U.S. Legislative/Regulatory News

1. Senate Medicare Bill Includes Competitive Bidding Repeal

On Friday, June 6, 2008, Senate Finance Committee Chair Max Baucus (MT) introduced the “Medicare Improvements for Patients and Providers Act of 2008.”

On June 11, 2008 Senate Finance Committee Ranking Member Charles Grassley (IA) also introduced the “Preserving Access to Medicare Act of 2008” as an alternative proposal on behalf of the Republicans. Both bills contain provisions to repeal the competitive bidding demonstration project for clinical laboratory services.

Each bill contains a provision to permanently repeal the competitive bidding demonstration for clinical laboratory services effective immediately upon enactment of the bill. Each also reduces the Consumer Price Index (CPI) payment update for clinical laboratory services by 0.5 percent for the next five years. Clinical laboratory services are currently under a five year freeze scheduled to end December 31, 2008.

In late December 2007, President Bush signed the “Medicare, Medicaid, and SCHIP Extension Act of 2007 (S 2499)” into law. S. 2499 was designed only to contain narrow and specific provisions to extend existing Medicare programs for six months. Therefore, competitive bidding repeal was not included in that law. Time sensitive provisions in the law expire June 30, 2008.

The Clinical Laboratory Coalition (CLC) of which CLMA is an active member, has been working behind the scenes with Senate Finance Committee staff to ensure that repeal of competitive bidding was included in the latest Medicare package.  Faced with the same obstacle regarding narrow and specific provisions, the best way to ensure that repeal was included in the bill was to also include a “pay for.”  This “pay for” will be applied by reducing the CPI update by 0.5 percent for the next five years, totally $600 million.

By spreading the $600 million “pay for” out over five years and only taking a 0.5 percent reduction each year, clinical laboratories will receive a CPI update each year for the first time since 2004 while permanently eliminating the threat of the current competitive bidding demonstration project. Our intelligence indicates that even opponents of repeal for competitive bidding will not block it due to the included savings.

Other significant provisions in both bills include:

• A provision to block scheduled cuts to the physician fee schedule through December 31, 2009 and provides a 1.1 percent update in 2009

• A provision that provides an 18 month extension of the “Grandfather Clause,” which would allow Medicare reimbursement for the technical component (TC) for pathology services provided to a “covered” hospital to continue to be paid to the laboratory providing the service instead of the hospital. “Covered hospitals” are defined as those having an arrangement with an independent laboratory that was in effect as of July 22, 1999.

• A provision that allows Critical Access Hospitals (CAHs) to receive 101 percent of reasonable costs for laboratory services regardless of whether the specimen is collected in the hospital or off site, as long as the specimen is collected in the same county as the CAH
  

Senator Baucus intends to move the bill straight to the Senate floor while continuing to work towards bipartisan passage. To read a section by section analysis of the “Medicare Improvements for Patients and Providers Act of 2008,” please visit http://finance.senate.gov/sitepages/legislation.htm. med.

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2. Competitive Bidding Action Alert Update:
Repeal Legislation in 2008 is More Critical Than Ever!

As stated above, Senate Finance Committee Chair Max Baucus (MT) and Ranking
Member Charles Grassley (IA) have both introduced bills that include the repeal of the
competitive bidding demonstration project. These bills are the first step towards enacting
permanent repeal of competitive bidding into law.

Prior to the current Medicare bills out of the Senate Finance Committee, two specific repeal bills had been introduced in Congress; the “Protecting Access to Clinical Laboratory Services Act of 2007(S 2099)” and the “Community Clinical Laboratory Fairness in Competition Act (HR 3453).” A large number of cosponsors for these bills helps to ensure that repeal for competitive bidding will be included in a final Medicare bill. Senator Baucus’ bill is slated to go directly to the Senate floor this month. It is critical to contact both your Senators and House members to make sure repeal for competitive bidding is included in the final Medicare package.

Senator Baucus’ bill is slated to go directly to the Senate floor this month.
It is critical to contact both your Senators and House members to make sure
repeal for competitive bidding is included in the final Medicare package.

