thomas o tiffany phd ceo ac2t november 5, 2015 ac2t llc strictly confidential1 navigating the...

Thomas O Tiffany PhD

CEO AC2T

November 5, 2015

AC2T LLC Strictly Confidential 1

Navigating the Regulatory Maze, including: ACA-ACO, FDA, PAMA, LDTs, CMS, MACs, NCDs-LCDs and More


Presentation Overview

• Changing Health Care Landscape

• Affordable Care ACT (ACA)• Accountable Care

Organizations (ACO)• Food & Drug Administration

FDA Laboratory Developed Tests LDT Guidelines and Industry Response

• Patient Access to Medicare Act PAMA

• Clinical Lab Fee Schedule –CLFS Reform

• MAC- LCD – NCD OIG Review• OIG & Physician Lab

Contracts• Some Comments on

Regulatory Issues from Laboratorians

The Changing Healthcare Landscape –Hospitals

and Labs Consolidation of market

Hospital mergers Practice acquisitions and Contracts

Provider margins are under attack Reductions in Medicare/Medicaid reimbursement CLFS Higher costs – PAMA –CLFS Data Collection Private payer reductions Pay for performance vs FFS and Bundling

New models of provider integration are emerging Patient centered medical home ACOs

FDA Proposed Lab Developed Tests (LDT) Guidelines

AC2T LLC Strictly Confidential

The Changing Healthcare Landscape - Hospitals

Shift from “Volume to Value” as a basis of reimbursement Pay for performance ACO quality metrics Value Based Purchasing Bundling of Outpatient Services Reduced or denied reimbursement for:

Hospital acquired conditionsNever events – (Billing Medicare for a

never event is considered a false claim)Readmissions within 30 days


US Health Care Reform 2010Two-pronged approach to redesign of the US Health Care System. Who will lead “Delivery System Reform”?

US Health Care Reform

Delivery System Reform

Insurance Reform

Medical-Loss Ratio

ACO

Payment Reform

• PCMH = Patient Centered Medical Home• ACO = Accountable Care Organization• Slide from Baystate Health

New Org Structures

Bundled Payments

Value-Based

Payments

5

Coverage Expansion

PCMH

Individual Mandate



Payer Partners:

Insurers Employers States CMS

ACO LeadershipPopulation Health Data Management

Health

People

Pharmacy

Homecare

Ancillary Providers

Public Health Agencies

Long term care

Specialists

Post Acute care

hospitals

hospice

• Coordination and collaboration – seamless delivery

• Data collection and use –Total interoperability

• Measure value – quality, savings, satisfaction

• Population health focus –Reward wellness rather than services provided

• Time – Long-term commitment

• Shared savings – Aligning reimbursement so providers can capture income based on savings delivered

ACO’s Innovating to drive coordinated care

©2012 PREMIER, INC.

AC2T LLC Strictly Confidential8

Source: Leavitt Partners Center for Accountable Care Intelligence

David Muhlestein, Ph.D., is Director of Research at Leavitt Partners

Growth Of Accountable Care Organizations (ACOs) In 2015

Triple Aim

Growth of ACOs 2011 -2015

ACO Payer Contracts 2011 -2015

ACO Covered Lives and projected Covered Lives


1. The FDA released a document in October 2014 for “comment only” that describes a risk-based framework for addressing the regulatory oversight of a subset of in vitro diagnostic devices (IVDs) referred to as laboratory developed tests (LDTs). A. This document is intended to provide guidance to clinical laboratories

that manufacture LDTs,B. How FDA (the Agency) intends to enforce authorities that apply to such

laboratories,C. Who are medical device manufacturers under the Federal Food, Drug,

and Cosmetic Act (the FD&C Act or the Act).2. The Guidance document describes FDA’s priorities for enforcing premarket

and postmarket requirements for LDTs as well as the process by which FDA intends to phase in enforcement of FDA regulatory requirements for LDTs over time.

