ASCLS-DE Government Affairs

For the coming year the following GAC committee members have been assigned to be your regional liaisons.  They will be communicating with your state GAC liaisons and our ASCLS membership.

2013-2014 assignments:

Region I – Leslie Martineau

Region II – Kyle Riding is the regional(Delaware is in Region II) liasion for ASCLS, Dave Muhuri is the state liasion for ASCLS-DE.  Contact either Dave or Kyle regarding Government Affairs.  

Region III – Angela Phillips

Region IV – Linda Goossen

Region V - Lori Murray

Region VI – John Koenig

Region VII – Becky See

Region VIII – Debbie Shell

Region IX – Donna Reinbold

Region X – Josh Pulido

Student and New Professional Liaison - Theresa Fruehling

  Rick Panning, GAC e-newsletter editor (2013-2014)

Fixing the SGR has the potential to reduce clinical laboratory reimbursement from Medicare.  On July 30, 2013, the House Energy and Commerce committee passed a bill that would provide a permanent fix to the physician payment methodology, known as the Sustainable Growth Rate (SGR). The SGR is the formula CMS uses to determine reimbursement rates for physicians accepting Medicare patients. The committee’s bill would make changes in three phases:

a period of payment stability and development of an improved fee-for-service program

 applying quality measurement to payments

an “opt-out” provision to allow providers to move to an alternative payment model, such as an accountable care organization or a patient-centered medical home.

The period of stability would call for some small increase in payments (likely 1%) during the first few years, with a possible differential for primary care physicians.  What has not yet been defined is how the fix would be paid for and that is a concern for the clinical laboratory because recent history tells us that Congress keeps cutting us to pay for such fixes..  The Congressional Budget Office now estimates a fix will cost about $139 billion over the next decade. Since Congress is now on its 5-week break, the next steps in the process will occur in September when our legislators return to Washington DC.

ASCLS will be watching potential legislative action and paying particular attention to how the fix might impact laboratory reimbursement levels.

The GAC would like to call your attention to the current issues which have the potential to significantly impact clinical laboratory reimbursement.  While these topics specifically apply to Medicare reimbursement, we know that all health care insurance payers, including private payers and the Medicaid program, tend to follow Medicare’s lead on reimbursement decisions Therefore these issues have the potential to impact our profession significantly.

  In June we reported to you that the Department of Health and Human Services’ (HHS) Office of Inspector General (OIG) had just released a report “Comparing Lab Test Payment Rates: Medicare Could Achieve Substantial Savings”.  The report, recommends that the CMS seek legislation that would allow it to establish lower payment rates for lab tests and consider seeking legislation to institute competitive bidding, co-payments and/or deductibles for lab tests.  The analysis of 20 high volume laboratory tests showed an opportunity to lower reimbursement by $910 million per year (a 38% reduction).  The analysis is one-sided and does not reflect those tests which would result in higher reimbursement if the same analysis was made for all tests on the fee schedule.  CMS stated that it is exploring whether it has authority under current statute to revise payments for lab tests consistent with OIG’s recommendation and that a proposal to establish “deductibles and coinsurance” for lab tests is not included in the fiscal year 2014 President’s Budget. 

The link to the entire OIG report is at http://oig.hhs.gov/oei/reports/oei-07-11-00010.pdf

  The proposed rule contain three potential threats to current laboratory reimbursement and are presented below:

1.     Technology adjustments to the Clinical Laboratory Fee Schedule (CLFS)

CMS is proposing a process under its existing authorities in 1833(h)(2)(A)(i) that would allow for the systematic examination of payment amounts.  This examination would seek to identify those codes that had undergone “technological changes” affecting the price of the test.  CMS cites the increased use of point of care testing, genetic and genomic testing, and laboratory developed tests as rationale for developing this process. Under its proposal CMS would review all CLFS codes over a five-year period, beginning with the oldest codes, reviewing a portion of the total codes each year and making appropriate adjustments.  After the initial review of the codes, CMS will allow the public to nominate codes for review; however, these codes must have been on the CLFS for at least five years.  Public nominations must include sufficient rationale describing the technological changes and how those changes affect payment and delivery.  Here again, the concern is that the proposed methodology could result in cherry-picking to address only tests for which significant reduction in reimbursement is deemed possible.  The tests that have been on the fee schedule the longest include many of the automated tests that due to technology and automation are likely to be reduced when evaluated.  Many tests that we believe should require an upward adjustment are newer to the CLFS and thus may be delayed or never addressed.

