March 2011 Clinical Laboratory News: Regulatory Profiles

Regulatory Profiles

CMS Will Rescind Physician Signature Rule

After intense negotiations with several lab groups, Jonathan Blum, Director of the Centers for Medicare and Medicaid Services (CMS) told the American Clinical Laboratory Association (ACLA) that CMS plans to rescind the requirement for clinical laboratories to obtain physician signatures when billing Medicare for paper laboratory requisitions. The new requirement had met with outrage from laboratorians who criticized the measure as unnecessary and very burdensome for labs.

In the November 29, 2010 Medicare Physician Fee Schedule final rule, CMS finalized its proposed policy to require a physician’s signature on requisitions effective January 1, 2011. After heavy criticism, the agency then delayed implementation of the requirement until April 1, 2011. By February 2011, bipartisan letters signed by 89 members of the House of Representatives and 34 Senators had been sent to CMS raising concerns about the new requirement.

More information is available from the ACLA website.

CMS Planning Incentives for Reduced Infections, Readmissions

The Centers for Medicare and Medicaid Services (CMS) plan to launch a new financial incentive program for hospitals that achieve certain performance metrics, according to a draft of a CMS memo that was leaked online. The draft plan calls for $70 million of Medicare funding over 10 years to be contingent upon hospital performance on patient safety, with a special focus on hospital-acquired infections and readmissions.

Developed by CMS’s Innovation Center and dubbed the National Patient Safety Initiative, the new public-private partnership will have seven main goals: assistance to rapidly improve patient safety; collaborative networks; payment alignment between private and public sectors; rewards for high-performing hospitals; new standardized measures; improved patient engagement; and improved accountability and oversight.

Most significant for hospitals could be the reimbursement changes included in the plan, which call for 6% of hospital payments from Medicare to be tied to public reporting of errors and patient safety by 2013, increasing to 9% by 2015. The memo notes that CMS plans to partner with private payers to make reimbursement seamless on these quality measures. CMS also wants employers, unions, and health plans to participate in the initiative by promising to adjust their payments to hospitals based on performance.

The Obama administration has so far remained silent on the leaked CMS memo.

Final Rule Issued on Certifying Health Information Technology

The Office of the National Coordinator for Health Information Technology (ONC) issued a final rule to establish the permanent certification program for health information technology.  The certification program puts ONC’s stamp of approval on the comprehensiveness, transparency, reliability, and efficiency of electronic health records (EHR).  Meaningful use of certified EHRs is a core requirement for eligible healthcare providers seeking incentive payments under the Medicare and Medicaid Electronic Health Record Incentive Programs, authorized by the Health Information Technology for Economic and Clinical Health Act.

The temporary certification program, established through a final rule published on June 24, 2010, will continue to be in effect until it sunsets on December 31, 2011. ONC expects to implement the program incrementally throughout 2011. Among other requirements, the final rule requires that organizations must first be accredited in order to test and certify health information technology and must conduct post-certification surveillance. The National Institute of Standards and Technology will develop an accreditation program.

More information about the permanent certification program and the final rule is available from the government’s health IT website.

Anti-Fraud Measure Resurrected in Senate

Senator Chuck Grassley (R-Iowa) announced that he will reintroduce an anti-fraud bill, the “Strengthening Program Integrity and Accountability in Health Care Act,” that would give additional powers to regulators to combat fraud in the Medicare, Medicaid, and Children’s Health Insurance Programs.

News of Grassley’s intentions comes on the heels of an announcement by the Department of Health and Human Services (HHS) that the federal government recovered more than $4 billion in Fiscal Year 2010—the highest annual amount ever recovered. Grassley emphasized that much more work remains to be done in fighting fraud, citing reports that up to 8% of Medicare and Medicaid spending is for fraud, adding up to approximately $70 billion every year. 

Grassley’s bill would give the government enhanced authority to prevent fraudulent providers from participating in the programs, as well as more time to evaluate the legitimacy of Medicare payments before reimbursing providers. It also aims to improve the coordination among federal agencies responsible for combating fraud and abuse, expand the range of activities subject to penalties, and strengthen existing penalties.

More information is available from Grassley’s website.

Bill Would Overturn Medical Device Tax

Diagnostic manufacturers will be watching Congress closely after Senator Orrin Hatch (R-Utah) and Representative Erik Paulsen (R-Minn.) introduced the “Protect Medical Innovation Act,” S.17 and H.R. 436, respectively, that repeals the $20 billion medical device excise tax included in the healthcare reform law.

According to Hatch, if the tax is not repealed, it could “cripple an important engine of opportunity, job growth, and innovation.” Hatch’s measure attracted four co-sponsors: Sens. Scott Brown (R-Mass.), John Cornyn (R-Texas), Richard Burr (R-N.C.), and Tom Coburn (R-Okla.). During a January 27 hearing before the Senate Health, Education, Labor and Pensions Committee, Secretary of the Department of Health and Human Services Kathleen Sebelius stated that the Obama administration would oppose an effort to repeal the tax. 

In the House, 41 members signed on as co-sponsors of Paulsen’s bill. In addition, Rep. Jim Gerlach (R-Pa.) filed a bill with eight co-sponsors that carries the same name as Paulsen’s.

A copy of the legislation is available at the Congressional website.

Obama Orders Regulatory Overhaul

President Obama has issued a sweeping executive order intended to streamline federal regulations and cull outdated or ineffective policies, including those agencies that regulate clinical labs and diagnostic tests. The executive order requires all federal agencies to make sure the benefits of any regulation justify its cost; tailor regulations to impose the least burden on society; select approaches that maximize net benefits; specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior.

The full scope of the executive order will not be known until the Office of Management and Budget issues guidance to federal agencies, expected within the first half of 2011. The guidance document will describe the actual implementation of the order.

The executive order is available from the White House website.

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