips for establishing relationships with members of Congress. He also noted the importance of today's Hill visits in shaping final Medicare legislation.

"To the extent that you have parochial issues in the Medicare bill, now is the time to get it done," he said. "If you've got issues—and I'm sure you do—tomorrow is the day to get out and get it done," he said in a Tuesday breakfast presentation.


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OIG Attempts to Define Excessive Charges

The Department of Health and Human Services has proposed a regulation that would define, with respect to charges for Medicare laboratory tests and other non-physician services, the phrases "substantially in excess" and "usual charges."

In a Sept. 15 proposed rule, the HHS Office of Inspector General (OIG) noted its concern that current practices can create a "two-tier pricing structure," with Medicare paying more than other customers. "Unless the price differential can be justified by costs that are uniquely associated with the Medicare program, the provider is simply overcharging Medicare," the OIG said in the rule.

The proposal defines a usual charge and would consider charges 120 percent above that, or more, to be "substantially in excess." Exclusion from the Medicare program, while not mandatory for excessive chargers, would be within the OIG's discretion, under the proposal.

Usual charges are proposed to include amounts billed to cash patients or those covered by indemnity insurers with which the provider has no contractual arrangement, and any fee-for-service rates a provider contractually agrees to accept from any payer, including any discounted fee-for-service rates negotiated with managed care plans. Not included in the calculation of usual charges: free or reduced priced care to the uninsured, capitated payments, hybrid fee-for-service arrangements where more than 10 percent compensation is paid by bonus, and fees set by Medicare, state programs and other federal health programs.

To determine the usual charge, the OIG proposes to use a provider's average charge. The OIG, however, holds open for consideration using the 50th percentile, or median method.

While the proposal generally would apply to non-physician services, the OIG does solicit comment on whether any of the services on the Medicare Physician Fee Schedule should be subject to this proposed rule.
The College is reviewing the proposed rule closely and will submit comments on it to the OIG.

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HIPAA Compliance Contingency Plan in Effect

The Centers for Medicare and Medicaid Services last week, responding to concerns by the College and others, said it would carry out a contingency plan to allow non-compliant Medicare claims after the Oct. 16 start of a regulation requiring electronic submissions.

The contingency plan will allow providers to submit Medicare claims in current "legacy" electronic formats, giving them additional time to make their billing systems compliant with new transaction and code set standards mandated by the Health Insurance Portability and Accountability Act (HIPAA).

CMS, in a news release, said it will regularly reassess the readiness of its "trading partners" to determine how long the contingency plan will remain in place. CMS made the decision after reviewing statistics showing unacceptably low numbers of compliant claims being submitted, the agency said.

A July 24 guidance document provided the authority to implement a contingency plan, CMS said. That document stated that covered entities that make a good faith effort to comply with the HIPAA standards may implement contingencies to maintain operations and cash flow.

"Implementing this contingency plan moves us toward the dual goals of achieving HIPAA compliance while not disrupting providers' cash flow and operations," CMS Administrator Tom Scully said.

Meanwhile, two national organizations representing private health plans responded favorably to a call by the College and more than 50 other medical organizations to follow the government's lead by adopting contingency plans. The American Association of Health Plans and BlueCross BlueShield Association both say their members will, like CMS, allow use of legacy formats for claims submissions while providers work to comply with the HIPAA standards.

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College to Meet with CMS Chief on NCCI Issue

The College will meet tomorrow with Centers for Medicare and Medicaid Services Administrator Tom Scully to discuss concerns about the National Correct Coding Initiative (NCCI) and other issues important to pathology.

College representatives, led by Mark S. Synovec, MD, FCAP, chair of the CAP Economic Affairs Committee, will discuss with Scully several NCCI edits that, the CAP believe, unfairly deny payment for necessary pathology services.

The College, in numerous written comments and in a Sept. 8 meeting with other CMS officials, has raised concerns about the NCCI process, including the weight it gives to comments by knowledgeable specialties; access to utilization data used in the decision-making process; the openness of the process; and lack of opportunities to appeal final edit decisions. A special Sept. 15 edition of STATLINE provides extensive detail on the NCCI issue.

The CAP also will discuss with Scully coding and payment issues raised by the proposed 2004 Medicare physician fee schedule, in particular those regarding flow cytometry. Other expected topics of discussion include nominations to the Practicing Physicians Advisory Council and a recent federal proposed rule that would define "usual charges" and "substantially in excess" with regard to Medicare test payments (see story above).

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CAP Calls for Limits on Use of ICD-10-PCS

The College and more than 50 other medical organizations have told a federal advisory panel that uses for ICD-10-PCS should be limited to those now defined for the ICD-9-CM diagnostic coding system.

In a Sept. 23 letter to members of the National Committee on Vital and Health Statistics (NCVHS), the CAP and other groups also noted their strong support for continued use of Current Procedural Terminology (CPT) for coding physician services. The letter was presented to the NCVHS last week, at the panel's meeting in Washington, D.C.

The NCVHS is considering a recommendation to the Secretary of the Department of Health and Human Services on whether to proceed with the adoption of ICD-10-PCS as a replacement for ICD-9-CM Volume 3.

"ICD-10-PCS was designed to be used as a coding system to describe services provided by hospitals," the College and other organizations wrote. "ICD-10-PCS was never designed nor intended to describe professional services. Evidence of this is that there are no provisions for coding for evaluation and management services (the most frequently billed physician service). Additionally, there are no codes for anesthesia, psychiatry, home health services, pulmonary services, allergy or immunology services, etc."

The groups said they "strongly support" continued use of CPT and pointed out that it relies on just more than 8,000 codes compared with 170,000 under ICD-10-PCS. "Our organizations play a critical role in updating and maintaining the physician coding system," the groups said. "The current physician coding system is used as the basis for reimbursement for our services by virtually all public and private payers. The Resource Based Relative Value System and CPT code set are inextricably linked and have taken thousands upon thousands of physician hours to develop and refine. For all of these reasons, we strongly support the continued use of CPT."

The groups ended their comments by urging the committee "to confine your recommendation to the uses of ICD-10-PCS as a coding system for inpatient hospital services."

The NCVHS Subcommittee on Standards and Security is expected to consider the ICD-10 issue at its Oct. 28 to 30 meeting and make a formal recommendation to the full committee shortly afterward. The full committee is expected to make its final decision during a Nov. 5 to 6 meeting in Washington.
The College, in separate recent communications to federal officials, has argued against use of ICD-10-PCS for outpatient coding. The College has said ICD-10-PCS is flawed as a procedure coding system, particularly in its organization with respect to pathology and laboratory sections.

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College Unveils New State Society Web Area

The College has unveiled a new area of its Web site that provides comprehensive and regularly updated meeting and leadership information on state pathology societies.

The new state society area, under the "Community" section of the CAP site, expands existing information and organizes it in more useful ways. For example, the new area allows aggregate listings of all state society meetings and society officers.

In a major information technology improvement, the display of state pathology association officer and contact information is extracted from the College's membership database, thus ensuring timely and synchronous Web site publication of revised information.

Other major improvements allow chronological searches of meeting schedules and updated links to medical boards for each state. To reach the new area, choose "State Pathology Associations" from the "Practicing Pathology" drop-down menu on the CAP site's opening page.

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Editor: Carl Graziano
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