2.    Bundling of hospital outpatient laboratory testing into overall outpatient reimbursement.

In addition to its proposal to overhaul the rate-setting process under the CLFS, CMS proposed in the CY2014 Hospital Outpatient Prospective Payment System (OPPS) Notice of Proposed Rulemaking to bundle clinical laboratory payments into the OPPS payments.  This would have a significant impact on hospital laboratory revenue as all tests, with the exception of molecular testing and those tests ordered as “lab only” visits would no longer be billed and reimbursed separately.  They would be bundled into the overall outpatient procedure/visit.  Concern is also that it is unlikely that the reimbursement for the bundled payment will be adjusted upward to compensate for this change.

3.    Significant reduction in the technical component of anatomic pathology testing on the physician fee schedule.  Another component to the proposed rule is an update to payment policies and payment rates for services furnished under the Medicare Physician Fee Schedule (PFS). EffectiveJanuary 1, 2014 CMS proposes reductions in the technical component (TC) of 40 pathology codes it described as misvalued so they are reimbursed at the same rate as currently used for hospital outpatients. These reductions would be significant, as much as 80%.  For physicians, the cuts included in the proposed 2014 PFS rule primarily impact technical component payment and global payment for pathology services performed on non-hospital patients.  Professional components, with one exception are basically not impacted or have a small 1-2% adjustment.

GAC is discussing all of these issues and ASCLS will be providing written comments before the September 6 deadline.  We also send you comments that you can submit to CMS.  In addition, Elissa Passiment, Don Lavanty and Patrick Cooney plan to meet with CMS to share our concerns and offer alternatives.  Patrick and Don will also be in contact with Congressional legislators to determine the reactions and thinking of Congress about these developments.

Proposal 1: Summary of CMS revamping the fee schedule on its own annually by picking tests to be reviewed based on technological advances.

Currently: Clinical Laboratory Fee Schedule(CLFS) is updated annually to reflect changes in the Consumer Price Index for all Urban Consumers(CPI-U) and then gets a multi-factor productivity adjustment. However, except for these minor adjustments done every year, the price point(payments made to labs) for laboratory tests was determined once in 2005 and only reconsidered for one additional year prior to being finalized.

Problem: There are no process to make payment adjustments for the CLFS that reflects the changing cost of tests. Bottom-line: Payment amounts are locked in place and does not reflect budget neutrality.

Proposal: Implement a process to adjust payment amounts based on changes in technology. Acknowledgment: Significant changes in technology with increased POC testing, brand new genetic testing including genetics(ex cited: $95 million per whole genome sequencing in 2001 to $5,700 in 2013), and proliferation of laboratory-developed tests(do not have their own codes, not standardized).

Proposed Process: 1. Defining technological advances for each tests that needs reexamination: -resources(ex: reagents) -skilled labor -frequency of testing -site of service(labs to doctor's office) 2. Each year, will review certain codes on the CLFS starting from the oldest(given that the chances of technological improvement is higher for tests that has been around longer). Will review all 1,250 codes over a period of 5 years!

Seeking our Help: To prioritize codes, nominate additional codes for review(caveat being codes have to be on the CLFS for the last 5 years and have not been reviewed in the last 5 years), alternative approach to this process, and any information regarding general trend in laboratory technology.

Link to detailed Proposal 1 Then go to page 70 of the PDF.

Proposal 2: Summary of bundling of laboratory payments to the Outpatient Prospective Payment System (OPPS) for hospitals.