*To contact your Members of Congress, please use CLMA’s “one-click” advocacy software, CapWiz.  The links below will connect you to action alerts for both S 2099 and HR 3453. A template letter has been provided for each bill. You can customize the letter with your own story. Also, if your Member of Congress is already a co-sponsor of S 2099 or HR 3453, please customize the letter to thank them for their support. Your letter will automatically be emailed to your Members of Congress. The links below represent separate letters to your two Senators and to your Representative. Please click on each link separately in order to contact both the Senate and the House.

House Bill (HR 3453): http://capwiz.com/clma/issues/alert/?alertid=10372476

Senate Bill (S 2099): http://capwiz.com/clma/issues/alert/?alertid=10372386

*Note: Before responding to the call to action above, please check the list of co-sponsors for HR 3453 and S 2099.  For a list of co-sponsors, please visit http://thomas.loc.gov/  and search using HR 3453 and S 2099. If your Senators or Representative are already co-sponsors, please modify the letters in the action
alerts to thank them for their support.

Thank you for your support!

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3. CDC Publishes New Report on Status of Laboratory Medicine

In May 2008, the Centers for Disease Control and Prevention (CDC) published a comprehensive report on the status of laboratory medicine. CDC commissioned the Lewin Group, under subcontract to Battelle Memorial Institute to draft “Laboratory Medicine: A National Status Report,” in order to “lay the groundwork for transforming laboratory medicine over the next decade.”

In preparing the report the Lewin Group compiled and analyzed secondary data from a variety of sources including published and unpublished literature, government databases and reports, market research reports, Internet searches, and input from industry experts and government officials. The scope of the report as it evolved was further defined using a multidisciplinary Technical Experts Committee. 

The report acknowledges the significant role that laboratory services play in informing health care decisions and spending. It states that appropriate use of laboratory testing is vital to safe, effective and efficient care of patients.

The report provides a detailed overview of key factors impacting laboratory medicine as follows:

• Value of laboratory medicine (Chapter I) -addresses the role of laboratory medicine in screening, diagnosis and treatment; evidence-based medicine; clinical practice guidelines; assessing quality of care; contributing to cost-effective care; and protection from public health threats

• Profile of the laboratory medicine market sector (Chapter II)- provides detailed  information by setting ( hospital, independent laboratory, POL) and clinical discipline ( clinical pathology, anatomic pathology) on the magnitude and composition of the U.S. clinical laboratory testing market

• Laboratory Medicine workforce (Chapter III) – provides an overview of the clinical laboratory workforce including professional responsibilities, demographic characteristics, wage and vacancy rates, status of educational programs, and  licensing and certification requirements

• Quality and the total testing process (Chapter IV) – describes the total testing process and the quality issues and errors most relevant to each phase of testing on both the clinical and anatomic pathology side

• Quality systems and performance measurement (Chapter V) – describes the current status of performance measures and the current and  future status of quality systems, citing the shift  to a more comprehensive,  systems-based approach

• Laboratory information systems (Chapter VI) -  addresses laboratory information systems and automation technology including emerging technologies ( i.e., computerized physician order entry, electronic health record) and the degree to which these have been adopted

• Federal regulatory oversight of laboratory medicine (Chapter VII) – describes oversight of clinical laboratories by CMS (CLIA) and oversight of marketed tests by the FDA (Food and Drug Administration), including laboratory-developed tests

• Reimbursement for laboratory medicine (Chapter VIII) – describes public and private reimbursement systems for laboratory services focusing on coverage, coding and payment for each. Includes new initiatives like competitive bidding to reduce spending

The report validates the clinical laboratory community’s view on the competitive bidding demonstration project for laboratory clinical laboratory services. The chapter on reimbursement (Chapter VIII) states that the competitive bidding demonstration model for clinical laboratory services is “highly exclusive and could have significant detrimental effects on clinical laboratories that lose in the bidding process, as many depend on Medicare reimbursement for a sizable portion of their revenues.”

It also supports CLMA’s position on modernizing the clinical laboratory fee schedule. In addition to outlining the various flaws in the current payment system, Chapter VIII states that “redesign of the current Medicare payment system for laboratory services is needed in order to meet the growing scientific, technical, clinical and economic challenges of the U.S. health care system.”

