College of American Pathologists
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  STATLINE — CAP’s Bi–Weekly Federal and
  State Advocacy E–Newsletter

November 23, 2011  •  Volume 27, Number 24
Next Issue: December 8, 2011
© 2011 College of American Pathologists

In This Issue:

Deficit Deal in Tatters; CAP’s Focus Remains on Advocacy Priorities: SGR, TC Grandfather, and Self-Referral
Sens. Grassley, Baucus Investigating Nat’l Labs about Potential “Pull-Through” Agreements
CAP Requests Modifications to HHS Patient Access to Test Report NPRM
CAP Center’s Recommendations for Molecular Lung Cancer Testing Now Open for Comment
CAP, ASCP Residents Urge Super Committee to Protect Medicare GME Funding
Reps. Burgess, Gonzalez Discuss Potential LDT Regulatory Approaches at Policy Briefing
NCQA Launches ACO Accreditation Program
CMS Announces 90-Day Version 5010 Transaction Grace Period
Keep Up with the Latest CAP Advocacy News on Twitter

Deficit Deal in Tatters; CAP’s Focus Remains on Advocacy Priorities: SGR, TC Grandfather, and Self-Referral

The Joint Committee on Deficit Reduction has officially admitted failure to come up with recommendations to trim at least $1.2 trillion from the federal deficit, but the College’s remains intent on continuing its focus on three advocacy issues: two Medicare physicians payment extenders set to expire at the end of this year—the TC “grandfather” provision and physician payment under SGR—as well as removing anatomic pathology (AP) from the in-office ancillary services (IOAS) exception to the Stark Law.

CAP members had been lobbying Super Committee members about how closing the IOAS loophole can contribute to significant health care savings without harming delivery of health care services, and will continue engaging with members of Congress on this issue, as identifying potential health care savings will continue to be paramount.

Long-Term SGR Fix Unlikely

The Super Committee’s failure to produce recommendations triggers sequestration, resulting in across-the-board cuts in defense and entitlement programs beginning in 2013. For Medicare, this translates to 2% cuts in provider payments. Under the sequestration, Medicare beneficiaries are protected, as is Social Security. However, because these cuts don’t take effect until 2013, time remains for Congress to hammer out a deal to avoid these cuts. As 2012 is an election year, any agreement next year could be hard to come by, although the pressure to avoid the across-the-board cuts will be significant.

Still, beyond sequestration, there are more immediate threats. The CAP is now focusing on impending Medicare cuts, as physician payment under the sustainable growth rate (SGR) is set to be slashed by 27.4% beginning Jan. 1. In addition, the technical component (TC) grandfather provision is also set to expire at the end of the year.

The AMA, along with the CAP, advocated for a permanent SGR fix as part of the Super Committee deliberations. Even in the absence of a Super Committee product, the estimated cost of a permanent fix is over $300 billion—virtually prohibitive at a time of severe budget constraints. Our Hill sources predict that a one-to-two year fix is probably a more likely scenario. How it is paid for may result in cuts to providers. To support a 10-year fix to the SGR, MedPAC has proposed specialty physicians pay be cut by as much as 5.9% per year for a period of three years, as well as cuts to laboratories.

TC grandfather Advocacy Continues

In addition to SGR, the College will also continue lobbying lawmakers to make the TC grandfather provision permanent. CAP members will continue to travel to Washington, DC, for the next several weeks to meet with their lawmakers to urge an extension of the “grandfather” which allows independent laboratories, under certain conditions, to bill Medicare for the technical component of surgical pathology services for hospital patients. Without Congressional action, this provision will expire on Dec. 31, 2011.

There are currently two bills before Congress to continue this provision. The Physician Pathology Services Continuity Act of 2011 (H.R. 2461) calls for a permanent extension. This bill was introduced this summer by Representatives Geoff Davis (R-KY) and Mike Ross (D-AK). This bill just added another co-sponsor, Rep. Lynn Jenkins, (R-KS), who serves on the House Ways and Means Committee.

The second bill is a one-year extension included in the Rural Hospital and Provider Equity Act (R-HOPE; S. 1680). This legislation was introduced this past fall by Sen. Pat Roberts (R-KS), co-chairman of the Senate Rural Health Care Caucus, and Sen. John Barrasso (R-WY). Sens. Kent Conrad (D-ND) and Sen. Tom Harkin (D-IA) are also co-sponsors on this legislation.

Be sure to watch for next week’s special Statline Alert for continuing coverage of these developments.

