U.S. Legislative/Regulatory News

1. San Diego Court Awards PI Halting Competitive Bidding Demo
Laboratories Await CMS' Response

On April 8, 2008, United States District Judge Thomas J. Whelan granted a preliminary injunction (PI) blocking implementation of the competitive bidding demonstration project in the San Diego-San Marcos-Carlsbad Metropolitan Statistical Area (MSA). This is a huge victory for Medicare patients in San Diego, the three plaintiffs in the case, and the entire laboratory profession.

The original lawsuit was filed by Sharp HealthCare, Scripps Health, and Internist Laboratory of Oceanside against U.S. Department of Health and Human Services (HHS) Secretary Michael Leavitt on January 29, 2008. The Clinical Laboratory Coalition (CLC), of which CLMA is an active member, fully supports the lawsuit and joins the laboratory community in celebrating the plaintiffs’ victory.

The Centers for Medicare and Medicaid Services (CMS), as part of the Medicare Prescription Drug, Improvement and Modernization Act of 2003, chose the San Diego area as the first of two demonstration project sites to test competitive bidding for the procurement of clinical laboratory services. Those laboratories that did not win the bid could not bill for reimbursement of Medicare clinical laboratory services for the three-year duration of the project. Rather than creating competition, it would result in fewer laboratories, less competition and the government in essence picking winners and losers.

CMS had already accepted bids on laboratory services and was about to announce bid winners on April 11, 2008. Judge Whelan’s order granting a PI means that CMS cannot proceed with implementation of the demonstration project in San Diego, cannot announce the winning bidders on April 11, 2008, and cannot disclose information on any bids submitted.

Further, the judge agreed that the plaintiffs had shown irreparable harm and found there was substantial economic injury to the laboratories and to patients. He also noted that hospital laboratories would have to set up costly procedures to determine which tests were included in the demonstration and which tests were not.

The judge agreed that the balance of hardships falls “sharply” in favor of the plaintiffs and finds that the laboratories are likely to succeed on the merits of the case. He agreed that the HHS Secretary should have gone through rulemaking, the Secretary incorrectly interpreted the definition of “face-to-face encounter,” and that specimen collection should not have been included in the demonstration because it is not a laboratory test.

The injunction will stay in place until further order of the court. CMS can take one of the following steps in response:

• Engage in notice and rulemaking under the Administrative Procedures Act (APA)
• Seek a trial on the merits of the case in the Southern District Court of California
• Appeal the decision granting the PI to the Ninth Circuit Court of Appeals
• Appeal the decision to the Ninth Circuit Court of Appeals for reconsideration as to whether the District Court in fact had jurisdiction to hear the case

CMS’ next course of action will dictate how long the PI will delay the demonstration project and next steps for the plaintiffs and the laboratory community. Although the order will likely only delay implementation for a matter of months, the decision allows valuable time for Congress to provide a permanent solution with legislation to permanently repeal the competitive bidding demonstration project. CLMA continues to monitor the situation and keep members informed. 

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

As stated above, on April 8, 2008, United States District Judge Thomas J. Whelan granted a preliminary injunction (PI) blocking implementation of the competitive bidding demonstration project in the San Diego-San Marcos-Carlsbad Metropolitan Statistical Area (MSA). Not only is this decision a landmark win for clinical laboratories, it allows valuable time for Congress to provide a permanent solution through legislation to permanently repeal the competitive bidding demonstration project.  The PI is a temporary delay, and it is critical to enact repeal legislation this year!

Support for repeal of competitive bidding among key lawmakers continues to grow, thanks to the phenomenal grassroots response from CLMA members.  CLMA sincerely thanks all members who have contacted Congress regarding competitive bidding.  Rest assured that these efforts are not in vain and repeal for competitive bidding is still alive for 2008!

Medicare legislation is slated to come out of the Senate Finance Committee in June 2008. This legislation is the only chance we will have this year to enact repeal of competitive bidding.

Currently two repeal bills have 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).”

On October 2, 2007, CLMA launched a grassroots campaign to gain support for S 2099 and HR 3453, and CLMA members have more than answered the call to action. To date 1304 messages from 652 members have gone to the Senate, and 761 emails have gone to the House asking for co-sponsors for the repeal bills. We have reached 377 Senators and Congressmen combined so far!

These grassroots efforts continue to have an impact. In addition to Rep. Nydia Velazquez (NY), HR 3453 now has 41 co-sponsors. In addition to Senator Ken Salazar (CO), S 2099 now has 8 co-sponsors. Senator Norm Coleman (MN) joined as a co-sponsor on April 14, 2008. Representatives Patrick Kennedy (RI), John Tierney (MA), and Shelley Berkley (NV) joined as co-sponsors on April 8, 2008 and Representative Jo Ann Emerson (MO) joined on April 24, 2008.

Please contact your Senators and Representative and urge them to co-sponsor legislation to repeal the competitive bidding demonstration project and permanently stop CMS from implementing it.

