CEO SUMMARY: During the past 36 months, quiet and significant changes have occurred to certain legal issues involving anatomic pathology services. The resulting new environment exposes pathology groups to different types of threats, particularly to their sources of income. This intelligence briefing launches a new series concerning the law and pathology.
WITHOUT MUCH ATTENTION or fanfare, specific legal issues affecting anatomic pathology services have evolved in new directions during the past 36 months.
THE DARK REPORT identifies four specific areas where the marketplace is in transition and pathologists may be at risk if they fail to recognize and respond appropriately. “Pathologists should be aware that a number of developments during recent years have created new risks for their group practices,” stated Richard S. Cooper, Attorney and Partner at McDonald, Hopkins, Burke & Haber in Cleveland, Ohio.
“In some cases, it involves trends to reduce or even eliminate traditional sources of compensation for pathology services,” he said. “In other cases, longstanding and accepted legal standards are changing and evolving in directions that create a different type of risk exposure for pathologists.”
Four legal issues top Cooper’s list of concerns. In future installments, THE DARK REPORT will provide more detailed assessments of each. As an introduction, Cooper categorizes these four trends in the following manner.
Attack On Clinical Fees
“Top threat on my list is the widespread action by hospitals and payers across the country to reduce or eliminate compensation for clinical pathology services,” stated Cooper. “Obviously, this involves Medicare Part A agreements between pathology groups and hospitals. But it goes beyond that.
“There is sustained pressure by all classes of payers to eliminate the professional component for clinical pathology services,” he continued. “This despite successful lawsuits which did affirm the validity of these professional medical services and the right of pathologists to bill for them.
“The second trend involves payer’s actions that limit the number of pathology and laboratory providers for outreach medical services. This principally occurs in two ways,” explained Cooper. “One way is to limit the panel of pathology and lab providers. Another way is to offer reimbursement at levels that only larger labs are able to accept. Smaller anatomic pathology (AP) groups won’t pursue contracts offering minimum reimbursement for AP specimens. In my opinion, this represents a sustained threat to the long- standing access pathology groups have had to patients in their community.
“Pathology groups should recognize that the longer they delay before taking active steps to comply with HIPAA requirements, the greater the risk.”
“My third important issue is HIPAA compliance,” noted Cooper. “Right now, payers are ahead of the industry in their compliance efforts. Next would be hospitals and health systems. Smaller labs and anatomic pathology groups are lagging. Pathology groups should recognize that the longer they delay before taking active steps to comply with HIPAA requirements, the greater the risk.
Pressure To Consolidate
“Fourth on my list of key legal issues is pressure by hospitals and integrated delivery networks (IDN) to drive consolidation among pathology group practices affiliated with individual hospitals in the IDN,” he said.
“This pressure and interference has many forms,” continued Cooper. “It can range from pressuring independent groups to consolidate to actually dictating how the consolidation should be accomplished and which individual pathologists should be retained in leadership positions.”
Cooper’s list of high-priority issues is rooted in the experience he and his colleague gain in advising their pathologist-clients. “Geographically, we work with pathology groups from almost every region of the United States,” noted Cooper. “That gives us first-hand insights into which legal issues are regional in nature and which have national implications.”
THE DARK REPORT recommends that pathology groups take time to understand these trends and develop effective business strategies to counter them. In upcoming issues, THE DARK REPORT will address each of the four legal trends identified by Cooper in more detail.
These briefings will identify the factors defining the trend and explain how legal practices have changed. Also, effective responses and strategies already in use by top-performing pathology groups to deal effectively with these threats will be discussed, along with their pros and cons.
Preparation is one strategy that Cooper recommends. “At a minimum, I see lots of pathologists leaving lots of money on the table,” he declared. “One reason is because the opposition is well-prepared and holds the money. But the other reason is that many pathologists do not prepare themselves effectively before entering into these types of negotiations. They are not good advocates for themselves.”