A bill that is on the verge of being passed in South Carolina and a resolution presented to the Ohio State Medical Association have some dermatologists worried that the pathology community may be trying to restrict the ability of non-pathologists to perform and bill for anatomic pathology procedures. The South Carolina bill, if passed, would prevent physicians from referring those services to another physician or facility and then marking them up. The bill that is sitting on the governor’s desk waiting for a signature would allow any physician who performed an anatomic pathology procedure to bill for it. What’s making dermatologists in South Carolina and elsewhere nervous is not the bill that looks as if it will be passed — similar legislation is already on the books in several other states — but language in earlier drafts of the bill. They say that the original bill contained language that could be interpreted to prevent non-pathologists from performing anatomic pathology services. Those dermatologists point to a resolution that went before the Ohio State Medical Association in April. While that initiative called for an end to the marking up of anatomic pathology services, it also clearly called for supporting “direct billing for anatomic pathology services only when rendered personally by a licensed pathologist.” While the resolution was quickly defeated by the Ohio State Medical Association, a number of dermatologists view it as a troubling sign of the intent of some in the pathology community. They say that the two initiatives, combined with statements from others in the pathology community, make them question the real motives of pathologists proposing direct billing initiatives. Trying to End Wholesaling On a basic level, the recent initiatives from the pathology community are designed to do one simple thing: put an end to the practice of wholesaling, or the marking up of services. Visit the Web site of the College of American Pathology (CAP) and type the words “direct billing” into the search engine, and you’ll find article after article describing the efforts of the CAP to prevent physicians from marking up pathology services that they outsource to pathologists. An April column by CAP president Mary E. Kass, M.D., for example, talks about the efforts of other physicians to “seize and hold hostage our right to direct-bill patients and third parties for anatomic pathology services.” She goes on to say that arrangements that allow indirect billing are “Faustian at best” and threaten the independence and objectivity of pathologists. The particulars of wholesaling vary from specialty to specialty. In dermatology, for example, it is almost nonexistent in parts of the country where commercial payers have joined Medicare and Medicaid in outlawing the practice. Still, it remains enough of an issue nationally that it has the attention of pathologists. Pathologists seem to be most concerned about indirect billing of OB/GYN work because of the growing number of huge labs that offer Pap smears at below-cost rates. These giant labs use Pap smears as a loss leader to entice physicians to refer more lucrative work. The labs may lose money on Pap smears, pathologists say, but they more than make it up on other lucrative procedures. CAP officials recognize that direct billing is a major issue for pathologists. They insist, however, that the organization wants to prevent physicians from marking up pathology services, and that they have no interest in restricting scope of practice. “There’s no attempt here to restrict scope of practice, and the South Carolina bill would allow the person to bill who is licensed to practice medicine in the state,” said David Jadwin, M.D., Vice Chair of the CAP Federal and State Affairs Commit-tee, and Chair-man of Pathology at Kern Medical Center in Bakersfield, CA. “The legislation would basically make sure that only the person who performs the procedure must directly do the billing.” Dr. Jadwin added that the goal of the CAP is to bring about direct billing rules that are consistent with Medicare and Medicaid. He also noted that legislation in several states requires physicians to directly bill for their services or prohibits them from marking up services, or requires them to tell patients when they are marking up services. (See, “Did Pathologists in South Carolina Try to Restrict Scope of Practice? Decide for Yourself” for more information on state laws.) Dr. Jadwin also explained that the CAP’s goal in prohibiting the marking up of services is to protect patients first and pathologists second. “Mark-ups and similar arrangements increase the cost to patients,” he explained. “Our primary goal is to reduce healthcare costs for patients by ensuring that the professional fee is the exclusive cost incurred.” He also said the CAP’s goal is to make sure that physicians don’t select a pathology provider on the basis of his ability to profit, putting financial interests ahead of quality of care. “If someone is going to a wholesaler and seeking the lower cost primarily to make an unearned profit, that would be unethical according to the AMA’s guidelines,” he said. As yet more proof that pathologists are not trying to prevent non-pathologists from performing anatomic pathology services, he pointed out that the final language in the South Carolina bill does not restrict scope of practice. He also noted that the pathologist who sponsored the Ohio resolution quickly changed its wording when others complained that it would restrict the scope of practice of other physicians. (At press time, the Ohio State Medical Association’s Web site contained only the original version of the resolution, not any amended version.) Economic Survival for Pathologists While CAP officials insist that the recent direct billing initiatives aim to make sure that patients aren’t paying more than necessary for pathology