College of American Pathologists
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December 22, 2011  •  Volume 27, Number 26
Next Issue: January 5, 2012
© 2011 College of American Pathologists

In This Issue:

Season’s Greetings Statline Readers!
SGR, TC Grandfather Unresolved as Congress Heads Home
CMS Issues 10–Day Hold on 2012 Medicare Claims
CAP Urges CMS Adoption of Molecular Pathology CPT Codes
CMS Chooses ACO Pioneers
CAP Analysis: ACO Final Rule Offers Greater Flexibility and Better Terms for ACOs
High Court Hears Oral Arguments in Mayo v. Prometheus

Season’s Greetings Statline Readers!

We hope you’re enjoying this holiday season. We’re going to try to do the same. Unless Congress takes action sooner, Statline will return on Thursday, January 5, 2012.

SGR, TC Grandfather Unresolved as Congress Heads Home

It now appears that H.R. 3630, Middle Class Tax Relief and Job Creation Act of 2011, which would have avoided a 27.4% Medicare physician pay cut starting on January 1, 2012, may not be approved by Congress before year end.

Over the last week the House and Senate have passed markedly different versions of the bill and negotiations are at a stalemate. The latest word in Washington suggests Congress will adjourn for its holiday recess – many members have already left Washington, and regroup to negotiate a final agreement when Congress reconvenes in early January. Whether House and Senate members will have a change of heart and return to settle their differences before year’s end is uncertain. For pathologists and other physicians, this delay is guaranteed to create a billing mess, as CMS has already instructed its contractors to hold 2012 claims for 10 business days in hopes that will be enough time for Congress to reach a compromise.

The stalemate is rooted in disagreement on how to pay for the three main programs in the bill: extending the payroll tax holiday; extending unemployment benefits for the long-term unemployed; and avoiding the 27.4% Sustainable Growth Rate (SGR) physician pay cut. Although the Senate passed a largely bi-partisan bill, it excluded key provisions that were in the House version of the bill and House Republicans balked, demanding further negotiations.

The votes began on December 13, with a vote of 234-193, the House passed legislation that would have provided Medicare physician payment updates of 1 percent a year for two years. But, due to disagreements over financial offsets and other policy issues unrelated to physician payments, the legislation could not attract a sufficient number of votes to pass the Senate. This bill did not include a provision to extend the Technical Component (TC) “Grandfather”, prompting CAP’s already active TC-Grandfather grassroots network to carry out an intensive letter writing campaign to persuade their Senators to support the program in the Senate version of the bill.

Then, on December 17, the Senate, with a large bipartisan vote of 89-10 passed an amended version of the bill that would extend all the expiring policies, including current Medicare physician payment rates, for two months. The TC-grandfather provision was included in the two month extension. The rationale for the short-term extension was to avoid disruptions on January 1 and provide time for further negotiations on financing longer-term extensions.

Following the Senate’s action, a significant number of House Republicans expressed strong opposition to the two-month extension, and several relevant votes were held on Tuesday, December 20th. Most important of these, the House approved a resolution by a vote of 229-193 to disagree with the Senate and appoint members to a House-Senate conference committee, which would be charged with working out differences between the two versions of the bill.

Prior to the vote, the Senate leadership announced that the Senate would not reconvene over the holidays to engage in further negotiations and votes, and House members also began departing for the holidays, after being informed that they could be called back to Washington on short notice.  The American Medical Association issued a statement that it does not appear likely the outstanding issues will be resolved before January 1. Although just today House Republicans changed their tack with the possibility of a 3-month fix. Stay tuned.

The Senate is scheduled to return on January 23. The House is scheduled to return on January 17, although it may be as early as January 3. Right now the SGR patch remains bundled with the extensions to the payroll tax cut and unemployment benefits, all of which will likely be made retroactive from January 1, 2012. If the TC Grandfather is included in that bill, it too would be extended retroactively.

The CAP will continue to follow this important issue and provide updates.

CMS Issues 10–Day Hold on 2012 Medicare Claims

The negative update under current law for the 2012 Medicare Physician Fee Schedule is scheduled to take effect January 1, 2012. If Congress fails to avert the scheduled pay cut, CMS announced it will instruct its Medicare claims administration contractors to hold claims containing 2012 services paid under the Medicare Physician Fee Schedule for the first 10 business days of January 2012 (i.e., Sunday, January 1 through Tuesday January 17). The hold should have minimal impact on provider cash flow because, under current law, clean electronic claims are not paid sooner than 14 calendar days (29 days for paper claims) after the date of receipt.

