Advocacy Feature image
ePolicy 300x175
eAdvocacy Center 300x175

ePolicy News August 2014

Monday, August 4, 2014




FDA Issues Final Guidance on Companion Diagnostic, LDT Draft Guidance to Follow 

On July 31, the U.S. Food and Drug Administration (FDA) notified Congress of its plans to release the long-awaited draft guidance for the regulation of laboratory developed tests (LDTs).  With this notification, the FDA released a preview of the draft guidance. The Agency will formally publish its draft guidelines for public comment after 60 days. In addition, the Agency released a final guidance on the development, review, and approval of companion diagnostics.

“With today’s notification of the Agency’s intent to issue the lab-developed test draft guidance, the FDA is seeking a better balanced approach for all diagnostics,” said Jeffrey Shuren, Director of the FDA’s Center for Devices and Radiological Health. “The Agency’s oversight would be based on a test’s level of risk to patients, not on whether it is made by a conventional manufacturer or in a single laboratory, while still providing flexibility to encourage innovation that addresses unmet medical needs.”

As anticipated, the preliminary details of the draft indicate the FDA’s intent to implement a risk-based approach for LDT oversight. Moderate to high-risk assays will be subject to premarket review as well as registration, listing, and adverse event reporting requirements. The highest-risk diagnostics will have to begin meeting premarket review requirements 12 months after the final guidance is released, with the remaining high-risk tests will be phased in over four years. Laboratories offering LDTs deemed to be moderate-risk will have to begin registration, listing and adverse event reporting six months after the guidance is finalized.
Oversight of these diagnostics has been the subject of much debate in the laboratory community for many years, with some charging that the FDA lacks the legal authority to regulate LDTs. With the passage of the Federal Food, Drug, and Cosmetic Act (FDCA) and Clinical Laboratory Improvement Amendments (CLIA), the U.S. Congress established provisions for the oversight of various aspects of laboratory medicine. Passage of the Medical Devices Amendments Act in 1976 granted the FDA jurisdiction over commercially distributed test kits as in-vitro diagnostic devices. The FDA claims the statute also grants them jurisdiction over the regulation of LDTs. The FDA plans to continue its practice of enforcement discretion with regard to LDTs for rare diseases and unmet medical needs. Premarket or quality systems review will not be required for these types of assays, however, laboratories will have to register and list them.

Appropriate regulation of LDTs is a high priority issue for ASCP to ensure that only high quality, clinically and analytically valid diagnostic laboratory tests are offered to patients.  Out of concern for patient safety and quality laboratory testing, ASCP developed a policy statement on the regulation of LDTs.

OIG Report Suggests More than 20 Percent of Medicare Lab Claims are “Questionable”

On July 9, the U.S. Department of Health and Human Services Office of the Inspector General released a report suggesting that as much as 20 percent of Medicare clinical laboratory claims are “questionable.” The report raised concern about $1.7 billion of the $8.2 billion reimbursed by Medicare for services on the Clinical Laboratory Fee Schedule (CLFS) in 2010. That’s more than 20 percent of the total amount paid by Medicare for its 2010 CLFS claims.  

The OIG reviewed Medicare claims data from 2010, utilizing 13 screening measures to identify potentially questionable billing practices. Of the 95,000 laboratories examined in the study, OIG indicated that “over 1,000 labs exceeded the thresholds…for five or more measures of questionable billing for Medicare lab services.” OIG also stated that “almost half of the labs that exceeded the thresholds for five or more measures of questionable billing—compared to 13 percent of all labs—were located in California and Florida, areas known to be vulnerable to Medicare fraud.” In total, OIG identified 32.9 million claims for laboratory services as questionable.  

