News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups
Hosted by Robert Michel
February 25, 2009
Providers might blame soaring healthcare costs in part on caring for uninsured patients, but a new study published by the journal Health Affairs suggests this argument may not hold much water. (more…)
Hospitals, physicians, laboratories and others have until January 1, 2009, to provide comments on the proposal by the Centers for Medicare and Medicaid (CMS) on three National Coverage Determinations about preventable surgical errors, or “never events.”
Dark Daily readers know that, beginning October 1, CMS stopped paying hospitals for care or services associated with a list of eight “never events.” Other insurers, including Blue Cross and Blue Shield Association, Aetna, Cigna Corp and Wellpoint, have followed the CMS lead, implementing similar nonpayment policies for medical errors.
A never event is the industry term for a serious preventable medical incident occurring while the patient is under the care of a medical provider. The National Quality Forum (NQF) has developed a list of 28 never events, ranging from surgical and other procedural errors to sending an infant home with the wrong parents.
CMS is proposing to add these three categories of errors to its “no pay” list:
The CMS proposal to expand the number of “never events” on the no pay list is not without controversy. So far, the American Medical Association (AMA) and AHA have voiced disagreement with the proposal. The AMA opposes CMS using its National Coverage Determination process, which dictates procedures Medicare will or will not pay for, to fight surgical errors. Instead, the AMA suggests that the agency “develop a clear payment policy outlining the circumstances under which surgery would not be payable by Medicare.” The AHA also wants CMS to provide a clear definition of what costs or services would not be covered, but also wants the agency to describe how it would assign accountability for an error.
Meanwhile, there is support for the CMS “never event” policy from other sectors of healthcare. Researchers determined that, since CMS announced implementation of the first “never event” policy for eight conditions in August 2007, 23 state hospital associations had adopted policies forbidding or discouraging billing for serious preventable medical errors.
Large insurance companies quickly responded to the CMS announcement on “never events” by instituting their own no-pay policies for “never events. Aetna was first to publicize its policy. WellPoint and CIGNA soon announced similar policies.
Hospital laboratories are already experiencing the impact of the first round of the CMS “never event” policy that took effect on October 1, 2008. Among the eight conditions were nosocomial infections and administering incompatible blood products to a patient. In both cases, laboratory test services play a key role in providing clinicians with information to properly diagnose the patient and chose the appropriate course of treatment.
Related Information:
CMS Proposes Three National Coverage Determinations to Protect Patients from Preventable Surgical Errors
Reluctance of small and mid-sized physician practices to invest in electronic medical record (EMR) systems has been oft noted by Dark Daily. Now, Medicare is hoping to motivate these physician groups to adopt electronic health records (EHRs) with a new incentive program.
In an effort to jump-start physician adoption of EHR systems, the Centers for Medicare and Medicaid launched a five-year demonstration that offers small and mid-size physicians offices the opportunity to earn bonuses and receive a free EHR system.
Over the five years of the project, each doctor chosen for the demonstration could receive up to $58,000, with a limit of $290,000 per practice. The initiative will operate in Alabama; Delaware; Georgia; Louisiana; Maine; the Maryland/Washington, D.C., area; Oklahoma; and Virginia. Demonstration sites with communities in multi-county areas will also be in South Dakota; Jacksonville, Florida; Madison, Wisconsin; and Pittsburgh, Pennsylvania.
Participation alone will not guarantee the extra Medicare payments. CMS will randomly choose only half of the 200 practices recruited in each community to get EHR incentive payments The other half will serve as a control group and will get no bonuses, even if they use certified systems. Some physicians are frustrated about the prospect of being in the control group and not getting bonuses, but most accept the control group system as necessary.
According to coverage from American Medical News physician practices put into the control group will know from the outset. These groups will be required only to complete an annual survey of their EHR status. They will receive a small fee for participating in the survey. CMS wants to see how physician practices in the group progress in IT adoption, despite not receiving financial incentives from the Medicare program. No physicians in the control group will be required to use an EHR. Incentive payments will not be available to non-primary care doctors or to practices with more than 20 physicians.
“This demonstration is designed to show that streamlining health care management with electronic health records will reduce medical errors and improve quality of care for 3.6 million Americans,” stated Health and Human Services (HHS) Secretary Mike Leavitt. “By linking higher payment to use of EHRs to meet quality measures, we will encourage adoption of health information technology at the community level, where 60% of patients receive care. “We also anticipate that EHRs will produce significant savings for Medicare over time by improving quality of care. This is another step in our ongoing effort to become a smart purchaser of health care-paying for better care, rather than simply paying for more care.”
According to the HHS press release, the demonstration will be open to participation by up to 1,200 physician practices. Over a five-year period, the program will provide financial incentives to physician groups using certified EHRs to meet certain clinical quality measures. A bonus will be provided each year based on a physician group’s score on a standardized survey that assesses the specific EHR functions a group employs to support the delivery of care.
