College of American Pathologists
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October 1, 2009  •  Volume 25, Number 20
Next Issue: October 15, 2009
© 2009 College of American Pathologists

In This Issue:

CAP Proposes Improved Oversight of Lab-Developed Tests: Three-Tiered Approach Would Categorize New LDTs by Potential Risk
Tom Daschle, Doris Kearns Goodwin Headline Events at CAP ’09
Healthcare Reform Update: Baucus Replaces $750 Million Clinical Lab Fee with CLFS Cut; Finance Committee Rejects Public Insurance Option
CAP, AMP and APC Urge Senate Finance Committee to Modify or Defeat Special Molecular Test Payment Amendment for Commercial Independent Laboratories
CAP, Others Urge Senate to Fix the SGR

CAP Proposes Improved Oversight of Lab-Developed Tests: Three-Tiered Approach Would Categorize New LDTs by Potential Risk

The CAP last week announced new recommendations for strengthening oversight of laboratory-developed tests (LDTs), proposing a three-tier ‘risk-based’ system that would protect patients by ensuring every laboratory developed test is reported to an oversight body, and instituting a graduated system of review based on a test’s potential risk to patients.

“While the preponderance of laboratory developed tests present relatively low risk to patients, the increasing use and complexity of some LDTs underscores the need for increased oversight,” said Jared N Schwartz, MD, PhD, FCAP, president of the College of American Pathologists. “CAP’s risk-based model employs a public private partnership to address oversight of these tests in an inclusive, systematic way.”

CAP’s proposed changes would incorporate oversight of claims of clinical validity, and would specify scientific and regulatory standards to be applied to all LDTs. Risk would be determined based on claims made, potential risk to patients, and the extent to which its results could be used in the determination of diagnosis or treatment.

The College believes optimum oversight would be achieved by applying a risk-based classification (low-, moderate-, or high-) to every LDT; strengthening CLIA accreditation standards on labs using low- and moderate-risk LDTs, and requiring FDA review of all high-risk LDTs.

“Laboratory-developed tests (LDTs) represent some of the most innovative clinical testing being offered to patients today, and have a long history of advancing patient care as safe and effective laboratory services,” Schwartz said. “Strengthening their oversight ensures they will remain one of the key tools medical laboratories use to answer increasingly complex questions.”

Additional materials, including the Public Statement, and Frequently Asked Questions are available on the Advocacy tab at

Comments and questions are being accepted by Helena Duncan.

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Tom Daschle, Doris Kearns Goodwin Headline Events at
CAP ’09

Former Senate Majority Leader and White House health policy advisor Tom Daschle, and Pulitzer Prize winning biographer and historian Doris Kearns Goodwin, will be featured speakers at two different events at CAP ’09, October 9-13, 2009.

Senator Daschle, one of the nation’s leading healthcare policy experts, will give his unique insider’s view on Congressional and White House efforts to pass healthcare reform, and will discuss aspects of the bills that will be most important to patients and physicians. Daschle will speak at the CAP House of Delegates and Residents Forum on Saturday, October 10.

Author and historian Doris Kearns Goodwin will be the Spotlight Event speaker on Sunday, October 11, where she will share historical lessons in leadership relevant to today’s issues and headlines. A recognized presidential historian, Goodwin has authored books on a number of American icons, including Lyndon Johnson, the Kennedys and Fitzgeralds, the Roosevelts and most recently, the highly regarded “Team of Rivals: The Political Genius of Abraham Lincoln.”

In this Spotlight event, Goodwin will offer her insights into parallels between President Obama and President Lincoln, and other leaders who have forged change in this country.

For more information on CAP’09, please visit the CAP ’09 website.

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Healthcare Reform Update: Baucus Replaces $750 Million Clinical Lab Fee with CLFS Cut; Finance Committee Rejects Public Insurance Option

Faced with significant pressure from the medical laboratory community and the CAP, Senate Finance Committee Chairman Max Baucus (D-Mont.) last week modified the Chairman’s proposed Americans Health Future Act, replacing a $750 million annual fee on clinical laboratory revenues with a 1.75% reduction in the CPI update for the next five years for tests under the Clinical Laboratory Fee Schedule (CLFS).

The “fee” or tax was to be based on market share, and would have included physician payment in calculating the tax owed. The CLFS will be cut 1.75% across the board for Medicare providers of laboratory services but will not include items paid through the Medicare Physician Fee Schedule.

While the CLFS cut is not optimal, such a cut is preferred over a new tax such as the one proposed which would be difficult to repeal once enacted and could be raised in the future. The CAP applauds the Chairman for reaching out to the medical community and forging a compromise on this important issue.

In a separate move earlier this week, the Senate Finance Committee put to rest any hopes of including a public insurance option in its bill.

