Many Hospital Labs Still Don’t Know They Must Report PAMA Data

by Jondavid Klipp | Feb 18, 2019 | CLFS, PAMA Data

Many Hospital Labs Still Don’t Know They Must Report PAMA Data

On January 22, the Centers for Medicare & Medicaid Services (CMS) hosted a teleconference that focused on a new rule that requires nearly all hospital outreach labs to collect their private-payer payment data from January 1 to June 30, 2019, and report it to CMS in early 2020. This data, along with private-payer data from independent labs and physician office labs, will be used to set new rates for the Medicare CLFS in 2021.

Although the new rule was published in early November 2018 and the data collection period is already underway, the teleconference Q&A showed that many hospital outreach labs are unaware that they are required to report. Broad participation from hospital outreach labs in the current data collection cycle is critical to stabilizing Medicare CLFS rates in 2021.

The Final Medicare Physician Fee Schedule for 2019 states that hospital outreach labs that bill for their non-patient lab services using the hospital’s national provider identifier (NPI) must now use Medicare revenues from the Form CMS-1450 14x Type of Bill to determine whether they meet the majority of Medicare revenues threshold and low expenditure threshold.

During the teleconference, CMS confirmed that this will require most hospital outreach labs to collect and report their private-payer data.

Laboratory Economics notes that in simplest terms, the rule requires any hospital outreach lab that collects $12,500 or more in Medicare CLFS revenue during the first six months of 2019 to report their private-payer payment data to CMS. Of course, all independent labs and physician-office labs meeting the $12,500 threshold must also report.

Based on an analysis of Hospital Cost Report data from 2018, Laboratory Economics has identified more than 1,000 hospital outreach labs that will meet the $12,500 threshold and are therefore required to report.

The PAMA law authorizes CMS to impose civil monetary penalties of up to $10,000 per day on labs that are required to report, but fail to do so. However, CMS did not enforce this law during the first reporting cycle (2016-2017) and it has not threatened to do so in the current cycle.

The cost and complexity involved with collecting private-payer payment data combined with CMS’s unwillingness to impose penalties on non-reporting labs lead Laboratory Economics to the unfortunate conclusion that most hospital outreach labs, as well as smaller independent labs and POLs, will dodge their reporting responsibility.

This likely scenario will have devastating long-term consequences for all laboratories. It means that lab test codes paid through the Medicare CLFS—already scheduled for three straight years (2018-2020) of 10% rate reductions—may suffer reductions of as much as 15% in 2021.

Note: This is an excerpt from an article in the February 2019 issue of Laboratory Economics.

Special New Year’s Report: Lab Execs Share Outlook for 2019

by Jondavid Klipp | Jan 14, 2019 | Laboratory Economics, Laboratory Market Research, Laboratory Outlook

Special New Year’s Report: Lab Execs Share Outlook for 2019

For an inside look at what may be in store for the clinical lab and pathology business this year, Laboratory Economics interviewed the top executives at a diverse group of 10 lab companies.

Not surprisingly, our interviews revealed that commercial insurers are using Medicare’s repricing of the CLFS as a pretext to cut their own rates. What is surprising (and alarming) is that some commercial insurers have demanded the full three-year phased-in ~30% CLFS reduction applied to their rates upfront immediately.

Labs are hoping to offset the pricing pressure by gaining economies of scale through geographic and test menu expansion. On the brighter side, the extreme pricing pressure that terrorized technical services for anatomic pathology seems to be over. Furthermore, molecular diagnostics and prescription drug monitoring continue to be high-growth markets.

Pricing pressure from both Medicare and commercial insurers
High volume growth in molecular diagnostics and prescription drug monitoring
Anatomic pathology reimbursement rates have stabilized
Hospital outreach labs benefiting from health system acquisitions of physician practices
Nursing home labs are restructuring and consolidating

Companies profiled in the January 2019 issue of Laboratory Economics include Sonic Healthcare USA, NeoGenomics, Health Network Laboratories, CellNetix, TriCore Reference Labs, Enzo Clinical Labs, Clinical Laboratory Services, CellMax Life, Psychemedics and Wisconsin Diagnostic Labs.

Does New Far-Reaching Anti-Kickback Law Apply To All Labs?

by Jondavid Klipp | Dec 15, 2018 | Laboratory Regulations

Does New Far-Reaching Anti-Kickback Law Apply To All Labs?

Hastily passed opioid legislation, signed into law by President Trump on October 24, outlaws the use of volume-based compensation for laboratory sales reps, regardless of the type of testing involved. The new law, Section 8122 of the “Eliminating Kickbacks in Recovery Act of 2018” (EKRA), authorizes criminal penalties for some conduct that is currently permissible under antikickback statute safe harbors.

The new law prohibits commission payments based on the number of patients referred to a laboratory, the number of tests performed, or the amount billed to or received from a “health care benefit program” (which includes commercial insurers as well as Medicare and Medicaid). As written, Section 8122 of EKRA applies to all laboratories, not merely labs that perform testing for recovery homes and clinical treatment facilities, and to all services covered by all payers, rather than only services covered by Federal healthcare programs.