Currently: clinical lab tests done in outpatient setting have been payed to hospitals following the Fee Schedule rates(CLFS)

Proposal: will bundle and package clinical lab tests as part of the OPPS which are integral to primary service in a hospital outpatient setting following these two conditions: tests must be ordered on the same date of service as the primary service and by the same practitioner who ordered the primary service. Exception: molecular tests, because they are too new and has a different pattern of clinical use.

Alternative proposal but wasn't considered: same as above but also include a certain dollar threshold policy. So only CLFS payment rates for tests below a certain amount would be packaged together.

Interestingly, if lab tests become part of the OPPS then the deductible and coinsurance to beneficiaries will also apply to lab tests packaged under the OPPS.

With House Energy and Commerce and Ways and Means committees discussing physician payment reforms, there appears to be momentum in Congress this year to repeal the Medicare's sustainable growth-rate formula (SGR), the troublesome formula the CMS uses to determine physician payments under Medicare for participating doctors.

In April the House committees added details to a plan that MedPAC, a committee that advises Congress on Medicare policy, had included in their latest report and sought feedback from the physician community. The Energy and Commerce Committee has now drafted legislation and is holding hearings on this topic. Although the two congressional committees are working together for a solution, Energy and Commerce is the committee of jurisdiction and is finally working toward a permanent fix for the SGR.

The committee’s bill would establish three phases to transition from the SGR: · a period of payment stability and development of an improved fee-for-service program · applying quality measurement to payments · an “opt-out” provision to allow providers to move to an alternative payment model, such as an accountable care organization or a patient-centered medical home.

The period of stability would call for some small increase in payments during the first few years, with a possible differential for primary care physicians. What has not yet been defined is how the fix would be paid for and that is a concern for the clinical laboratory because recent history tells us that Congress keeps cutting us to pay for such fixes. The Congressional Budget Office now estimates a fix will cost about $139 billion over the next decade. The goal is to try to repeal the current SGR methodology before the August congressional break.

ASCLS will be watching potential legislative action and paying particular attention to how the fix might impact laboratory reimbursement levels.

The Clinical Laboratory Coalition (CLC), of which ASCLS is a member, is urging Senators’ Max Baucus (D-MT) and Orrin Hatch (R-UT) on the Finance Committee to reject a proposed 14 percent cut in the Medical clinical laboratory fee schedule (CLFS) over 10 years. This proposal is contained in President Obama’s proposed budget request to Congress for fiscal year 2014 that begins on October 1, 2013. The proposed reduction in the CLFS reimbursement will total approximately $9.46 billion over this 10 year timeframe.

Essentially, what the administration is calling for is an extension of the 1.75% cut in clinical laboratory fee schedule reimbursement that was implemented to help pay for healthcare reform (The Accountable Care Act). This decrease was to be limited to 5 years. President Obama’s proposed budget would extend the 1.75% cut for an additional 10 years.

Please be aware that this is a “proposed” budget; both chambers of Congress would need to approve the budget as presented and that never happens. At this time we consider the President’s proposal to be another indicator of the potential for more cuts to clinical laboratory reimbursement.

The Department of Health and Human Services’ Office of Inspector General (OIG) released a report “Comparing Lab Test Payment Rates: Medicare Could Achieve Substantial Savings” in June 2013. In the report, there is a recommendation that the Centers for Medicare & Medicaid Services (CMS) seek legislation that would allow it to establish lower payment rates for laboratory tests and consider seeking legislation to institute competitive bidding, co-payments and/or deductibles for laboratory tests. The analysis of 20 high volume laboratory tests showed an opportunity to lower reimbursement by $910 million per year (a 38% reduction). ASCLS and other organizations that have examined the report have expressed concern about the lopsided nature of the analysis. The 20 high volume tests that were examined are primarily routine laboratory tests that all third party payors typically pay little for. The analysis did not include those esoteric and/or new tests for which reimbursement barely or does not cover costs. We believe if those tests had been included the resulting savings would have been much lower. In response to the study, CMS stated that it is exploring whether it has authority under current statute to revise payments for lab tests consistent with OIG’s recommendation and that a proposal to establish “deductibles and coinsurance” for laboratory tests is not included in the fiscal year 2014 President’s Budget.