It must be emphasized, however, that exceeding the threshold of the OIG measures does not necessarily mean that the laboratory’s billing practices are inappropriate or fraudulent. Indeed, OIG noted as much when it acknowledge that it “did not independently verify the accuracy of the data used for this study.” That said, ASCP is concerned about the report, its implications, and some of the measures used to identify questionable billing practices. For example, the single biggest finding ($1.2 billion of the $1.7 billion), in terms of quantifying the cost of potentially inappropriate claims, related to “claims with beneficiaries who had no associated Part B service with the ordering physician within six months prior to the lab service.” Many of these claims, however, could relate to testing performed the day of, or in advance of, a physician visit. Further, patients with chronic conditions requiring routine monitoring, such as for patients requiring blood glucose, prothrombin time, lithium testing, etc., could seemingly run afoul of OIG’s screening criteria.


ASCP Briefs CMS on CLFS Re-pricing, New Test Pricing Recommendations

On July 14, ASCP outlined its initial recommendations on revaluing the Clinical Laboratory Fee Schedule (CLFS) and for pricing new laboratory CPT codes to the Centers for Medicare and Medicaid Services (CMS). During a CMS public forum, ASCP Past President Lee H. Hilborne, MD, MPH, FASCP, DLM(ASCP)CM, presented ASCP’s recommendations to CMS.  

The Protecting Access to Medicare Act (PAMA) (P.L. 113-93) requires CMS to re-price the entire CLFS (See Section 216, pp. 15-23). In a nutshell, PAMA requires laboratories to report data on private payor payment rates and the corresponding test volume every three years. The statute exempts providers from reporting bundled and capitated data and requires payment rates to reflect discounts, rebates, etc. CMS will then use the data to calculate a payment rate, based on the weighted median for each test submitted. CMS is required to release final regulations implementing the data reporting requirement by June 30, 2015. Congress mandated that laboratories begin reporting this data on Jan. 1, 2016.

ASCP commented that the revaluation will result in in “the most significant changes in the way laboratory tests are reimbursed by Medicare since the creation of the Clinical Laboratory Fee Schedule (CLFS) in 1984.” ASCP urged CMS to structure the reporting requirement in a manner that would minimize the associated regulatory burden as well as the potential penalties for non-compliance. Dr. Hilborne noted in his comments that sampling laboratories, rather than requiring all labs to report data, could allow CMS to greatly reduce the overall regulatory burden associated with revaluation. ASCP also urged that CMS give laboratories at least six months to report data, as the reporting requirement will like prove extremely complex for laboratories to meet.

ASCP also urged CMS to collect data from all major market sectors (hospital labs, reference labs, physician office labs, etc.) for laboratory services and that the data be adjusted to reflect each type of laboratory’s related market share. With concerns that hospital laboratory payment data may be under represented in the data, ASCP is urging CMS to weight the data to reflect hospital laboratories' applicable market share. Since payment rates for hospital laboratories tend to exceed payment rates for reference laboratories, there is a concern that the underreporting of hospital laboratory data would put increasing financial pressure on hospital laboratories. For a copy of ASCP’s full comments on the CLFS revaluation, click here.

In addition to commenting on the PAMA revaluation, ASCP provided the agency with recommendations on pricing over 100 new CPT codes on the CLFS for CY 2015. A copy of ASCP’s recommendations on this aspect of the public meeting can be obtained on page 4 of this document.


Special Fraud Alert Targets Lab Community, Blood Specimen Collection and Registry Arrangements under Heightened Scrutiny

OIG aims to eradicate financial incentives tied to referrals in an effort to secure patients an active role in their medical decision-making and uphold the integrity of the Medicare program

On June 25, the U.S. Department of Health and Human Services Office of Inspector General (OIG) issued a Special Fraud Alert entitled “Laboratory Payments to Referring Physicians.” Unlike Advisory Opinions, the OIG very rarely releases Special Fraud Alerts, which are reserved for addressing national-level trends in healthcare fraud rather than specifically-reported incidences. Hence, given that the OIG has not released a Special Fraud Alert targeting the  laboratory industry since 1994, the federal agency is sending a very strong cautionary message with its release of this recent alert.

