2/20/2017

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AAD Annual Meeting 2017 - Forum FO74

Threats to Independent DP Labs Jane M. Grant-Kels, M.D.

Founding Chair Emeritus, Dept of Dermatology, UCONN

Founding Director Emeritus, UCONN Dermpath Lab

Director, Cutaneous Oncology Ctr & Melanoma Program

Professor of Dermatology, Pathology, Pediatrics

Vice Chair, Department of Dermatology

grant@uchc.edu

Housekeeping Disclosures• Relevant relationships w/ industry: None

• Former Chair: AAD DP Rapid Response Committee (DPRRC)

• Former member: AAD Council on Government Affairs, Health

Policy & Practice (GAHPP)

• AAD Board of Director

• AAD Clinical Melanoma Guidelines Update Committee

Work Group

• AAD In-Vivo Microscopy of the Skin Work Group

• AAD Deputy Chair of the Appropriate Use

Criteria (AUC) Committee

• Bias: Founding Director Emeritus, UCONN DP Lab

My Goals for

next 20 minutes1. How did we get here?

2. Update on where & how DP done & billed

3. Economic trends, regulatory developments, legal

& ethical concerns

4. Key takeaways to avoid legal & financial problems

as well as ethical dilemmas

5. AAD advocacy efforts &

educational resources

• The Amer Assoc of Independent DP Labs morphs into Ameripath Dermpath Diagnostic Quest

• Other corporate labs acquire independent DP labs

• Typically, lab directors sell equity, stay on w/ salary + stock options

• New hires: employees

• Grow in size eliminate competition

– Most vulnerable: independent, physician office lab (POL) & university labs

How did we get here? Rise of Corporate DP:

A story of questionable behavior

• Congress wanted to encourage EMRs, so enables “donation” of EMR systems

• Originally intended to enable linkages to & between hospitals

• Labs began to “donate” EMR systems to clinicians

• Regulations prohibited quid pro quo… but it is understood

Enter the EMREMR Gift by Labs Outlawed

• 12/29/2013: OIG for US Dept of HHS & CMS

released their final ruling effective 1/1/2014:

– Extended safe harbor exception until end of 2021

– Excluded “lab companies” from types of entities

that may donate EHR & services

– Eliminated abuses assoc/d

w/ donations

– Victory for independent, POL &

academic DP labs

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Enter Meaningful Use Requirements1. Use computerized provider order entry for meds, labs, &

radiology orders

2. Generate & transmit prescription electronically

3. Use clinical decision support to improve performance on high priority health conditions

4. Provide pts ability to view on line, download, & transmit their health info

5. Incorporate clinical lab-test results into certified HER

6. Use secure electronic messaging to communicate w/ pts on relevant health info

CMS provides incentive payments to professionals & hosps who adopt, implement, upgrade or demonstrate MU of certified EHR

Threat of Big

Commercial Labs

• Ethical + Legal concerns re: large labs

– Teaming up w/ EMR companies: limiting importing of non-preferred lab results

– Giving kickbacks w/ free consulting for EMR & MU compliance

• Big labs compete better for contracts

• Insurance co’s will continue to require derms to send to one lab w/ lowest prices irrespective of service or quality

My Goals for

next 20 minutes1. How did we get here?

2. Update on where & how DP done & billed now

3. Economic trends, regulatory developments, legal

& ethical concerns

4. Key takeaways to avoid legal & financial problems

as well as ethical dilemmas

5. AAD advocacy efforts &

educational resources

Derms w/ In-house Path Labs - Practice Type

AADA Dermatopathology Services Survey 2014 Findings

• Derm office lab driven by size of practice: larger gp practice

likelier to have physician office lab (POL)

• Urology, GI, & Derm have led “insourcing” of POLs

DP Slide Prep & Interpretation

AADA DP Services Survey 2014

Most derms outsource path work to a DP lab:

• ~60% use outside lab to prep & read slides

• ~20% provide full service in office (POL)

• ~20% have outside lab prep slides & read in office

Billing DP Services: Slide Prep’d & Interpreted by Outside Path Lab

AADA DP Services

Survey 2014

• Most derms rely on outside lab to perform full service & bill

directly for work they performed

• Consistent w/ AAD policy statement

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Billing DP Services:

