Last summer, the Centers for Medicare and Medicaid Services (CMS) released the 2011 Medicare Physician Fee Schedule and proposed rules, and two of those rules caught the attention of many healthcare professionals. One establishes a new disclosure requirement for doctors who self-refer for imaging services, and the other tries to clarify the rule that requires requisitions for clinical lab tests to include a physician’s signature (or one from another qualified medical professional.)

The 2011 changes show that CMS is taking steps toward limiting physician self-referral of these services. But according to many healthcare professionals, this is just a step in the right direction, and the rules should really be extended to cover other services covered by the anti-markup rule.

In 2007, CMS revised the anti-markup rule to include measures that were meant to stop the abusive billing practices some pathology services were engaged with—but there was a loophole that seemed to encourage physicians who owned “pod labs” to relocate them to their own offices. Though CMS’s original intent was to simplify the process of basic lab tests for the sake of patient convenience, some offices were accused of using the in-office labs to increase their profits.

According to Mark Stoler, MD, president of American Society for Clinical Pathology (ASCP), the two main problems with this are the lack of a requirement for a pathologist to oversee the in-office labs and the existence of a seemingly inevitable overuse of the facilities which appeared to be associated with financial health, rather than patient health.

In fact, many physicians’ practices have set up labs that are actively conducting highly complex tests, including tissue biopsies for conditions like cancer. While these types of biopsies require tissue specimens to be processed by teams of expert professionals and should be handled only under the direction of a pathologist in an accredited laboratory, the current Medicare anti-markup rule only requires that these labs are supervised by “a physician.” Any physician, so long as he’s a part of the billing practice—regardless of whether or not he has formal training in pathology.

That same year, the Department of Health and Human Services Office of the Inspector General (OIG) released the results of their investigation into anatomic-pathology-related self-referral. The report revealed an alarming increase in the utilization of these services once a practice had an in-office lab that allowed it to bill for those services. In one example, three urology offices entered into arrangements which allowed them to profit from lab referrals—and their utilization of pathology services increased the following year by as much as 699%.

It’s not surprising then that in 2004, ASCP expressed its concern about these “pod labs” and their potential for abusive practices and threats to patient safety when it launched its very successful “Stop Pod Labs Now” campaign.  ASCP continues to fight pod labs today and states goals that include preventing the abusive billing practices, protecting pathologists and their profession and most notably, the health of patients who need these services.

So what about that other rule, the one that requires a physician or qualified non-physician to sign each requisition for lab tests that are to be reimbursed? CMS’s intentions are to clarify the current signature requirement, but the rule change may actually add further confusion about the need for a signature, healthcare industry experts say. And, it seems to add to the already complicated administrative process and duplicate efforts, which certainly doesn’t seem to be in the best interest of the patients involved.

If the doctor fails to sign the requisition, the lab might be denied payment under the proposed rule. So, if there are no consequences for the physician, as the rule states, there doesn’t seem to be any incentive for compliance. Is it fair to hold the laboratory responsible for the physician’s non-compliance?

This makes the lab responsible for obtaining the necessary signatures—and since timely lab results are generally important for patient health, the delay that might be caused is a potential risk to the outcome of treatment. This seems very unfair to both the labs and the patients involved.