College of American Pathologists
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October 29, 2009  •  Volume 25, Number 22
Next Issue: November 12, 2009
© 2009 College of American Pathologists

In This Issue:

Senate Bill to Replace SGR Fails Quickly
Policy Analysis: Who Are the Winners and Losers if the 14-Day Rule
Provision Survives?

Public Comment Invited on Pathology Quality Measures
Senate Considers Bill to Waive Red Flags Rule for Smaller Medical Practices
Illinois Appellate Court Upholds Professional Component Billing

Senate Bill to Replace SGR Fails Quickly

Despite the efforts of CAP members and other physician groups who urged their Senators to support it, the Medicare Physicians Fairness Act of 2009–S. 1776, has failed in the Senate. The bill, which would have repealed the SGR payment model for physicians and wiped out the debt accumulated by yearly congressional overrides, failed by a vote of 47-53 raising questions about how the issue will be addressed when the revised House and Senate healthcare bills reemerge, probably in the next few weeks.

All versions of the House bill, H.R. 3200–America’s Affordable Health Choices Act of 2009, and the Senate Health, Education, Labor, and Pensions (HELP) Committee, call for rebasing the SGR, a move supported by CAP and the AMA. The Senate Finance Committee healthcare reform bill, S. 1796–America’s Healthy Futures Act would cancel the 21% reduction in Medicare physician reimbursement rates designated for 2010, and replace it with a .5% increase.

The Senate needed 60 favorable votes in order to invoke cloture so the bill could be considered. Failure to get anywhere near that number suggests efforts to rebase the SGR may also be thwarted when the issue is visited by the full House and Senate.

The AMA has made SGR reform its single most important issue in healthcare reform in 2009. Statline will continue to follow this issue and keep CAP members informed as events unfold.

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Policy Analysis: Who Are the Winners and Losers if the 14-Day Rule Provision Survives?

Just last week the CAP was joined by the American Hospital Association, the Association for Molecular Pathology (AMP), the Association of Pathology Chairs (APC), the Association of American Medical Colleges (AAMC), and the American Society for Investigative Pathology (ASIP) as cosigners of a letter to the Senate opposing a provision that would change current law with respect to payment for certain molecular laboratory tests that fall within the Medicare 14-day rule.

The rule pertains to blood or tissue samples collected by a hospital from patients while they are a hospital inpatient or outpatient. Under current Medicare regulations, if a laboratory performs testing on such a specimen within 14 days of a patient’s discharge, the laboratory performing the test must be paid by the hospital through its existing DRG, rather than a direct payment from Medicare.

The provision, Section 3114 of the Senate Finance Committee’s America’s Healthy Future Act–S. 1796, earmarks $100 million for Medicare to make direct payments to laboratories for qualifying molecular tests outside the hospital DRG. The laboratories that conduct these tests argue that patients are suffering because hospitals seeking to preserve as much of their DRG as possible often wait the 14 days before ordering the tests from outside labs, or they send it to their own labs.

In its current form, the provision would benefit a select group of commercial reference laboratories, and exclude the vast majority of hospital-based laboratories, medical schools and teaching hospitals, even if they perform the very same tests or a less costly but equally effective alternative.

On the face of it, hospitals would seem to benefit from having Medicare pay directly for potentially expensive molecular tests rather than have it come out of their DRG. So, why are they opposed? Under such a scenario, it is easy to imagine how innovation would be stymied as hospitals, medical schools, and teaching hospitals are discouraged from developing the in-house capability to perform these tests. If all such tests ultimately are sent out, opportunities for important clinician-laboratory consultation and the oversight of the tests’ clinical validity, utility, safety, and effectiveness would also be greatly diminished. If this happens, patient care will suffer.

The College has opposed the provision for some time. It creates an unfair advantage for the commercial reference labs, and we have been actively advocating to either allow direct payment to all laboratories for these tests, or removal of the provision altogether. The final healthcare reform bill could be sent to the floor of the Senate as early as the first week of November.