Slide Prep’d by Outside Lab & Interpreted in Practice

AADA DP Services

Survey 2014

• Path services split btw derm & outside lab patterns:

~40% bill full service after buying slide prep from lab

~35% bill interpretation they did in office, lab bills TC

~12% bill slide reading + cost of slide prep by lab

Policies Impact QOC?Derms that believe policies have impacted the QOC they provide

February 20, 2017 Source: AAD14

45% 37% 18%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Regulatory Payer Influence on Ability to Provide Optimal Dermpath Services

Much Improved No Change Somewhat Worsened Much Worsened

1%

My Goals for

next 20 minutes1. How did we get here?

2. Update on where & how DP done & billed

3. Economic trends, regulatory developments,

legal & ethical concerns

4. Key takeaways to avoid legal & financial problems

as well as ethical dilemmas

5. AAD advocacy efforts &

educational resources

Physician Office Labs (POLs) Trends

• ~20% office-based derms w/ full-service DP lab

• Urology, GI, & OB/GYN: adopting POLs. WHY?

– Growth of gp practices + $$$$

– Clinical integration: medical + surgical + path

• Cost controls & barriers from payers & large commercial labs

– Medicare & pvt payers cut fees for 88305 & imposed lab accreditation requirements on POLs (not derm yet)

– Large commercial labs (Quest, LabCorp, Miraca) growth: 1) Mergers & acquisitions 2) Exclusive arrangements w/ “Big Insurers” & hosp’s

based on volume for discounts 3) EMR / Lab deals with pvt offices

“The U.S. Anatomic Pathology Market: Forecast & Trends 2016”. Laboratory Economics 2016

Onslaught of Payment Cuts starting 1/1/2013

Medicare Reimbursement: CPT 88305 TCLaboratory Economics Vol 8, No 12, Dec 2013

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

2008 2009 2010 2011 2012 2013 2014

2013: CMS implemented 52% reduction in 88305 TC

PC increased by 2% 33% global cut

2014 Changes: Attack on IHCCPT Stain per

site/specimen

2014

payment

Total % Change

from 2013 88342

G0461 1st IHC or multiplex

stain

$88.04 - 24% global

G0461-TC TC $57.39 - 22%

G0461-26 PC $30.65 - 27%

G0462 Each add’l or

multiplex stain

$68.08 - 41% global

G0462-TC TC $55.61 - 24%

G0462-26 PC $12.48 - 70%

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“The Proposed Rule & Payments for

2017: The Good, the Bad & the Ugly”Siegel D. Cutis 2016;98:245-248

• The Bad: 15% cut to TC

for CPT 88305 due to

redefinition of the

valuation of eosin stains

• The Ugly: global service

codes under attack

The US Govt Accountability

Office (GAO) Report (2013)• Address higher use of AP services by providers who self-refer

– 2004 - 2010: self-referred services ‘d by 113%

– 2004 - 2010: non-self-referred services ‘d by 38%

• Analyzed “switchers”: derms who used to send out path

specimens for processing & then created their own POL

• GAO compared # of bx’s “switchers” did

in yr before they created their own labs

to volume of bx’s in yr following

• GAO Report 7/2013 “switchers” sig. increased # of bx’s

performed in yr following establishment of POL

– 24% increase in path specimens among derms who self

referred Vs 0.3% for those who sent specimens elsewhere “GAO-13-445 Medicare Self-Referral of AP Services.” US Govt Accountability Office Report

to Congressional Requesters. June 2013. http://www.gao.gov/assets/660/655442.pdf

GAO Report Conclusions

• GAO estimated in 2010 self-referring providers

referred over 918,000 more anat path services

than non-self-referrers

• Additional cost to Medicare ~ $69 million

• “To the extent that these additional referrals were

unnecessary, avoiding them could result in savings to

Medicare & beneficiaries, as they share in cost of services”

• Consequences: Congress will try to restrict POL’s by

overturning Stark exemptions for POL & self-referral

Efforts at Legislation

to Restrict Derms’ Path Privileges

• Attempts to eliminate derms abilities to supervise labs, send DP to practice colleagues & force path to be sent out of practice for prep

– AIM (Alliance for Integrity in Medicine) Bill• Threat w/in past 3 yrs

– PIMA (Promoting Integrity in Medicare Act) • Threat w/in last 2 yrs

2013’.” The office of Congresswoman Jackie Speier. August 1, 2013.

http://speier.house.gov/index.php?option=com_content

– .