In particular, the OIG’s June 2014 alert addresses two types of compensation arrangements between clinical laboratories and referring physicians or physician groups believed to present a substantial risk of fraud and abuse under the federal Anti-Kickback Statute (AKS): (1) Blood Specimen Collection Arrangements and (2) Registry Arrangements. The AKS makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services payable by a federal healthcare program. Hence, under the AKS, liability may fall on either the referring provider and/or the referral-based laboratory and may result in up to a $25,000 fine, exclusion from federal healthcare programs, and/or imprisonment for up to five years for either or both parties.

Blood-Specimen Collection, Processing, and Packaging Arrangements
OIG’s Special Fraud Alert first addresses arrangements in which compensation is paid by clinical laboratories to referring physicians (or physician groups) for blood specimen collection, processing, and packaging services. Under current law, the individual that collects the specimen is permitted to bill Medicare for a nominal specimen collection fee under certain circumstances, such as when the blood sample is obtained via venipuncture (CPT Code 36415). Additionally, Medicare only allows such billing practice when it is the custom practice, both at the local- and provider-level, for the physician to bill separately for specimen collection. Only one collection fee is permitted for each type of specimen for each patient encounter, regardless of the number of specimens drawn. Medicare also reimburses specimen processing and packaging for transport through a bundled payment (via CPT code 99000).

Nonetheless, though billing separately for these services is allowed by Medicare in certain circumstances, this does not mean that these circumstances are exempt from further scrutiny. Accordingly, the OIG identifies these arrangements as especially vulnerable to fraudulent activity, thereby necessitating the need to assess their “lawfulness,” which is to be determined based on the perceived intent of both parties involved. As such, the OIG provides the following examples of arrangements with potentially enhanced likelihood of “unlawful purpose”:
  • Payment to physician exceeds fair market value
  • Payment to physician is duplicative of third party (Medicare) reimbursement
  • Payment is made directly to the ordering physician, rather than the physician’s group practice
  • Payment is made on a per-specimen basis during a single patient encounter
  • Payment is directly tied to volume (i.e. made on a per-test, per-patient basis)
  • Payment is conditional on type, volume, and/ or panel of tests (regardless of medical necessity)
  • Payment is made to physician even though the clinical lab provides the performing provider

Registry Arrangements
OIG’s Special Fraud Alert also addresses arrangements in which compensation is paid by clinical laboratories to referring physicians or physician groups for submitting patient data to a registry or database. Just as separate billing for blood specimen collection is not prohibited under Medicare, the AKS does not prohibit laboratories from engaging in or compensating for legitimate research activities (via registries). However, due to the nature of referrals, even retaining an Institutional Review Board (IRB) does not entirely exempt registry arrangements from additional scrutiny. Accordingly, the OIG provides the following examples of arrangements with potentially enhanced likelihood of “unlawful purpose”:

  • The lab requires physician to order tests with a stated frequency for adequate data collection
  • The lab requires comparative data to be generated via duplicate, unnecessary test orders
  • Payment is made directly to the ordering physician, rather than the physician’s group practice
  • Payment is directly tied to volume of services input in registry (i.e. on per-test, per-patient basis)
  • Payment to physician exceeds fair market value
  • Payment is not supported by adequate documentation
  • Payment is restricted to tests for which the lab has obtained patents/ exclusively performs
  • When a test is performed by multiple labs, the lab collects data only from the tests it performed
  • Tests specified as eligible for payment cloud medical decision-making (i.e. disease related panels)
  • The lab pays and collects data from physicians based on referral volume, rather than data type

Though the arrangements identified above are in reference to the unlawful purpose behind referrals for federal healthcare program beneficiaries, the OIG cautions that arrangements in which such beneficiaries are “carved out” will be equally suspect. This is because many physicians have the incentive to minimize reference laboratories for administrative efficiency and convenience factors. Hence, it is nearly impossible to detach financial incentive for the referral of privately-insured beneficiaries from the referral of Medicare beneficiaries.  Accordingly, ASCP encourages all clinical labs to closely examine all of their referral-based relationships with physicians to ensure that financial interest is not in any way underlying referral decisions. Additionally, in the closing remarks of its Special Fraud Alert, the OIG encourages the pathology and laboratory community to report any suspected fraud, regarding these or other issues, via the OIG Hotline at or by phone at 1-800-447-8477 (1-800-HHS-TIPS).