Medicare Physician Fee Schedule claims for services rendered on or before December 31, 2011 are unaffected by the 2012 claims hold and will be processed and paid under normal procedures and time frames.

CMS said it would provide more information on or before January 11, if next steps regarding the claims hold are needed beyond the January 17 end date.

CAP Urges CMS Adoption of Molecular Pathology CPT Codes

In a letter to CMS Administrator Marilyn Tavenner this week, the CAP urged CMS recognize the 100+ new molecular pathology CPT codes developed by the AMA Molecular Pathology Coding Workgroup, and adopt the related AMA Relative Value Update Committee (RUC) recommended values. The CAP developed the physician work relative value unit (RVU) recommendations, as well as practice expense (PE) direct inputs for medical supplies, equipment, and clinical staff for 79 of the new codes which were reviewed and submitted to CMS by the RUC for use in the 2012 Medicare physician fee schedule (PFS).

Without specific codes available, Medicare has for years required physicians to use generic “stacking” codes for reporting molecular pathology services. It was thought when the new, more descriptive codes were made available last fall, CMS would adopt them for use in 2012. However, that did not happen, prompting CAP to feature the issue prominently in its comment letter on the Proposed Final Rule for the 2012 PFS.

“The CAP, and every payer who has a history with these services strongly believe the “stacking” code methodology is extremely antiquated and the new CPT codes superior,” CAP President Stanley Robboy, MD FCAP wrote. “The highest volume codes are analyte specific which allows payers to determine what service is actually being performed in contrast to the stacking codes which are methodology based. The CAP considers CMS’s decision a huge barrier to patient access for these services.”

CAP also described broad support in the health care community for the new pathology codes. “This decision has astonished all health care providers and payers, as bringing these new services to the forefront of medicine was viewed as a tremendous cooperative undertaking of the entire health care industry,” CAP’s letter stated.

Read CAP’s comment (PDF, 101 KB) letter on the Proposed Final Rule for the 2012 PFS.

CMS Chooses Pioneer ACOs

Four health care systems served by pathologists in the CAP Accountable Care Organization (ACO) Network will be among the initial 32 participants in the Medicare Pioneer ACO initiative, it was announced by the Centers for Medicare & Medicaid Services (CMS) Innovation Center this week. Congratulations to Partners Healthcare, Mount Auburn Cambridge Independent Practice Association serving eastern Massachusetts, Bronx Accountable Healthcare Network and Presbyterian Healthcare Services – Central New Mexico Pioneer Accountable Care Organization!

Chosen in part for their experience coordinating care for patients, the participating organizations are scheduled to begin the program January 1, 2012. The Pioneer program is intended to encourage primary care doctors, specialists, and hospitals to provide higher quality, more coordinated care for Medicare beneficiaries. CMS estimates that the program could save Medicare up to $1.1 billion in Medicare savings over five years.

The Pioneer ACOs include physician-led organizations and health systems, urban and rural organizations, and organizations in various geographic regions of the country. They provide care to about 860,000 Medicare beneficiaries in 18 states, CMS says.

The organizations will help Medicare test a new payment plan. The first two years of the Pioneer program involve a shared savings payment arrangement with higher levels of savings and risk than those of the Shared Savings Program established by the Affordable Care Act. If participants show savings in the first two years, they will be eligible to move to a population-based payment model and receive per-beneficiary, per-month payments intended to replace some or all of the ACO’s fee- for-service payments with a prospective monthly payment. Pioneer ACOs must develop similar payment arrangements with other payers by the end of the second year.

To allow Pioneer ACOs more flexibility in how quickly they assume financial risk, participants may also choose one of two alternative payment arrangements. They both follow a shared savings model in years one and two, and provide an option for a partial population-based payment that removes limits on rewards and risks in year three.

Visit the CMS Innovation Center website for more information about the Pioneer ACO program.

See the program fact sheet (PDF, 200 KB) for more details and a full list of participating organizations.

CAP Analysis: ACO Final Rule Offers Greater Flexibility and Better Terms for ACOs

The final Medical Shared Savings Program (MSSP) rule is more flexible, less burdensome, and potentially more financially palatable for accountable care organizations (ACOs) than the proposed rule, according to an analysis of the rule conducted by the CAP.

CAP’s analysis (PDF, 265 KB) of the October 20, 2011 final rule explains key features of the MSSP program, including the impact on pathologists, and how pathologists can make the most of their participation in ACOs and the Affordable Care Act’s coordinated care model.

CAP found that provisions in the final ACO rule were dramatically different from the proposed rule, crediting CMS with having given serious consideration to the more than 1,300 comments, amongst them comments from CAP, it received on the proposed rule as well as feedback at numerous stakeholder calls and meetings.

