College of American Pathologists
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October 28, 2010  •  Volume 26, Number 22
Next Issue: November 11, 2010
© 2010 College of American Pathologists

In This Issue:

Congressman Crowley (D-NY) Tours Bronx Lab
SGR Update: Support Grows for 13-Month Extension, but Funding Remains in Question
New York DOH Clarifies Scope of Anti-Kick Statute for Labs
NCQA Solicits Feedback on Draft ACO Criteria
Blumenthal Pledges Not to Rush Meaningful Use Stages 2,3
Myriad Genetics Files Appellate Brief in Patent Appeal
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Congressman Crowley Tours Bronx Lab

Apfelroth Lab Tour New York Representative Joseph Crowley (D-Queens, The Bronx) recently toured the pathology lab at the Jacobi Medical Center in the Bronx.

The tour was led by CAP member Stephen Apfelroth, MD, PhD, FCAP, who is the facility’s director of clinical laboratories.

SGR Update: Support Grows for 13-Month Extension, but Funding Remains in Question

With the current 2.2% sustainable growth rate (SGR) for physician payments set to expire in just over a month, leaders in both the House and Senate appear amenable to a 13-month extension of the current payment rates. However, the most pressing issue of how to pay for the extension remains unclear.

A freeze of the current rate or slight boost to the SGR is estimated to cost approximately $17 billion. The American Medical Association (AMA) is currently working with the Obama administration to find an “offset”, although there are no details on any potential savings plan.

The College, the AMA, and other physician groups continue to push Congress to avoid any short term SGR extensions. Without Congressional action, physicians will experience a 23% cut in Medicare reimbursement rates on Dec. 1. The reimbursement cuts then increase to 30% on Jan. 1, 2011, based on the current SGR formula.

Potential Extensions

Following the mid-term elections, Congress is slated to reconvene on Nov. 15, giving them an extremely short window to address the SGR cuts before the November 30th deadline. One rumored scenario is that Congress may vote on a 30-day extension in mid-November, and then vote on a 12-month extension when they return to the Hill after the Thanksgiving recess.

But a lame duck session is likely to provide little incentive for any far-reaching SGR maneuvers, including a permanent “fix.” There is also concern that a lame duck Congress would pass an SGR patch through January or February 2011. Under this scenario, the SGR would then have to be addressed by the next Congress—that could be comprised of some fresh faces, depending on the mid-term elections.

In the meantime, however, many medical practices are identifying ways to cope with the reduced payment, including limiting the number of Medicare patients, according to a recent survey of almost 3,000 medical groups conducted by the Medical Group Management Association (MGMA). If Congress does not halt these cuts, 67% of 2,860 practices that responded to the survey indicated that they would likely scale back on accepting new Medicare patients, while 27.5% of respondents said that they would stop treating all Medicare patients.

The survey, conducted between mid-September and mid-October, also found that some groups are already limiting their Medicare exposure. Of the respondents, 29.5% said they began reducing their acceptance of new Medicare patients this past summer when Congress failed to avert payment cuts by the June 1 deadline.

New York DOH Clarifies Scope of Anti-Kick Statute for Labs

Officials from the New York’s Department of Health (NYS DOH) recently clarified that state law prohibits laboratories from donating EHR products and services to health care providers. Furthermore, state officials are also aware of abusive business practices among clinical laboratories offering EHRs.

These clarifications came in a Sept. 27 letter to the state’s laboratory owners and operators signed by Rachel Block, NYS DOH’s deputy commissioner, office of HIT transformation, and Betty Kusel, the department’s director of regulatory affairs and deputy director of the division of laboratory quality certification.

The letter also pointed out that while laboratories may be operating within the federal anti-kickback safe harbor providing for some donation/cost sharing of EHR costs, New York state prohibits these arrangements. Under a safe harbor to the federal anti-kickback statute, clinical laboratories may pay up to 85% of the costs associated with EHRs, software, and training, provided they meet certain requirements.

However, New York does not permit cost sharing. “Therefore, provision of EHR, software and training that otherwise may be permitted under federal law is prohibited in connection with a laboratory’s operating in New York State,” stated the letter.

Concerns about Abusive Practices

In noting that it had become aware of “abusive business practices”, the NYS DOH expressed concern that these arrangements may influence a health care provider’s choice of laboratory. “These arrangements have the potential to adversely impact competition, reduce quality of services, and risk potential overutilization of health care services, resulting in unnecessary increased overall health care costs,” noted the letter.

The College has long been concerned about these arrangements. In 2009, the CAP recommended to the HHS Office of Inspector General (OIG) that laboratories be removed from the safe harbor category of protected donors. These comments were in response to the OIG’s annual solicitation of feedback on anti-kickback safe harbors required by law. “These arrangements do not promote widespread adoption and use of health information technology, as intended by the safe harbor, but instead promote fragmented care, duplicative testing, and a reduction in care coordination,” stated the CAP’s comments.