Sens. Grassley, Baucus Investigating Nat’l Labs about Potential “Pull-Through” Agreements

Senate leaders Chuck Grassley (R-IA) and Max Baucus (D-MT) are taking a hard look at arrangements between the country’s two major clinical laboratories—Quest and LabCorp—and major private payers Aetna, UnitedHealth Group, and Cigna due to reports that the arrangements involved deeply discounted pricing extended by the laboratories in exchange for referrals, including those for Medicare beneficiaries. Grassley is the Ranking Member of the Senate Judiciary Committee and Baucus is Chair of the Senate Finance Committee.

In a letters to Quest, LabCorp and the insurers, Grassley and Baucus said they are investigating reports that “pull through” arrangements are in place between certain laboratory providers and payers. The Nov. 8 letter to LabCorp CEO David King explained that “‘pull-through’ involves the alleged offering by LabCorp for discounted or below cost pricing to managed care organizations (MCOs), such as health insurance companies, in exchange for those MCO’s directing their in-network physicians to refer or arrange for the referral of other laboratory testing business, including testing for Medicare beneficiaries, to LabCorp.” The letters also requested copies of laboratory service agreements between the laboratories and the insurers, correspondence related to the negotiation of the agreements and the incentives for referrals to the laboratory providers, and financial analyses, among other documentation.

The HHS Office of Inspector General has issued advisory opinions in 1999 and 2004 expressing concerns about this “pull-through” practice, noting that discount arrangements such as those at issue here are “particularly suspect” under the anti-kickback statute. Indeed, the letter to King noted that LabCorp is currently in the middle of a lawsuit in the Southern District of New York regarding this very issue.

Earlier this year, the California Attorney General settled with Quest for $241 million and LabCorp for $49.5 million; the settlements related to Medicaid fraud suits claiming that both laboratory providers overcharged the state’s Medicaid program and gave doctors medical kickbacks for patient referrals.

CAP Requests Modifications to HHS Patient Access to Test Report NPRM

The College is supporting an HHS Notice of Proposed Rulemaking (NPRM) calling for the release of laboratory test results to patients upon request, albeit with some specific modifications. Primarily, the CAP wants to ensure that test results are not released to the patient in advance of release to the ordering clinicians except in emergency circumstances, as noted in comments submitted to HHS, CMS, CDC, as well as the HHS Office of Civil Rights on Nov. 14.

In addition, the CAP is also recommending that HHS not mandate a specific time lag for the release of laboratory results to the patients once the laboratory has released the results to the ordering physician. “While we support the rule’s intent to provide easier and greater access for patients to their laboratory tests, we also are sensitive to not undermining the relationship between the responsible physician and the patient,” stated the letter. “By providing the clinician with the laboratory report requested, we have fulfilled our medical obligations to the clinician and then, if requested, we should be free to release the results to the patient without further encumbrance.”

The College is also recommending that the rule require that the ordering physician disclose to the patient the identity of the testing laboratory and preempt and void any state restriction impeding laboratory-initiated release of test results and/or laboratory-initiated contact with patients.

CAP Center’s Recommendations for Molecular Lung Cancer Testing Now Open for Comment

The College’s CAP Center has posted evidence-based guideline recommendations for public comment on the molecular testing of lung cancers for two predictive biomarkers—epidermal growth factor receptor (EGFR) and anaplastic lymphoma kinase (ALK). The comment period will remain open until Dec. 19.

Partnering with the International Association for the Study of Lung Cancer (IASLC) and the Association for Molecular Pathology (AMP), the Center convened an expert panel to review published data and address three principal key questions:

  1. When should molecular testing of non-small cell lung cancer (NSCLC)’s be performed?
  2. How should molecular testing of NSCLC’s be performed?
  3. How should molecular testing of lung cancers be operationalized?
The CAP Center is a forum to author and maintain evidence-based guidelines and consensus statements. More information can be found online.

CAP, ASCP Residents Urge Super Committee to Protect Medicare GME Funding

The CAP Resident Forum Executive Committee and the American Society for Clinical Pathology (ASCP) Resident Council urged the Joint Committee on Deficit Reduction to protect existing Medicare financing for Graduate Medical Education (GME).

Identified as a potential target for spending cuts in December 2010 by the Bowles-Simpson Commission, GME cuts could negatively impact residency programs, thus worsening the projected pathologist shortage by decreasing the number of young pathology-trained physicians, noted both groups in a Nov. 14 letter to Joint Committee members.

The Bowles-Simpson Commission proposed two levels of cuts—unding reductions at 30% and 50%, explained Nicole Riddle, MD, Chair of the CAP Residents Forum Executive Committee, who added that these cuts are likely to hit medical specialties like pathology particularly hard. “If hospitals have to make decisions in terms of cutting residency programs, pathology is likely to suffer greater compared to other specialties,” she told Statline. “This is daunting, considering the predicted shortage of pathologists and the great need for new physicians to enter this specialty.”

