In-office pathology labs not included in President Obama’s 2014 budget

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Tucked inside President Obama’s 2014 budget on page 40-41 is this little nugget that appears to indicate the in-office ancillary services (IOAS) exception to Stark may not be around much longer:

MedPAC cautions that physician self-referral of ancillary services leads to a higher volume when combined with fee-for-service payments, a finding consistent with GAO analysis. The Budget encourages more appropriate use of ancillary services by only allowing providers who meet certain accountability standards to self-refer radiation therapy, therapy services, and advanced imaging services.

On page 197 it is projected the closure of the in-office loophole for the aforementioned services will result in deficit reduction of $6.05 billion between 2014-2023.

While I am very happy the government obviously recognized the waste, fraud and abuse that has resulted from this loophole, I was very upset to see pathology was not included in the president’s budget proposal.

I reached out to someone in the DC area who is very much “in the know” about this issue and has worked for years to close the loophole to help me understand why pathology was not included.  He agreed the omission of pathology is odd and could be due to something so simple as a typographical error.

He further added that pathology should not be left behind.

Since this person is currently lobbying the government to close the IOAS exception, I am encouraged by his words.

Further evidence that pathology will not be thrown to the wolves is in the statement released by the Alliance for Integrity in Medicare (AIM) coalition about the budget proposal.

AIM, which includes the American College of Radiology, American Society for Radiation Oncology and the American Physical Therapy Association, stated in three places that pathology should be added to the proposed list of excluded services.

So far I have not heard anything from clinical specialty groups (American Urological Association, American Gastroenterological Association, American Academy of Dermatology, etc) that would be most impacted by this, but I can only imagine their opinions will soon be heard.

It is also unclear to me at this point what the “accountability standards” will be that will allow some providers to self-refer services, but unless they are very strict, I fear clever attorneys will be able to find a way to “meet” those accountability standards.  We shall see.

There was, however, one part in the budget proposal that could be some good news for pathology.  Also on page 41:

In addition, the Budget would modernize Medicare payments for clinical laboratory services by more closely aligning payment levels with the private sector and granting the Secretary authority to make other appropriate payment adjustments, as well as supporting policies to encourage electronic reporting of laboratory results.

Seeing as Medicare generally pays less than private insurers, I can only presume clinical labs may see a bump in reimbursement.

Comments

  1. Timothy McIntire says:

    Are you sure when they say “In addition, the Budget would modernize Medicare payments for clinical laboratory services by more closely aligning payment levels with the private sector and granting the Secretary authority to make other appropriate payment adjustments, as well as supporting policies to encourage electronic reporting of laboratory results” they are not talking about $3 CBCs and $2 pap smears? I do not see the government raising AP fees to private pay levels, but could easily see them reducing clinical path lab fees to the “private client bill” floor. What do you think? Especially since the traditional AP CPT codes are not within the clinical lab fee schedule.

  2. RunFastDieYoung says:

    OMG, a bump in reimbursement? Make no mistake, Medicare is wanting “client pricing”. The days of Medicare patients being pull through business are over. Look at the lawsuits in California over Medi-cal.

  3. dr st paula says:

    this means another reduction in payment for AP services. this is an indirect way to stop pull throughs and fee splitting. the govt is going to stop it alright but honest labs will suffer too. the government feels that if labs can do all this fee splitting then they can handle a reduction of fees in half. by january we will see another 26 percent reduction in all the 88305 and similar codes. this time they will attack the profession component. the inhouse labs will automatically shut because there will be no profit motive. no incentive to even do pathology. they wont have to shut the loophole because the payment will barely cover the expenses. so the inhouse labs will shut by default.

    • RunFastDieYoung says:

      Get used to the in-office labs. They will NEVER close UNLESS the laws are changed. They will just pay the pathologist less money. There are ways they can get economy of scale to reduce supply, labor costs. I am sure the people who set up in-office labs will find a way for them to thrive.

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