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COBRA coils for strike against clinical lab fees.

COBRA coils for strike against clinical lab fees After a year of fine tuning and a seemingly endless series of debates, the Government is now set to implement clinical laboratory rule changes contained in the Consolidated Omnibus Budget Reconciliation Act of 1985 (known forevermore as COBRA).

Laboratory association leaders say there are both positive and negative elements in the package, and most seem to have accepted the changes that have been on the table for so long. For the most part, groups have turned their attention to the next round of budget skirmishes and the further revisions that might be gained there.

The bill, which was signed into law by President Reagan in early April, contains 58 Medicare-related provisions and 29 relating to Medicaid. The following is a rundown of elements with the most direct effect on lab testing:

* National fee caps. Beginning July 1, payment for outpatient lab procedures subject to the Medicare fee schedule will be capped at 115 per cent of the median determined across all carriers. The limit is a cap, meaning payments below the 115 per cent level will not be increased. Lawmakers expect "reasonable" implementation delays for tests where there is a discrepancy in services reported in the same procedure code (such as with organ- or disease-oriented panel tests).

The new limit only affects laboratory services reimbursed under the 60 and 62 per cent Medicare fee schedules enacted in 1984. It won't apply to the physician laboratory services Medicare pays for under reasonable charge methodology.

The upper limit will be racheted down to 110 per cent of the median on Jan. 1, 1988, unless HCFA implements a national clinical lab fee schedule. That deadline was pushed back from the original date of July 1, 1987.

* Annual updates. Lab tests will next be updated by the Consumer Price Index on Jan. 1, 1987. The increase will reflect changes for the 18-month period beginning July 1, 1985.

* Physician office testing. Doctors face mandatory assignment (patient deductible and coinsurance waived) for Medicare payments as of Jan. 1, 1987.

Further, the HHS Secretary is instructed to report to Congress within 12 months with a study of standards for physicians' office labs. Topics to be addressed include the scope, type, and complexity of tests performed by physicians, as well as factors that indicate a need for different guidelines between lab types. Officials within HCFA, the agency charged with the review, have hinted that their enthusiasm for the project will turn on the efforts of private organizations in presenting voluntary standards for doctors' office laboratories.

* Competitive bidding. A moratorium on demonstration projects is in effect until Jan. 1, 1987. The trial was to begin next month under terms of a HCFA contract awarded last September.

During the moratorium, lab groups anticipate an opportunity to research alternatives that might be better than competitive bidding for allowing the marketplace to determine Medicare payment levels. The HHS Secretary and General Accounting Office are required to help lab industry representatives in presenting their findings to Congress.

Despite the delay, it appears the design work on competitive bidding is nearly complete. At a recent meeting of the College of American Pathologists, a spokesman for HCFA contractor Abt Associates described a model that would allow even bid "losers" to serve Medicare, although at some discount from the "winning" prices.

* Proficiency exams. Authority to test for qualifying lab personnel at the medical technologist level is extended under Medicare through Sept. 30, 1987. Testing is expected to be offered again next year, although some organizational regrouping has made it uncertain exactly what role the Centers for Disease Control will play in its supervision.

* Hospital services. The existing 62 per cent fee schedule (with the national cap limit) will apply for hospital outpatient services until Jan. 1, 1988. If Congress fails to extend the fee schedule, payments will revert to cost-based reimbursement. Hospitals performing referral lab services for nonhospital patients will continue to be paid at 60 per cent of the fee schedule, as adjusted by the rate cap.

* Simplified billing. Taking a page from the all-Washington cliche list, Congress expressed continued "concern" that HHS hasn't made much progress in simplifying current billing requirements for lab services. Language in COBRA suggests HHS should consider "eliminating requirements that a patient diagnosis appear on a clinical laboratory bill, mechanisms to insure prompt payment, minimizing the amount of information required for claims processing, and facilitating bulk or periodic billing for multiple beneficiaries." It remains to be seen how seriously HHS interprets the warning.

* Impact on pathologists. A "Dear Doctor" letter issued by HCFA advised that the Medicare physician fee freeze was to remain in effect through April 30, 1986. During April, all physicians had the opportunity to enter or withdraw from the Participating Physician Program. Updates were set for May 1, 1986. Those who participate through the end of this year will get a 4 per cent increase in fee limits. Nonparticipating doctors have their limits and actual charges frozen through Jan. 1, 1987.

COBRA alters the cycle both for updating customary and prevailing charges, and for enrolling as a participating provider. Reasonable charges will be updated Jan. 1, 1987, instead of Oct. 1 of this year. Those changes will be based on actual charges billed during the 12 months ending June 30, 1986.

Beginning next January, the period for deciding on participation will be based on the calendar year. The next opportunity to change status won't be until the 45-day stretch between Nov. 15 and Dec. 31, 1986. Also starting next year, there will be a permanent one-year lag or differential between the prevailing charges affecting participating and non-participating physicians. The latter group will have the prevailing charges applicable to participating doctors the previous year.

The bill in its final form contained few surprises to laboratorians who had followed its lengthy journey into law. COBRA contains some positives (primarily the mandatory assignment and competitive bidding delay provisions) and some negatives (fee ceilings), according to association leaders. But many observers see the package as an interim step to additional changes.

Dr. Mark Birenbaum, associate administrator of the American Association of Bioanalysts, called the assignment provision "a step toward putting everyone in the field on the same basis." But he said the pay ceilings ignore the critical element of the cost containment equation.

"The cap is really nothing more than another cut in the fee schedule," Birenbaum stated. "The bill's failure is that it addresses cost only through the schedule. You have to look at total program outlays and consider utilization." He added that the Government should have given labs at least three months after receiving the new fee levels to allow more time for management planning. As it stands, labs may not receive the calculations until mid-June and be faced with the July 1 implementation.

Many in the industry speculate that COBRA's bite on mandatory assignment and the study of office lab standards may dampen physician involvement in testing. A spokesperson for the American Society for Medical Technology opined that the "jury is still out" on that question. Others say the changes aren't likely to discourage doctors currently active in testing, but that they might dissuade practitioners from initiating or expanding their services.

Meanwhile, lab groups continue to buttress the studies being undertaken on in-office quality assurance standards. CAP is polishing its report due out in August. And ASMT has just issued a new "white paper" it hopes will become an important part of the industry dialogue.

With COBRA already out of the cage, associations are also turning their attention to a united front against health care budget cuts. A group of more than 100 associations and large companies has initiated an awareness campaign through letters to Congress and newspaper ads.

A statement signed by provider groups including CAP and ASMT remarks: "During the past five years, the Medicare program has been cut by nearly $40 billion. This constitutes 12 per cent of total budget cuts even though Medicare now represents only 7 per cent of Federal outlays. Now the Administration is proposing $55 billion in additional Medicare cuts over the next five years.

"These proposals would adversely impact the quality of services and access to needed health care by elderly and poor patients. Neither the Government nor providers can be expected to continue to deliver more care to more people for less money."
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Title Annotation:Consolidated Omnibus Budget Reconciliation Act of 1985
Publication:Medical Laboratory Observer
Date:Jun 1, 1986
Previous Article:Across the Pacific, the same lab concerns.
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