GAO Pathology Report: Methodologically Flawed, Factually Inaccurate

The Government Accountability Office (GAO) report titled “Medicare: Action Needed to Address Higher Use of Anatomic Pathology Services by Providers Who Self‐Refer” (GAO‐13‐445, Jun 24, 2013) includes a number of methodologically flawed and misleading statements that suggest that integration of pathology into urological, dermatological, and gastrointestinal physician practices has led to overutilization. Although the GAO report does not recommend the elimination or narrowing of the Medicare in‐office ancillary services exception (IOASE), the report is being used incorrectly by some to rationalize its repeal. As practicing urologists who treat patients with multiple complex conditions, we are concerned about the impact altering the IOASE could have on the quality of patient care, including delaying or missing diagnoses and promoting fragmented care. Therefore, we urge that the IOASE remain an exception to the Stark Law and draw your attention to our concerns with the GAO report.

The GAO fails to properly account for shifts in practice pattern.
The GAO reports that the total number of anatomic pathology (AP) services performed by physicians with in-house laboratories increased by 113% from 2004‐2010, resulting in a 164% increase in expenditures over the same time period, with 90% of services in the specialties of dermatology, gastroenterology and urology. However, the GAO acknowledges that during this period, there was a shift in site of service for AP services toward in‐office labs for these specialties. When this change is accounted for, the net growth rate in AP services and expenditures for in‐house labs in these specialties is reduced to 8.4% and 39.4%, respectively, both lower than that for providers who referred AP services to hospitals and commercial laboratories.

The GAO does not account for changing clinical standards during the study period.
GAO also disregarded substantial peer‐reviewed literature that documents changing clinical standards during the time period studied. For example, during the study period, the peer‐reviewed literature in urology suggested that increasing the number of biopsy specimens improved cancer detection rates by 31%.1 These changes eventually resulted in National Comprehensive Clinical Network (NCCN) guidelines recommending a sampling regimen of 10‐12 cores per biopsy in 2010.  The largest study performed on prostate biopsies indicates that while physicians with in‐house laboratories adopted this regimen sooner, ultimately, there was no difference in core sampling between providers utilizing in‐house AP laboratories and those sending these services outside their practices. In fact, the GAO reports that in 2010, providers with in‐house AP laboratories performed 12.5 cores/biopsy … the clinical standard. Physicians complying with existing clinical standards cannot be considered to be over utilizing services.

The GAO’s statement that “providers differ on whether or to what extent tissue samples can be combined in creating a specimen or if each tissue sample must become a specimen” also is inaccurate. In fact, the pathology literature regarding handling of prostate specimens strongly suggests that specimen handling is improved if biopsies are segregated into unique vials.

This failure of GAO to adequately account for changing practice patterns and clinical standards during the study period invalidates their analysis of “switchers,” the term GAO uses for providers that elected to integrate pathology services into their practices. GAO reports that the number of specimens/biopsy increases the year after providers incorporate AP services, but also notes that utilization is comparable between providers with established AP labs and those without such services. This suggests that the “switcher” category may represent physicians joining or forming larger groups, and adopting a more appropriate pattern of care as they develop standardized clinical protocols, which are the hallmark of integrated groups.

The GAO report excludes analysis of hospital utilization
The GAO recognizes that there are three potential sites of service – physician offices, independent laboratories and hospitals. The GAO reported that in 2010, 16.2 million total AP services were performed across all settings, yet they deliberately excluded hospitals from the study, reporting on only 10.03 million services, failing to account for 38% of all AP services performed that year.

The GAO overstates savings from limiting in‐office AP services
The GAO reports that $69 million in 2010 could have been saved had clinicians with AP labs performed biopsies at the same rate as those without such services, yet the GAO made no effort to determine if the services performed were medically appropriate. In the case of prostate biopsies, the GAO suggests that payments could be reduced if urologists performed a lower number of cores/biopsy (8.5), ignoring the fact that the prevailing clinical standard was 10‐12. According to GAO, urology comprised 16.4% of services; therefore, $11.3 million of the purported savings is based on GAO’s failure to account for changing clinical guidelines.

GAO further fails to mention in its executive summary that any historical difference in payment is not relevant to future public policy – through regulation, Medicare reimbursement for the technical portion of AP services was reduced in 2013 by 52%. While GAO states that future savings under the new fee schedule would be approximately $48 million per year, GAO acknowledges that it did not include providers that only provided professional services in the study – potentially understating the savings from these reimbursement changes.

GAO does not report on quality advantages to in‐house laboratories
Incorporation of AP services into clinical practices offers a number of advantages for patients and physicians, including more rapid turn‐around time, the ability for pathologists to develop disease specific expertise, enhanced communications between pathologists and treating providers, as well as the development of standardized clinical pathways. Peer‐reviewed literature reports that the rate of certain specimen handling errors in urology‐owned AP labs is lower than for any other site of service.

GAO did not recommend eliminating or narrowing the IOASE
GAO made three recommendations based on their report, but importantly, did not recommend eliminating or even narrowing the in‐office ancillary services exception to the Federal self‐referral statute. Of these three, the US Department of Health and Human Services (HHS) only agreed that modification to payments for AP services was warranted; those changes were already made by the Centers for Medicare and Medicaid Services (CMS) nearly a year prior to release of the GAO study.