In addition, the CAP is also concerned about the how the financial benefit of an EHR donation could influence a physician’s choice of laboratory, rather than quality, access, or the needs of patients and other providers who may need to access patient records electronically.

However, laboratories remain in the class of protected donors under the anti-kickback safe harbor, as defined in the original 2006 anti-kickback rule. In the preamble to this rule, though, OIG noted its concern about the inclusion of laboratories as protected donors, but concluded they had a stake in the development of EHR technology sufficient to warrant safe harbor protection. Since then, OIG has pledged to monitor potential abuses by laboratories and other ancillary service providers for abusive business practices related to EHR products and services.

NCQA Solicits Feedback on Draft ACO Criteria

The National Committee for Quality Assurance (NCQA) has released a draft of proposed criteria to evaluate entities wishing to act as an accountable care organizations (ACO). These criteria would also be used to evaluate an ACO performance.

The NCQA is seeking comments on this proposal. NCQA is accepting comments—limited to 1,800 characters—through Friday, Nov. 19.

“Most potential ACOs do not have data that can be used from the start to evaluate performance,” said Robert Margolis, MD, CEO of the HealthCare Partners Medical Group and chair of NCQA’s ACO Task Force. “Public feedback will help with finalizing the criteria that will start these organizations to a firm foundation.”

The draft criteria are organized into seven categories reflecting what NCQA believes should be ACOs’ core capabilities: program structure operations, access and availability, primary care, care management, care coordination and transitions, patient rights and responsibilities, and performance reporting.

The College is currently analyzing this draft criteria, and evaluating the opportunity to comment as part of its strategy to ensure that pathologists have a role in emerging health care delivery models like ACOs.

Blumenthal Pledges Not to Rush Meaningful Use Stages 2,3

Federal officials are now working on the next stages of HHS’s final meaningful use rule, and the National Coordinator for Health IT, David Blumenthal, MD, said that a more measured approach will be used to develop the forthcoming regulations.

“We are mindful of the fact that the first go-round was very rushed,” he said at the Oct. 20 meeting of the HIT Policy Committee, comprised of private and public sector HIT stakeholders. Policymakers developed measures quickly and made recommendations in a “tight timeframe” that did not leave time for reflection and analysis. “We want to do better than that this time,” Blumenthal said, adding, “We want more time to make sure we consider the long-term strategy.”

Nevertheless, the committee’s Meaningful Use Workgroup appears to have an aggressive timeline. The workgroup’s chair, Paul Tang, indicated that the members plan to have draft criteria for stages 2 and 3 to the committee by Nov. 19. Following comments from the committee and a public comment period, the committee should have final recommendations to the Office of the National Coordinator (ONC) by the third quarter of 2011. According to this schedule, CMS will release a notice of proposed rulemaking by the fourth quarter of next year.

For more on the impact of meaningful use, listen to a recording and download handouts from CAP’s Oct. 6 Webinar, “Health Information Technology Policy & Perspective: What Does ‘Meaningful Use’ Mean for Pathology?”. This event was sponsored by the CAP’s Advocacy Division, Practice Management Committee, and the Diagnostic Intelligence and Health Information Technology (DIHIT) Committee.

Myriad Genetics Files Appellate Brief in Patent Appeal

Salt Lake City-based Myriad Genetics has filed an appellate brief, fleshing out its arguments opposing the April federal court decision invalidating patents on genes BRCA 1 and BRCA 2. These genes are the basis of Myriad’s profitable BRACAnalysis testing services that assess a patient’s genetic risk for hereditary breast and ovarian cancer by identifying a mutation.

This brief accompanies the original appeal filed in June, and contains no surprises, said Chris Hansen, a senior attorney with the American Civil Liberties Union (ACLU). The ACLU and Public Patent Foundation, representing cancer victims and medical groups including CAP, sued Myriad Genetics in March 2009 on behalf of cancer victims and medical groups including CAP. Any amici curiae briefs that support Myriad’s position (or support neither the plaintiff nor defendant, but want to make a statement) must be filed by this Friday, Oct. 29. It is expected that approximately 12 biotechnology companies will file this “friend of the court” brief in support of Myriad’s opposition, added Hansen. The plaintiffs’ brief is due Dec. 1, and any amicus briefs supporting the plaintiffs are due Dec. 8.

“The defendants will likely then have approximately two weeks to respond, which means the Federal Circuit Court of Appeals in Washington, DC, will likely hear the argument over the winter,” explained Hansen.

This latest filing by Myriad is important, however, as it once again details the company’s two-pronged defense: that the plaintiffs do not have standing to bring the case and that their patents—on the genes and testing methods—are valid.

“We are arguing that we do have standing and that the patents create a sufficient block to what the plaintiffs want to do,” said Hanson. “Furthermore, these genes and the testing method are not patentable.”

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