Jonathan D. Blum
Centers for Medicare & Medicaid Services
Director, Center for Medicare Management
Mail Stop 314G
200 Independence Avenue, S.W.
Washington, D.C. 20201
Thank you very much for meeting with representatives of the College of American Pathologists and ACLA last week. We thought it was a very useful meeting and appreciated the opportunity to discuss pathology self-referral issues, particularly in light of the recent publication of Dr. Jean Mitchell’s study in Health Affairs. As we discussed, this study demonstrates the increased utilization and the reduced cancer detection rate in urology practices that engaged in self-referral of pathology services.. In follow-up to our discussion, we wanted to emphasize several points.
As we mentioned at our meeting, Dr. Mitchell’s study is just one in a long line demonstrating the impact of self-referral on overutilization. We are attaching a summary that we compiled of recent articles from Health Affairs alone, which highlights the problems of self- referral generally across several specialties and settings, including its effect on utilization and costs. Numerous other studies and government reports have also come up with similar findings.
Second, we wanted to reemphasize that self-referral limitations would not affect the convenience of the patient. Self-referral limitations would not affect the urologist’s ability to perform the biopsy—the one part of the process where the patient’s convenience is a factor. The physician will continue to be able to perform the biopsy, either in his office or in an ASC just as he does today, although without a financial interest the number of biopsies he chooses to perform would likely go down.
Self-referral limitations only affect where the specimen is sent for processing and interpretation after the biopsy. However, whether the laboratory is on-site or off-site does not affect the convenience of the patient in any way. A tissue sample taken during a biopsy procedure must be fixed in a preservative, processed, and sectioned, before it can be read by the pathologist. These preparatory steps and pathologist interpretation typically take a minimum of 24 hours to complete (and may take longer depending on the complexity of the diagnosis); thus the pathology service cannot be completed at the same time as procurement of the tissue during biopsy or while the patient waits in the physician’s office or at the ASC following biopsy.
In fact, when a physician engages in self-referral, the patient is usually adversely affected. Independent laboratories typically process the tissue as soon as it received, and have a pathologist interpret the slides within one working day. On the other hand, an in-house laboratory that depends on self-referral usually has longer turnaround time because, as we shared at our meeting, in-house labs often have fewer histotechnologists to prepare the slides, which means the tissue may not be processed right away. Jn addition, if the self-referring practice also bills for the professional component, the pathologist who provides that service on-site may only be at that office once or twice a week. Both of these factors mean that it may take longer for patients to find out the results of their biopsies, a more problematic—and far less convenient— experience for the patient.
In addition to patient convenience, as you heard, the quality of pathology at in-house laboratories may also present concerns. The economic model for these self-referring arrangements hinges on their keeping overhead as low as possible, which often limits the number of personnel available to prepare the slides. And, when they are prepared, the slides often do not include as many “levels” for each specimen. These limitations on resources may be particularly significant when the pathologist requests that additional slides be prepared from the paraffin block to fhrther evaluate the specimen following review of the initial slides. The experience of our members is that such additional slides are difficult, if not impossible, to obtain when the slides are prepared by a histotechnologist who works for an in-house laboratory. In addition, at an independent laboratory a community of pathologists is readily available to consult together on difficult cases. Where necessary, the pathologists can also go back to the tissue “block” to obtain tissue for additional studies if questions arise during the pathologists’ interpretation. Neither of these advantages is possible in the in-office situation. Thus, the quality of the pathology results being reported is more consistent and reliable at the independent laboratory.
We wanted to re-emphasize that self-referral results in physicians making decisions based on financial incentives rather than solely on what is in the best interest of the patient. If a physician does not have a financial interest in processing the biopsy, the decision as to where to send the biopsy for processing will be based solely on medical grounds and the best interest of the patient. Financial self-interest leads to physicians taking more biopsies in cases of marginal utility. It also increases the number of specimens taken and specimen “jars” billed. As we noted at the meeting, the correct question is not whether the appropriate number of biopsy cores obtained is 12 or 10 or 6. The question is: Should decisions related to whether or not to perform a biopsy and, if so, how many specimens are taken, be driven by a physician’s personal financial interest, rather than concerns about what is best for the patient?
We also wish to emphasize that although Dr. Mitchell’s study focused on questions of prostate biopsies, the question of self-referral in anatomic pathology is much broader and involves not only urologists, but also gastroenterologists and dermatologists. A solution that focuses merely on one particular subspecialty, therefore, will not truly address the problem.
As indicated above, Dr. Mitchell’s study is just one of many examining the negative effects of self-referral on utilization and Medicare costs. For this reason and all those indicated above, we urge CMS to consider a solution that removes the perverse incentive created by self- referral by limiting the In Office Ancillary Services exception in the Stark law. As we discussed, we believe that other proposed solutions, such as reducing or bundling payment, will only result in greater utilization of pathology services and an increase in the number of related services, such as special stains. In addition, bundling could also result in patients in need of biopsies not receiving them because the bundled payment encourages the underutilization of services.
Thank you again for taking the time to meet with us. If you have any questions, please do not hesitate to contact me.
cc: Troy Barsky