Read the Latest Issue of STATLINE

January 18, 2017

In This Issue:

The House took a key step toward repealing the Affordable Care Act (ACA), passing a fiscal 2017 budget resolution on Friday, January 13. The House vote of 227–198 followed Senate passage on Thursday, January 12, by a 51–48 vote.

The budget resolution is key to Congressional Republican plans to repeal the ACA because it will go through a filibuster-proof budget reconciliation process. The budget resolution instructs Congressional Committees of jurisdiction to draft a bill to repeal the tax and spend provisions of the ACA. The resolution contains reconciliation instructions to four authorizing committees in the Senate: (Finance and Health, Education, Labor, and Pensions) and two in the House (Ways and Means and Energy and Commerce) to achieve at least $1 billion each in deficit reduction over 10 years.

President-elect Donald Trump added additional pressure on Congress when he vowed to "repeal and replace Obamacare essentially simultaneously" after the Senate confirms Rep. Tom Price (GA-6), his pick for Department of Health and Human Services secretary.

House speaker Paul Ryan (WI-1) indicated that the ACA's repeal and replace will happen together, perhaps even within the same bill, but the timing is still being worked out.

The CAP would prefer that Congress have a replacement plan to minimize the impact on patients, pathologists, and the health care delivery system before the law is fully repealed.

Back to the top

The Alaska Pathology Association (APA), with the support of the CAP, has come out in opposition to any change to the state's use of the 80th percentile rule for calculating physician out of network (OON) payment and in support of language ensuring network adequacy.

The Alaska Division of Insurance solicited public comment on whether the "80th percentile rule" should be amended, repealed, or left unchanged. (The 80th percentile rule prescribes that payment to OON physicians should be based upon the 80th percentile of market-based charges for the same service in the geographic region.) The intent of the rule was to reduce the balance billing that consumers receive from out-of-network health care providers by requiring health insurers to pay claims for health care services and supplies based on an amount equal to or greater than the 80th percentile.

In comments submitted to the Division of Insurance, the APA says it supports Alaska's current use of the 80th percentile of market charges for determining "usual and customary rates" (UCR), noting that the use of the 80th percentile rule in Alaska should not be altered to accommodate the business interests of health insurance payors. "The rule is a common-sense consumer protection measure that ensures that health plans cannot shift out-of-network costs to their enrollees," the APA says. "The rule also ensures that it is in the financial interest of health plans to have a robust provider network that will minimize the occurrence of out-of-network costs for their enrollees and the plans as well."

The APA adds that the use of a market-based charge formula, such as that used by FAIR Health Inc. in its databases, makes sense because it provides transparency to the health care and health insurance marketplaces. The FAIR Health database contains medical claims for approximately 150 million covered lives and 16 million medical procedures. It is used by United Health Inc. for their plans in multiple states, the association notes.

"If payors believe that the UCR (when calculated at the 80th percentile of FAIR Health Inc.) is in excess of what they want to pay for the service, there will be a strong market incentive for them to negotiate in-network contracts with physician groups," says the APA. "The problem of balance billing of patients emerges in scenarios wherein patients cannot access in-network providers at in-network hospital and facilities. In these situations, out-of-network physicians are under ethical and sometimes legal obligations to provide medical services for their out-of-network patients."

For these reasons, the APA is urging the Division of Insurance to include network adequacy language that effectuates American Medical Association policy: "Our AMA advocates that health plans should be required to document to regulators that they have met requisite standards of network adequacy, including hospital-based physician specialties (ie, radiology, pathology, emergency medicine, anesthesiologists, and hospitalists) at in-network facilities, and ensure in-network adequacy is both timely and geographically accessible." The CAP has long believed that any state-approved health insurance plan network should be subject to plan adequacy requirements and supports the APA's position.

Back to the top

On Friday, January 13 the Food and Drug Administration (FDA) released a discussion paper outlining a possible approach to laboratory developed test (LDT) oversight that gives both the Centers for Medicare & Medicaid Services (CMS) and the FDA a place in regulating the tests, but applies a risk-based framework phased in over four years and grandfathers in previously marketed LDTs. The paper proposed expanding the FDA third-party premarket review program to include eligible LDTs.

The FDA discussion paper represents comments received by the Agency from stakeholders, including the CAP, since releasing the draft guidance in 2014, but does not represent a final version of the LDT draft guidance documents. In addition, the document does not represent the FDA's formal position and it is not enforceable.

In addition to a synthesis of feedback received on the proposal put forth in 2014, "with the hope that it advances public discussion on future LDT oversight," the FDA also points to several alternatives to what was proposed and should be considered, including:

  • Exempting LDTs already on the market from all FDA oversight except for adverse event and malfunction reporting ("grandfathering"), and exempting traditional LDTs and LDTs for public health surveillance from all oversight;
  • Not adopting proposals requesting laboratories to notify the FDA of their LDTs on the market because the FDA generally would no longer need to classify LDTs currently on the market as the result of "grandfathering";
  • Providing additional time before the FDA would begin actively overseeing certain regulatory requirements; and
  • Shortening the overall phased-in timeframe.
Complementary Approach Between FDA and CMS

The discussion paper outlines a complementary approach between the FDA and CMS as the best method to streamline effective oversight. This FDA/CMS complementary approach will take advantage of each federal agency's existing structure and strengths, including FDA's experience in premarket review of diagnostics and its deep knowledge of clinical research methodology.

In 2014, the FDA issued its draft guidance document. The CAP opposed the initial draft as written and called for changes based on the CAP's longstanding principles for LDT oversight. Since 2009, the CAP advocated for a targeted, risk-based approach to oversight that ensures quality laboratory testing for patients, allows for innovation, and prevents undue burdens on laboratories.

The CAP will continue to engage on LDT oversight with the FDA, Congress and key stakeholders, including patient advocates, other physicians, laboratory organizations, and industry groups.

Back to the top

Beginning on January 1, 2017, the Protecting Access to Medicare Act (PAMA) required certain laboratories to submit private payor rates for clinical laboratory tests. The CAP developed pathology-specific PAMA resources, including an informative infographic and podcast, to help laboratories understand regulatory requirements and upcoming deadlines. These resources and additional tools can be found on the CAP’ PAMA resources web page.

Back to the top

Let your voice be heard at the 2017 CAP Policy Meeting with its theme of Protecting the Practice of Pathology and Our Patients. From April 24–26, CAP members can connect with government leaders and policy experts to discuss the impact of federal regulation on their pathology practices.

Registration is now open for the annual CAP Policy Meeting. Stay tuned for more updates.

Back to the top