procedures, dermatologists see another motive. They view those efforts as nothing more than an attempt by pathologists to stop their peers from gaining business by drastically discounting some of their services. CAP officials say that those initiatives aren’t aimed at the large labs that engage in wholesaling, but they admit that the growth of wholesaling is a concern for pathologists. As Dr. Jadwin noted, “There are entities out there that are trying to find creative ways to circumvent those provisions.” Edward Catalano, M.D., a pathologist who worked on the South Carolina bill, acknowledged that large labs offering discounted services are driving many of the direct-billing initiatives. In his mind, the issue of reigning in wholesalers is a matter of survival. “Ultimately, if this practice becomes widespread, you could have a group of pathologists in India reading slides for a dollar a piece,” said Dr. Catalano, who is managing partner of a 15-physician pathology practice at Palmetto Health Hospital in Columbia, SC. “Physicians could then mark up those slides and use them as a revenue generator.” He worries that in an era of stagnant reimbursements, money will increasingly drive decision-making — to the disadvantage of pathologists. “Physicians may be very comfortable with my professional competence,” Dr. Catalano explained, “but as the reimbursement pie becomes smaller and smaller and everyone is squeezed tighter, people make decisions based on the bottom line that don’t always have the highest ethical or moral considerations.” But he quickly added that the South Carolina bill aimed only to prevent physicians from marking up other services, not prevent non-pathologists from billing for their work. He explained that the first part of the bill very clearly states that any physician who performs anatomic pathology services should be the one to bill for it. Language in the following paragraph that originally referred specifically to pathologists, he said, would not have prohibited dermatologists or other physicians from performing or billing for anatomic pathology procedures. (The original language from the South Carolina bill is in “Did Pathologists in South Carolina Try to Restrict Scope of Practice? Decide for Yourself.") “There was never any intent to keep dermatologists from reading slides,” he said. “The purpose of this bill was to eliminate physicians from going out and buying a service and then marking it up and selling it to patients.” “Uncollegiality” As CAP officials are quick to point out, the final version of the bill in South Carolina, as well as similar legislation recently passed in states like Louisiana, focuses solely on direct billing. Nevertheless, dermatologists remain nervous about future initiatives from the pathology community. They think it’s no coincidence that pathologists in both South Carolina and Ohio initially included language in their proposals that they say would exclude non-pathologists from anatomic pathology work. They admit that pathologists changed the troubling language in their proposals, but only after other physicians complained. Dermatologists point to other evidence that makes them question the intent of at least some pathologists. Even as officials with the CAP insist that they have no intention of restricting scope of practice, the organization’s president seemed to suggest exactly that. Although CAP president Dr. Kass’s April president’s column focused largely on the need for direct billing laws at a state level, one suggestion toward the end of the article shows why some dermatologists are wary. In the column, she plainly states that “. . . we need state-based action to prohibit non-pathologists from billing for pathology services.” (The column is on the CAP Web site at www.cap.org/apps/docs/cap_today/feature_stories/pres_column_04_04.html.) CAP officials repeatedly say that if individuals draft resolutions and bills that call for only pathologists to perform anatomic pathology, they are acting on their own and not representing the policies of the CAP. But when dermatologists see the organization’s president encouraging members to work together to “prohibit non-pathologists from billing for pathology services,” they are understandably concerned. When Steve Feldman, M.D., Ph.D., Professor of Dermatology, Pathology and Public Health Sciences at Wake Forest University in Winston-Salem, N.C., read that statement, it confirmed his worst fears. He had already been closely following developments in South Carolina and Ohio, and any doubts about pathologists motivations were confirmed upon reading those remarks. “This kind of uncollegiality, going behind peoples’ backs and trying to cut them out, it’s going to infuriate people,” Dr. Feldman explained. “I don’t think people are aware of what the pathologists are trying to do, but when they become aware, the pathologists could be in a heap of trouble.” Ironically, pathologists are raising the ire of dermatologists with legislation that many say they would support. Many of the dermatologists interviewed for this story, for example, generally agreed that they don’t support the idea of marking up services performed by other physicians and passing those charges on to patients. They note that the practice contradicts guidelines from the AMA and the AAD. On a more practical level, many commercial payers simply don’t allow it. While Brett Coldiron, M.D., Clinical Assistant Professor of Dermatology at the University of Cincinnati, opposed the resolution that went before the state medical society, he said he doesn’t buy arguments that dermatologists should be paid a separate fee for processing lab results and notifying patients. He said dermatologists already receive payment for this in their evaluation and management fee for seeing the patient. “I don’t think it’s enough work to justify a separate charge,” he said. Even in South Carolina, Jim