ASCP Responds to USPTO Guidance 

ASCP has joined the Association for Molecular Pathology (AMP) and others in a sign-on letter responding to the U.S. Patent and Trademark Office (USPTO) Guidance for Determining Subject Matter Eligibility of Claims Reciting or Involving Laws of Nature, Natural Phenomena, & Natural Products. The guidance was developed to help implement the U.S. Supreme Court rulings in the Myriad (Association for Molecular Pathology v. Myriad Genetics) and Mayo (Mayo Collaborative Services v. Prometheus Laboratories, Inc.) decisions questioning the patentability of subject matter related to personalized medicine.

While ASCP is pleased that USPTO acknowledges the Court’s rulings and is attempting to offer clarification for patent practitioners, the Society joins AMP and others in urging th Agency to specify that patent claims that attempt to assert ownership over natural products, natural laws, natural principles of products of nature are now ineligible for patenting. Furthermore, applications that attempt to claim the associations between genetic changes and physical characteristics or physiological effects, whether through process claims that in effect claim these natural relationships, or through claims on the gene sequences themselves are also ineligible for patent consideration.

ASCP was a plaintiff in the Myriad case which challenged Myriad Genetics’ right to patent BRCA1 and BRCA2. The Supreme Court ruled unanimously last year that human genes, including isolated genes, are products of nature and, therefore, ineligible for patenting.


Palmetto’s Practice Guidelines: Safeguarding Professional Integrity or Infringing upon Professional Autonomy?

ASCP wants to hear what YOU think as Palmetto walks the fine line between “Guard against Fraud” and “Gatekeeper of Coverage” for special stains and IHC services.

This May, Medicare Administrative Contractor (MAC) Palmetto GBA released two educational “covered tests” postings which established “Special Stains and Immunohistochemistry (IHC) Indications for Gastric Pathology” as well as “Immunohistochemistry Indications for Breast Pathology.” Within the postings, Palmetto assigns responsibility for the ordering of special stains and IHC to the pathologist and asserts that standing orders for these services are not “reasonable and necessary.” It further expands upon the clinical indication specifications for what is considered “reasonable and necessary” when performing these services, specifically on gastric biopsies and breast specimens. (See Reference Chart Below.)

Special Stains and IHC on Gastric Biopsies

Special Stains and IHC on Breast Specimens

Specifies that it is NOT “reasonable or necessary” to:
  • Perform special stains when looking for intestinal metaplasia
  • Order a special stain or IHC to look for Helicobacter species
  • Perform special stains and/or IHC on greater than 20 percent of gastric biopsies
Clarifies that it will restrict reimbursement by:
  • Only paying for ER, PR and Her-2/neu IHC stains on breast specimens and specimens which contain breast cancer metastases
  • No longer reimburse for other biomarkers such as Ki-67, PI3K and gene expression assays

ASCP anticipates that it may be our members’ initial instinct to assess whether or not the coverage policies introduced via Palmetto’s recent postings are clinically sound. The Society understands this initial instinct and is, thus, also currently assessing whether or not we support these specific clinical indications. However, ASCP encourages our members to first take a step back and consider the broader picture when assessing the full scope of Palmetto’s recent postings.

Do You Agree with the PURPOSE behind these postings?
The frequency limitations specifying the appropriate range of special stains and/or IHC to perform on gastric biopsies is intended by Palmetto to mitigate the unnecessary and overutilization of these services indicative of fraudulent activity. ASCP appreciates Palmetto’s attempt to narrow its target when attempting to combat fraud so that pathologists who are not guilty of fraudulent behavior do not necessarily have to be subject to CMS’s punishment intended for those that are guilty. However, MACs’ current protocol for assessing whether or not a given service is “reasonable and necessary” typically takes into consideration the uniqueness of the patient condition; whereas, a standard utilization threshold does not. Accordingly, many are concerned that pathologists may be forced to adhere to a 20-percent threshold, even when their patient population (test results) necessitates a higher percentage of necessary special stains and/or IHC. While Palmetto cites examples of when ancillary stains are appropriate in its postings, it does not directly address how pathologists with a patient population that clinically requires the performance of special stains and or IHC on greater than 20 percent of gastric biopsies will fare, should they exceed the threshold in order to best serve their patients’ needs. Additionally, Palmetto does not explain what “additional action” they will take in the case of a pathologist’s failure to adhere to this threshold. However, ASCP anticipates that possible actions may include: a MAC probe, pre-payment review, post-payment review, RAC audit, or ZPIC audit.