My Goals for

next 20 minutes1. How did we get here?

2. Update on where & how DP done & billed

3. Economic trends, regulatory developments, legal

& ethical concerns

4. Key takeaways to avoid legal & financial

problems as well as ethical dilemmas

5. AAD advocacy efforts &

educational resources

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• Submit bx specimen: referral implicates state & federal fraud &

abuse laws + payer restrictions

• Compliance issues, legal risks, ethical concerns bc MD

potential to gain $ 20 referral to lab which MD has relationship

https://www.aad.org/dw/monthly/2016/january/dermpath-fraud-and-abuse-

sixscenarios-to-consider

Scenarios to consider before

enter into DP arrangement1/1/2016 Dermatology World:

DP Referral Models Under

Scrutiny By Dept of Justice & OIG

1. Vendor or lab arrangements that allow treating Dr. to bill for services that they do not personally provide

2. Vendor or lab providing items or services to a practice for free (or < fair market value) tied to referrals to that vendor or lab

3. Vendor or lab that has “preferred arrangements” w/ other vendors w/ which Dr. may do business

4. Sale of Dr.’s practice to entity to which the Dr. already or subsequently refers

5. A practice’s requirement that employee or contractor Drsrefer to an affiliated lab

https://www.aad.org/dw/monthly/2016/january/dermpath-fraud-and-abuse-sixscenarios-to-consider

Risks of tech-only labs &

fee-splitting arrangements

DEFINITIONS

• Direct Billing

Lab performing path services bills pt &/or 3rd-party payer & receives payment directly from billed party http://www.aad.org/gov/congressional/directbilling.html

• Client Billing or Account Billing

Referring derm pays lab fixed amt for tech & prof fees & then bills pt &/or 3rd-party payer Amer Soc for Clinical Path. Self-Referral, Markups, Fee-Splitting, & Related Practices. The Amer Soc for Clinical Path Policy Statement. Policy Number 04-03. 2009.

Federal Compliance

Rules for Path Billing

& Referrals 3 Key Federal Compliance Factors:

• Medicare Anti-Markup Regulations: cannot mark-up

cost of a purchased professional or technical component path

service when billing Medicare

• Anti-Kickback Law: prohibits the payment,

receipt, offering or solicitation of remuneration

in exchange for the referral of services or

items covered by Medicare or Medicaid

Federal Compliance

Rules for Path Billing & Referrals

• The Stark Law: prohibits physician from making a referral for certain designated health services, including path, which are covered by Medicare or Medicaid if the physician has a financial relationship w/ the provider of services – Currently exception to Stark Law allow

derms to read own bxs as part of their scope of practice & to run lab under CLIA regs

State Laws & Path Billing Direct Billing:

if you provide the service,

then you can bill the patient or

payer directly

Anti-Markup:you cannot purchase part of

or the full lab test, then rebill it

by marking up the original

cost

Disclosure:the lab or individual

performing the tests & the

amount charged, needs to

appear on either the claim or

the bill

Arizona, California, Colorado,

Connecticut, Massachusetts,

Nevada, New Jersey, New York,

Rhode Island, Louisiana, Ohio,

South Carolina, Tennessee,

Indiana, Iowa, Maryland,

Montana, Kansas, and

Washington

California, Florida, Illinois,

Michigan, Oregon,

Pennsylvania, Utah, Virginia,

and Washington

Arizona, Connecticut, Delaware,

Florida, Louisiana, Maine,

Maryland, Nebraska, North

Carolina, Ohio, Pennsylvania,

Texas, Vermont, New Jersey,

Tennessee, and Utah

College of American

Pathologists

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Relationship with an Outside Lab:

Billing & Referral Red Flags1. Path lab that derm practice sends skin bx’s charges

the practice for services BUT practice bills pts’ health

care plans, including Medicare, for those services

(BEWARE: mark up of fee)

