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ePolicy News August 2013

Wednesday, July 24, 2013



Medicare PFS: A Triple Whammy for Pathologists and Labs

The Centers for Medicare and Medicaid Services’ newly released CY 2014 Physician Fee Schedule (PFS) proposed rule outlines several initiatives that could profoundly affect Medicare pathology and laboratory services payment rates. CMS proposes to cap payment of pathology services paid by the PFS, revalue every clinical laboratory test reimbursed by the clinical laboratory fee schedule (CLFS), and shift reimbursement for testing performed in a hospital outpatient setting from the CLFS to the Hospital Outpatient Prospective Payment System (OPPS). The estimated impact of the proposal, excluding the revaluing of CLFS tests, will cut reimbursement for pathologists and medical laboratories between 5 and 25 percent, respectively. According to the proposed rule, the PFS accounts for only 14 percent of Medicare payments to independent laboratories.

PFS-OPPS Payment Rate Cap: Under the physician payment cap proposal, a ceiling on PFS payment rates is imposed, but only in cases where payment for the service provided at a “non-facility” (non-hospital setting) exceeds the payment provided under the Medicare Outpatient Prospective Payment System’s fee schedule. Payment amounts for services that are less on the PFS than the OPPS are not affected. CMS’s rationale for imposing the cap is based on the belief that physician offices (non-facilities) should not be reimbursed at a level greater than hospital outpatient services, since hospitals’ costs are, on average, greater.

For pathology, the five codes with the biggest cuts, in terms of the greatest expected reduction in total charges, are as follows (the cuts below are specific to the technical component, not the professional component):


CLFS Technological Update: Currently, when a laboratory test is placed on the medical laboratory fee schedule, the price it is assigned, either through the Cross walking or Gap-fill process, is essentially fixed—with the exception for annual updates. There is no mechanism for Medicare to capture technological efficiencies that occur over time. The newly proposed rule, however, would enable Medicare to re-price each test on the fee schedule. The agency’s plan is to collect cost data on certain price inputs (labor, reagents, equipment, overhead, etc.) on approximately 1,250 tests over five years, or about 250 per year. Public input on identifying tests will be allowed, but not until the revaluing process has been in operation for five years.

Migration of Outpatient Laboratory Services to OPPS: Since the establishment of the Hospital Outpatient Prospective Payment System (OPPS), fees for medical laboratory tests (laboratory tests) provided in the hospital outpatient setting have been separately paid to hospitals at Clinical Laboratory Fee Schedule (CLFS) rates. Except for molecular pathology tests, CMS is proposing to pay for laboratory tests under the OPPS rather than the CLFS. The proposal would apply specifically to those laboratory tests that are “integral, ancillary, supportive, dependent, or adjunctive to a primary service or services provided in the hospital outpatient setting (same date of service as the primary service and when ordered by the same practitioner who ordered the primary service).” The proposal would also apply deductible and coinsurance to laboratory tests packaged (bundled) into other services in the OPPS.

ASCP’s Response: ASCP is very concerned about the proposals, each of which could have a devastating effect on the pathology and laboratory community. ASCP is reviewing the proposal. It has also expressed concern to CMS about the proposal and urged the agency to release additional details on its methodology for identifying which pathology codes are subject to the cap. ASCP is also consulting with the American Medical Association and our partners within the pathology and laboratory community to better assess the impact of the rule and to develop a cogent advocacy response to the agency’s proposal. As the largest organization representing the specialty of pathology and laboratory medicine, ASCP intends to launch a grassroots action campaign to respond to CMS’ proposal.


FDA Commissioner: Laboratory Developed Tests Need More Regulation

The debate on how best to regulate laboratory developed tests (LDTs) is once again heating up as Food and Drug Administration (FDA) Commissioner Margaret A. Hamburg, MD, is now renewing the call for more active oversight of LDTs by the agency.

At a recent meeting of the American Society of Clinical Oncology, Dr. Hamburg discussed LDT regulation and noted that LDTs do not undergo premarket review. 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. However, the agency issued a draft guidance in 2006 announcing that, with the exception of a small subset of LDTs deemed to be “in vitro diagnostic multivariate index assays,” it would exercise enforcement discretion, reasoning that most LDTs were simple, low-risk diagnostic tools that were well characterized. In addition, most LDTs were reliant upon various FDA-regulated individual components, either analyte specific reagents or general reagents, and the tests were performed in CLIA laboratories certified to conduct high complexity testing.