3. The FDA, through the proposed guidelines document, establishes “Risk Based” categories to determine levels and extent of regulation of LDT’s,

4. Low risk LDTs need only be reported higher risk based tests need PMA level clinical trials.

FDA Guidelines Document on LDTS


1. Per 21 CFR 809.3(a) in vitro diagnostic devices are “those reagents, instruments, and systems intended for use in the diagnosis of disease or other conditions, including a determination of the state of health, in order to cure, mitigate, treat, or prevent disease or its sequelae. Such products are intended for use in the collection, preparation, and examination of specimens taken from the human body. These products are devices as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act (the act.” ), and may also be biological products subject to section 351 of the Public Health Service Act

2. In the past, LDTs were referred to as “home brew” or “in-house” devices. The term “laboratory developed test” and its acronym “LDT” replaced “home brew” over time, but the regulatory considerations are not affected by the change in terminology.

3. A manufacturer is any person who engages in the “manufacture, preparation, propagation, compounding, assembly, or processing of a device,” defined as “the making by chemical, physical, biological, or other procedures of any article that meets the definition of device in section 201(h) of the act.” 21 CFR 807.3(d); see also 21 CFR 803.3 (a manufacturer is “any person who manufactures, prepares, propagates, compounds, assembles, or processes a device by chemical, physical, biological or other procedure.”).



The main elements of FDA’s framework for regulatory oversight include: 1. Either notification to FDA of LDTs manufactured by a laboratory or

Registration and Listing 2. Medical Device Reporting Requirements (MDR) for LDTs (e.g., adverse event

reporting) 3. Continued enforcement discretion with respect to premarket review

requirements for low-risk LDTs, “Traditional LDTs,” LDTs used for rare diseases, and “LDTs for Unmet Needs”

4. Risk-based, phased-in approach to enforcing the premarket review requirements for other high-risk and moderate-risk LDTs

5. Use of clinical literature to support a demonstration of clinical validity, which FDA expects would reduce the need for additional clinical studies to show clinical validity for LDTs where the analytes/markers that are measured/assessed have had their clinical validity established in the literature

6. Facilitation of third-party review for many moderate risk LDTs 7. Phased-in approach to enforcing the Quality System regulation



Category Registration and Listing (Section 510) of the FD&C Act; 21 CFR Part 807)

Manufacturer Reporting Requirements for Medical Device Reporting (Section 519(a) of the FD&C Act; 21 CFR Part 803 Subpart E)

Premarket Review Requirements (Sections 510(k) and 515 of the FD&C Act; 21 CFR Part 807, Subpart E; 21 CFR Part 814)

Quality System Regulation Requirements (Section 520(f) of the FD&C Act; 21 CFR Part 820)

LDTs solely used for forensic (law enforcement) purposes LDTs used in CLIA-certified, high-complexity histocompatibility laboratories for transplantation

LDTs used for Rare Diseases X X Traditional LDTs X X LDTs for Unmet Needs X X LDTs with the same intended use as a cleared or approved Companion Diagnostic LDTs with the same intended use as an approved Class III medical device Certain LDTs used to determine safety/efficacy of blood or blood products

X X -Enforced for currently marketed LDTs that have not made a premarket submission within 12 months of finalization of this guidance document • Enforced for new LDTs initially marketed after finalization of this guidance document

• Enforced once PMA submitted or FDA issues clearance order

Class III (high risk) LDTs

X X • Enforced on a risk-based, phased-in basis • FDA plans to announce the priority list within 24 months of finalization of this guidance

• Enforced on a risk-based, phased-in basis until a manufacturer of a given LDT submits a PMA.

Class II (moderate risk) LDTs

X X Enforced on a risk-based, phased-in basis • Enforced after FDA has completed the phase-in of Class III • FDA plans to announce the priority list for class II within 4 years of finalization of this guidance

• Enforced on a risk-based, phased-in basis until FDA issues a 510(k) clearance order for the LDT

Class I (low risk) LDTs X X

Requirements FDA Intends to Enforce


Laboratory Testing Services,As the Practice of Medicine, Cannot

be Regulated as Medical DevicesA White Paper (1-6-2015)

ByPaul D. Clement & Laurence H. Tribe

Counsel to the American Clinical Laboratory Association (ACLA)