Do you agree with the PROCESS by which Palmetto specified these practice standards?
It is important to clarify that, in further specifying the clinical indications for the “reasonable and necessary” performance of special stains and/or IHC, Palmetto is inadvertently specifying the conditions under which Medicare will or will not reimburse for these tests. Though it is within a MAC’s authority to specify conditions for coverage, this is typically done through the MAC’s Local Coverage Determination (LCD) process, which enables multiple mechanisms for stakeholder input. Accordingly, many within the laboratory community are caught off guard that Palmetto did not opt to go through the LCD process. Those concerned are left questioning whether the MAC is over-exerting its authority by circumventing a process that would require it to seek clinical expertise from the laboratory community when establishing practice standards.

However, should Palmetto opt to go through the LCD process regarding these practice guidelines, it should be considered that the MAC would then have the ability to set up an auto-denial process for special stains and/or IHC exceeding the 20-percent threshold. Also through the LCD process, Palmetto could require pathologists to provide extensive documentation supporting the medical necessity of each individual service exceeding the specified threshold. Nonetheless, it should be noted that the Patient Access to Medicare Act will begin requiring that MACs go through the LCD process when issuing coverage policies beginning in CY 2015.

There are a lot of moving pieces to consider when assessing whether or not ASCP supports Palmetto’s actions entirely or in part. However, one thing is for certain:  If we do not establish our own practice guidelines, others may do that for us. Accordingly, ASCP strongly asserts that it is inappropriate for any third party (i.e. MACs, private insurers, the Federal government, etc.) to exclude members of the laboratory community, with the necessary clinical expertise, from this important process. Though practice standards may not be appropriate for all tests as we move further into an era of personalized medicine, they remain extremely important for others. Practice standards can serve not only as the most appropriate regulator of medical necessity, but also as powerful tools for mitigating fraudulent overutilization and solid foundations for quality indicators. ASCP directs our members to the ASCP-led Choosing Wisely Initiative and Intermountain Health’s program as excellent examples of pathologist-led efforts to assess clinical utility, reinforce appropriate utilization of laboratory tests, and create a solid foundation for the development of meaningful practice standards.

Now, ASCP wants to hear from each of YOU regarding whether or not you think Palmetto has the best interest of the laboratory or is simply a “fox guarding the hen house” regarding its recent postings specifying practice standards. Join fellow members in an ongoing discussion around this complicated and controversial topic by entering ASCP’s OneLAB community forum chat room here.


Alleged Conflict of Interest in Data Security Provision

On July 24, the House Oversight and Government Reform (OGR) Committee held a hearing entitled, The Federal Trade Commission and Its Section 5 Authority: Prosecutor, Judge, and Jury. The hearing covered issues pertaining to the security of patient healthcare data and the Federal Trade Commission’s actions to ensure secure data.

Section 5 of the Federal Trade Commission (FTC) Act provides the Commission with authority over data security issues. This authority was intentionally made broad by Congress to keep pace with rapidly changing digital technologies. One aspect of the Commission’s authority is the “Reasonableness Standard” used to assess grievances in the private sector. Committee Chairman Darrell Issa (R.-Calif.) pointed out that this standard is very hard to adhere to due to the lack of written regulations, arguing that the Commission’s reliance on “industry standards” can be arbitrary.