*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. CMS Publishes Inpatient Prospective Payment System (IPPS) Proposed Rule

In the April 30, 2008 Federal Register, the Centers for Medicare and Medicaid Services (CMS) published the hospital inpatient prospective payment system (IPPS) proposed rule for fiscal year (FY) 2009. The changes contained in the proposed rule impact more than 3,500 acute care hospitals paid under IPPS and are estimated to increase payments by nearly $4 billion in FY 2009. They would apply to discharges on or after October 1, 2007 through September 30, 2009.

Under IPPS, hospitals receive a prospectively set single payment rate per case based on a patient’s diagnosis. Cases were categorized by Diagnosis Related Group (DRG), which was assigned a payment weight based on the average resources used to treat Medicare patients in a particular DRG. For FY 2008, starting with discharges after October 1, 2007, the 538 DRGs were converted to 745 Medicare-Severity DRGs, or MS-DRGs. The MS-DRG takes into account the patient’s diagnosis, but also reflects the severity of illness.

CMS implemented changes in 2007 to transition the determination of DRG relative weights to cost-based from charge-based. In 2009, CMS will base the relative weights 100 percent on costs. According to the proposed rule CMS will also add a cost center to the cost report to allow costs and charges for relatively inexpensive medical supplies to be reported from the costs and charges of more expensive devices. This revised cost reporting in 2009 will ultimately affect the relative weights under both IPPS and the Outpatient Prospective Payment System (OPPS).

The proposed rule estimates that the market basket update used to adjust hospital payments in FY 2009 will be 3.0 percent. As mandated by the Deficit Reduction Act of 2005, only hospitals that successfully report quality measures in 2008 will receive the full update in 2009. Hospitals that do not report quality measures will receive an update of 1.0 percent.

For FY 2009, CMS is proposing to expand the quality measures by adding 43 new measures to the original 30 measures for a total of 73. Hospitals must report the 30 original quality measures in 2008 in order to receive a full market basket update in FY 2009. These measures are publicly reported on Hospital Compare, a consumer-oriented website that provides information on how well hospitals provide recommended care to their patients. The additional proposed 43 measures would be reported in FY 2009 for a full update in FY 2010. The proposed additional measures are in the following types:

• Surgical Care Improvement Project (SCIP)- 1 new measure
• Hospital readmissions-3 new measures
• Nursing care-4 new measures
• Patient Safety Indicators developed by the Agency for Healthcare Research and Quality (AHRQ)-5 new measures
• Inpatient Quality Indicators developed by AHRQ-4 new measures
• Venous thromboembolism measures (VTEs) –6 new measures
• Stoke measures (STK)-5 new measures
• Cardiac surgery measures-15 new measures

CMS is also proposing to expand the list of hospital-acquired conditions for which Medicare will no longer pay additional reimbursement from eight to 17. The list of proposed conditions to add includes:

• Surgical sire infections following certain elective procedures
• Legionnaires’ disease (a type of pneumonia caused by a specific bacterium)
• Extreme blood sugar derangement
• Iatrogenic pneumothorax (collapse of the lung)
• Delirium
• Ventilator-associated pneumonia
• Deep vein thrombosis/Pulmonary Embolism (formation/movement of a blood clot)
• Staphylococcus aureus septicemia (bloodstream infection)
• Clostridium difficile associated disease (a bacterium that causes severe diarrhea and mre serious intestinal conditions such as colitis)

Comments on the proposed rule will be accepted through June 13, 2008. CMS expects to issue a final rule on or before August 1, 2008.

To read the proposed rule titled “Medicare Program; Proposed Changes to the Hospital Inpatient Prospective Systems and Fiscal Year 2009 Rates; Proposed Changes to Disclosure of Physician Ownership in Hospitals and Physician Self-Referral Rules; Proposed Collection of Information Regarding Financial Relationships Between Hospitals and Physicians,” please visit http://www.access.gpo.gov/su_docs/fedreg/a080430c.html.

Scroll to “Centers for Medicare and Medicaid Services.”

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4. OIG Refines Provider Self-Disclosure Protocol

On April 15, 2008 Inspector General Daniel Levinson issued an “Open Letter to Health Care Providers” outlining certain refinements and clarifications to the Office of Inspector General (OIG) Self-Disclosure Protocol (SDP).

The SDP provides a way for health care providers to voluntarily report potential fraud affecting the Medicare, Medicaid or other Federal health care programs. The SDP provides guidance for voluntary disclosure of Federal health care compliance issues that the provider believes potentially violate criminal, civil or administrative law and to which exclusion or civil money penalties may apply.

In the April 15, 2008 Open Letter, Inspector General Levinson stated that the initial submission under the SDP must contain the following information:

1. A complete description of the conduct being disclosed
2. A description of the provider’s internal investigation or a commitment regarding when it will be completed
3. An estimate of the damages to the Federal health care programs and the methodology used to calculate that figure, or a commitment regarding when the provider will complete such estimate
4. A statement of the laws potentially violated by the conduct

The letter further clarifies that the success of the SDP is dependent upon a provider’s good faith determination that the issue involves potential fraud against a Federal health program, and is not simply a matter of overpayment. Disclosures that are characterized as billing errors or overpayments are not appropriately addressed through the SDP and should be submitted directly to the Medicare contractor or other appropriate claims-processing entity.