ACLA’s Response to the FDA


14

FDA’s Guidance document seeks to impose significant, binding requirements on private parties that provide laboratory-developed testing services. In recognition that FDA lacks the resources to regulate the entire range of laboratory-developed testing services over which it claims jurisdiction, the Guidance announces a risk-based, phased-in approach to a “Framework for Regulatory Oversight of Laboratory Developed Tests.” The main elements of this new Framework include numerous obligations that laboratories must observe. These obligations include: 1. Giving notification to FDA about, or registering and listing of, laboratory-developed

testing services (and “significantly” changed laboratory-developed testing services) under 21 C.F.R. Part 807, to assist FDA in determining their risk classification and what premarket review requirements to enforce against which tests;

2. Reporting of “adverse events” involving laboratory-developed testing services under 21 C.F.R. §803.50, whenever a laboratory that develops in-house tests or significantly modifies FDA-approved test kits becomes aware of any information that reasonably suggests that their test may have caused or contributed to death or serious injury;

3. Submitting for premarket review “high-risk” and “moderate-risk” laboratory-developed testing services to assess their clinical validity, see 21 C.F.R. Part 814;

4. Complying with Quality System Regulations, including the device-related design control procedures of 21 C.F.R. §820.30(a)-(j); and

5. Demonstrating the “clinical validity” of laboratory-developed testing services.


I. LABORATORY-DEVELOPED TESTING SERVICES ARE MEDICAL SERVICES NOT MEDICAL DEVICES

II. FDA’S SWEEPING ASSERTION OF JURISDICTION OVER LABORATORY-DEVELOPED TESTING SERVICES FLOUTS THE DECISIONS MADE BY CONGRESS

III. FDA MAY NOT REGULATE LABORATORY-DEVELOPED TESTING SERVICES BY MEANS OF “GUIDANCE” DOCUMENTS RATHER THAN NOTICE-AND-COMMENT RULEMAKING A. FDA’s “Guidance” Imposes Binding, Substantive Obligations

on Private Parties - It is not a GuidanceB. FDA May Not Circumvent the Requirements of

Rulemaking By Using a “Guidance” Document Instead 1. FDA May Not Use “Guidance” Documents To Evade the APA’s Notice-

and-Comment Requirements 2. FDA May Not Use “Guidance” Documents To Avoid

Considering the Enormous Economic Impact of its Proposal.

Clemet and Tribes -Analysis


1. AAB’s position on the regulation of LDTs is that these tests should not be regulated by the FDA as medical devices.

2. AAB supports a separate regulatory pathway, both within the FDA for high-risk tests and through CLIA for moderate- and low- risk tests, paired with a formal stakeholder process to establish the risk level of LDTs.

3. AAB believes the FDA’s current proposal (Guidelines) on the regulation of LDTs is unacceptable and should be rescinded,

4. AAB believes that laboratory stakeholders should refrain from opposing FDA oversight of LDTs by making legal arguments that would overturn nearly 50 years of established state case law and CLIA regulations permitting non-physician doctoral scientists to direct clinical laboratories

AAB’s position on the regulation of LDTs


17

• The proposal would apply to all in vitro diagnostic tests – both kits and LDTs, and components of the same (collectively IVDs) and calls for establishment of a new center within FDA.

• The proposal allocates responsibility for oversight of IVDs across FDA, CMS and the individual states. FDA would be responsible for IVD development, CMS would be responsible for laboratory operations, and the states would be responsible for medical applications (e.g., test result interpretation and consultation).

• IVDs will be classified as high risk, moderate risk and low risk, and the proposal sets out criteria for classification into each category.

• IVDs can move from high risk to low risk when the test and/or analyte become well characterized.

• The proposal sets a new standard for IVDs: the developer must “establish a reasonable assurance of analytical validity and clinical validity for the intended use.” Reasonable assurance would be established through competent and reliable evidence, which includes published literature and clinical guidelines. There would be a presumption that clinical trials would not be required to demonstrate clinical validity.