The Oversight Committee addressed allegations of conflict of interest involving the FTC through two witnesses whose companies were the target of FTC actions. The witnesses addressed concerns related to Tiversa, a P2P (peer to peer) intelligence and security company. Michael Daugherty, CEO, LabMD, and David Roesler, Executive Director, Open Door Clinic of Greater Elgin, were supposedly contacted by Tiversa who had acquired sensitive patient data from their systems. According to Daugherty’s testimony, in November 2008 after repeatedly refusing their services, he received a call from Tiversa notifying him that they were turning the files they had acquired over to the FTC. In 2010, Daugherty received an inquiry from the FTC which would eventually escalate into a fully-fledged legal battle. The Open Door clinic of Elgin encountered a similar situation in July 2008. In this case, the Clinic’s clients were solicited to join a class-action lawsuit alleging a breach of patient data. The lawsuit was initiated after Tiversa said it had acquired Open Door’s patient data. The class-action suit was apparently settled out of court.

As a patient-centered organization, ASCP is concerned about the security of patient information. It is worth noting that both LabMD’s and Open Door clinic’s security breaches were traced to P2P software, such as Limewire, which had been installed on both companies’ computers. ASCP urges all clinical laboratories to carefully review their information technology systems to ensure the security of patient healthcare and other sensitive data. As technology progresses, it is important to err on the side of caution to avoid security breaches and to be mindful of the appropriate requirements. Meeting HIPAA’s requirements may not satisfy the FTC’s “Reasonableness Standards.”

Individuals interested in viewing the hearing in its entirety along with written witness testimonies on the OGR website.

Protecting Patient Information Key to Healthcare Transformation

ASCP attended a Health Affairs briefing on July 9 at the National Press Club in Washington, D.C., which gave an overview of “Big Data,” as it pertains to healthcare. This event addressed the obstacles that need to be surmounted before big data can be utilized to its full potential.

For those unfamiliar with the concept of “Big Data,” it is simply defined by Webster’s Dictionary as, “Data sets that are too large and complex to manipulate or interrogate with standard methods or tools.” Joachim Roski, PhD, MPH, of Booz Allen Hamilton, believes that this definition was an oversimplification and Big Data should be broken up into three main categories: Volume, Velocity, and Variety. To summarize, Big Data is an immense and diverse collection of information that can be accessed and analyzed swiftly. With this, companies like Amazon and Netflix can provide recommendations, based on the information they have collected from their entire consumer base. In time, the hope is that the healthcare industry will fully embrace Big Data to provide faster, more accurate counsel. Before this end goal can be reached, however, numerous setbacks need to be overcome, including additional research and development, capital acquisition (both monetary and intellectual), and regulatory roadblocks.

The take-away from the briefing was that in order for the integration of Big Data in a clinical setting to be successful, three main things need to occur. Primarily, it requires backing and cooperation from the entirety of the healthcare community, from patients to the FDA. Subsequently, the concern about data security and privacy needs to be addressed. Finally, the infrastructure that gets developed to handle the data needs to be self-sustaining. The first point was covered by numerous experts who were concerned with the developing culture of data hoarding within the industry. The latter two concepts come from I. Glenn Cohen, Professor of Law and Director at the Petrie-Flom Center for Health Law Policy at Harvard Law School, and Harlan M. Krumholz, MD, Professor of Medicine at Yale University School of Medicine. Both Cohen and Krumholz acknowledge that the privacy of patient information is a sensitive issue. The consent process, in regards to the right to use to this information, is more sensitive still.  However, they believe it is not feasible to explicitly request consent from each individual patient. Both stand firm in their belief that for Big Data in the healthcare sector to progress, there needs to be access. In order for this to be implemented properly, certain policies need to be adapted and others will need to be adopted. Conceptually speaking, there needs to be a less robust consent process and a more robust oversight body. The recommended course of action consists of creating an oversight body and educating the public that their medical information will stay safe and anonymous. Dr. Krumholz’s final point addressed the sustainability of the system. No one within the industry is going to want to funnel money into this system to keep it running. As a result, the infrastructure that is developed needs to be inherently sustainable so that it can keep adapting to the rapidly growing wealth of information being put into it.