Flexibility in Start Date and Payment

The first example of CMS flexibility is the final rule’s two start dates for the roughly 300 ACOs that will enter initial federal contracts that run through 2015. ACOs may start on either April 1, 2012 or July 1, 2012. The choice allows more time to establish appropriate health information exchange infrastructure, the analysis says CMS indicated.

In contrast to the proposed rule, the final rule offers a truly one-sided risk model in which providers can earn a share of the savings, but need not re-pay losses in the first three years. ACOs that don’t participate in the program risk losing potential shared savings payments that may be made on top
of existing Medicare fee-for-service payments. They might also lose volume and revenue if pathologist referrals shift to ACO participants, the analysis predicts.

Further, ACOs participating in the two-sided model are responsible for any losses, but are also eligible for a higher level of shared savings on top of base fee-for-service payments, the analysis adds.

Quality Measurement and Provider Participation

The final rule reduces the 65 proposed quality measures to 33. While none of the adopted 33 measures apply specifically to pathologists, many measures depend heavily on laboratory data, according to the analysis. The final rule allows pathologists to devise quality measures that better demonstrate labs’ data aggregation capabilities and value to population health and care teams, and does not preclude ACOs from rewarding pathologists, the analysis notes.

Under the final rule, pathologists and other physicians who don’t negotiate ACO participation before the start of CMS contracts can still take part, the analysis adds. The final rule newly allows ACOs to add or subtract participants, with 30 days notice to CMS. The proposed rule would have effectively barred for three years those physicians who did not negotiate ACO involvement before contracts start.

Nothing in the final rule prevents pathologists from participating or assuming leadership roles on ACO boards, the analysis adds. In contrast to the proposed rule, the final rule does not require that board control be proportionate so pathologists may be able to secure greater than proportionate control.

A Federal Trade Commission/Department of Justice antitrust enforcement final statement and a CMS/Office of Inspector General interim final rule on fraud and abuse law waivers, released concurrently with the final MSSP rule, also afford greater flexibility. The antitrust enforcement statement does not condition ACO participation in MSSP on mandatory review and approval by federal antitrust agencies, while the interim final rule sought to ease impediments under the current fraud and abuse laws to ACO formation, acknowledging that doing so could require more screening. As this is an interim rule, however, it could change.

High Court Hears Oral Arguments in Mayo v. Prometheus

The U.S. Supreme Court on December 7 heard oral arguments in Mayo Collaborative Services’ and Mayo Clinic Rochester’s (known collectively as Mayo) appeal of a decision by the Federal Circuit Court of Appeals in Prometheus Laboratories, Inc. v. Mayo Collaborative Services et al.

At issue are Prometheus’s claims on two patents involving a correlation between metabolite levels in the blood and safe, effective thiopurine drug doses for individual patients.

CAP has supported Mayo’s position that these patents are invalid because covered methods merely evaluate natural responses to illness and medical treatment, so they do not meet the standard for patentable subject matter in section 101 of the Patent Act. CAP signed on to two amicus briefs backing Mayo’s attempts to have the U.S. Supreme Court hear the case both before and after the court remanded the case to the Federal Circuit Court of Appeals on the same day it issued its decision in Bilski v. Kappos and also another in support of Mayo’s brief on the merits submitted to the Supreme Court.

“The Supreme Court is interested in the question of whether section 101 is the best test [of patentability] or if courts should rely on other sections of the patent law,” noted Sandra Park, an ACLU lawyer. ACLU represents CAP and the other petitioners in The Association for Molecular Pathology, et. al. v. Myriad Genetics, Inc. et. al which challenges certain BRCA1 and BRCA2 gene patents held by Myriad. Also on December 7th, the ACLU submitted its brief to the Supreme Court to have the court hear the Myriad case. Looking at section 101 is important because U.S. Patent and Trademark Office (PTO) generally bases patents on other sections of the law.

Oral arguments made by Prometheus’s lawyer, Richard P. Bress, maintained that the company’s patents were valid under section 101 because the company had devised a new process to generate useful information.

Solicitor General Donald Verrilli, Jr. pointed out merits in arguments made by both parties and answered the justices’ many questions about whether hypothetical patents were based on natural processes or transforming actions and if they would be valid under different sections of the patent law.

Based on oral arguments, it’s difficult to tell how the justices will ultimately rule on the case, Park maintained, but added the justices’ questions show they are taking Section 101 of the patent law more seriously than the U.S. Patent and Trademark Office (PTO) and patent lawyers usually have in the past.

A decision in the case is expected by the end of June per Park.


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