2. Path lab provides the services of a lab tech to a

derm practice as long as practice refers a certain # of

bx samples per month for testinghttps://www.aad.org/dw/monthly/2016/january/dermpath-fraud-and-abuse-

sixscenarios-to-consider

Client Billing: Legal issues

• If lab charges $50 / specimen & derm bills pt or insurer $100 profit of up to $50 for clinician = fee-splitting (violates AMA code of ethics & disciplinary action by some state medical bds)

• Law prohibits CB w/ markup of fees for Medicare pts but legal in 34 states for privately insured

• Lab may offer derm discounted rates for processing privately-insured pts’ specimens, in exchange for guaranteed referral federally-insured specimens

• If clinician then CBs for privately-insured specimens & turns substantial profit violate AKS

Wood. How to compete when everyone seems to be cheating. Am Soc for Clinical Path Companion Meeting, 2007 US & Canadian Academy of Path Annual Mtg, San Diego, 3/25/07 http://www.pathologyportal.org/96th/pdf/companion21h02.pdf

EHR Vendors, Labs & Derm

Practices: A Tangled Web3. EMR company a derm practice uses charges path labs a fee for uploading test results into the practice’s EMRs, except for its “preferred” lab partner

4. Preferred lab partner above offers to provide customers of EMR co. that agree to switch to the preferred lab w/ technical support & consulting services for an amt that appears to be well under market value for such serviceshttps://www.aad.org/dw/monthly/2016/january/ dermpath-fraud-and-abuse-six scenarios-to-consider

Lab & Practice Dynamics: Mergers &

Acquisitions, Employment Arrangements 5. Path lab that derm practice has been using for several yrs has offered to buy practice. Practice is interested but not sure if sale allowed since it has a referral relationship w/ the lab

6. Owner of a derm or multi-specialty practice, or the owner of multiple derm practices, requires its employed physicians to refer to its in-house lab or a particular outside lab https://www.aad.org/dw/monthly/2016/january/dermpath -fraud-and-abuse-sixscenarios-to-consider

Consolidation, Mergers, Acquisitions• Growth of derm practice; consolidation thru M & A

• DP lab buy derm practice reliable referral base

• Referral & billing questions: legal & ethical

– Involves using docs as independent contractors

• 2015 Family Derm PC: paid >$3 million to settle False Claims

Act & Stark Law charges

“owns & operates DP lab in Georgia & # of derm practices

thruout Eastern US, agreed to pay US $3,247,835 + interest

to settle allegations that it violated False Claims Act by

engaging in improper financial relationships w/ a # of its

employed physicians” https://www.justice.gov/ Justice Dept

My Goals for

next 20 minutes1. How did we get here?

2. Update on where & how DP done & billed

3. Economic trends, regulatory developments, legal

& ethical concerns

4. Key takeaways to avoid legal & financial problems

as well as ethical dilemmas

5. AAD advocacy efforts &

educational resources

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Dermatologists & DP:

AAD has our back!

AAD Position Statement on

Path Billing: 4 key principles• Supports right to bill for one’s own work

• Supports freedom of choice of DP consultants

• Supports principle of derm office labs

• Cautions against risks assoc’d w/ certain POL models:

– Fee splitting services designed primarily for financial gain &

– Marking up purchased tests raise ethical concerns & legal liabilities

https://www.aad.org/Forms/Policies/Uploads/PS/PS%20Pathology%20Billing.pdf

Statement reviewed & reaffirmed w/o changes 11/2015

AAD DP Rapid Response Committee

(DPRRC) Addressing pressures from payers

re: physician office lab accreditation

• Work w/ Pt Access & Payer Relations Committee to address payer related issues that impact DP

• In discussions w/ United Healthcare’s (UHC) re: their Lab Benefits Management Pilot (LBMP) program

– Pilot launched in FL 2 yrs ago

– Expanding to TX March 2017

– Targets ~79 clinical & anatomic lab tests that are deemed “high-volume & high-cost”

1. Prenotification of bx’s using dedicated system

– Your staff logs onto Beacon Lab Benefits Solutions' thru EHR interface or Beacon’s online portal to enter info re: pt & specimen

• + your own EHR & paperwork to process specimen

• Beacon (owned by LabCorp, largest US commercial lab) administers program for UHC

• Not considered “preapproval” but “prenotification”

– Uses office staff time, barrier to providing effective pt care.

