Supreme Court to Take Up Gene Patent Case
After bouncing back and forth between appeals courts and the U.S. Supreme Court for almost 4 years, the Supreme Court has finally agreed to rule on the patentability of genes associated with breast and ovarian cancer, a decision that could have far-reaching effects on the business of molecular diagnostics. The American Civil Liberties Union and the Association for Molecular Pathology (AMP) originally filed the lawsuit in 2009 against the U.S. Patent and Trademark Office, as well as Myriad Genetics and the University of Utah Research Foundation, which hold the patents on the BRCA1 and BRCA2 genes. The lawsuit charges that patents on human genes violate the First Amendment and patent law because genes are "products of nature" and therefore cannot be patented.
The first time a decision was handed down on the case was in March 2010, when a New York federal court ruled the patents invalid. Myriad appealed, and a year later, the Court of Appeals for the Federal Circuit ruled that companies can obtain patents on the genes but cannot patent methods to compare those gene sequences.
The case made its way to the Supreme Court for the first time in March 2012, when the court vacated the decision of the appeals court and instructed the court to reconsider the case in light of Mayo v. Prometheus, a Supreme Court decision unanimously invalidating patents on methods for evaluating a patient's response to a drug. However, the appeals court essentially repeated its original ruling. Finally, in September 2012, the plaintiffs again asked the Supreme Court to rule on the patentability of genes, and the court agreed to hear the case.
More information is available from AMP.
PT Referral Legislation Signed Into Law
In a welcome victory for the lab community, President Obama on December 4 signed the Taking Essential Steps for Testing (TEST) Act, easing automatic penalties for labs that refer a proficiency testing (PT) specimen unintentionally.
Under the existing law, a lab that referred a PT specimen to an outside laboratory could lose its CLIA certificate for 2 years, even if the specimen was not referred to deliberately cheat on a PT challenge. Since many labs have policies that automatically refer certain specimens to another lab, the statute has worried labs for years, although harsh punishments have been rare. If CMS discovered a PT referral, the sanctions under previous versions of the law would also have extended to the lab director and even the hospital in which a lab operated, potentially forcing a hospital to find another organization to perform all lab testing.
With the changes to the law prescribed in the TEST act, CMS will now have legal leeway on how to punish a guilty lab, such as levying fines instead of revoking the lab's CLIA certificate. The TEST act also makes clear that CMS can differentiate between a PT referral that happened through a clerical error in good faith, or through the lab knowingly trying to subvert the regulation.
House Representatives Michael Grimm (R-N.Y.) and Michael Burgess (R-Texas) championed the act along with 13 cosponsors. In the Senate, Senator Amy Klobuchar (D-Minn.) introduced the bill with six cosponsors.
The new legislation is posted on the Library of Congress's THOMAS website.
Medicare Pays First, Asks Questions Later
Rather than make sure bills are correct before paying them, Medicare relies too much on after-the-fact audits, and as a result, wastes money, according to a recent Government Accountability Office (GAO) report. While a limited number of so-called prepayment edits saved Medicare $1.76 billion in 2010, the Centers for Medicare and Medicaid Services (CMS) could save more if the agency employed this approach more widely.
In its investigation, GAO illustrated this point using analysis of certain Medicare coverage policies that govern in what cases or how frequently a test or procedure can be reimbursed. GAO identified $114.7 million in payments made in 2010 that appeared to be inconsistent with national and local policies and which could have been prevented through automated prepayment edits.
Even when Medicare does use prepayment edits to screen bills from hospitals and other providers, Medicare's system often fails, the report found. For example, GAO found that Medicare paid $8.6 million for claims that exceeded limits on the quantity of certain services that can be provided to a beneficiary by the same provider on a single date of service. In the GAO investigation, although CMS had ostensibly implemented prepayment edits to limit service quantities, a weakness in the agency's systems allowed providers to bypass the quantity limits.
The report noted that CMS most recently reported an improper payment rate of 8.6%—or nearly $30 billion—for 2011.
More information is available online.
Warnings of EHR Incentive Abuses as Adoption Rises
According to a new report from the Medicare watchdog agency, the Office of the Inspector General (OIG), the Centers for Medicare and Medicaid Services (CMS) faces some serious holes in its system meant to reward physicians and hospitals that adopt electronic health records (EHRs).
As physicians and labs have rushed to adapt to burgeoning networks of EHRs, CMS often does not go far enough to make sure that it only offers incentives to organizations that truly have the required technology, OIG found. CMS expects to give close to $7 billion in incentive payments between 2011 and 2016.
OIG emphasized that because professionals and hospitals self-report data to demonstrate that they meet EHR incentive program requirements, CMS needs to verify that this data will help ensure the integrity of Medicare EHR incentive payments. OIG is recommending that CMS in at least some cases ask for proof from physicians and hospitals that their EHR systems measure up before paying, as well as issue better guidance to organizations on how to demonstrate compliance.
CMS reviewed OIG's report before publication, and disagreed with the first recommendation for stepped-up prepayment review. CMS believes requiring more documentation from providers up front could prove burdensome for physician offices and hospitals and delay payments. The full report is available online.
Physician Adoption of EHRs Continues Rapid Growth
In related news, a December 2012 report from the National Center for Health Statistics (NCHS) found that 72% of office-based physicians used some kind of EHR system in 2012, a 26% increase over 2011. However, fewer physicians report using EHRs that meet certain minimal requirements suggested by the government, such as the ability to view lab results electronically. In 2012, 40% of physician offices had such systems, up from 34% in 2011.
The NCHS report also found that EHR adoption varied by state. In 2012, the percentage of physicians using any EHR system ranged from 54% in New Jersey to 89% in Massachusetts, and the percentage having a system that met the criteria for a basic system had an even wider range: from 22% in the District of Columbia to 71% in Wisconsin. Notably, 66% of all office-based physicians surveyed reported that they planned to apply, or already had applied, for the EHR incentive program.
The NCHS report is available through the Centers for Disease Control and Prevention website.