3/15/10
The battle over physicians profiting from self-referrals for pathology services is far from over. The American Society for Clinical Pathology (ASCP) has fired the latest salvo, charging that these business arrangements result in abusive billing practices that foster overutilization of services and higher costs for patients.
In a March 1 letter to the Centers for Medicare and Medicaid Services (CMS), ASCP urged the agency to exclude pathology from the Stark in-office ancillary services exception and to fix “unintended flaws” in the anti-markup rule for diagnostic services that are being “aggressively exploited and the costs passed on to Medicare beneficiaries and taxpayers.”
In the letter to CMS acting administrator Charlene M. Frizzera, ASCP president Mark H. Stoler, MD, FASCP, asked that these changes be incorporated in the 2011 Medicare physician fee schedule rule the agency will propose later this year. He said studies have consistently shown that self-referrals encourage excessive use of services and increase health care costs.
ASCP and other pathology groups have been highly critical of the proliferation of self-referral arrangements whereby specialty physician groups establish an in-house histology laboratory and contract with pathologists for professional services.
Their express purpose, the groups charge, is to siphon off business from pathology groups and labs and capture more Medicare revenue from pathology work. Most prominent in this market trend are gastroenterologists and urologists, and increasingly oncologists.
In the letter to CMS, ASCP pointed out, “Interestingly, there has also been a corresponding increase in the utilization of pathology services, both in terms of the number of biopsies being performed per patient and the number of patients being biopsied.”
The Stark In-Office Service Exception
Removing pathology from this exception is “the most effective and appropriate means to deter abusive billing practices involving pathology services,” Stoler said.
The physician self-referral law (known as the Stark law after its congressional proponent Democratic Rep. Pete Stark of California) prohibits physicians from referring Medicare or Medicaid patients for designated health services to facilities in which the physician (or an immediate family member) has a financial stake, whether as an ownership interest or compensation arrangement or both.
However, the law does allow a number of exceptions, including one that permits physicians to provide designated health services in their offices, including clinical and anatomic pathology testing and diagnostic imaging.
By its very nature, ASCP argues, pathology should not be included in the in-office services exception. “Pathology services are complex medical procedures requiring significant time, skill, and expertise to perform properly. These services cannot be performed during a patient visit—the driving rationale for including medical services or procedures in the exception.”
The College of American Pathologists (CAP) also is lobbying to have anatomic pathology tests removed from the Stark exception. CAP contends that self-referral arrangements can only be controlled by removing the economic self-interest of ordering physicians, either by tightening the exception or prohibiting reassignment for such services under Medicare.
Anti-Markup Rule for Diagnostic Services
Currently, the markup of these tests is allowed only when the tests are performed by a physician who “shares a practice” with the billing physician (the ordering physician). There is a two-test approach to determine whether the physician performing the service meets this requirement.
The first test requires that the performing physician––either the physician perform—ing the professional component (PC) or supervising the technical component (TC)—furnish at least 75 percent of his or her services through the billing physician or group practice. Alternatively, the TC and/or PC may be marked up if the service is performed in the office of the billing physician.
“While the first of these two tests may help deter self-referral arrangements, the latter test is weak and ineffectual,” ASCP said. “This test can easily be satisfied by any physician who is part of the billing group practice.”
One of the problems with these arrangements, Stoler said in the letter to CMS, is that the TC is often supervised by a physician who has little or no training or experience supervising (or performing) histology (the TC of the pathology service).
“This is because neither the Clinical Laboratory Improvement Amendments of 1988 (CLIA) nor Medicare requires that the physician supervising the processing of the biopsied specimen have any training or experience in pathology,” he noted. “This major oversight essentially allows the highly skilled, near art form field of histopathology—the key step in taking a tissue sample and preparing it for diagnosis—to be equated with in-office laboratory tests waived under CLIA. … Given the often irreplaceable nature of anatomic pathology specimens and the highly complex multistep process of properly making a biopsy into a slide, the improper supervision of this process can potentially have dire consequences for patient care.”
To fix these flaws with the anti-markup rule, ASCP recommends that CMS:
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Prohibit the use of independent contractors by referring physicians or grouppractices billing for the performance of the PC and the TC of a pathology service.
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Require that supervision of the TC be provided by a physician (preferably an anatomic pathologist) meeting the high-complexity laboratory director requirements enumerated in CLIA.
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Past or present injection drug users.
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Require that the supervision be provided on site during the performance of the TC.
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Alternatively, delete the “second test” that allows the markup of diagnostic tests performed in a physician’s office. Most of the flaws in the anti-markup rule are traceable to this part of the two-test approach, ASCP said.
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Require that supervision of the TC be provided by a physician (preferably an anatomic pathologist) meeting the high-complexity laboratory director requirements enumerated in CLIA.
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Reinstate the purchased test rules to prohibit physicians from marking up tests purchased from outside suppliers.
MedPAC Weighs In Too
The Medicare Payment Advisory Commission (MedPAC), which reports to Congress, is also looking at three options to tighten the Stark in-office services exception, including excluding certain services such as diagnostic tests that are not usually provided at the same time as the office visit.
The other options are creation of new payment tools (for example, bundling of services) to reduce the incentive for using such services and establishment of a prior-authorization system for physicians who are self-referring for advanced imaging.
In-office ancillary services are growing at a rapid pace, and the increased utilization may require narrowing the exception for such services under the physician self-referral law, as well as altering the payment system, MedPAC officials noted at a public meeting held earlier this year to invite comments.
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