– No indication that this improves care

UHC-LBMP Program Prenotification

Beacon/UHC: Accreditation2. CAP or Joint Commission accreditation for POLs

• POLs are currently CLIA accredited

• Why is CAP or Joint Commission not appropriate for POLs?

– Designed for hi volume labs w/ many types of path services

(heme, GI, GU, DP, etc.) & for labs that process outside

specimens (not just in-office specimens)

– Expensive, time-consuming review process concern will

force closure of POLs where CAP not feasible

• “Quality” initiative or way to reduce costs & force derms to use

central UHC labs?

Beacon/UHC: Reread for Cancer3. Cut malignancies to be read by AP or board

certified DP

– If derm made ca dx require 2nd read by AP or DP

• AAD official position: all derms able to read all DP specimens,

with no difference in scope between board certified derms &

board certified dermpaths

• Curtails derm scope of practice

• Elevates anat path over derms who are more expert at DP

• Wastes medical resources thru unnecessary duplication

• Slows down Dx & Rx

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UHC-LBMP Program

AAD Successes

1. CAP accreditation requirement for DP labs postponed

while we negotiate alternatives. Meanwhile DP labs

only required to have CLIA accreditation

2. Mohs surgery exempt: not required to use the decision

support system to perform tests & not restricted to

approved labs for Mohs surgery

3. Reread for skin ca reduced to just reread for MM

4. Streamlined pre-notification

DPRRC Exploring Lab Accreditation Options:

CLIA-Plus (Lab Accreditation Alternative)

• Mid-2016: DPRRC approved “CLIA-Plus” concept

– Set of derm-relevant & friendly lab quality criteria

– Pursue potential relationship w/ Accreditation

Assoc for Ambulatory Health Care’s (AAAHC)

new lab accreditation program: Healthcare

Facilities Accreditation Program (HFAP)

• Pilot testing & validation to ensure reasonable &

feasible for derm POL + pass “test” w/ payers

AAD P

Lab

Certified

Avoid Legal & Financial Headaches? 1. Develop practice Compliance Plan

2. Routine self-audits or independent auditor

3. Solid documentation

4. Regular training & education of clinicians & staff

5. Hire healthcare compliance atty for legal guidance

6. Stay aware of trends & issues

7. Consult AAD.org website for additional resources

Compliance plan should be kept up to date:

• Growing enforcement action of path services from state & federal authorities

• Growing scrutiny by private payers

AAD Compliance Resources: https://www.aad.org/aad-store

Cover False Claims Act, Anti-Kickback Statute, Stark Law on

physician self-referrals, state regulations re: client billing &

concerning client billing & markups

AAD 2

compliance

manuals explain

requirements &

potential pitfalls

involved in

providing &

billing for path

Free Resources

• https://www.aad.org/dw/monthly/2014/april/pathology-billing-and-cms

• https://www.aad.org/dw/monthly/2016/october/dermpath-billing-dos-and-donts

• https://www.aad.org/members/publications/member-to-member/gao-report-raises-concerns-about-dermatologists-use-of-in-office-labs

Conclusion: Things to think about….

• Implications of consolidations, M&A to future of derm

• Large commercial labs selling services for discount

– 2015: BC/BS of TN bought lab services from large national

lab at 50% of Medicare

• Losing independent labs & acad labs: DOWNSIDES

– Helps insurers limit our choice of DP lab

– Lose our ability for POLs & to SO own cases

– Impact on derm residencies

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Thanks for your attention & to:

• Dr. Jack Resneck

• William Brady, AAD Associate Director, Health Care Policy, Advocacy & Policy Department

• Dr. Phil LeBoit, UCSF

• Dr. Robt Brodell, Chair DPRRC

Women’s Dermatology Society Journal

http://www.ijwdonline.org

• Open Access

• Fee to publish, no subscription

• 40% of profits go to WDS

• Same publisher as JAAD

• Rapid turnaround