Chow, M.D., a dermatologist and Mohs surgeon who worked to stop the original language of the bill from being passed by the state legislature, said that the number of dermatologists who mark up pathology services was dropping, even before the legislation was drafted. Philip Werschler, M.D., F.A.A.D., said he questions the ethics of marking up services provided by other physicians because he feels like he’s already fairly compensated for the care of the patient who is undergoing lab work. “The system is screwy and full of errors,” he explained, “but we all have to play by the rules until we change them.” He also likes the collegiality that comes from working with local pathologists and dermatopathologists. “I’m a big believer in using your local referral base,” he explained. “If I have a question, I enjoy the opportunity to pick up the phone, call the pathologist and walk over to the office to look at the slide together. Support for Direct Billing Not all dermatologists, however, agree that direct billing is inherently bad. And that makes the direct billing initiatives being proposed by pathologists that much more threatening. Dermatologists point out, for example, that those initiatives can produce unintended consequences that can hurt both physicians and patients. Legislation that would require direct billing was introduced several years ago in North Carolina. At first blush, said Phillip Williford, M.D., Associate Professor of Dermatology and Director of Dermatologic Surgery at Wake Forest University, the bill seemed reasonable. While he doesn’t think that marking up other physicians’ services just to make a profit is necessarily a good idea, the issue became less black and white when he started to think about it. “A lot of managed care systems were demanding that people send their slides to some pathologist in Timbuktu who spent three seconds looking at a slide,” he said. “Instead of sending back a diagnosis, they would give a description of what they saw, which was oftentimes worthless.” These obvious descriptions have raised a red flag and given some dermatologists concern about the skill set of some of the large pathology labs. While pathologists and dermatologists alike said that for the most part, large labs that process anatomic pathology work do a good job, the model these labs use — handling large volumes of slides at low costs — can cause problems. Dr. Williford recalled some of the reports he saw that his colleagues had received. “They would reflect the lack of the reading ability of the reading pathologist, who didn’t really understand dermatopathology well enough to give a differential diagnosis. A lot of people have the sense that reading these slides is like reading stop signs, that it will be red and have letters on it. But there’s a real art to it, and particularly in areas like melanocytic lesions, deciding whether something is a melanoma or not is not always straightforward.” Dermatologists who wanted to send their slides to labs they thought offered better quality circumvented the system by outsourcing the service themselves and then billing for it themselves. Some of the practices would then charge a small administrative fee — about $5 — to cover their administrative costs. While dermatologists considered the defeat of the bill a victory, Dr. Williford said it has at times been a mixed blessing. While physicians in his state can still indirectly bill for services like pathology to avoid shoddy labs chosen by health plans, Dr. Williford acknowledged that some physicians have other motives. “The problem is that there are people who use that kind of arrangement to make a margin,” he said, “which is probably not right.” Despite that type of abuse, Dr. Williford said he’s also not ready to outlaw the practice in all instances. “I don’t necessarily have a problem marking up these services nominally,” he explained, “because there are some costs involved in billing and keeping records, and practices have to make a margin to avoid losing money on these services. When does the margin cover costs and when does it become a money producer? I don’t know.” An Issue That’s Sure to Resurface As dermatologists examine the direct billing initiatives coming from pathologists, some who would normally support such efforts find their stance shifting. “If it was just a direct billing issue, I think there might be some sympathy for the pathologists,” said Dr. Feldman. “But when they go and try to cut out other physicians” like dermatologists from doing work they’re qualified for through training, he said, “I lose all sympathy for them.” Dr. Feldman, along with several dermatologists interviewed for this story, also said the direct billing initiatives raise issues of control. “The problem is when somebody forces clinicians to do something they don’t want to do,” Dr. Feldman said. “Clinicians have their patients’ best interest at heart, and they’re trying to get a reading from someone they trust.” Dr. Chow, who is Associate Director of Dermatology and Dermatologic Surgery and Associate Clinical Professor of Surgery at the University of South Carolina School of Medicine and who led the effort to have the wording in his state’s bill changed, said that negotiations with pathologists over the bill left him questioning the motives of at least some from that specialty. He said that sponsors of the bill agreed to drop the wording he found troubling only when he showed that he had the influence to have the bill killed. When the language was changed and the bill was still defeated, legislators quietly attached it to another bill and passed it unnoticed. He described the whole affair as “sneaky” and said that he feels like he must be vigilant to prevent similar legislation from appearing in the future. Dr. Coldiron, the dermatologist who helped defeat the Ohio resolution, said he is convinced that the language of the original