Feature Story

Capitol Scan

Your CPT Questions

June 2004
Carl Graziano

In Florida, sole-source plan out, capitated plan in

The Florida legislature has directed the state’s health department to competitively bid a contract for Medicaid clinical laboratory services that would make capitated payments to single or multiple winning bidders.

The legislative direction came in a recently passed appropriations bill for the fiscal year beginning July 1. It follows efforts by the College, local pathologists, and Florida laboratories to defeat an earlier attempt by the state’s Agency for Health Care Administration, or AHCA, to solicit bids for a three-year, sole-source contract for Medicaid clinical laboratory services statewide.

The agency withdrew the RFP for that contract, but the legislature soon followed with its competitive bidding requirement. Under the provision, the state will choose a single lab or multiple independent laboratories to provide services to all the state’s Medicaid patients for a per-patient, per-month flat-rate payment. The legislature, expecting opposition from laboratories and others, included a fail-safe measure to ensure reduced spending: If the AHCA is unable to enter into contracts by April 1, 2005, "because of litigation or for other reasons," it must reduce all Medicaid fees for independent laboratory procedures by 10 percent.

The budget law also requires that participating laboratories provide test results to patients, the state, and its contractors in a real-time, Web-based format.

Opposition to the new requirement is expected to be strong in the laboratory community, as it was for the original competitive bidding proposal. In response to that earlier plan, the College and the Florida Society of Pathologists, participating in a coalition effort, sent a letter to the office of Florida Gov. Jeb Bush asking that the RFP be rescinded.

"The major concern is that competitive bidding fundamentally subordinates consistent medical quality to medical pricing considerations," the CAP and state society wrote. "Driving price structures to the lowest possible bidder commoditizes the practice of medicine and, in general, devalues medical services and may erode quality of care."

They pointed out that a 2000 Institute of Medicine report, "Medicare Laboratory Payment Policy: Now and in the Future," recommended against competitive bidding, saying its disadvantages outweigh its advantages for use as a basis of payment and that competitive bidding’s impact "could disproportionately disadvantage certain segments of the laboratory industry."

Reassignment by off-site contractors now okay

Medical groups, staffing companies, and other entities may now accept Medicare assignment from contracted physicians who provide services off-site, under a recent rule change.

Medicare has broad prohibitions against reassigning claims. However, there are several exceptions. A previous Medicare reassignment rule, the so-called clinic exception, required a contractor to provide services on-site. Last year’s Medicare prescription drug law deleted the language requiring the contractor to perform services in space owned or leased by the billing entity, giving medical staffing companies, medical groups, and others greater flexibility to use independent contractors and bill Medicare directly for technical component and professional component services.

The reassignment exception for contracted providers is among several Medicare allows to its general rule that providers cannot bill for services they did not perform. Reassignment issues are not problematic in an employee-employer arrangement.

Reaction to the rule change in the pathology community has been mixed, with some saying it could prove useful in rural and underserved areas, where medical groups could share the services of a single pathologist. The change also could work to promote greater use of telemedicine services. Medicare place-of-service rules pertain. This means reassignment is limited to those independent contractors who are providers within the carrier of jurisdiction—that is, the carrier in which the specimen was obtained.

There is concern the rule change could result in increased pressure on pathologists to discount their professional services in exchange for referrals from the dominant medical group in a given market. Federal Stark self-referral laws and anti-kickback statutes continue. Medicare anti-kickback rules do require that physicians be paid fair market value for their services.

Refining ASHI accreditation standards

The College has asked the American Society for Histocompatibility and Immunogenetics to refine language in its proposed revised standards for accredited histocompatibility testing laboratories.

In earlier comments on the revised standards, the College raised concerns that ASHI personnel qualification requirements might deter qualified clinical pathologists from entering the field of histocompatibility testing, or HLA. The CAP provided ASHI with documentation showing that pathologists’ exposure to immunology, cell biology, and numerous other relevant areas should make them eligible for two-year histocompatibility training.

