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By Joseph W. Plandowski
01/15/08
For years, I have read with interest materials provided by the College of American Pathologists (CAP) to glean from organized pathology the blazing issues of the day. My consulting business has profited from understanding these issues. However, some of what I've recently read about pod labs has given me reason to pause and ponder. You may have experienced the same thing. I point to these specific examples:
- July 5, 2007, STATLINE headline: CMS Concurs With College on Pod Labs; Formal Comments and Meetings Provide Good Start to Ending Abusive CJVs (Contractual Joint Ventures).The subheadline states that CMS "included several recommendations from the College urging an end to pod labs and other abusive CJVs designed to capture the revenue stream from anatomic pathology services and exploit loopholes in existing Medicare rules."
- Sept. 20, 2007, STATLINE headline: College Clarifies Key Issues Surrounding Phase III of Stark Law. The text states, "CMS is considering excluding anatomic pathology from the in-office ancillary services exception, which would end pod labs and other contractual joint ventures."
- Nov. 2, 2007 STATLINE headline: Final Physician Fee Schedule Includes College Recommendations to Help End Pod Labs; Other Payment Issues Require Congressional Intervention. The subheadline states, "The final 2008 physician fee schedule from CMS includes recommendations by the College urging an end to pod labs."
I'm struck by CAP's insistence on ridding the world of pod labs, as if those laboratories are a terrible disease thrust upon mankind. Let me make it clear that I am not a pod lab supporter. Let me also make it clear that, in the world of pathology, pod labs are no more than a gnat on an elephant's hindquarters.
The reason I'm not a supporter of pod labs is they are not operating within the intent of CMS's centralized building regulations. Pod labs have extended laboratory sites well beyond what CMS intended: down the hall, across the street, around the corner, on the other side of town, etc. Having a pod lab a thousand miles from the practice is stretching the rules a bit.
What I believe organized pathology appears to miss is that pod labs offer excellent quality, good turnaround time, reasonable fees, and pathologists who are expert in diagnosing urology specimens (pod labs are primarily urology labs). However, blaming pod labs for capturing the revenue stream from anatomic pathology seems far-fetched at best.
If organized pathology is truly concerned about the capture of revenue streams from anatomic pathology services, why aren't they skewering Quest (AmeriPath), LabCorp (Dianon/Urocor/US Labs), CBL Path, GI Pathology, Caris Diagnostics, Oncodiagnostics, Oppenheimer Urologic Reference Laboratory, Bostwick Laboratories, Clarient and a host of others who are truly capturing serious monies in anatomic pathology? The lowly pod labs, primarily UroPath, have maybe a total of 50 urology practices under their control. The labs noted are just some of the commercial laboratories that, on a combined basis, have at least 50 times more urology practices for which they provide anatomic pathology testing services. And how about the gastroenterology practices receiving services from the commercial laboratories noted?
The commercial laboratories I named are enriching the pockets of their nonpathologist and pathologist shareholders by employing hundreds of pathologists at compensation far below the monies earned from payers for the work performed by the hired pathologists. A comment taken directly from the Nov. 27, 2007, issue of the Federal Register perhaps best describes this situation as "reducing pathologists to the status of indentured servants. …" As the pathologists are employees of these companies, "indentured servants" may not be politically correct, but you get the drift. All of these companies must earn a profit for their investors, and the only way that can be done is to pay out less money than is brought in. Yet the commercial laboratories don't feel the wrath of organized pathology. Instead, it is the lowly pod lab group that becomes the whipping boy for organized pathology.
The issue of "abusive" is another matter. Abusive of whom? "Abusive" is not really related to Medicare program billings because Medicare pays claims based on its fee schedule and not on what a given party bills unless billed fees are lower than amounts in the Medicare fee schedule. I suspect "abusive" implies abusive to pathologists. But I fail to understand why it is abusive when the pod labs contract or employ pathologists in their laboratories to provide professional services. Perhaps the majority of their brethren look down upon pod lab pathologists because they are taking work out of local communities and local pathologists' pockets.
Perhaps organized pathology is using "abusive" to indicate overutilization, which is a popular claim. If so, why haven't pathologists who are contracted or employed in those situations blown the whistle to the OIG or to their own professional organization about such alleged overutilization? I suspect there is little, if any, of that happening. And I find it hard to understand an argument whereby the pathology community is self-policing against pod labs when their own members are providing professional services to those same labs. Perhaps it is just a popular cause of the day to rally around.
In the July 2007 issue of STATLINE can be found the common cry that physician groups are billing for pathologists' services at a profit. Can you imagine this? On the other hand, what are the writers of this stuff thinking? Do they think Quest and the other commercial laboratories are performing pathology services for zero profit? Physician groups are profiting off pathologists, just like Quest and the others, because they are trying to earn a return on their investment. The relatively few pathologists who have invested in their own freestanding laboratories do understand this concept. It appears the majority of organized pathology does not. There is nothing wrong with pathologists working for other specialty physicians. Consider that plenty of pathologists work as employees of pathology groups in hospital settings and in private pathology laboratories. The employed pathologists are contributing more income to their employer-pathologists than they take home in compensation.
What organized pathology seems to miss is that commercial laboratories and specialty physicians, especially urologists and gastroenterologists, are taking investment risks by building a laboratory. Furthermore, they are saddling-up hapless pathologists, as some would like us to believe, to work for them. There is no hue-and-cry when commercial laboratories do the saddling. But woe to the specialty physician group that tries to saddle-up pathologists.
On the surface, it would appear that pathologists have an ego problem with working for other physicians, specifically urologists and gastroenterologists, who are "abusively" taking advantage of them by paying less than the monies pathologists bring in for services they provide. The fact that these specialty physicians are risking capital to own a laboratory, for which they deserve a return of capital, seems to escape the thinking within organized pathology.
And what about headlines announcing the end of pod labs? Simply put, they are not true. Pod labs will continue to exist into 2008 and beyond. CMS did not end pod labs. What CMS did is apply their anti-markup provision to pod labs because the work is not being done within the "office of the group practice." This anti-markup provision applies only to Medicare patients. If the group practice has 20% of their patients on Medicare, then the remaining 80% of their patients' specimens can still be processed and billed through the pod lab. It does not appear that the end of the world has come for pod labs.
Here is the great shame in all of this: Buried in paragraph seven of the November 2007 issue of STATLINE is an item that should really be the focus of pathologists' ire. It states, "The professional component of CPT code 88305 will see a 15 percent reduction in 2008, with 10 percent attributed to the SGR." Now that is something to get excited about! There is not much sense putting that in headlines. Instead, because organized pathology has a "win" of sorts on pod labs, the approach is to pound pod labs again for good measure.
I suggest that the fee cuts impact virtually every pathologist while pod labs impact few. However, headlines sell newspapers. I wonder how well the pathologists are being served with the drivel on pod labs they are being fed. The hit to pathologists' wallets has got to carry a higher priority. With Congress halting implementation of the 2008 SGR, a 15% expected reduction in fees has been chopped to a 5% reduction for pathologists. Unfortunately, this reduction continues a general downward trend that hurts organized pathology. Besides, the enacted Medicare bill covers only the first six months of 2008 and means we will be at it again in a few months. It's time to tighten the belt a few more notches and focus on facts rather than the fluff of pod labs.
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