resolution was no mistake. He pointed out that indirect billing, which the bill allegedly aimed to prevent, was almost nonexistent in his state, at least among dermatologists. He said he thinks pathologists were trying to grab a larger piece of the anatomic pathology pie to make up for the battering many are taking from large labs. As a result, he is certain that the resolution he helped defeat in the spring is just a sign of things to come. “Something will come out in the legislature next year,” Dr. Coldiron predicted. “You know they have a bill in the wings. They were hoping to get the endorsement of the Ohio State Medical Association so the bill would breeze through.” He said he’s not worried that pathologists may next take their case to the Ohio legislature. Dermatologists have been put on notice, he said, and are ready to respond. “The legislature will have hearings,” he explained, “and we’ll line people up to blast this bill.” That sentiment was echoed by other dermatologists, who say they’re keeping an eye on bills and other proposals that come from pathologists. And perhaps just as important, they urge their colleagues to do the same. “We need to sound the horn that these initiatives are out there, that dermatologists need to keep their eyes open for them,” said Dr. Coldiron. “It was caught in South Carolina 2 days before it was going to pass. If everybody knows this legislation is coming, they can testify against it before it passes.”
Are Pathologists Trying to Prevent Dermatologists from Doing Dermatopathology
A bill that is on the verge of being passed in South Carolina and a resolution presented to the Ohio State Medical Association have some dermatologists worried that the pathology community may be trying to restrict the ability of non-pathologists to perform and bill for anatomic pathology procedures. The South Carolina bill, if passed, would prevent physicians from referring those services to another physician or facility and then marking them up. The bill that is sitting on the governor’s desk waiting for a signature would allow any physician who performed an anatomic pathology procedure to bill for it. What’s making dermatologists in South Carolina and elsewhere nervous is not the bill that looks as if it will be passed — similar legislation is already on the books in several other states — but language in earlier drafts of the bill. They say that the original bill contained language that could be interpreted to prevent non-pathologists from performing anatomic pathology services. Those dermatologists point to a resolution that went before the Ohio State Medical Association in April. While that initiative called for an end to the marking up of anatomic pathology services, it also clearly called for supporting “direct billing for anatomic pathology services only when rendered personally by a licensed pathologist.” While the resolution was quickly defeated by the Ohio State Medical Association, a number of dermatologists view it as a troubling sign of the intent of some in the pathology community. They say that the two initiatives, combined with statements from others in the pathology community, make them question the real motives of pathologists proposing direct billing initiatives. Trying to End Wholesaling On a basic level, the recent initiatives from the pathology community are designed to do one simple thing: put an end to the practice of wholesaling, or the marking up of services. Visit the Web site of the College of American Pathology (CAP) and type the words “direct billing” into the search engine, and you’ll find article after article describing the efforts of the CAP to prevent physicians from marking up pathology services that they outsource to pathologists. An April column by CAP president Mary E. Kass, M.D., for example, talks about the efforts of other physicians to “seize and hold hostage our right to direct-bill patients and third parties for anatomic pathology services.” She goes on to say that arrangements that allow indirect billing are “Faustian at best” and threaten the independence and objectivity of pathologists. The particulars of wholesaling vary from specialty to specialty. In dermatology, for example, it is almost nonexistent in parts of the country where commercial payers have joined Medicare and Medicaid in outlawing the practice. Still, it remains enough of an issue nationally that it has the attention of pathologists. Pathologists seem to be most concerned about indirect billing of OB/GYN work because of the growing number of huge labs that offer Pap smears at below-cost rates. These giant labs use Pap smears as a loss leader to entice physicians to refer more lucrative work. The labs may lose money on Pap smears, pathologists say, but they more than make it up on other lucrative procedures. CAP officials recognize that direct billing is a major issue for pathologists. They insist, however, that the organization wants to prevent physicians from marking up pathology services, and that they have no interest in restricting scope of practice. “There’s no attempt here to restrict scope of practice, and the South Carolina bill would allow the person to bill who is licensed to practice medicine in the state,” said David Jadwin, M.D., Vice Chair of the CAP Federal and State Affairs Commit-tee, and Chair-man of Pathology at Kern Medical Center in Bakersfield, CA. “The legislation would basically make sure that only the person who performs the procedure must directly do the billing.” Dr. Jadwin added that the goal of the CAP is to bring about direct billing rules that are consistent with Medicare and Medicaid. He also noted that legislation in several states requires physicians to directly bill for their services or prohibits them from marking up services, or requires them to tell patients when they are marking up services. (See, “Did Pathologists in South Carolina Try to