Further, a provider who self-discloses in good faith, cooperates fully, and supplies requested information in a timely manner, will generally not be required to enter into a Corporate Integrity Agreement or Certification of Compliance Agreement with the OIG.

To read Inspector General Levinson’s Open Letter to Health Care Providers, please visit http://www.oig.hhs.gov/fraud/docs/openletters/OpenLetter4-15-08.pdf.

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On April 4, 2008, CMS published Transmittal 330, Change Request (CR) 5961 implementing Section 107 of the “Medicare, Medicaid and State Children’s Health Insurance Program (SCHIP) Extension Act of 2007,” which passed into law in December 2007.

Section 107 extends reasonable cost payment for clinical laboratory tests performed by hospitals with fewer than 50 beds in qualified rural areas as part of their outpatient services for cost reporting periods on or after July 1, 2004 through June 30, 2008. This may affect services performed as late as June 30, 2009.

The effective date for CR 5961 is cost reporting periods beginning July 1, 2007 through June 30, 2008. The implementation date is July 7, 2008.

To read Transmittal 330 Change Request (CR) 5961, “Extension of Reasonable Cost Payment for Clinical Lab Tests Furnished by Hospitals with Fewer than 50 Beds in Qualified Rural Areas,” please visit http://www.cms.hhs.gov/transmittals/downloads/R330OTN.pdf.

On April 11, 2008, CMS published Transmittal 331, Change Request (CR) 5987 implementing Section 113 of the “Medicare, Medicaid and State Children’s Health Insurance Program (SCHIP) Extension Act of 2007.”

Section 113 sets the payment rate for CPT 83037 Hemoglobin; glycoslylated (A1C) by device cleared by the FDA for home use as equal to the payment rate for CPT 83036 Hemoglobin; glycoslylated (A1C). The National Limitation Amount (NLA) for CPT 83036 is $13.56.

The effective date for CR 5987 is for tests furnished on or after April 1, 2008. The implementation date is May 12, 2008.

To read Transmittal 331, Change Request (CR) 5987, “Clinical Laboratory Fee Schedule-Implementation of Section 113 of the Medicare, Medicaid and State Children’s Health Insurance Program (MMSCHIP) Extension Act of 2007,” please visit http://www.cms.hhs.gov/transmittals/downloads/R331OTN.pdf.

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THINKLAB '08 -- REFUNDS/ROLLOVERS

6. There Is Still Time To Roll Over Your ThinkLab '08 Registration Fees To ThinkLab '09 in Tampa, Or Request A Full Refund!

 CLMA’s third party registration vendor, LASER Registration, sent an email with the subject line “ThinkLab 2008: Roll-over or Refund” on April 21^st, 2008.

You will have until Friday, May 30, 2008 to request a refund or roll-over your registration to ThinkLab ’09.  If Laser Registration does not receive your preference by this date, your registration will automatically be rolled over to ThinkLab ’09.

You will still be able to cancel your registration prior to ThinkLab ’09 if you so choose.

It’s quick and easy to do!

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EDUCATION NEWS

7. Check Out Our Upcoming AudioLabs.

Lab Reimbursement & Regulatory Flashpoints: Telling It Like It Really Is!
(converted from ThinkLab '08: Session 623)
Wed., May 21, 2008: 2-3:30pm ET

This session will focus on late-breaking federal legislative, regulatory, and reimbursement developments affecting clinical laboratories and pathology practices. In this session, the speaker will discuss the progression of a long-awaited Medicare competitive bidding demonstration project for lab services from its bidding process to site selection, through the launch of the pilot program in the spring of 2008. He will also detail revisions to the Stark self-referral law, and how it is likely to affect lab and pathology business ventures. Additionally, the session will address key reimbursement initiatives aimed at labs and pathologists and how they may influence Medicare payment changes in 2009 and beyond. Finally, the speaker will examine the legislative initiatives in Congress that may affect lab and pathology interests and assess the outlook for statutory changes that will directly impact the industry.

Learning Objectives:
At the conclusion of this session, participants should be able to:

• Discuss a minimum of three actions taken by the Centers for Medicare and Medicaid Services (CMS) to launch a Medicare lab competitive bidding pilot program in spring 2008.
• Describe how Stark regulatory changes will close loopholes affecting lab business arrangements.
• Assess key legislative and regulatory developments impacting operations and Medicare payment levels in labs and pathology practices.

Presenter: Dennis Weissman, President, Dennis Weissman & Associates, LLC, Washington, DC

All Levels
1.5 Credit Hours

Program handouts will be available prior to the sessions.

Click Here For Registration Information

*Pricing is per phone line with an unlimited number of participants.

*New for 2008 - A CD of the presentation will no longer be sent to each institution. A new user friendly web site has been developed that allows all session participants to access the complete presentation online after the live lecture has concluded! Session participants will be given a special pass code to access the presentation.

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