CEO SUMMARY: Over-utilization is likely to be a prime concern when federal healthcare enforcers eventually investigate in-house anatomic pathology laboratories owned by specialist physicians. Some in-house pathology lab condo promoters are basing financial performance on 100% utilization of 12-core prostate biopsies. That significantly exceeds current clinical practices, as the numbers below demonstrate.
OVER-UTILIZATION WILL BE one major Achilles’ Heel in the ability of in-house anatomic pathology laboratories operated by specialist physician groups to fully meet Medicare and Medicaid compliance requirements.
This is the first observation made when experts well-versed in anatomic pathology (AP) lab compliance look at documents and projections that support various in-house AP lab schemes. It is these documents promotors of in-house AP labs use to convince specialist physician groups to invest in an AP laboratory.
The 12-Core Controversy
One example of an AP lab condo financial projection is found in this issue. Prepared for urology practices, it bases revenues on 100% utilization of a 12-core prostate biopsy. That raises a red flag for pathologists. Within the United States, there is no clinical standard which supports performing a 12-core prostate biopsy on 100% of patients undergoing this procedure.
Were a urology group to adopt a clinical standard of ordering 12-core biopsies for every patient requiring a prostate biopsy from its own in-house anatomic pathology laboratory, two negative outcomes may result.
First is the patient care issue. Was the patient needlessly subjected to 12 fine needle punches, with the resulting increased morbidity, bleeding, and pain, simply because urologists had an incentive to self-refer a case which maximized revenues to their group practice? Second, since Medicare, Medicaid, and private payers reimburse for each individual analysis of a biopsy core, ordering a prostate biopsy with 12 identifiable cores is a way to generate additional revenue to the specialist group practice.
That revenue impact is substantial. Today, evidence exists that the majority of prostate biopsies involve diagnosing six or fewer cores. If the example of $100 reimbursement per biopsy core (slide) is used (technical and professional), a six-core prostate biopsy would be reimbursed at $600. A 12-core prostate biopsy would double that to $1,200.
In this issue, THE DARK REPORT is publishing evidence that some promoters of in-house AP laboratories do rely on 100% utilization of 12-core prostate biopsies to justify the financial investment for prospective specialist physician groups. (See this article.)
To identify the existing standard-of- practice within the anatomic pathology profession, THE DARK REPORT contacted Pathology Service Associates, LLC(PSA), based in Florence, South Carolina. The results will interest even veteran anatomic pathologists.
Survey Of Billing Data
“PSA is a member network of 71 pathology group practices and represents more than 400 pathologists in 21 states,” stated Louis D. Wright, Jr., M.D., Founder. “PSA handles billing for a substantial number of our member practices, so we do service a representative slice of the AP profession.
“At your request, we did a study of prostate biopsy claims filed by our member groups during the first six months of this year, from January 1 to June 30, 2004,” he continued. “Our records show 8,663 prostate biopsy patients. A total of 39,733 needle biopsies for these patients were submitted as separately identified for evaluation.
Number of Cores
“Our study indicated an average of 4.6 billable CPTs per patient were generated for this procedure,” stated Wright. “This is an average of billable CPTs, which includes cases where the referring physician has sent a right hemisphere bottle and a left hemisphere bottle, each containing three cores. Although the pathologist performed six evaluations for this case, it is properly submitted as two billable 88305 claims.
“I want to stress that this average of 4.6 billable CPT codes reflects what the physicians order our pathologists to evaluate,” noted Wright. “We consider this to be a reasonable reflection of what is happening in the local healthcare community. It indicates that, within the urology community, 12-core prostate biopsies are not the standard.”
“To the contrary,” he added, “a much smaller number of biopsies per case is typical. We excluded prostate biopsy cases that originated within hospitals, so our number is based exclusively on biopsies ordered by office-based physicians.”
“At your request, we also looked at how frequently a 12-core prostate biopsy was ordered,” said PSA CEO Al Sirmon. “Of the 8,663 patients, 3% of the test orders separately identify more than 12 cores and 7% separately identify 12-cores. Combined, that indicates that physicians across the country separately identify and submit 12-core prostate biopsies on about 10% of their patients.”
3% of Nation’s Biopsies
During 2004, the Prostate Cancer Foundation estimates 230,000 new cases will be diagnosed. Assume a 40% positive rate on all patients undergoing a biopsy. That projects to about 575,000 patient biopsies in 2004. PSA’s 8,663 patient claims during the first six months of 2004 indicates it may be billing for 3.01% of all prostate biopsies diagnosed annually. Although not the result of a rigorous scientific study, these numbers do provide a reliable insight into existing ordering patterns for prostate biopsies.
THE DARK REPORT observes that a 12-core prostate biopsy does increase a specialty group’s revenue. But it also increases the reimbursement paid by Medicare and Medicaid to settle these claims. It may not take long for federal healthcare fraud investigators to pick up this pattern and take enforcement action. Specialists physicians should be forewarned. The last time the lab industry faced comparable Medicare Fraud and Abuse charges, it paid more than $1 billion in restitution and fines!