Restrict Scope of Practice? Decide for Yourself” for more information on state laws.) Dr. Jadwin also explained that the CAP’s goal in prohibiting the marking up of services is to protect patients first and pathologists second. “Mark-ups and similar arrangements increase the cost to patients,” he explained. “Our primary goal is to reduce healthcare costs for patients by ensuring that the professional fee is the exclusive cost incurred.” He also said the CAP’s goal is to make sure that physicians don’t select a pathology provider on the basis of his ability to profit, putting financial interests ahead of quality of care. “If someone is going to a wholesaler and seeking the lower cost primarily to make an unearned profit, that would be unethical according to the AMA’s guidelines,” he said. As yet more proof that pathologists are not trying to prevent non-pathologists from performing anatomic pathology services, he pointed out that the final language in the South Carolina bill does not restrict scope of practice. He also noted that the pathologist who sponsored the Ohio resolution quickly changed its wording when others complained that it would restrict the scope of practice of other physicians. (At press time, the Ohio State Medical Association’s Web site contained only the original version of the resolution, not any amended version.) Economic Survival for Pathologists While CAP officials insist that the recent direct billing initiatives aim to make sure that patients aren’t paying more than necessary for pathology procedures, dermatologists see another motive. They view those efforts as nothing more than an attempt by pathologists to stop their peers from gaining business by drastically discounting some of their services. CAP officials say that those initiatives aren’t aimed at the large labs that engage in wholesaling, but they admit that the growth of wholesaling is a concern for pathologists. As Dr. Jadwin noted, “There are entities out there that are trying to find creative ways to circumvent those provisions.” Edward Catalano, M.D., a pathologist who worked on the South Carolina bill, acknowledged that large labs offering discounted services are driving many of the direct-billing initiatives. In his mind, the issue of reigning in wholesalers is a matter of survival. “Ultimately, if this practice becomes widespread, you could have a group of pathologists in India reading slides for a dollar a piece,” said Dr. Catalano, who is managing partner of a 15-physician pathology practice at Palmetto Health Hospital in Columbia, SC. “Physicians could then mark up those slides and use them as a revenue generator.” He worries that in an era of stagnant reimbursements, money will increasingly drive decision-making — to the disadvantage of pathologists. “Physicians may be very comfortable with my professional competence,” Dr. Catalano explained, “but as the reimbursement pie becomes smaller and smaller and everyone is squeezed tighter, people make decisions based on the bottom line that don’t always have the highest ethical or moral considerations.” But he quickly added that the South Carolina bill aimed only to prevent physicians from marking up other services, not prevent non-pathologists from billing for their work. He explained that the first part of the bill very clearly states that any physician who performs anatomic pathology services should be the one to bill for it. Language in the following paragraph that originally referred specifically to pathologists, he said, would not have prohibited dermatologists or other physicians from performing or billing for anatomic pathology procedures. (The original language from the South Carolina bill is in “Did Pathologists in South Carolina Try to Restrict Scope of Practice? Decide for Yourself.") “There was never any intent to keep dermatologists from reading slides,” he said. “The purpose of this bill was to eliminate physicians from going out and buying a service and then marking it up and selling it to patients.” “Uncollegiality” As CAP officials are quick to point out, the final version of the bill in South Carolina, as well as similar legislation recently passed in states like Louisiana, focuses solely on direct billing. Nevertheless, dermatologists remain nervous about future initiatives from the pathology community. They think it’s no coincidence that pathologists in both South Carolina and Ohio initially included language in their proposals that they say would exclude non-pathologists from anatomic pathology work. They admit that pathologists changed the troubling language in their proposals, but only after other physicians complained. Dermatologists point to other evidence that makes them question the intent of at least some pathologists. Even as officials with the CAP insist that they have no intention of restricting scope of practice, the organization’s president seemed to suggest exactly that. Although CAP president Dr. Kass’s April president’s column focused largely on the need for direct billing laws at a state level, one suggestion toward the end of the article shows why some dermatologists are wary. In the column, she plainly states that “. . . we need state-based action to prohibit non-pathologists from billing for pathology services.” (The column is on the CAP Web site at www.cap.org/apps/docs/cap_today/feature_stories/pres_column_04_04.html.) CAP officials repeatedly say that if individuals draft resolutions and bills that call for only pathologists to perform anatomic pathology, they are acting on their own and not representing the policies of the CAP. But when dermatologists see the organization’s president encouraging members to work together to “prohibit non-pathologists from billing for pathology services,” they are understandably concerned. When Steve Feldman, M.D., Ph.D., Professor of Dermatology, Pathology and Public Health Sciences at Wake Forest