Reps. Burgess, Gonzalez Discuss Potential LDT Regulatory Approaches at Policy Briefing

While continuing to push for CMS oversight of laboratory developed tests (LDTs), Congress Michael Burgess, MD (R-TX) conceded that his pending legislation is low on the priority list of other members of Congress. “House leadership is concerned about a lot of things right now, given the ongoing Super Committee meetings, but this is not one of them,” he said at a Nov. 17 policy briefing breakfast on genetic testing, alluding to the Modernizing Laboratory Test Standards for Patients Act (H.R. 3207), the legislation that he introduced last month providing that CMS under CLIA has oversight jurisdiction over LDTs, rather than the FDA. FDA has claimed oversight jurisdiction of LDTs.

The event, hosted by The Hill newspaper, also featured Rep. Charles Gonzalez (R-TX), who indicated he was also in favor of increasing oversight of these tests. However, as he is currently uncertain about the appropriate regulatory path for oversight, he is not backing Burgess’s bill.

In speaking with Statline following the briefing, Congressman Gonzalez indicated that he was still gathering information about whether this regulatory approach would be rooted in the FDA or CMS, although he was in favor of utilizing existing infrastructure to establish an oversight framework, as he sees this as more cost effective.

The FDA has said it would issue guidance at some time with regard to LDT oversight, but has not indicated when the guidance would be available.

NCQA Launches ACO Accreditation Program

The National Committee for Quality Assurance (NCQA) is now offering an Accountable Care Organization (ACO) accreditation program that is designed to align with expectations of CMS’s Shared Savings Program, as well as private ACO models.

CMS Announces Advanced Payment Model Application Dates

CMS has announced application and start dates for the Advance Payment Model. Selected participants will receive advance payments that will be recouped from the shared savings they earn from participating in CMS’s Shared Savings Program. Information on applying for the Shared Savings Program is available online.

  • For the Apr. 1, 2012, start date: applications accepted between Jan. 3 and Feb. 1, 2012.
  • July 1, 2012, start date: applications accepted between March 1 and March 30, 2012.
The application process will not require a notice or letter of intent. A template of the application will be available later this year. For more information, visit the Advance Payment Web site.

Focused on helping organizations meet the needs of multiple payers—both public and private—this accreditation program is open to providers in group practice arrangements, individual practice networks, hospital/provider partnerships or joint ventures, as well as hospitals and their employed or contracted providers, among others. In addition, the program offers three different “levels” of accreditation, based on the facility’s readiness.

Last November, the College submitted comments to the NCQA on its draft ACO accreditation criteria, emphasizing the importance of having pathologists and diagnostics services at the core of any ACO structure. The comments also stated that pathologists should have a governing role in the structure, in order for the ACO to realize its goals of delivering efficient, coordinated health care services.

CAP ACO Updates

This month’s profile (and accompanying videos) on the CAP ACO Web site features Conrad Scheurch, MD, FCAP, a member of the CAP ACO Network and Chairman of Geisinger Medical Laboratories, based in Danville, Pa. Considered a national leader in the coordinated care movement, Dr. Scheurch explains how Geisinger’s pathologists collaborate with other clinicians to coordinate care, and they also lead by taking ownership of all clinical laboratory services, including clinic and physician office laboratories.

Other updates include a link to the final ACO rule, as well as a video of ACO leader Elliott Fisher, MD, PhD, discussing how the shift to coordinated care is transforming the payer-provider relationship. Dr. Fisher is the Director, Center for Population Health, The Dartmouth Institute for Health Policy and Clinical Practice and a Co-Chair of the Brookings ACO Learning Network, of which the College is a member.

CMS Announces 90-Day Version 5010 Transaction Grace Period

CMS is delaying enforcement action related to any HIPAA covered entity that is not in compliance with the next generation of HIPAA electronic transaction standards, known as Version 5010 from Jan. 1 to March 31, 2012. The delay is a result of feedback—primarily from the AMA—that the health care industry is behind in implementing the necessary conversions to these new standards.

All health care providers, including physicians, are HIPAA “covered entities”, requiring them to comply with HIPAA requirements as related to electronic transactions. It’s important to note, however, that the compliance deadline of Jan. 1 will stand, and CMS plans to begin investigating non-compliance complaints beginning on that date. During the 90-day enforcement “grace” period, physicians who have a complaint filed against them will need to provide evidence of compliance or a good faith effort in order to become compliant.

Non-compliance could result in disruptions in claims processing, as well as receiving reimbursement. Therefore, the AMA recommends that physicians continue implementing the Version 5010 transactions before Jan. 1. For more information, visit the AMA’s Version 5010 Transactions Web site.

Keep Up with the Latest CAP Advocacy News on Twitter

CAP Advocacy is now 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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