Dr. Hamburg pointed out that FDA historically exercised enforcement discretion for LDTs “because they were relatively simple, low-risk tests performed on a few patients being evaluated by physicians at the same facility as the lab.” In contrast, today’s LDTs “are more sophisticated and complex,” according to Dr. Hamburg. Results from LDTs are rapidly becoming drivers of medical decision-making, particularly for cancer.

“The Agency is working to make sure that the accuracy and clinical validity of high-risk tests are established before they come to market,” Dr. Hamburg said. “The risk-based framework we have under development will ensure that diagnostics used in cancer treatment will provide medical professionals with a critical baseline for confidence in the tests they order for their patients.”

ASCP believes that LDTs, as with all diagnostic tests, should be of the highest quality, reliability, and safety, and that each test should provide valid and useful information for medical decision-making. Click here to see ASCP’s Policy Statement on the regulation of LDTs.

Whether the FDA is about to announce a new proposal for regulation of LDTs remains unclear. ASCP will continue to monitor this issue closely.


ICD-10 Compliance Deadline: Are Physicians Prepared?

The American Medical Association (AMA) met in its Washington, D.C., office to discuss how other membership organizations are preparing for the Oct. 1, 2014, transition to ICD-10 deadline. It has sought feedback on how Medicare could create a more flexible advanced payment policy. The AMA also conducted a survey on outreach and education strategies to determine what tools are accessible to its members. The survey results indicate other organizations have provided ICD-10 resources through alerts and messages, articles, in-person presentations, conference calls and webinars, web-based learning, a link to the AMA website, links to other organizations’ sources, and other written materials. Most respondents responded that the criteria CMS uses to determine giving an advanced payment should be based on “a combination of time delay and amount of outstanding reimbursement.” AMA continues to recognize the need to educate physicians on the upcoming change. Membership organizations are encouraged to share their initiatives regarding this topic.



Senate Appropriations Gives Green Light for Health Professions Funding

The U.S. Senate Appropriations Committee has approved a FY 2014 Labor-Health and Human Services (HHS) spending bill (S. 1284) that restores funding for health professions and medical research to pre-sequestration levels. The bill, approved along party lines, provides $285.1 million for Title VII health professions, a $64.5 million (29.3 percent) increase over the FY 2013 post-sequestration levels. The bill also provides $14.9 million for the Health Careers Opportunity Program and $30 million for the Area Health Education Centers program.

Unfortunately, funding in the bill for allied health professions remains zeroed out. In recent years, funding for the health professions has focused on nursing through the Title VIII program and three Title VII initiatives: the chiropractic demonstration program; mental and behavioral health funding; and state dental health improvement grants. These initiatives are authorized under Sec. 340G of the Public Health Services Act, leaving all other disciplines under allied health stagnant. This, however, demonstrates a pattern of Congressional funding that fails to take into account the critical role of the laboratory and the need to assure that there is available training to continue to feed the pipeline with qualified laboratory professionals.

In 2006, Congress slashed the Title VII Allied Health Professions program by 68 percent. Funding for the establishment and expansion of allied health training programs was reduced from $300 million in fiscal year 2005 to $94 million for fiscal year 2006. The allied health and other disciplines’ account, which included grants for a small number of laboratory training programs, was reduced from $11.8 million to $4 million for the 2006 fiscal year. And Congress altogether eliminated funding for the allied health special project grants that supported a very small number of medical technology education programs under Title VII of the Public Health Service Act. Over the years, the allied health special project grants, as part of Title VII, provided a few hundred thousand dollars for medical technology and medical laboratory science programs in academic settings. However, this line item has now been eliminated, and each allied health discipline is looked as its own entity. ASCP and other laboratory organizations have lobbied Congress over the years to re-establish funding streams for laboratory science education programs to stem the workforce shortfall of laboratory professionals across the country.

Senate Democrats intend to bring the Labor-HHS bill to the floor before the August recess. However, U.S. Sen. Jeff Sessions (R-Ala.), the ranking Republican on the Senate Budget Committee, said he will block this bill as well as other appropriations bills from coming to the Senate floor. He said the overall funding totals for the bills violate the spending caps established as a result of the 2011 Budget Control Act.