University in Winston-Salem, N.C., read that statement, it confirmed his worst fears. He had already been closely following developments in South Carolina and Ohio, and any doubts about pathologists motivations were confirmed upon reading those remarks. “This kind of uncollegiality, going behind peoples’ backs and trying to cut them out, it’s going to infuriate people,” Dr. Feldman explained. “I don’t think people are aware of what the pathologists are trying to do, but when they become aware, the pathologists could be in a heap of trouble.” Ironically, pathologists are raising the ire of dermatologists with legislation that many say they would support. Many of the dermatologists interviewed for this story, for example, generally agreed that they don’t support the idea of marking up services performed by other physicians and passing those charges on to patients. They note that the practice contradicts guidelines from the AMA and the AAD. On a more practical level, many commercial payers simply don’t allow it. While Brett Coldiron, M.D., Clinical Assistant Professor of Dermatology at the University of Cincinnati, opposed the resolution that went before the state medical society, he said he doesn’t buy arguments that dermatologists should be paid a separate fee for processing lab results and notifying patients. He said dermatologists already receive payment for this in their evaluation and management fee for seeing the patient. “I don’t think it’s enough work to justify a separate charge,” he said. Even in South Carolina, Jim Chow, M.D., a dermatologist and Mohs surgeon who worked to stop the original language of the bill from being passed by the state legislature, said that the number of dermatologists who mark up pathology services was dropping, even before the legislation was drafted. Philip Werschler, M.D., F.A.A.D., said he questions the ethics of marking up services provided by other physicians because he feels like he’s already fairly compensated for the care of the patient who is undergoing lab work. “The system is screwy and full of errors,” he explained, “but we all have to play by the rules until we change them.” He also likes the collegiality that comes from working with local pathologists and dermatopathologists. “I’m a big believer in using your local referral base,” he explained. “If I have a question, I enjoy the opportunity to pick up the phone, call the pathologist and walk over to the office to look at the slide together. Support for Direct Billing Not all dermatologists, however, agree that direct billing is inherently bad. And that makes the direct billing initiatives being proposed by pathologists that much more threatening. Dermatologists point out, for example, that those initiatives can produce unintended consequences that can hurt both physicians and patients. Legislation that would require direct billing was introduced several years ago in North Carolina. At first blush, said Phillip Williford, M.D., Associate Professor of Dermatology and Director of Dermatologic Surgery at Wake Forest University, the bill seemed reasonable. While he doesn’t think that marking up other physicians’ services just to make a profit is necessarily a good idea, the issue became less black and white when he started to think about it. “A lot of managed care systems were demanding that people send their slides to some pathologist in Timbuktu who spent three seconds looking at a slide,” he said. “Instead of sending back a diagnosis, they would give a description of what they saw, which was oftentimes worthless.” These obvious descriptions have raised a red flag and given some dermatologists concern about the skill set of some of the large pathology labs. While pathologists and dermatologists alike said that for the most part, large labs that process anatomic pathology work do a good job, the model these labs use — handling large volumes of slides at low costs — can cause problems. Dr. Williford recalled some of the reports he saw that his colleagues had received. “They would reflect the lack of the reading ability of the reading pathologist, who didn’t really understand dermatopathology well enough to give a differential diagnosis. A lot of people have the sense that reading these slides is like reading stop signs, that it will be red and have letters on it. But there’s a real art to it, and particularly in areas like melanocytic lesions, deciding whether something is a melanoma or not is not always straightforward.” Dermatologists who wanted to send their slides to labs they thought offered better quality circumvented the system by outsourcing the service themselves and then billing for it themselves. Some of the practices would then charge a small administrative fee — about $5 — to cover their administrative costs. While dermatologists considered the defeat of the bill a victory, Dr. Williford said it has at times been a mixed blessing. While physicians in his state can still indirectly bill for services like pathology to avoid shoddy labs chosen by health plans, Dr. Williford acknowledged that some physicians have other motives. “The problem is that there are people who use that kind of arrangement to make a margin,” he said, “which is probably not right.” Despite that type of abuse, Dr. Williford said he’s also not ready to outlaw the practice in all instances. “I don’t necessarily have a problem marking up these services nominally,” he explained, “because there are some costs involved in billing and keeping records, and practices have to make a margin to avoid losing money on these services. When does the margin cover costs and when does it become a money producer? I don’t know.” An Issue That’s Sure to Resurface As dermatologists examine the direct billing initiatives coming from pathologists, some who would normally support such efforts find their stance shifting. “If it was just a direct billing issue, I