CLMA and the American Society for Clinical Laboratory Science (ASCLS) have been working on a broad proposal to put in place a process to modernize and rationalize the Medicare clinical laboratory fee schedule (CLFS) as recommended by the CDC report.  

Based on both organizations’ support for the Institute of Medicine (IOM) Study published in 2000, we are proposing legislation to put in place a process where all stakeholders provide input to craft a method of reimbursement that reflects the value and complexity of technology
of laboratory services as offered in the market place today. This legislation is slated to be introduced July 1, 2008.

To read the CDC report, “Laboratory Medicine: A National Status Report,” please visit http://www.futurelabmedicine.org/

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4. CMS Updates NCDS with ICD-9-CM Changes

On June 6, 2008, CMS published Transmittal 1531, Change Request (CR) 6084, “Laboratory National Coverage Determination (NCD) Edit Software Changes for July 2008.”

CR 6084 lists ICD-9-CM changes that will be included in the July 2008 release of the laboratory edit module for the NCDs. The last quarterly release was April 2007.  This CR incorporates all changes from April 2007 until the present.

CMS contracted Computer Sciences Corporation to develop the software designed so that laboratory claims subject to one of the 23 NCDs are processed uniformly throughout the nation.  Quarterly updates to the edit module began as of January 1, 2003. The edit module is updated as necessary to reflect implemental coding updates and substantive changes to the NCDs developed through the NCD process. This is the first time that CMS has missed multiple quarterly updates.

CR 6084 includes the addition and/or deletion of more than 70 ICD-9-CM codes and affects nine of the 23 laboratory NCDs, including:

• HIV Testing
• Blood Counts
• Prothrombin Time
• Serum Iron Studies
• Glycated Hemoglobin/Glycated Protein
• Thyroid Testing
• Gamma Glutamyl Transferase
• Hepatitis Panel/Acute Hepatitis Panel
• Fecal Occult Blood Test

The implementation date for CR 6084 is July 7, 2008.

To read Transmittal 1531, Change Request (CR) 6084, “Laboratory National Coverage Determination (NCD) Edit Software Changes for July 2008,” please visit http://www.cms.hhs.gov/transmittals/downloads/R1531CP.pdf.

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5. CMS Updates Medicare Travel Allowance

On May 30, 2008, CMS published Transmittal 1524, Change Request (CR) 5996, “Clinical Laboratory Fee Schedule –Medicare Travel Allowance Fees for Collection of Specimens.” CR 1524 updates the Medicare travel allowance fees for collection of specimens for calendar year (CY) 2008.

CR 5996 contains instructions regarding separately payable fees for traveling to collect specimens from nursing homes or homebound patients. There are two codes used for billing travel: P9603 for a per mileage trip longer than 20 miles, or P9604 for a flat rate trip where the average round trip is less than 20 miles. The minimum mileage rate for these fees is reviewed and updated in conjunction with the clinical laboratory fee schedule as needed.

Contractors have discretion to choose either a mileage basis or flat rate, and how to set each type of allowance. Many contractors have chosen to establish local policies to pay on a flat rate basis in order to avoid potential abuse by laboratories claiming travel mileage in excess of the minimum distance required to collect specimens.

Under either method, when one trip is made for multiple specimen collections, i.e., at a nursing home, the travel payment component is prorated based on the number of specimens collected during that trip, for both Medicare and non-Medicare patients, either at the time the claim is submitted or when the flat rate is set by the contractor.

The fee for code P9603 is being updated to $0.955 per mile, based on the Federal mileage rate of $0.505 and the $0.45 per mile rate to cover the time and travel costs of the staff person collecting the specimen.  The fee for P9604 is being updated to $9.55.

The effective date for CR 1524 is January 1, 2008. The implementation date is June 30, 2008.

To read Transmittal 1524, Change Request (CR) 5996, “Clinical Laboratory Fee Schedule –Medicare Travel Allowance Fees for Collection of Specimens,” please visit http://www.cms.hhs.gov/transmittals/downloads/R1524CP.pdf.