ASHI responded positively to the CAP’s concerns by recognizing in its proposed standards revisions that board-certified pathologists meet the eligibility qualifications for laboratory director/ technical supervisor. The College, in followup comments April 23, said that while it was "pleased" with that decision, further improvements in "wording and/ or organization" are necessary to add clarity and make the ASHI document consistent with the Clinical Laboratory Improvement Amendments of 1988.

Among various requests, the College asked that ASHI strike from the document language that would add qualifications for a director who also assumes the responsibilities of technical supervisor beyond those required separately for each position. The separate requirements, the CAP said, "adequately provide rigid criteria for these positions without the need for any additional requisite qualifications."

The CAP also asked that the document clearly require board certification in either clinical pathology or combined anatomic and clinical pathology for an HLA laboratory director. As it is now, the ASHI document would inappropriately allow an individual certified only in anatomic pathology to direct an HLA laboratory.

Like the College, ASHI has CLIA deemed status from the federal government, meaning the laboratories it inspects are considered CLIA certified. ASHI standards cover numerous areas, including personnel qualifications; quality assurance; typing for HLA antigens by serology, cellular, or molecular-based methods; antibody screening to determine patient sensitization; and flow cytometry.

Bill would reverse policy on critical-access lab pay

An Idaho lawmaker is seeking to reverse a Medicare payment policy that allows cost-based payment for laboratory services at critical-access hospitals only if the services are provided at the hospital.

The legislation, the Critical Access to Clinical Lab Services Act of 2004, or H.R. 4257, would allow cost-based payment for clinical laboratory services delivered by a critical-access hospital regardless of where the patient provides a specimen.

Rep. C. L. "Butch" Otter (R-Idaho) introduced the bill April 30. It now has 18 cosponsors and has been referred to the House Ways and Means and Energy and Commerce committees for consideration.

When it created Medicare’s Critical-Access Hospital program in 1997, Congress sought to protect the viability of remote, rural hospitals by establishing cost-based reimbursement for inpatient and outpatient services, regardless of where the services are provided. But in a Centers for Medicare and Medicaid policy change last October, reimbursement for lab services is based on the clinical laboratory fee schedule, rather than actual costs, unless patients are "physically present in a critical access hospital" when specimens are collected.

Given the disparity in payment, hospitals might require patients to travel to the hospital rather than use closer testing sites.

"These federal bureaucrats apparently decided it’s fine for senior citizens in far-flung states like Idaho to travel an hour or more each way to get lab work done, or for tiny rural hospitals already fighting for their lives to take on one more financial burden. That’s the choice we were given, and it makes no sense to me," Otter said in a news release.

House again behind liability reform

In a statement of continued support for comprehensive medical liability reform, the House of Representatives last month passed a reform measure that mirrors legislation it approved in March 2003.

In a 229-197 floor vote May 12, House lawmakers passed the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2004, or H.R. 4280. The bill is nearly identical to legislation of the same name that passed the House March 13, 2003, in a 229-196 vote.

The legislation, introduced by Rep. Jim Greenwood (R-Pa.), would set a $250,000 limit on noneconomic damages in medical malpractice cases, place lawyers’ contingency fees on a sliding scale to discourage frivolous lawsuits, allow periodic payment of damages, and institute a three-year statute of limitations on claims, among other important reforms.

Senate Republicans so far have been unable to overcome Democratic filibusters and pass a comprehensive liability reform measure in that chamber. Even two limited measures—one targeted at obstetrical and gynecological services and another for ob/gyn and trauma care—could not garner the 60 cloture votes needed to move to floor consideration.

Republican leaders in the Senate have vowed to keep pressure on Democrats by continually introducing targeted reform measures. President Bush has signaled his strong support for liability reform and called on Congress to pass a comprehensive bill.

sCarl Graziano is CAP manager of government communications.