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ASCP Relieved CMS Eliminates Payment Cap in CY 2014 PFS Final Rule, Though Concerns Remain

Recent ASCP e-Policy Stories 
on the 2014 CY PFS/CLFS Rules 
ASCP Members’ Voices Heard on CMS Physician Fee Schedule Payment Cap; CLFS Still Hit Hard (Dec. 2013)  

ASCP, Laboratory Community Anxiously Awaiting PFS/OPPS Final Rules (Nov. 2013) 

ASCP Members Flood CMS with Letters Over PFS/CLFS Proposed Rule (Oct. 2013) 

ASCP Community Unites in Response to CMS Payment Scheme (Sept. 2013) 

Medicare PFS: A Triple Whammy for Pathologists and Labs (Aug. 2013) 

On Nov. 27, 2013, the Centers for Medicare and Medicaid Services (CMS) released its CY 2014 Medicare Physician Fee Schedule (PFS) Final Rule in addition to its CY 2014 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Final Rule. The pathology and laboratory community was especially anxious for the release of this year’s final rules, which was delayed due to the government shutdown. Pathologists’ nerves were particularly heightened, as this year’s proposed rules disproportionately threatened their reimbursement when compared with other specialist physicians.

Initial assessment indicates pathologists can breathe a sigh of relief in response to CMS’s decision to eliminate its highly controversial OPPS cap proposal…for now. However, ASCP is disappointed that CMS has moved forward with finalizing both the revaluation of the Clinical Laboratory Fee Schedule (CLFS) and the packaging into OPPS bundles certain pathology and laboratory services currently paid separately under the PFS and CLFS. ASCP provides further response to CMS’s decisions below.

OPPS Cap on PFS Payment Rates

ASCP is relieved that CMS eliminated its proposal to cap PFS payment rates at OPPS payment rates from both the PFS and OPPS Final Rules. Moreover, it appears that ASCP is not alone in this relief, as CMS noted that “the overwhelmingly majority of commenters objected to the proposed policy.” However, ASCP fears that this relief is temporary, as evident in CMS’s intentions stated in the Final Rule to “develop a revised proposal for using OPPS and ASC rates in developing PE RVUs” through future notice and comment rulemaking.

The proposal would have capped PFS payment rates at Hospital OPPS payment rates for services reimbursed at higher rates in the physician office setting than in the hospital outpatient setting. If CMS had finalized this proposal, 38 of the 39 pathology services affected would be reimbursed at rates that would not even cover direct cost inputs, as is statutorily required. As such, ASCP President Steven Kroft, MD, FASCP expressed relief saying “CMS’s change of position on the cap secures affordable supply of these life-saving diagnostic services for the patient community we serve.”

Dr. Kroft, Vice Chair for Clinical Pathology and Director of Hematopathology at the Medical College of Wisconsin, in Milwaukee, credited ASCP’s strong advocacy strategy in influencing CMS to remove this harmful proposal in the both final rules. In addition to meeting with CMS officials and speaking with Congressional staff about ASCP’s concerns with the proposed rules, the Society launched a highly successful grassroots campaign that generated more than 10,000 messages to CMS and members of Congress. Dr. Kroft also noted ASCP’s collaborative efforts with the College of American Pathologists, the American Clinical Laboratory Association, and others, in rallying Congress to generate 113 signatures in the U.S. House of Representatives and 40 signatures in the U.S. Senate on bipartisan letters voicing concern with the proposal to CMS.

ASCP will carefully monitor any future CMS initiatives to cap PFS payment rates at OPPS payment rates and respond as necessary.

Revaluation of the CLFS to Account for Technological Change

While ASCP is relieved that CMS eliminated its proposed cap on PFS rates in both final rules, there is lingering concern regarding CMS’s decision to finalize its proposal to review and revalue all 1,250 codes on the Clinical Laboratory Fee Schedule (CLFS) in the PFS Final Rule. ASCP initially communicated concerns that review of 250 codes annually for five straight years may not be feasible, given CMS’s failure to revalue the 114 molecular pathology codes in a single year.

Nonetheless, while CMS’s decision to finalize this policy was anticipated by many leading policy experts in Washington, D.C., CMS appears to be altering its implementation approach to identifying and prioritizing codes for review. Rather than reviewing a specified number of codes each year over a specified window of time, CMS will conduct a data analysis of codes on the CLFS to determine which codes should be proposed during the rulemaking cycle and will also allow for public nominations of codes. ASCP is pleased that CMS is soliciting public nomination of codes, as the Society included a recommendation for stakeholder input in its PFS Proposed Rule comment. However, ASCP remains unsure whether this approach will be more or less feasible than what was proposed, as it does not appear CMS has specified a limit for the number of codes that can be reviewed each year.

While much remains unclear at this time, ASCP is pleased that CMS has acknowledged that “payment amounts could increase or decrease as a result of these reviews.” ASCP voiced concerns that much of the language in the PFS Proposed Rule seemed to suggest that adjustments would only be downward.

Packaging of Physician Services into Payment Bundles with Hospital Outpatient Services

ASCP is disappointed that CMS finalized its proposal to package into the OPPS payment bundles certain pathology and laboratory services currently paid separately under the PFS and the CLFS. In a comment letter to CMS on the OPPS Proposed Rule, ASCP expressed concern that this policy may result in the underutilization of laboratory services, inadequate compensation for services, and increased administrative burden associated with distinguishing referral origin (hospital vs. physician office). ASCP also did not feel that CMS provided enough information around its methodology for identifying the “primary procedures” under which payment for services deemed “ancillary” will be allocated into bundles. ASCP will review the OPPS Final Rule to see if such information has been provided.

ASCP is in the midst of a thorough review of both the PFS and OPPS Final Rules. Once this review is complete, ASCP will release a detailed analysis of the rules’ impact on reimbursement for the pathology and laboratory community.

To obtain a copy of ASCP’s comment letter on the PFS Proposed Rule, submitted jointly with the American Pathology Foundation, click here.

To obtain a copy of ASCP’s comment letter on the OPPS Proposed Rule, click here.