The Clinical Laboratory Coalition will be discussing this issue and ASCLS’s Legislative consultant, Patrick Cooney will be checking to see if this report is being discussed on Capitol Hill. The link to the entire OIG report is at http://oig.hhs.gov/oei/reports/oei-07-11-00010.pdf

The purposes of this Act (originally passed in 1998) included the following: (1) Increase economic growth by improving education/skills of American workers. (2) To ensure middle class prosperity through strong investment in talent and workforce development. (3) To prepare the unemployed, the underemployed, and those most disadvantaged with skills to match up with employer needs. (4) To provide individuals streamlined access to in-demand skills training and employment services by aligning education, training and workforce programs. (5) To strengthen engagement with employers in in-demand industries and all sectors to meet the needs of employers. (6) To improve the competitiveness and dynamism of the Nation's future workforce by investing in college and career-ready pathways for young adults. (7) To ensure accountability and efficiency through system performance measures that incentivize continuous improvement in services for workers and employers. (8) To encourage private sector partnerships connecting employers, labor unions, community colleges, workforce boards and related stakeholders to develop workforce skills that meet employer needs.

The House of Representatives voted to reauthorize the Workforce Reinvestment Act by passing the SKILLS (Supporting Knowledge and Investing in Lifelong Skills) Act (H.R. 803), which moved through the House Committee on Education and the Workforce. The SKILLS Act has been forwarded to the U.S. Senate and is being considered by the Senate Committee on Health, Education, Labor and Pensions (HELP). During the Legislative Symposium we thanked our House members for reauthorizing the legislation and asked our Senators to support the legislation when it comes up for action. (A second bill was also introduced in the House, H.R. 798, to reauthorize the Workforce Investment Act, but has not yet been considered by the House Committee on Education and the Workforce).

On May 9, 2013 the Centers for Medicare and Medicaid Services (CMS) published interim pricing for 114 new molecular pathology (MoPath) CPT codes developed by its Medicare Administrative Contractors (MACs). The reimbursement proposed was determined by the gap-fill methodology. Laboratories that perform these tests have been waiting for this information because CMS Carriers had not been paying for molecular testing since January 1, 2013. For most carriers, payment has now been restored, but at these new, lower rates.

CMS’s publication of all the MoPath prices officially launched a 60-day comment period. To close out the 2013 gap-fill process for the MoPath codes, CMS will share comments after the 60-day comment period closes, and will publish the final gap-fill pricing decisions in September 2013. These rates will form the basis for Medicare payments in 2014, during which each MoPath code will be paid at the median of the final MAC gap-fill rates determined in 2013. Another 30-day reconsideration period will follow the posting of the final rates in September.

ASCLS will be developing a formal response to these reimbursement rates. CMS website for the reimbursement rates for the molecular path codes: http://www.cms.gov/Medicare/Medicare-Fee-For-Service-Payment/ClinicalLabFeeSched/Gapfill-Pricing-Inquiries.html

Independent of the fiscal cliff, there are a number of adjustments to the Medicare Clinical Laboratory Fee Schedule which take place on January 1, 2013. Overall, our reimbursement will decrease by 2.95%. The components are as follows.

Consumer Price Index adjustment (Urban component, CPI-U): +1.7%

Productivity adjustment: -0.9%

Cuts from Accountable Care Act (healthcare reform): -1.75%

Cuts to fix the physician fee schedule in 2012: -2.0%

Total reduction in reimbursement: 2.95%

For items not on the fee schedule and based on reasonable charge reimbursement, fees will increase by 1.7%. Examples of these items are as follows.

Blood products

Transfusion medicine procedures

Reproductive medicine procedures

Another possible cost impact for laboratories to be aware of is that under the Accountable Care Act, effective January 1, 2013, medical device manufacturers are subject to a 2.3% Medical Device Excise Tax on their products. The potential exists for manufacturers to pass all or part of this tax on to their customers.

