May 22, 2006 “Intelligence: Late Breaking Lab News”

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Another investment firm has acquired an anatomic pathology company. It was announced today that Water Street Capital Partners of Chicago, Illinois, has acquired a majority ownership in Lakewood Pathology Associates, located in Lakewood, New Jersey. Under new ownership, Raza Bokhari, M.D., a founding pathologist of Lakewood Pathology, will continue as President and CEO. Purchase price was not disclosed, but it was stated that Water Street has “committed $50 million in equity financing…to acquire small and mid-size surgical pathology services providers nationwide.”

MORE ON: Lakewood

This development intensifies competition on the national scene. As disclosed recently in THE DARK REPORT, James New, formerly CEO of AmeriPath, Inc., is in the midst of launching a national anatomic pathology company, also with funding from private equity investors. (See TDR, May 1, 2006.)

CMS RECONSIDERS PROPOSED MUES FOR LAB AND AP

Last year’s list of MUEs (Medically Unbelievable Edits), currently proposed for implementation in January 2007, will be “much less restrictive” to the current proposal, according to a release distributed today by the College of American Pathologists (CAP). CAP reports that, in testimony before the Practicing Physicians Advisory Council (PPAC), Lisa Zone stated that the initial phase of the proposed MUEs will “focus largely on anomalies and obvious typographical errors.” Zone is Deputy Director of the Program Integrity Department of the Centers for Medicare and Medicaid Services (CMS). Zone disclosed that, in August, a shorter list of proposed MUEs will be made available for public comment.

ADD TO: Proposed MUEs

These developments represent positive progress for anatomic pathology group practices and laboratories. The proposed MUEs included some onerous caps on service, include a limitation of two units of service per patient per day for CPT 88305. (See TDR, January 16, 2006.) Opposition and criticism to the proposed MUEs was immediate and intense. In her public comments, Zone also indicated that CMS is seriously evaluating how modifiers will be used and what kind of appeals process would be appropriate.

TRANSITIONS

• After many years as Managing Editor of Laboratory Industry Review and Diagnostic Testing & Technology Report, JonDavid Klipp recently resigned his position to form his own company, based in Poughkeepsie, New York. He now publishes Laboratory Economics. The first issue of the monthly newsletter hit the street in April.

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