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6. OIG Publishes New Compendium on Unimplemented Recommendations

On May 30, 2008, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) published its second annual “Compendium of Unimplemented Office of Inspector General Recommendations.” The Compendium combines two OIG publications previously known as the “Red Book” and the “Orange Book.”  The “Red Book” included cost-saving recommendations that had not been fully implemented, and the “Orange Book” contained recommendations to improve the operation of HHS programs.

The Compendium lists and describes selected OIG recommendations that have not been implemented as of December 31, 2007. Each item listed contains a background summary, findings, recommendations, and the status of the item. The monetary recommendations also include an estimate of savings that may be achieved by implementing the recommendations.
The estimates provide a general indication of possible savings, as actual savings are dependent on specific legislative, regulatory or administrative actions. The estimates are only based on the specifics of each review and are not extrapolated beyond that review or adjusted to current year dollars.

• Review Payment Levels and Reinstate Beneficiary Cost Sharing for Laboratory Services.
  
  
• Improve Enrollment and Certification Processes in the Clinical Laboratory Improvement Amendments Program.
  

Regarding reviewing payment levels and reinstating co-payment for clinical laboratory services, the Compendium states that an OIG 1996 follow up report found that generally, “Medicare continued to pay clinical laboratories more than physicians pay for the same tests.” Previous work by the OIG indicated that laboratories marketed customized panels to physicians at less than what Medicare paid for the same tests, which “contributed to a significant increase in the use of laboratory services.”

The OIG recommends that CMS should (1) review payment for laboratory services and (2) reinstate the beneficiary coinsurance and deductible as a way to control utilization.

The OIG estimates savings at $1.25 billion, based on 20 percent co-pay applied to fiscal year (FY) 2005 Medicare payments for laboratory services totaling $6.28 billion.  A savings estimate based on a fee schedule adjustment is “TBD.”

The current status of these recommendations is that CMS partially concurs and has taken steps to reduce payments for laboratory services. CMS did not concur with the recommendation to reinstate co-pay. Currently the CPI update for laboratory services is frozen through 2008, and CMS had taken steps towards implementing the competitive bidding demonstration project in San Diego.

Regarding the enrollment and certification process under CLIA, the OIG found as of July 2000 a significant number of laboratories with certificates of waiver and provider-performed microscopy were testing beyond the scope of their certificates and were not following manufacturers’ instructions. Moderate- and high-complexity laboratories also failed to meet requirements for waived testing.

The OIG continues to recommend that CMS provide educational outreach and self-assessment tools and require laboratories with waived and provider-performed microscopy certificates to identify the test systems that they use. They also recommend that CMS conduct yearly random inspections of these laboratories to assess compliance. Although CMS agrees with these recommendations, resource limitations may affect the agency’s ability to fully implement them.

CMS did work collaboratively with the Centers for Disease Control and Prevention (CDC) to develop laboratory best practices for waived testing.  These were published in November 2005 issue of “Morbidity and Mortality Report.”

To read the “Compendium of Unimplemented Office of Inspector General Recommendations,” please visit http://oig.hhs.gov/publications/compendium.html.

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EDUCATION NEWS

7. Several audioLab sessions have been added to the schedule for the remainder of the year. Check out all of CLMA's recently scheduled audioLabs by clicking here.

Are you a lab manager who finds it difficult to locate and schedule learning opportunities for your staff? CLMA is here to help! We encourage laboratory managers to invite their staffs to observe our upcoming cutting-edge audioLab session offerings for 2008. 

By doing so, you will:

• Eliminate the headaches associated with travel while taking advantage of the convenience of learning from your home or laboratory.
  
  
• Ensure your staff are receiving critical, continuing education credits at a very reasonable fee.

And, as an added bonus, you are charged the same single phone line rate regardless of how many people participate.

We encourage you to visit the audioLab Web site to learn more about this exciting learning opportunity.

Last chance to register for the “Coaching: The Tool for Influencing Outstanding Performance and Inspired Achievement” audio-only audioLab being broadcast on Friday, June 13^th live from the N.Y. Chapter.  Session begins at 1:15 PM and ends at 2:45 PM, ET.

Town Hall audioLab rescheduled to July 23, 2008  from 2:00 PM – 3:30 PM, ET

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