Until then, CAP members and advocacy staff continue to meet with key Senators and their staffs to explain the issue and urge that changes be made. In addition, CAP’s advocacy efforts have mobilized a coalition of national pathology societies and state pathology societies, and focused grassroots activity on the Senators who are heavily involved in formulating the bill, including Senate Majority Leader Harry Reid (D-NV), Senate Whip Richard Durbin (D-IL), Finance Committee Chairman Senator Max Baucus (D-MT) Senator Chris Dodd of the HELP Committee, as well as Senators Charles Schumer (D-NY), John Kerry (D-MA), and John Rockefeller (D-WV) of the Finance Committee.

There are a number of weighty reasons to oppose Section 3114 of the Senate Finance Committee’s healthcare bill. Legislators will still have several opportunities to remove the provision before the healthcare reform legislation is finalized. We will continue to track this issue and inform CAP members at critical junctures.

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Public Comment Invited on Pathology Quality Measures

In keeping with the CAP’s commitment to improving the quality and safety of the services to our patients, the CAP has continued its effort to develop quality measures. The CAP and the Physician Consortium for Performance Improvement® (PCPI) are soliciting public comments on nine draft pathology performance measures developed by the CAP. Public comment on the measures is an important part of the multi-step process required for measure review by the AMA PCPI and for endorsement by the National Quality Forum.

The CAP has participated in the Physician Consortium for Performance Improvement® for almost a decade and began actively developing pathology performance measures with the PCPI in 2006. There are currently two pathology measures for breast and colon cancer protocols endorsed by the National Quality Forum and included in CMS’ Physician Quality Reporting Initiative (PQRI). If additional measures are approved, more pathologists could participate in the Medicare Pay for Reporting program, which paid 1.5% bonuses to physicians who in 2008 reported on approved quality measures. The public comment period is one step in the measures review and approval process.

The comment period began on Monday, October 26, 2009 and will close at midnight (ET) on Wednesday, November 25.

Review the proposed measures or comment on them at the CAP website.

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Senate Considers Bill to Waive Red Flags Rule for Smaller Medical Practices

Congress has added a new wrinkle to the Federal Trade Commission’s Red Flag Rule which requires creditors, including physicians, to implement written identify theft prevention and detection programs.

Although it is unlikely to affect the November 1, 2009 deadline by which all creditors must comply with the rule, Congress is considering a bill that would exclude health care practices with 20 or fewer employees from the meaning of “creditor”. It would do the same for accounting and legal practices with 20 or fewer employees.

It would also exclude any other business which the FTC determines:

  • knows all its customers or clients individually;
  • only performs services in or around the residences of its customers; or
  • has not experienced incidents of identity theft, and identity theft is rare for businesses of that type.

The bill, HR 3763, has already passed in the House in a vote 400:0. On October 20, 2009, it was referred to the Senate Committee on Banking, Housing and Urban Affairs. The Committee is said to have some concerns about the House bill’s language, which means they are unlikely to vote on it before the November 1 deadline. Still, the hope of coming legislation has led some to speculate that FDA may again postpone the deadline for compliance. There is no word of any change at the time of this writing.

Currently, many pathology practices are considered to be at low-risk for identity theft. Unless and until the bill is signed into law, healthcare practices will be required to prepare their written identity theft prevention and detection programs by November 1, 2009. (See the FTC tool for Low-Risk Creditors.)

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Illinois Appellate Court Upholds Professional
Component Billing

The Appellate Court of Third Circuit of Illinois on October 20 issued a strong decision upholding professional component billing for pathologists in the Martis v. Pekin Memorial Hospital case.

The appeal was filed by Richard Martis, a patient, on behalf of himself and all others similarly situated, against Pekin Memorial Hospital, Data Management Inc., and Peoria-Tazewell Pathology Group and its individual shareholders stemming from laboratory tests his physician ordered in 2004. One month after the tests were performed, the patient received a bill from the hospital for $609, and a bill from the pathologist group for $73.30.

Although the form authorizing treatment, which the patient signed and which the court found to be an express contract, explicitly included the services provided by pathologists, the plaintiff alleged defendants double-billed for their services. Also that the pathology group and its members violated the Medical Practice Act of 1987, the Illinois Consumer Fraud and Deceptive Business Practices Act, and the Medical Patient Rights Act, and that they were unjustly enriched.

The trial court granted the defendant’s motion to dismiss, holding that professional component billing is not actionable. The Appellate Court reaffirmed that ruling, basing its decision on the plaintiff’s failure to state an actionable claim.

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