The Diagnostic Test Working Group (DTWG), is an independent group consisting of representatives from diagnostic manufacturers and clinical laboratories. Their proposal offers a compromise for those on both sides of the LDT debate. For laboratories, it would mean greater regulation of LDTs while not trying to fit LDTs into the traditional medical device regulatory framework, and for IVD manufacturers, it would result in significant changes to the current regulatory model. A few key points of interest in the DTWG proposal:

Diagnostic Test Working Group (DTWG) Alternative Proposal*

*Allyson B. Mullen, JD & Jeffrey N. Gibbs JD Hyman, Phelps & McNamara Blog April 16, 2015


• The premarket requirements for each of the three classifications are different. High and moderate risk IVDs require premarket submissions and low risk IVDs merely require notification to FDA.

• Post-market quality system and recall reporting will be generally the same as FDA’s current medical device requirements. Adverse event reporting would be clarified to better fit IVDs.

• New submissions would be required for test modifications to high and moderate risk IVDs, if the modification has a “meaningful clinical impact” or changes the intended use of the IVD. The proposal includes special pathways for IVDs for rare diseases, emergency use IVDs, and IVDs for unmet needs.

• There is a proposed three or four year transition period for LDTs currently on the market and those that would enter the market after the proposal goes into effect.

• Instrument platforms will be automatically classified as low risk. Platform manufacturers would also be granted a safe harbor for

discussion of off-label uses.

Diagnostic Test Working Group (DTWG) Alternative Proposal continued*

*Allyson B. Mullen, JD & Jeffrey N. Gibbs JD Hyman, Phelps & McNamara Blog April 16, 2015


FDA and CMS created a joint task force in 2015 to determine ways to ensure effective and efficient oversight of LDTs so laboratories can offer tests to the American public with confidence that they are accurate and provide clinicallymeaningful information without unnecessary or duplicative agency oversight. The goals of the FDA/CMS Task Force on LDT Quality Requirements include:

• identifying areas of similarity between the FDA quality system regulation and requirements under CLIA;

• working together to clarify responsibilities for laboratories that fall under the purview of both agencies; and

• leveraging joint resources to avoid duplication and maximize efficiency.

The task force is currently exploring areas where collaboration may realize greater oversight efficiency and produce the greatest benefit to patients, providers, and laboratories. The task force understands stakeholders’ concerns about differences in terminology used by FDA and CMS. We intend to clarify the terms used so that labs may better understand what is expected of them.

FDA and CMS Create a Joint LDT Task Force


• The Protecting Access to Medicare Act of 2014 (PAMA) Signed into law on April 1, 2014, includes the most extensive reform of the Medicare Clinical Laboratory Fee Schedule (CLFS) since it was established in 1984.

• Section 216 of PAMA creates a new Section 1834A of the Social Security Act, which contains many of the CLFS reforms.

• Starting on January 1, 2017, most rates on the CLFS will be derived from private payer rates for laboratory services provided by “Applicable Laboratories”.

• PAMA also designates certain tests as “advanced diagnostic laboratory tests” (ADLTs); includes provisions affecting coding, coverage and oversight of the CLFS; and makes some changes to CMS’s review of mis-valued codes in the Physician Fee Schedule (PFS) affecting anatomic pathology services provided by laboratories.

• The Centers for Medicare Services (CMS) on September 25, 2015 released its proposed rules for the new Clinical Diagnostic Laboratory Tests Payment System. The published date was to be June 31, 2015.

• This leaves very little time to prepare and collect the required data.

*Information provided by ACLA on their website

Protecting Access to Medicare Act (PAMA) Medicare Clinical Laboratory Fee Schedule (CLFS)*


Definition of “Applicable Laboratory”*

• CMS defines an applicable lab as one that receives more than 50% of its Medicare revenue from services paid under the Clinical Laboratory Fee Schedule (CLFS) and the Physician Fee Schedule (PFS).

• Entities that have multiple facilities, including at least one lab (as defined by CLIA), will qualify as an applicable lab if more than 50% of the revenue from the entire entity (not just the lab part) comes from the CLFS and PFS.

• If an otherwise applicable lab receives less than $50,000 per year in revenue from services on the CLFS, it will not be considered an applicable lab.

• CMS estimates that hospital labs will not be considered applicable labs, and neither will more than 50% of independent labs and more than 90% of physician office labs.

• CMS believes it will still capture 96% and more than 99% of the CLFS spend on physician office laboratories and independent laboratories, respectively.