The adoption of Big Data is in its early stages, with organizations having smaller frameworks within their own institutions. This conference called for organizations to open their doors to collaboration and embrace this new technology with open arms. There are still a lot of problems that have gone unaddressed or are up in the air. Dr. Krumholz admits that he is a bit of a dreamer, but he firmly believes that solutions will be found once the community agrees to throw themselves behind the idea. Through the briefing, privacy, security, and reservation to change were fundamental issues brought up. As it stands, a lot of work needs to be done to smooth them out. But once they are, Big Data will fundamentally change the world of health care.

ASCP will remain vigilant to areas involving patient privacy, especially when it resides in developing health information technologies. Additional information covering ASCP’s stance on this issue can be found here. A full recording of the briefing is available on the Health Affairs website.

Milken Institute Reports Positive Economic Impact of Medical Technologies Over Next 25 Years

The Milken Institute released a report last month forecasting the potential economic impact of medical technologies that treat diabetes, musculoskeletal disease, colorectal cancer, and heart disease. It included both the direct costs and indirect benefits of using each. These indirect benefits can include not only the increased productivity of a healthier patient, but also the increased productivity of those family members, or other informal caregivers, who no longer have to care for the patient. The estimated net annual benefit from the four diseases studied is $23.6 billion in 2010 and would lead to an aggregate growth of $1.4 trillion in the next 20 years.

While the Milken Institute did not offer any suggestions on the regulatory measures that could help to foster increased incentives, the panelists at the report’s briefing spoke to potential roadblocks and solutions on a policy level. Jim Blankenship, MD, Director of the Department of Cardiology at the Geisinger Medical Center, suggested that before any regulatory action could take place, the scope of a dynamic economic impact study needed to be expanded and more generalized, beyond these four diseases. Further, Ross DeVol, Chief Research Officer at the Milken Institute and co-author of the study, remarked on how hard it is to get CBO to use methods that are more dynamic, because of the strictness of the economic tools they are able to use.

Mr. DeVol and Jeff Hitchcock, the President and Founder of Children with Diabetes, both argued that changes should happen within the FDA, specifically in how quickly they are able to process and review new technologies.

This study emerges alongside a national conversation being held in the Health Subcommittee of the House of Representatives’ Energy and Commerce Committee, led by Subcommittee Chairman Joe Pitts (R-Pa.) and Chairman Fred Upton (R-Mich.), and known as 21st Century Cures. Six hearings have been held by the Subcommittee, including one on Tuesday, July 22, 2014, which focused on the barriers to developing new technology (e.g. information silos in the industry and the cost of running trials in the U.S.). Members of Congress and medical professionals alike called for incentives that would improve turnaround between a drug’s or device’s creation and it becoming available to patients, with enhanced post-market surveillance.


IOM: GME’s Public Financing Systems Needs Overhaul to Meet Future Demand

The U.S. needs to significantly reform the federal system for financing physician training and residency programs in order to ensure that the public’s $15 billion annual investment is producing enough doctors to meet the nation’s healthcare needs, according to a new report from the Institute of Medicine (IOM). The report, Graduate Medical Education That Meets the Nation’s Health Needs, claims that current financing, provided mainly through Medicare, requires little accountability, allocates funds independent of workforce needs or educational outcomes, and offers insufficient opportunities to train physicians in the healthcare settings used by most Americans.

Despite a looming physician shortage and stakeholder calls for additional Medicare funding for residency and fellowship slots, the new report recommends Medicare funding remain at its current level. However, the report recommends that the U.S. Health and Human Services (HHS) establish a two-part governance infrastructure in which a Graduate Medical Education Policy Council within the Secretary’s Office at HHS that would oversee policy and decision making, and an office within the Centers for Medicare and Medicaid Services (CMS)  that would oversee fund distribution. Medicare support would be provided through two distinct channels—an operational fund to finance ongoing residency training and a transformational fund to finance new training slots as needed, provide technical support, and research and innovative pilot programs.