The 2012 elections resulted in the Democratic Party retaining their control of the Senate and the Republican Party maintaining a majority in the House of Representatives. In the recently completed “lame duck” session of Congress, the main Congressional agenda item was the year-end convergence of the urgent tax and spending issues know as the “fiscal cliff” (are you sick of that term yet?). The key facets of the “fiscal cliff” were the following.

At the end of 2012, lower, “temporary” tax rates enacted a decade ago under President George W. Bush were set to expire. If Congress did nothing, individual income tax rates would rise sharply for all Americans.

Deep, across-the-board cuts in federal programs (sequestration) would take effect on January 1 if Congress took no action. This would include a 2% additional cut in the clinical laboratory fee schedule.

Another issue, contributing to a possible negative impact for clinical laboratories is that Medicare payments to physicians (including pathologists) were scheduled to be cut by 26.5% starting January 1, 2013. ASCLS believes that to avoid this cut, Congress will enact cuts in other areas to balance the revenue and expense.

Don Lavanty (Legislative Consultant), Elissa Passiment (Executive Vice President) and the Government Affairs Committee (GAC) have been monitoring the congressional and administrative negotiations closely to remain aware of any additional potential cuts to laboratory reimbursement.

With the Senate vote on December 31 and the House vote on January 1, a bill was passed which addressed most of the revenue side of the equation. It helps avoid the immediate ramifications of the “fiscal cliff” but did not address the expense side of the equation and the potential sequestration ramifications. So an additional 2% cut to the laboratory fee schedule that was part of the sequestration has been delayed and will need to be addressed between now and March 1.

Here is a summary the significant revenue items addressed in the recently passed legislation, which amount to about $600 billion in new revenues over 10 years. (Source: Modern Healthcare.com, January 1, 2013 and CNN.com, January 2, 2013)

Tax rate for individuals making more than $400K and couples making more than $450K will rise from 35% to 39.6%

Itemized deductions will be capped for individuals making $250K and couples making $300K.

Taxes on inherited estates will go up to 40% (currently 35%)

Unemployment insurance will be extended for a year for 2 million people

The alternative minimum tax (AMT) will be permanently adjusted for inflation.

Child care, tuition, and research and development tax credits will be renewed.

The “Doc fix” – Medicare reimbursement for physicians – will continue for one year (this avoids the 26.5% drop in reimbursement). You will see this issue referred to as the Sustainable Growth Rate (SGR). To pay for this item, the bill calls for a recoupment of past DRG overpayments to hospitals and re-pricing of end-stage renal disease payments.

One thing not addressed was the payroll tax rate. It had been previously reduced by 2% and that reduction expired on December 31 and was not renewed in this legislation. To put this in perspective, a person making $30K per year will see $50 less per month on their pay check and a person making $113,700 will see $189.50 less per month)

On December 4, 2012, President Obama signed the Taking Essential Steps for Testing (TEST) Act, introduced in the House by Rep. Michael Grimm (R-NY) and in the Senate by Senator Amy Klobuchar (D-MN). The House passed the bill (H.R. 6118) on September 19 and the Senate passed the companion bill (S. 3391) on November 14.

The TEST legislation will provide the Centers for Medicare and Medicaid Services (CMS) with some flexibility when surveyors find that a laboratory has inadvertently (not on purpose) sent a PT sample to another laboratory. Since PT samples are supposed to be handled exactly as the laboratory would handle a patient’s sample, in today’s healthcare environment, testing can be referred to another laboratory (often in the same system) in order to perform a confirmatory test or because they do not perform the test in-house. Under the current regulatory language, CMS had to revoke the CLIA certificate of the offending laboratory and suspend the laboratory director from directing any laboratory for a period of time, possibly creating a significant access problem for patients. CMS had expressed concerns about their inability to exercise discretion when imposing sanctions for PT referral with laboratories that had an otherwise stellar reputation. This law allows that discretion.