Karen Lovitch, attorney at Mintz Levin, notes that Senators Marco Rubio (R-FL) and Amy Klobuchar (D-MN) introduced this provision in an effort to target patient brokers who recruit patients for addiction treatment centers and allegedly receive financial kickbacks in return. Brokers have reportedly paid for patients’ travel, rent, or other expenses to make it easier for them to seek treatment, and even helped uninsured patients obtain private insurance coverage by paying their premiums while in treatment.

Lovitch says the EKRA fails to carve out lab testing that has nothing to do with opioid or drug abuse. Furthermore, it applies to all labs when doing business with all payers. The legislative history fails to clarify whether Congress intended to construct this anti-kickback provision so broadly
with respect to laboratories and, if so, whether Congress had any rationale for doing so, according to Lovitch.

Lovitch believes that it’s unlikely that Congress will remove laboratories from the new law entirely, but expects that there will be significant pressure on Congress to limit its applicability to services related to opioid use and treatment.

GAO Warns Of Increased Costs From Unbundling Panel Tests

by Jondavid Klipp | Dec 4, 2018 | CLFS, GAO, Laboratory Regulations

GAO Warns Of Increased Costs From Unbundling Panel Tests

A new report from the U.S. Government Accountability Office (GAO) has zeroed in on the unbundling of common panel tests as a practice that could cause Medicare to overpay billions under PAMA’s new market-based CLFS.

The potential for overpayment stems from a loophole that enables labs to charge significantly more for common panel tests by billing for each component test individually (see LE, December 2017). Previously, Medicare had paid a lower bundled rate for routine panel tests such as Comprehensive Metabolic Panel (CPT 80053) and Lipid Panel (CPT 80061).

But starting January 1, 2018, PAMA limited CMS’s ability to automatically combine individual component tests into groups for bundled payment. Labs now have the ability to game the system for higher reimbursement by billing individually for tests in a panel. The GAO report has estimated that this practice could potentially increase Medicare expenditures by as much as $10.3 billion from 2018 through 2020.

The Department of Health and Human Services (HHS) commented that it is taking steps to address this issue. More specifically, HHS is developing an automated process to identify claims for panel tests that should receive bundled payments and anticipates implementing this change by the summer of 2019. In addition, HHS posted guidance on November 14, 2018, stating that for panel tests with billing codes, laboratories should submit claims using the corresponding code rather than the codes for the separate component tests beginning in 2019.

In addition, CMS says that it has been monitoring changes in panel test utilization, payment rates, and expenditures. CMS says that preliminary data indicates that Medicare payments for individual component tests of panel tests have, in fact, increased substantially in 2018.

UltraClinics Aims to Spread Telepathology

by Jondavid Klipp | Apr 15, 2006 | Digital Pathology, Telepathology, UltraClinics

UltraClinics Aims to Spread Telepathology

UltraClinics Inc. (Tucson, AZ) has begun marketing a telepathology service that will allow diagnostic imaging centers and outpatient surgery centers to offer their patients same-day anatomic pathology reports from on-site tissue biopsies, Ronald Weinstein, M.D., 67, chairman of UltraClinics, tells LE. UltraClinics is a for-profit spin-off company of the University of Arizona and its renowned telemedicine program.

Weinstein says the system is currently in use at two locations in Arizona. The University Physicians Tucson Breast Center is offering same-day pathology reports for breast cancer biopsies. And the University Physicians Hospital at Kino (Tucson) is offering the service for both breast and prostate cancer biopsies. Both sites have connected with University Physicians Healthcare for professional services. Weinstein says UltraClinics will add a dermatopathology service soon as well.

The service requires each outpatient site to invest roughly $200,000 to set up a rapid histology lab, microtome, digital slide scanner, and electronic medical record (EMR). The outpatient site prepares a patient biopsy slide, and then electronically transmits a high-resolution image of the entire slide to an off-site pathologist for professional interpretation. The pathologist transmits the lab report into the patient’s EMR. The whole process is usually completed within five hours versus more than two weeks for traditional anatomic pathology reports, according to Weinstein.

He says the service allows referring physicians to consult with their patients about the pathology results on the same day as the biopsy procedure. It also makes it easier to obtain a second opinion on the pathology report, he adds.

Weinstein, who is also head of pathology at the University of Arizona and co-founder of the digitalslide-scanning company DMetrix (Tucson), is hoping to install the UltraClinics’ system at more than 500 outpatient sites in the United States over the next five years. He views UltraClinics as a “turnkey solution” that can connect any pathologist with any hospital or outpatient clinic in the world.

In fact, Weinstein says that foreign-born pathologists on the faculty at the University of Arizona are already making plans to link with their American-boarded pathologist colleagues in India and Shanghai, China. “Telemedicine will enable international group practices to form,” he says. “You’ll have a conference where three world experts can look at the slide at the same time.” He says UltraClinics will leverage time zone differences so that women who have breast biopsies late in the afternoon will be able to receive their lab reports the same day. He expects this service to be available in the near future.

But what about the controversy that outsourcing pathology work overseas is sure to bring? “I believe every American should have access to sub-specialty pathology. It’s quality that we should be focused on,” answers Weinstein.

Weinstein believes the movement towards cosumer-driven healthcare will minimize third-party reimbursement issues. “As we move from insurance company referrals toward HSAs [health savings accounts] that let patients determine where their specimens go, fast test results and second opinions will bring people to UltraClinics,” he says.