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HCFA asks Congress to wait for its 'manageable' lab regs.

The Reagan Administration has officially opposed Congressional plans to revamp clinical laboratory regulation, indicating it will present its own proposals for change by late summer.

At a hearing July 6, Health Care Financing Administration chief William Roper told Congress his agency is already stretched and may not have the resources necessary to comply with provisions under discussion. He suggested HCFA's own plan will be a more manageable approach to answering quality concerns lawmakers have uncovered.

The hearing by the health panel of the House Energy and Commerce Committee was convened to consider a bill by Rep. Ron Wyden (D-Ore.) and two late entries in the legislative derby sponsored by Re .John Dingell (D-Mich.) .

Like Wyden's bill, the first Dingell proposal would extend licensing mandates to all test sites including physician office laboratories (POLs). A second lockbuster bill caught many in the industry by surprise by proposing to limit Government reimbursement to a lab's lowest prices for any customer. That bill would also prohibit payments to any tab that is privately owned by referring physicians. The latter two provisions drew the strongest opposition from the professional groups that testified.

Opening the hearing, Energy and Commerce Chairman Dingell charged HCFA with acting "lethargically" on lab regulation. "Like Rip Van Winkle rising from a slumber, the Health Care Financing Administration is just now getting acquainted with the field," Dingell stated. "The Government has abdicated its enforcement responsibility to private bodies with neither the inclination nor the experience to enforce the law."

Dingell's most-favored-customer pricing proposal would turn the current system of lab fee schedules inside out. It would direct HCFA to invoke an existing authority known as "inherent reasonableness" to limit payments to a lab's lowest charge level, referred to as LCL.

Dingell said the provision "seeks to correct inequities in reimbursement policy by securing a fair market price for services provided under Medicare and Medicaid. It is absolutely unacceptable when the Federal Government, the biggest and best customer of laboratory services, willingly deprives itself of a fair price."

The Congressman added that his proposal concerning physician lab ownership "provides disincentives for unnecessary utiliza-, tion by discouraging arrangements in which physicians invest in facilities to which they make referrals."

In his first official comments on the host of bills now pending, Roper said, "The overall quality of clinical laboratories is adequate. Later this summer we expect to propose comprehensive regulations that will strike a better balance among the three fundamental components that determine the quality of laboratory performance: proficiency testing, personnel qualifications, and quality assurance."

In general, Roper said, the standards will include the national criteria for a uniform proficiency testing program; require labs to develop and implement quality assurance programs; assure that personnel are adequately trained for stateof-the-art testing performance; and remove outdated, obsolete, and redundant requirements.

The HCFA administrator also raised questions about the price tag of proposed legislation. As he stated, "These bills would extend CLIA requirements, which currently apply to 1,520 laboratories engaged in interstate commerce, to all clinical laboratories, including all 12,000 Medicare and Medicaid certified facilities and as many as 100,000 physician office labs.

"Clearly, this presents a dramatic increase in regulatory workload, for which adequate state survey resources are not now available."

Roper specifically opposed extending CLIA licensure requirements to POLs, urging Congress "not to take precipitous action in this area." He said monitoring and enforcement requirements affecting hospital and independent labs "may be wholly unworkable" for POLs; therefore it would be "premature and counterproductive to broaden regulation" prior to additional research.

Back to the expense issue, Health and Human Services Inspector General Richard Kusserow testified that the cost of annual inspections for all labs could, by itself, run to $197 million a year. He suggested a more cost-effective system based on random, targeted inspections of certified labs.

Overall, however, Kusserow called Dingell's plan "a particularly well thought out, all encompassing approach" to perceived problems. He especially favors provisions that would crack down on "shell" lab schemes, in which doctors and independent labs consort to circumvent rules on physician markups of lab services performed by others.

According to Kusserow, "Eliminating this exemption, where one of the labs has an ownership or management relationship with the shell laboratory, would prevent doctors and laboratories from using this loophole to increase their profits at Medicare's expense."

On that subject, the American College of Physicians supported restrictions on referrals to outside labs in which the physician has a financial interest.

However, group spokesman Clifton Cleveland, M.D., asked for some modification in the proposal's wording. "There may be financial arrangements for labs that do not pose a conflict of interest, but would inappropriately be excluded under the provision as written," he said.

"For example, if several otherwise independent physicians jointly own and operate a lab that performs tests for their patients only, we think that that lab can be considered an extension of their offices, and should not come under [such] restrictions."

Laboratory associations, understandably, directed many of their comments toward the Dingell proposals that would rachet down Government reimbursements.

Loyd Wagner, M.D., president-elect of the College of American Pathologists, said, "A lowest-charge limitation would be inequitable because discounts to non-Medicare patients are often justified by differences in billing, handsing, and collection costs.

"For example, Medicare billing requirements are much more detailed and complex than those of any other purchaser of clinical diagnostic tests. Simplified billing procedures and prompt payment justify a lower price because the cost of providing the service is lower."

William C. O'Neil, past president of the American Clinical Laboratory Association, remarked, "In general, these bills are an important first step toward achieving ACLA's goals, and for the most part ACLA supports their enactment."

Still, the group is "very troubled" by the LCL provision. According to O'Neil. "The financial losses that ACLA envisions laboratories sustaining if this proposal is adopted could threaten quality, access, and the very existence of some laboratories."

O'Neil first focused on the administrative complexities involved with the plan. "While there are now approximately 56 different carrier fee schedules, adoption of a lowest charge level rule would mean that every Medicare certified lab would have separate, individual ceilings for every test it performed," he remarked.

"Moreover, it appears that many laboratories do not know what their lowest charges are. If they do not know, it is difficult to see how Medicare could know."

O'Neil explained that ACLA's constituency of large, full-service labs have 1,000 or more clients including doctors, HMOs, hospitals, employers, unions, government agencies, and research institutions. "Pricing mechanisms for each client may vary considerably, " he noted.

Also at the hearing, American Society for Medical Technology spokesperson Judith Barr said: "ASMT supports the intent behind these bills to eliminate performance site as a key factor in laboratory regulation and to treat POLs equally with hospital and independent laboratories, and we strongly support a 1989 or 1990 effective date for regulation of all laboratories."

Focusing on personnel requirements, Barr urged that specific standards be adopted for type of test, along with rules for assuring continued competency of all lab workers. Requiring certification and recertification by nationally recognized groups is the best assurance of competency, she said.

At this point, it appears to be something of a tortoise vs. tortoise footrace between HCFA's alleged "lethargy" in producing its vision of what to do about quality control problems and Congress's own cumbersome process of doing business. Although Senate leaders have come to similar conclusions about the need for action, the proposals offered by Representative Dingell will need some mulling over.

This much is clear: The pressure is squarely on HCFA to produce other satisfying solutions. Electiontime pressures surrounding what has become a pro-consumer issue won't permit much leeway.
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Title Annotation:Health Care Financing Administration
Publication:Medical Laboratory Observer
Date:Aug 1, 1988
Previous Article:Blame lab management for staffing shortage.
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