*September 28, 2015 by The Pathology Blawg


Data collection and data reporting*

• Applicable labs must report applicable information for the period of July 1, 2015 through December 31, 2015 to CMS no later than March 31, 2016 (the original deadline was January 1, 2016). This information will be used to determine CLFS reimbursement rates for 2017.

• CMS will publish preliminary 2017 reimbursement rates in early September 2016. The public will have about 30 days to comment, and final rates will be published November 1, 2016 and go into effect January 1, 2017.

• All subsequent data collection periods will cover a full calendar year, and all applicable labs will be required to report applicable information (with the exception of information about new ADLTs) to CMS by no later than March 31st of the year after the data collection period.

• Information about new ADLTs (defined as an ADLT that has not been paid under the CLFS prior to January 1, 2017) will be due at the end of the second quarter of the new ADLT initial period.



Portion of Pricing Data That will be used to determine Medicare Lab Test Prices

Source: Laboratory Economics October 2015 edition. Laboratory Economics based these data on each company’s Medicare lab test revenue in 2013

42%

5%

10%20%

14%

5%

2%2%


Applicable labs will be required to report the following:• The payment rate that was paid by each private payer for each

test during the data collection period; and The volume of such tests for each such payer

• The rate reported to CMS must be “the price for a test prior to application of any patient deductible and coinsurance amounts.”

• All applicable information must be certified by a laboratory’s president, CEO, or CFO prior to submission to CMS.

• Labs can have a civil monetary penalty of no more than $10,000 per day per test levied against them for failing to report applicable information, or for misrepresentations or omissions.

• Neither CMS nor its contractors may divulge any information “in a form that reveals the identity of a specific payer or laboratory, or prices, charges or payments made to any such laboratory”, with the following exceptions:

• As the Secretary determines to be necessary to carry out sect.1834A of the Act;

• To permit the Comptroller General to review the information provided;

• To permit the Director of the Congressional Budget Office (CBO) to review the information provided; and

• To permit MedPAC to review the information provided.

Data integrity*



An ADLT is a lab test that “is offered and furnished only by a single laboratory and not sold for use by a laboratory other than the original developing laboratory (or a successor owner)” and meets one of the following criteria:

• The test is an analysis of multiple biomarkers of DNA, RNA, or proteins combined with a unique algorithm to yield a single patient-specific result;

• The test is cleared or approved by the FDA;• The test meets other similar criteria established by the Secretary.

Definition of Advanced Diagnostic Laboratory Test (ADLT)*



• Reimbursement for each test will be determined by calculating a weighted median from the submitted applicable information.

• Any reduction in reimbursement for a test must be phased in over a six year period, and cannot drop more than 10% per year for 2017-2019 or more than 15% per year for 2020-2022.

• CMS provides a handy example: A test is currently reimbursed at $20 A weighted median of $15 is calculated from submitted data in 2016 In 2017, CMS will pay $18 for the test (a 10% reduction) In 2018, CMS will pay $16.20 (a further 10% reduction)

• This continues until the reimbursement rate achieves parity with the weighted median.

• For new ADLTs, initial reimbursement will be the “actual list charge” for the first three quarters; after that, the weighted median price will go into effect. The “actual list charge” is defined as the: publicly available rate on the first day at which the test is available for purchase by a private payer for a laboratory test.


Payment methodology*


In 2014, Medicare Part B paid $7.0 billion for 451 million lab tests. About 63,000 labs received Medicare payments for providing lab tests to 27 million beneficiaries, representing over half of all Medicare beneficiaries in 2014. For the top 25 lab tests in 2014:

• Medicare Part B payments totaled $4.2 billion; (60% of $ paid 25 tests)

• independent labs accounted for the majority of Medicare Part B payments;

• a small portion of labs accounted for the majority of Medicare Part B payments;

• the tests fell into seven categories, predominantly the chemistry category; and

• molecular pathology tests cost the most per test.

OIG Medicare Part B Lab Fee Reimbursement Study

Executive SummaryReleased September 29, 2015


• The new system of payment required by PAMA calls for a major undertaking by CMS, with significant implications for the lab industry

• This data brief provides baseline analyses of the top 25 lab tests for 2014, 3 years before the new payment system goes into effect.