GAO Urges Halt to Physician Self Referral of Anatomic Pathology Services

On July 15, the Government Accountability Office (GAO) released its long awaited report on the impact of physician self-referral arrangements on anatomic pathology services, urging the Centers for Medicare and Medicaid Services (CMS) to take steps to rein in such practices. The GAO found that in 2010 self-referring physicians ordered almost one million unnecessary anatomic pathology procedures at a cost of about $70 million.

GAO indicated that between 2004 and 2010 the growth rate in charges for pathology services ordered by self-referring physicians tripled in comparison with non-self referring clinicians, 164 percent vs. 57 percent. Moreover, between 2004 and 2010, the growth rate in utilization on pathology services ordered by self-referring clinicians also tripled compared to non-self-referring clinicians, 116 percent vs. 38 percent respectively.” About 90 percent of the work GAO identified as ordered by a self-referring provider was traced to dermatology, urology, and gastroenterology.

GAO’s study examined Medicare charges for CPT Code 88305 (Tissue examination by pathologist, level four) as well as related “special stains,” specifically CPT code 88342 (Immunohistochemistry), 88312 (Special stains group 1), and 88313 (Special stains group 2). Growth of special stains, which are among the most expensive where self referral was involved, increased almost 500 percent between 2004 and 2010, while it increased by 150 percent within non-self-referring physician referral arrangements. The study focused only on the technical component of certain pathology services, as GAO encountered difficulty accurately identifying self referral for the professional component.

GAO issued several recommendations including addressing higher use of self referral through a payment approach. ASCP is opposed to addressing self referral via a payment approach. The Society believes that the most effective way to deal with the issue is to prevent clinicians from profiting on their referrals, rather than penalizing the laboratories.

The GAO report is the second in a series of four studies on which agency is working. The first report, on advanced imaging, found that physician self-referral of these services unnecessarily cost Medicare about $116 million in 2010, with 400,000 unnecessary imaging procedures identified. GAO is expected to release reports on the impact of physician self referral arrangements involving radiation oncology and physical therapy later this year.

GAO Report on PEPFAR:
Millions Treated, but Better Information Management Needed

The President’s Emergency Plan for AIDS Relief (PEPFAR) programs need to improve how the programs evaluate and communicate to achieve their goals. These goals include increasing the number of people on antiretroviral (ARV) therapy and transitioning from providing services and supplies to countries confronting HIV to supplying guidance and support.

That is the assessment outlined in the United States Government Accountability Office’s (GAO) new report, Millions Being Treated, but Better Information Management Needed to Further Improve and Expand Treatment. The report incorporates findings from earlier reports over the last two years on PEPFAR planning, evaluating, and reporting, as well as three reports this year examining PEPFAR drug supply chains, treatment costs, and treatment results. In the three reports, released in May, which examine components of treatment efforts, the GAO advised that PEPFAR needed to better address weaknesses in recipient country’s management of antiretroviral drugs, gather more comprehensive treatment retention data, and improve the accuracy of its estimates of treatment costs. Concurrently, the report highlighted PEPFAR’s successes, including increased treatment cost effectiveness, higher treatment retention rates, and improved efficiency and reliability of ARV drug supply chains.



Laboratory Medicine Plays a Key Role in Genetic and Genomic Testing

ASCP attended a briefing in Capitol Hill on the current innovations in genetic and genomic testing. U.S. Rep. Jackie Speier (D-Calif.) was the keynote speaker at the meeting, which was hosted by the American Clinical Laboratory Association’s branch, Results for Life. “Thanks to the results of the human genome project and genomic testing, we’re seeing results that allow for real personalized medicine,” Rep. Speier said. Clinical laboratory testing allows for a more targeted diagnosis and treatment that benefits the patients, clinicians, and the health system.

Steven Shak, MD, Chief Medical Officer and Executive Vice President of Research and Development at Genomic Health, indicated the value of genomic testing by providing data on breast, colon, and cancer patients who received treatment aided by the results of their genomic tests. For example, physicians recommend 62 percent of breast cancer patients receive chemotherapy prior to taking a genomic test. The actual percentage of breast cancer patients who need it, however, is 4 percent. These tests have made important contributions to the improvement of healthcare delivery and lowered healthcare costs. However, more research is needed to develop genomic tests for other types of cancer and diseases. The panel urged attendees to advocate for policies that would approach the issue of personalized medicine and develop a system of reimbursement that would make these tests more affordable. ASCP continues to monitor developments on genomic testing on Capitol Hill.


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