think there might be some sympathy for the pathologists,” said Dr. Feldman. “But when they go and try to cut out other physicians” like dermatologists from doing work they’re qualified for through training, he said, “I lose all sympathy for them.” Dr. Feldman, along with several dermatologists interviewed for this story, also said the direct billing initiatives raise issues of control. “The problem is when somebody forces clinicians to do something they don’t want to do,” Dr. Feldman said. “Clinicians have their patients’ best interest at heart, and they’re trying to get a reading from someone they trust.” Dr. Chow, who is Associate Director of Dermatology and Dermatologic Surgery and Associate Clinical Professor of Surgery at the University of South Carolina School of Medicine and who led the effort to have the wording in his state’s bill changed, said that negotiations with pathologists over the bill left him questioning the motives of at least some from that specialty. He said that sponsors of the bill agreed to drop the wording he found troubling only when he showed that he had the influence to have the bill killed. When the language was changed and the bill was still defeated, legislators quietly attached it to another bill and passed it unnoticed. He described the whole affair as “sneaky” and said that he feels like he must be vigilant to prevent similar legislation from appearing in the future. Dr. Coldiron, the dermatologist who helped defeat the Ohio resolution, said he is convinced that the language of the original resolution was no mistake. He pointed out that indirect billing, which the bill allegedly aimed to prevent, was almost nonexistent in his state, at least among dermatologists. He said he thinks pathologists were trying to grab a larger piece of the anatomic pathology pie to make up for the battering many are taking from large labs. As a result, he is certain that the resolution he helped defeat in the spring is just a sign of things to come. “Something will come out in the legislature next year,” Dr. Coldiron predicted. “You know they have a bill in the wings. They were hoping to get the endorsement of the Ohio State Medical Association so the bill would breeze through.” He said he’s not worried that pathologists may next take their case to the Ohio legislature. Dermatologists have been put on notice, he said, and are ready to respond. “The legislature will have hearings,” he explained, “and we’ll line people up to blast this bill.” That sentiment was echoed by other dermatologists, who say they’re keeping an eye on bills and other proposals that come from pathologists. And perhaps just as important, they urge their colleagues to do the same. “We need to sound the horn that these initiatives are out there, that dermatologists need to keep their eyes open for them,” said Dr. Coldiron. “It was caught in South Carolina 2 days before it was going to pass. If everybody knows this legislation is coming, they can testify against it before it passes.”
A bill that is on the verge of being passed in South Carolina and a resolution presented to the Ohio State Medical Association have some dermatologists worried that the pathology community may be trying to restrict the ability of non-pathologists to perform and bill for anatomic pathology procedures. The South Carolina bill, if passed, would prevent physicians from referring those services to another physician or facility and then marking them up. The bill that is sitting on the governor’s desk waiting for a signature would allow any physician who performed an anatomic pathology procedure to bill for it. What’s making dermatologists in South Carolina and elsewhere nervous is not the bill that looks as if it will be passed — similar legislation is already on the books in several other states — but language in earlier drafts of the bill. They say that the original bill contained language that could be interpreted to prevent non-pathologists from performing anatomic pathology services. Those dermatologists point to a resolution that went before the Ohio State Medical Association in April. While that initiative called for an end to the marking up of anatomic pathology services, it also clearly called for supporting “direct billing for anatomic pathology services only when rendered personally by a licensed pathologist.” While the resolution was quickly defeated by the Ohio State Medical Association, a number of dermatologists view it as a troubling sign of the intent of some in the pathology community. They say that the two initiatives, combined with statements from others in the pathology community, make them question the real motives of pathologists proposing direct billing initiatives. Trying to End Wholesaling On a basic level, the recent initiatives from the pathology community are designed to do one simple thing: put an end to the practice of wholesaling, or the marking up of services. Visit the Web site of the College of American Pathology (CAP) and type the words “direct billing” into the search engine, and you’ll find article after article describing the efforts of the CAP to prevent physicians from marking up pathology services that they outsource to pathologists. An April column by CAP president Mary E. Kass, M.D., for example, talks about the efforts of other physicians to “seize and hold hostage our right to direct-bill patients and third parties for anatomic pathology services.” She goes on to say that arrangements that allow indirect billing are “Faustian at best” and threaten the independence and objectivity of pathologists. The particulars of wholesaling vary from specialty to specialty. In dermatology, for example, it is almost nonexistent in parts of the country where commercial payers have joined Medicare and Medicaid in outlawing the practice. Still, it remains enough of an issue nationally that it has the attention of pathologists. Pathologists