1. 2012 CCLA Annual Conference
Washington Update
The Westgate Hotel
San Diego, CA
November 8, 2012
Dennis Weissman, President
Dennis Weissman & Associates, LLC and
Founder & Executive Editor, G2 Intelligence

2. Presentation Outline
Analyze the 2012 election results and the impact on heath care policy and laboratory & pathology interests
Discuss What’s At Stake for Labs and Pathologists In the Lame Duck Congress
Project Medicare payment rates for labs and pathologists in 2013
Assess key policy issues for labs and pathologists in the year ahead

3. 2012 Projected Presidential Results
ELECTORAL VOTES
POPULAR VOTE (%)
BARACK OBAMA
leading 29 (FL)
50%
MITT ROMNEY
206
48%
THIRD-PARTY CANDIDATES 2%
TOTALS
535
100%

4. Current Congressional Lineup
112th Congress, 2nd Session
HOUSE
SENATE
DEMOCRATS
190 51
REPUBLICANS
240 47
INDEPENDENTS 2
VACANCIES 5

5. Projected 2013 Congressional Lineup
113th Congress, 1st Session
HOUSE
SENATE
DEMOCRATS
195 (+5)
53 (+2)
REPUBLICANS
234 (-6)
45 (-2)
INDEPENDENTS 2
TOO CLOSE
TO CALL 6

6. Election Impact: Key Questions
What It means for future prospects of Affordable Care Act -- is repeal still possible or off the table?
Assess the most likely implications for Medicare – does it make payment reforms more probable in the near term?
Discuss how labs & pathologists are affected – does it matter who’s in the White House?
Examine the changing political dynamics – will it change what happens in the lame duck session?

7. Lame Duck Congress
Post-election session must deal with so-called “fiscal-cliff” which takes effect in 2013 when scheduled tax increases and spending cuts would spell trouble for U.S. economy
Set to expire are Bush tax cuts, temporary payroll tax cuts, ending of marriage penalty relief, contraction of Earned Income Credit, lower child tax credit, and $1.2 billion in automatic spending cuts over 10 years divided between domestic & military programs
Federal debt limit must be raised early 2013

8. Medicare Implications
Without congressional action, deficit outlook would improve but CBO says double-dip recession & 9% unemployment would result
Sequester would result in a $11 billion cut in Medicare via a 2% payment cut for providers including clinical labs
FDA budget would be reduced by $318M while NIH would face a whopping cut of $2.5B
Separately, Medicare payments for physicians would be cut 26% without SGR fix

9. Congressional Outlook
GOP would extend Bush tax cuts if Romney wins but if Obama prevails look for tax increase for wealthy
Expect moves to postpone automatic cuts particularly in defense to allow time to enact comprehensive deficit reduction plan
Look for trigger to require implementation of deficit reduction plan if Congress does not act within a specified period (i.e., six months)
Further Medicare revamping on the table only as part of long-term spending & tax overhaul

10. Medicare Reimbursement 2013 Update
2013 payment for laboratory services to be reduced by estimated -4.65% in under the Part B Clinical Laboratory Fee Schedule
2013 proposed Medicare physician fee schedule would cut physician fees by 26.5% which is triggered by the SGR
Congress virtually certain to delete automatic cuts similar to previous years
CMS proposes pay 7% increase for primary care, family physicians

11. 2013 Medicare CLFS Update
CPI Update…..;;…………… % Productivity Adjustment………-0.6% 1.10% 1.75% cut thru 2016)……… % % 2% Fee Schedule Rebasing… -2.0% -2.65% 2% Sequester cut………….…-2.0% 2013 CLFS CPI Update Estimate……-4.65

12. New MDx Pathology Codes
101 new molecular diagnostic codes were introduced this year by the AMA to replace the “stacking” codes currently used to bill Medicare for MDx tests
New codes include 92 Tier I analyte-specific codes for high volume tests (CPT ) and nine Tier II resource-level codes for low volume tests (CPT )
Medicare decides to begin paying under the new codes starting Jan. 1, 2013

13. MDx Coding for 2013
CMS opts to use gap-filling method for MDx codes and decides they should be payable under the Part B Clinical Lab Fee Schedule according to a final rule published Nov. 1
Agency claims that molecular pathology codes do not ordinarily require physician interpretation to produce a meaningful result
However, CMS has created a temporary code in 2013 – G0452 – to describe a medically necessary physician interpretation and written report for molecular pathology tests

14. Major Cut for CPT 88305
In final Physician Fee Schedule rule, CMS cuts the technical component of the most frequently billed pathology code – CPT by 52% starting Jan. 1, 2013
Though the professional component is raised by 2%, the total Medicare reduction for the surgical pathology code will be 33%
Overall, the cut represents a big financial blow to pathology groups, particularly since many private plans will reduce their fees too since they pay off the Medicare rate

15. Palmetto Update
CMS announces that Nordian Administrative Services has been named the new Medicare Administrative Contractor for Medicare Part A and B in Jurisdiction E which includes California, Nevada & Hawaii , replacing Palmetto, GBA
Palmetto has appealed the CMS decision and the earliest an administrative decision would be announced is either the first or second quarter of 2013

16. Federal Policy Briefs
PT Referral: Legislation giving CMS leeway in enforcing sanctions on labs for violating proficiency testing referral rules passed the House (H.R. 6118) on Sept. 19 and has advanced in the Senate when the Health, Education, Labor and Pensions Committee reported out S.3391, for floor consideration
ICD-10: CMS announces a one-year delay in the compliance deadline for use of the ICD 10th Revision, diagnosis and procedure code sets from Oct. 1, 2013 until Oct. 1, 2014