This EHR incentive program demonstrates the federal government’s resolve to push providers to eliminate paper charts and adopt electronic health records. Because this demonstration project will last five years, that fact alone indicates that health policy makers don’t expect to see rapid acceptance of EHRs by small and mid-sized physician groups in the near future.
Related Articles:
HHS Announces Project to Help 3.6 Million Consumers Reap Benefits of Electronic Health Records
CMS selects communities for Medicare EHR bonus pilot project
Doc groups back EHR study (Modern Healthcare subscription required)
Medicare anti-markup rules implemented last January 1, 2008, have apparently contributed to the sale of UroPath, LLC , to HealthTronics, Inc. (NASDAQ: HTRN), based in Austin, Texas. The sales price was $7.5 million and the acquisition was announced on July 21, 2008.
UroPath, of Arlington, Texas, is the largest operator of anatomic pathology condominium complexes (pod labs) in the United States. It serves 50 urology practices spread among 17 states. UroPath says it processed more than 400,000 specimens last year. With the implementation of the January 1, 2008 Medicare anti-markup rules, UroPath found itself unable to markup services on Medicare patients over its costs. The federal Centers for Medicare and Medicaid Services (CMS) amended its regulations to limit the amount a provider can bill Medicare for pathology services under certain conditions. After CMS issued the new rules in January, UroPath and its affiliates challenged the rules in a suit against federal Health and Human Services Secretary Michael O. Leavitt. In the suit, UroPath said the new rules would essentially put them out of business.
In May, U.S. District Court Judge Rosemary M. Collyer dismissed the UroPath suit, saying the plaintiffs should pursue a grievance through CMS’ administrative procedures. (see The Dark Report, May 27, 2008).
“The Centers for Medicare & Medicaid Services have been publicly concerned since at least 2004 about a growing tendency of physician groups to utilize so-called ‘pod’ [condo] laboratories for lab work, miles from the physicians’ offices, and then to claim that doctors in both locations are ‘sharing a practice’ for purposes of billing Medicare,” Collyer wrote in her decision. On June 30, 2008, CMS proposed additional amendments to its regulations which could further affect the way pathology services may be reimbursed, a fact HealthTronics noted in its announcement of the acquisition last week.
Despite the challenging regulatory environment, HealthTronics said the acquisition allows it to offer its services and products to UroPath’s 450 physicians in 50 urology practices nationwide. HealthTronics sells lithotripsy systems and other surgical products. It also owns an anatomic pathology laboratory in Augusta, Georgia, called ClariPath Laboratories.
There is one interesting aspect to this acquisition. Should the new Medicare anti-markup rules, in combination with the existing anti-markup rules, undermine the economics of the AP condo lab business model and cause the current urology group owners of the condo labs to close those operations, HealthTronics may believe it has a reasonable business alternative. Because HealthTronics owns an existing anatomic pathology company, it could convince those urology groups to refer their AP specimens to its ClariPath Lab operation.
Related Articles:
Yesterday was big news for the lab industry as Senate passed the “The Medicare Improvement for Patients and Providers Act of 2008″ (HR 6331).” This bill includes repeal of the Medicare Laboratory Competitive Bidding Demonstration Project. Because the House passed this bill last month, it means the bill now moves to the President for his signature or veto.
Also included in this Medicare funding bill for 2008 are a reversal of the 10.6% cut in Medicare physician reimbursement and an 18-month extension of the “TC Grandfather clause” (which covers independent laboratories located outside a hospital that provide technical component [TC] pathology services furnished to hospital patients). On July 1, 2008, the Medicare physician fee cut of 10.6% took effect. Also on July 1, the Centers for Medicare and Medicaid Services (CMS) implemented “a policy to pay only the hospital for the technical component (TC) of physician pathology services furnished to hospital patients.”
Thus, this Medicare funding bill represents a significant victory for pathologists and the laboratory industry. It is known that the President opposes this Medicare bill, as passed, because it would cut funding for Medicare Advantage insurance plans. However, both the vote in the Senate (69-30 in favor) and the House (355 to 59 in favor) indicates the likelihood that, were the President to veto this bill, there enough votes to probably override that veto.
In the meantime, some attorneys have advice to independent laboratories that provide TC services to Medicare inpatients. They suggest that these labs hold claims originated since July 1, 2008. Once the Medicare funding bill, with the 18-month extension of the TC grandfather clause becomes law, they should be able to submit those claims and be reimbursed.
Dark Daily observes that this legislative outcome is evidence that the collective lobbying effort of the laboratory industry and various associations in Washington, DC, has achieved a degree of effectiveness unseen in more than two decades.
Related Items:
Senate Passes Medicare Package, Lab Competitive Bidding Repeal-ACLA Thanks Senate for Passing HR 6331 & Urges President Bush to Sign the Bill