• In addition to issuing an annual analysis of the top 25 lab tests, we will conduct analyses that we determine appropriate regarding the new payment system's implementation and effect.

THE OIG Executive CONCLUSION FROM THEIR STUDY

(The OIG Study was Released September 29 2015)


Here is what OIG found for the top 25 tests (by expenditures):• The top 25 tests accounted for 60% of total lab expenditures

($4.23 billion)• Part B paid $1.36 billion (19% of total lab expenditures) for just the

top 3 tests (TSH, comprehensive group of blood chemicals, CBC with auto diff)

• Independent labs received 55% of the “Top 25” expenditures ($2.33 billion), hospital labs got 25% ($1.06 billion), and physician-office labs got 20% ($846 million)

• Out of 30,816 labs that performed at least one of the “Top 25” tests, 1% (309 labs) received 57% ($2.41 billion) of all “Top 25” payments and averaged $7.8 million in reimbursement

• The next 4% (1,233 labs) received 24% ($1.02 billion) and averaged $813,250 in reimbursement

• The remaining 95% (29,275 labs) received 19% ($804 million) and averaged $28,030 in reimbursement

The Office of the Inspector General (OIG) for the Department of Health and Human Services released a report on September 29, 2015 on Medicare Part B laboratory expenditures for 2014.

Laboratory Economics Summary of the OIG Lab Fee Report


Comparison of Medicare Payment Systems for Clinical Lab Tests*

Year Implemented

Current 1984 Future 2017

Basis of Payment Rates

Lab Charges in 1984-1985, adjusted across-the-board each year for inflation and other factors (31 years)

Private-payer rate data, updated every 3 years using then-current data

Number of Fee Schedules

57 regional fee schedules

Single national fee schedule

Source: Laboratory Economics October 2015 page 4 and CMS


• Medicare administrative contractors (MACs) and the Centers for Medicare & Medicaid Services (CMS) sometimes develop policies to limit Medicare coverage of specific items and services.

• MACs issue local coverage determinations (LCDs) that limit coverage for a particular item or service in their jurisdictions only.

• This can lead to State-by-State variation in Medicare coverage for similar items and services.

• Section 731 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) calls for a plan to evaluate new LCDs to determine which should be adopted nationally and to what extent greater consistency can be achieved among LCDs.

• This study determined the variation in coverage of Part B items and services as a result of LCDs and assessed CMS’s efforts to evaluate LCDs for national coverage as required by the MMA

LOCAL COVERAGE DETERMINATIONS CREATE

INCONSISTENCY IN MEDICARE COVERAGE OIG Study Released January 2014


WHAT THE OIG FOUND: (There are 12 A/B MACs and 4 DME MACs)• In October 2011, over half of Part B procedure codes were subject to an LCD in one

or more States.• The presence of these LCDs was unrelated to the cost and utilization of items and

services. • Furthermore, LCDs limited coverage for these items and services differently across

States. • LCDs also defined similar clinical topics inconsistently.• Finally, CMS has taken steps to increase consistency among LCDs, but it lacks a plan

to evaluate new LCDs for national coverage as called for by the MMA. WHAT WE (OIG) RECOMMEND • OIG recommends that CMS establish a plan to evaluate new LCD topics for national

coverage consistent with MMA requirements.• OIG also recommends that CMS continue efforts to increase consistency among

existing LCDs. • Finally, OIG recommends that CMS consider requiring MACs to jointly develop a

single set of coverage policies. CMS concurred with all of our recommendations.

LOCAL COVERAGE DETERMINATIONS CREATE

INCONSISTENCY IN MEDICARE COVERAGE OIC Study Released January 2014


Federal investigators signaled their interest in Medicare payments to lab companies last year. A special fraud alert issued by HHS' Office of Inspector General warned that certain types of lab payments to referring physicians for blood specimen collection, processing and packaging could be illegal.

By Lisa Schencker | October 19, 2015 Millennium Health, a San Diego based lab company, will pay the government $256 million to settle allegations it billed the government for medically unnecessary urine, drug and genetic testing and gave free drug cup tests to physicians in exchange for referrals.