After heated debate and impassioned arguments by some of the Senate’s leading members, the Committee voted down two different amendments put forward by Sen. John D. Rockefeller IV (D-WV) by 15-8, and Sen. Charles Schumer (D-NY) by 13-10, with some Democrats, including Chairman Baucus, voting with Republicans against the measures.

Besides Senator Baucus, Democrats Kent Conrad (D-ND) and Blanche Lincoln (D-AR), voted against both public option proposals. Two other Democrats, Senators Thomas R. Carper (D-DE) and Bill Nelson (D-FL), voted against the Rockefeller amendment, but supported the Schumer amendment.

Under the Rockefeller plan, payments to doctors and hospitals would be based on Medicare rates for the first two years.

The Schumer proposal would have required the public plan to negotiate rates with doctors and hospitals, rather than setting prices based on Medicare reimbursement rates.

Although the Finance Committee defeated the public plan amendments, an alternative to establish non-profit co-ops in the states is still on the table. A significant block of Democrats in both the House and Senate, however, continue to push for a strong public plan option. A resolution on whether there will be public plan or in what form is not likely to emerge until a final bill is agreed upon by the House and Senate later this year.

CAP will continue to closely monitor progress of the Senate Finance Committee bill and other healthcare bills, and will keep members informed as events unfold.

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CAP, AMP and APC Urge Senate Finance Committee to Modify or Defeat Special Molecular Test Payment Amendment for Commercial Independent Laboratories

Citing the inadvertent creation of an uneven playing field favoring independent laboratories over hospital laboratories and academic medical centers, CAP joined the Association for Molecular Pathology (AMP) and the Association of Pathology Chairs (APC) in opposing an anticipated Senate amendment that would change current Medicare law with respect to payment for certain molecular laboratory tests performed after a patient is released from the hospital.

At issue is an amendment to be offered by Senators Ron Wyden (D-OR) and Tom Carper (D-DE) that would allow independent laboratories to be paid directly from the Centers for Medicare and Medicaid Services (CMS) for qualifying molecular tests performed on specimens taken from a hospital patient within 14 days of the patient’s release from the hospital. Under current Medicare regulations, if a specimen is taken while a patient is in the hospital, and the laboratory performs a test on that specimen within 14 days after the patient is discharged, the laboratory receives payment from the hospital through its existing DRG, rather than direct payment from CMS.

“While appropriate reimbursement for complex molecular testing is a concern, the amendment, in its current form, would single out commercial reference, i.e. ‘independent’ laboratories for special reimbursement treatment to the detriment of patients, hospital based laboratories, and academic medical centers,” the letter said.

“Unless the amendment is modified to apply to all laboratory settings, the resulting inequitable reimbursement would cause hospital-based laboratories to cease or limit their offering of these important tests, open yet another avenue of direct marketing to patients of complex tests without sufficient assurances of appropriate utilization, and increase costs to the Medicare program.”

The letter called on Senators to oppose the Wyden-Carper Amendment (#D10) unless modified to apply to all laboratory settings. To date, the amendment has not been offered, and no further Senate action has been taken on this issue.

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CAP, Others Urge Senate to Fix the SGR

With replacement of Medicare’s Sustainable Growth Rate (SGR) formula for calculating physician payment excluded from the Senate Finance Committee’s healthcare reform bill, the College and over one hundred national and state medical societies sent a letter urging Senators to replace the flawed SGR formula with a new Medicare physician payment system.

The bill currently calls for a .5% increase in 2010 but contains no provisions for fixing or replacing the SGR beyond next year, thus continuing the cycle of negative updates for physicians. Previous versions of the House bill have proposed replacing the SGR with a formula tied to the Medical Economic Index.

The physician-groups’ letter explained the compounding risks of maintaining the existing payment system and outlined efforts by the physician community to help reform the Medicare program.

Excerpts from the letter include:

“A new Medicare physician payment system is essential for establishing a stable foundation for new payment models and delivery reforms,” the letter stated. “In fact, retaining the SGR runs counter to the delivery reforms now being considered by Congress as part of comprehensive health system reform. Initiatives to improve care coordination, promote primary care and preventive services, and encourage wellness initiatives will ultimately generate system-wide savings by avoiding hospitalizations and other costly interventions. However, in the short term the volume of physician visits and other services will increase. If the SGR remains in place, the activities policy makes want to promote will trigger additional payment cuts...”
“...We understand that the status quo is not sustainable, and the physician community is willing to embrace significant changes to help reform the Medicare program. This has been demonstrated by our support for comparative effectiveness research, our support for incentive programs to encourage electronic prescribing and the adoption of health information technology, and our efforts to develop new performance measures and appropriateness criteria. We are committed to working with Congress to design a new Medicare physician payment system that promotes delivery reforms that will help bend the spending curve for Medicare and other populations.”

We will continue to track this important issue and will keep members informed of any changes.

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