The report also urged that funding be distributed directly to organizations that sponsor physician training programs, in order to encourage opportunities at a variety of sites, using a single, national, per-resident amount. A 10-year transition period to fully implement the recommendation was suggested, given the complexity of the proposed GME financing system.

The study was conducted by the IOM Committee on the Governance and Financing of Graduate Medical Education and was funded by multiple health foundations, the Health Resources and Services Administration, and the U.S. Department of Veteran Affairs.

VA Physician Scarcity Indicative of Industrywide Shortage

ASCP attended a congressional briefing hosted by the American Association of Medical Colleges (AAMC) on July 17 at the Capitol Visitor Center. The purpose of this meeting was to raise awareness in Congress of the ever-growing physician shortage in the Veterans Administration (VA). A large number of factors contribute to this issue; however the AAMC’s recommended course of action for some short term relief was for Congress to co-sponsor and sign into law one of three bills.

AAMC has had a symbiotic partnership with the VA for nearly 70 years and is committed to remedying the physician shortage. This shortage will not remain within the VA for long though. As Patrick Brunett, MD, Associate Dean of the Oregon Health and Science University (OHSU) School of Medicine, pointed out, the VA is a microcosm for the healthcare sector as a whole. It will be the first to experience shortages, but other organizations will suffer the same fate if action is not taken soon.

Fortunately, the first couple of steps have already been taken. A few years ago, AAMC called for medical schools to increase their acceptance rate and class sizes. Schools responded and a projected 30 percent-increase in graduating class size is expected by 2016. This being said, more than 5,000 of these graduates will not be placed in a residency program due to the residency cap in place. The solution to this lies within The Resident Physician Shortage Act of 2013 (H.R. 1180), Training Tomorrow’s Doctors Today Act (H.R. 1201), and The Resident Physician Shortage Reduction Act of 2013 (S. 577). Any of these bills would increase the residency cap by 15,000 by 2019 and, in turn, increase Direct Graduate Medical Education funding.

Even if only one of these bills is signed into law, the quantity of practicing physicians will not meet the industry’s demand. According to AAMC estimates by 2020, America may face shortages of 45,000 primary care physicians and 46,000 surgeons and medical specialists. AAMC urged Congress to pass any of these bills, but warned that it is not a permanent fix by any means. Further GME funding and additional residency positions will still be required given America’s growing elderly population.
ASCP’s focus on this topic will continue as the issue develops. We will also remain alert to other difficulties that may arise regarding GME. For ASCP’s stance on GME and GME funding click here.

Additional information from the AAMC concerning this issue is available here.


U.S. Support the Key to Achieving an AIDS-Free Generation

ASCP joined fellow member organizations of the Global Aids Policy Partnership (GAPP) in thanking the chairs and ranking members of both the U.S. Senate and U.S. House State, Foreign Operations and Related Programs Appropriations Subcommittees for their unwavering bipartisan support of sustained funding levels for global HIV/AIDS programs for FY 2014. GAPP is a coalition of advocacy and implementing organizations committed to ending AIDS for the next generation by expanding and improving global HIV and AIDS programming.

ASCP and the GAPP also urged the leadership, as they work to finalize FY 2015 funding legislation, to maintain the amounts appropriated for the Global Health Programs–State account that funds the President’s Emergency Plan for AIDS Relief (PEPFAR) and the U.S. contribution to the Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund) at the levels included in the House committee mark: $4.32 billion and $1.35 billion, respectively. GAPP also requested that funding for the USAID HIV/AIDS program remain at $330 million.

In addition, ASCP and GAPP urged lawmakers to take steps to protect these important investments in PEPFAR and the Global Fund, as any reduction of financial support by the United States at this juncture could signal retreat from our progress and would likely have implications on assistance from other international donors as well. The coalition feels strongly that sustained U.S. investment has the potential to enable an important “tipping point” in the fight against HIV/AIDS wherein the annual growth in the number of available treatment rises above the number of new HIV infections. This would be a critical step on the path toward an AIDS-free generation.


Back to ePolicy News index


  ASCP ePolicy News is supported by
  an unrestricted grant from Hologic