By Lisa Schencker | April 9, 2015

The U.S. Justice Department announced a $47 million settlement with Health Diagnostic Laboratory, as well as a smaller deal with a second laboratory and additional lawsuits involving fees that labs pay to referring physicians.

Cigna drops Florida federal health insurance exchange plans mostly due to urine drug toxicology fraudBy The Pathology Blawg on Oct 21, 2015 08:00 am

HHS' Office of Inspector General (OIG) Fraud Alert

http://www.modernhealthcare.com/staff/lisa-schencker

http://www.modernhealthcare.com/staff/lisa-schencker

http://pathologyblawg.us6.list-manage.com/track/click?u=c08cc94490450d8dd2b3c6769&id=b332c462f6&e=af4e999ba1

http://pathologyblawg.us6.list-manage.com/track/click?u=c08cc94490450d8dd2b3c6769&id=b332c462f6&e=af4e999ba1


I am probably not the best person to provide input on regulatory challenges, but PAMA would definitely be number 1 on my list. On a broader scale I would list the following as major challenges for the industry; 1) PAMA 2) Use of lab data in a value based reimbursement environment3) (and related) Reasonable reimbursement for lab testing in a Value Based

reimbursement environment4) For commercial labs – the continued & increasing loss of outreach lab

business to health systems 5) For hospitals – Maintaining a profitable outreach program as UB04

reimbursements begin to fall in 2016 & 2017a) Anticipate other 3rd party payer lab reimbursements for hospitals will

fall as PAMA reimbursement falls

Noel Maring National Laboratory - Hospital Division Vice President

Top Regulatory Challenges concerning you


• I have been working on PAMA for my Molecular Pathology Laboratory over the past few days. It is going to be a very costly and time consuming project. So while Medicare decreases its reimbursement to labs, it increases the cost of operations. It is very complex to capture all of the payment components and report the information in a meaningful way.

• In regard to LDT’s, I believe there is a need to provide some enhanced oversight but it has to be done without strangling the process in getting important tests to patients. It is hard to understand how the FDA will have the manpower to make this successful. I think, and maybe by default, the best way is to develop the stronger standards (as needed) and evaluate the LDT’s through the accreditation process (CAP, JCAHO, COLA…).

Top Regulatory Challenges concerning you

James Carson, PhD, MBA, MLS(ASCP) Esoteric Pathology Laboratory Executive


Stewart Adelman CEO of a NW Pathology Group

• Pathology has endured dramatic reimbursement reductions over the past few years including expiration of the "Grandfather clause" and a 50% reduction in pathology's most order CPT code (88305) to name just a few.

• As a medium sized pathology practice we have been able to reduce costs carefully to maintain our practice and continue to provide high quality service to our hospital clients and the patients we serve.

• The new regulations related to PAMA and LDT's are not expected to have too much impact on how we are doing business.

• I am glad that we outsourced our billing several years ago to PSA McKesson who have assured me that they will be able to handle the data collection requirements to submit for PAMA.

• As a practice we are a "bread and butter" pathology practice and do not perform any LDT's currently so further regulations of these will have no additional impact on us.


I am sorry to say that none of these issues by themselves trouble me terribly. • Arbitrary and apparently capricious decreases in pathology reimbursement have

been occurring regularly for 30 years. No news here. These would be of great concern to commercial laboratories.

• Refinement of quality standards to address new technology; e.g., IQCP and LDTs, while an annoyance, is an attempt – at times in misguided ways - to address some key issues in laboratory medicine. No news there either. That said, operationalizing these new requirements (validations, training and competency assessment, procedures, etc.) will be a daunting task for the departments most directly effected.

Dr. Joseph Schappert, MD; Hospital Laboratory Medical Director

Top Regulatory Issues such as PAMA, LDT that concern you

But their underlying message – and its potential implications - is more worrisome to me than the specific initiatives.• The downward trend in reimbursements, • the lack of adequate reimbursement for key technologies supporting precision

medicine, • and the increased cost of maintaining regulatory compliance make it difficult to

envisage from where the money required to transform healthcare towards precision medicine will come. But the message regarding this from the government is clear: “You are on your own. Don’t look to us for any support.”

Thank you Questions


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