‘Health Lawyers News’ Attacks Pathology Part A

Triggered by debate on a lawyers listserv, story attempts to address key issues

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CEO SUMMARY: Pathologists should take time to read the cover story in the May 2003 issue of Health Lawyers News. Although the story nominally addresses questions involving how hospitals should reimburse physicians for administrative duties, it deals mostly with clinical pathology services and makes representations about the work pathologists do which some legal experts call factually and legally wrong.

FEW PATHOLOGISTS KNOW much about the publication Health Lawyers News. But that may change next time they sit down with their hospital administrators to negotiate the renewal of their contract for Medicare Part A professional component for clinical pathology services.

The issue was triggered by the story “Payment for Physician Administration Service: Navigating Around the Edge of Deep Waters,” published in the May 2003 issue of Health Lawyers News. Although the story starts by discussing issues related to compensating physicians for administrative services they provide to hospitals, it primarily deals with arguments against paying pathologists for the clinical pathology professional services they provide in directing laboratory testing operations for hospitals.

Inaccurate Information

“Essentially, this is an article we strongly disagree with,” stated Richard S. Cooper, Partner at the law firm of McDonald Hopkins, based in Cleveland, Ohio. “Readers of this article include lawyers advising hospital administrators. Pathologists should anticipate that some hospital administrators may present copies of this article during negotiations for agreements covering Part A clinical pathology professional services.”

Cooper provided examples to illustrate his conviction that the article contains inaccurate information. “The article explains that Medicare Part B payments received by pathologists take into account the fact that pathologists may be required to ensure proper calibration and functioning of laboratory equipment and that tests are being properly performed,” he explained. “This is incorrect because Part B of the Medicare program does not reimburse for any professional component of clinical pathology services.

“In another place, the article quotes the ruling in Parsa v. State of New York, 64N.y.2d 143 (1985) to support the claim that ‘pathologists are not entitled to directly receive a portion of the hospital’s Part A DRG reimbursement.’ However, the Parsa case dealt with Medicare reimbursement under the cost-based Part A methodology that was used prior to implementation of TEFRA. Under this arrangement, clinical pathology services at issue in the Parsa case were reimbursable under Part B. This citation is misleading and the story fails to make that clear,” explained Cooper.

“At another point, the story characterizes a pathologist’s clinical pathology professional services as more administrative in nature, noting that non-physician lab managers perform routine administrative tasks and day-to-day oversight of lab personnel,” continued Cooper. “This characterization fails to reflect the level of laboratory medicine practiced by pathologists on behalf of referring physicians and patients. It also fails to recognize that the medical profession established a board certification in clinical pathology because of its important function within the healthcare system. Because of the inaccuracies in the article, McDonald Hopkins immediately sent a counterpoint letter to Health Lawyers News.”

Health Lawyers News and a sister publication, Health Lawyers Weekly, plan to publish the McDonald Hopkins letter. To learn more about why this story appeared in Health Lawyers News, THE DARK REPORT contacted co-author Michael L. Silhol, Vice President, Legal Operations at Triad Hospitals, Inc., based in Plano, Texas. (Silhol co-authored the article with Jennifer Papapanagioutou, a consultant and attorney with experience in legal issues affecting hospital operations.)

Topic of High-Interest

“The genesis of this article was the volume of chatter involving this topic on one of the listservs operated by the American Health Lawyers Association,” said Silhol. “We were surprised at the number of hits directed at emails on this subject.

“Anyone familiar with the issue of Part A compensation for hospital-based physicians knows that this is topic with passionate advocates on each side,” he added. “This high level of interest is what spurred us to tackle the subject of reimbursement for these services.

“Our goal was to present a balanced view of the issue. We realize there is room for disagreement by both sides. We included a sidebar to the story which recognized specific attorneys who had contributed emails to the listserv discussion.”

Different Policies

Within his own company, Silhol observed that Triad has no company-wide policy which addresses reimbursement for the Medicare Part A professional component for clinical pathology services. “Each of the hospitals Triad owns or manages is operated to meet the needs of its community and local healthcare practices,” he said. “For that reason, there are a variety of arrangements between our hospitals and their pathologists.”

Several times the Health Lawyers News article stresses a key point. The authors accurately recognize the rancorous nature of the debate, stating at one juncture: “In summary, it is unlikely that hospital counsel and hospital-based physicians will ever fully agree on whether hospitals must pay for administrative services.”

Clients and long-time readers of THE DARK REPORT know that Medicare Part A reimbursement is handled differently in hospitals throughout the country. In site visits around the nation, THE DARK REPORT has found that the most successful Part A reimbursement arrangements can be consistently found in situations where the pathology group and the hospital administration are in close communication, and the full scope and impact of clinical pathology professional responsibilities are documented and understood by both parties.

Ongoing Disagreement

Unfortunately, this is not a universal situation. Since the recent story in Health Lawyers News did not present a balanced look at both sides of the issue, it seems likely that debate will continue in future issues of the publication. It is also likely that this story will surface in future negotiations between hospital administrators and pathologists. That’s because the attorneys who advise hospital administrators are most likely to read this article.

Even with an effective public response by the pathology profession, invariably some hospital administrators will use this article to justify the reduction or elimination of existing Part A reimbursement arrangements with their pathologists.

Pathologists Should Respond Strongly To Correct the Record on This Issue

PATHOLOGISTS WHO CAREFULLY READ the story “Payment for Physician Administration Service: Navigating Around the Edge of Deep Waters” published in the May 2003 issue of Health Lawyer News will probably be disappointed.

The first two sentences of the lead paragraph set the tone for the remainder of the article. “A recurrent issue that gnaws at hospital administrators revolves around the seemingly incessant demand by physicians to be compensated for administrative services they perform at hospitals. These requests have ranged from demands by pathologists to be paid for overseeing the hospital laboratory to requests from OB/GYNs and orthopedic surgeons to be paid for on-call availability.”

The second sentence makes two revealing characterizations. It labels pathologists’ desire to be paid for clinical pathology services as a “seemingly incessant demand.” It then equates the clinical pathology services rendered in maintaining a high-quality hospital laboratory as being equal to an OB/GYN or orthopedist request to be paid for on-call availability.

“Lacking in this article is a balanced and accurate presentation of evidence which supports the medical value of clinical pathology professional services,” noted Richard S. Cooper, Partner at the law firm of McDonald Hopkins. “State and federal courts have recognized that, as medical directors of clinical laboratories, pathologists are providing worthwhile services on behalf of referring physicians and patients, and that these services are required by various laws and regulations.

“Within my law firm, which maintains a national practice supporting anatomic pathology groups in all areas of the United States, the view is that this article is wrong in certain key areas,” declared Cooper. “We think it’s important for the pathology profession to know about this article and respond strongly to it. Pathologists should not be surprised if a hospital administrator shows up at the negotiating table and wants to use this article to justify reduced or no payment for Medicare Part A professional component for clinical pathology services.”


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