seem to be most concerned about indirect billing of OB/GYN work because of the growing number of huge labs that offer Pap smears at below-cost rates. These giant labs use Pap smears as a loss leader to entice physicians to refer more lucrative work. The labs may lose money on Pap smears, pathologists say, but they more than make it up on other lucrative procedures. CAP officials recognize that direct billing is a major issue for pathologists. They insist, however, that the organization wants to prevent physicians from marking up pathology services, and that they have no interest in restricting scope of practice. “There’s no attempt here to restrict scope of practice, and the South Carolina bill would allow the person to bill who is licensed to practice medicine in the state,” said David Jadwin, M.D., Vice Chair of the CAP Federal and State Affairs Commit-tee, and Chair-man of Pathology at Kern Medical Center in Bakersfield, CA. “The legislation would basically make sure that only the person who performs the procedure must directly do the billing.” Dr. Jadwin added that the goal of the CAP is to bring about direct billing rules that are consistent with Medicare and Medicaid. He also noted that legislation in several states requires physicians to directly bill for their services or prohibits them from marking up services, or requires them to tell patients when they are marking up services. (See, “Did Pathologists in South Carolina Try to Restrict Scope of Practice? Decide for Yourself” for more information on state laws.) Dr. Jadwin also explained that the CAP’s goal in prohibiting the marking up of services is to protect patients first and pathologists second. “Mark-ups and similar arrangements increase the cost to patients,” he explained. “Our primary goal is to reduce healthcare costs for patients by ensuring that the professional fee is the exclusive cost incurred.” He also said the CAP’s goal is to make sure that physicians don’t select a pathology provider on the basis of his ability to profit, putting financial interests ahead of quality of care. “If someone is going to a wholesaler and seeking the lower cost primarily to make an unearned profit, that would be unethical according to the AMA’s guidelines,” he said. As yet more proof that pathologists are not trying to prevent non-pathologists from performing anatomic pathology services, he pointed out that the final language in the South Carolina bill does not restrict scope of practice. He also noted that the pathologist who sponsored the Ohio resolution quickly changed its wording when others complained that it would restrict the scope of practice of other physicians. (At press time, the Ohio State Medical Association’s Web site contained only the original version of the resolution, not any amended version.) Economic Survival for Pathologists While CAP officials insist that the recent direct billing initiatives aim to make sure that patients aren’t paying more than necessary for pathology procedures, dermatologists see another motive. They view those efforts as nothing more than an attempt by pathologists to stop their peers from gaining business by drastically discounting some of their services. CAP officials say that those initiatives aren’t aimed at the large labs that engage in wholesaling, but they admit that the growth of wholesaling is a concern for pathologists. As Dr. Jadwin noted, “There are entities out there that are trying to find creative ways to circumvent those provisions.” Edward Catalano, M.D., a pathologist who worked on the South Carolina bill, acknowledged that large labs offering discounted services are driving many of the direct-billing initiatives. In his mind, the issue of reigning in wholesalers is a matter of survival. “Ultimately, if this practice becomes widespread, you could have a group of pathologists in India reading slides for a dollar a piece,” said Dr. Catalano, who is managing partner of a 15-physician pathology practice at Palmetto Health Hospital in Columbia, SC. “Physicians could then mark up those slides and use them as a revenue generator.” He worries that in an era of stagnant reimbursements, money will increasingly drive decision-making — to the disadvantage of pathologists. “Physicians may be very comfortable with my professional competence,” Dr. Catalano explained, “but as the reimbursement pie becomes smaller and smaller and everyone is squeezed tighter, people make decisions based on the bottom line that don’t always have the highest ethical or moral considerations.” But he quickly added that the South Carolina bill aimed only to prevent physicians from marking up other services, not prevent non-pathologists from billing for their work. He explained that the first part of the bill very clearly states that any physician who performs anatomic pathology services should be the one to bill for it. Language in the following paragraph that originally referred specifically to pathologists, he said, would not have prohibited dermatologists or other physicians from performing or billing for anatomic pathology procedures. (The original language from the South Carolina bill is in “Did Pathologists in South Carolina Try to Restrict Scope of Practice? Decide for Yourself.") “There was never any intent to keep dermatologists from reading slides,” he said. “The purpose of this bill was to eliminate physicians from going out and buying a service and then marking it up and selling it to patients.” “Uncollegiality” As CAP officials are quick to point out, the final version of the bill in South Carolina, as well as similar legislation recently passed in states like Louisiana, focuses solely on direct billing. Nevertheless, dermatologists remain nervous about future initiatives from the pathology community. They think it’s no coincidence that pathologists in both South Carolina and Ohio initially included language in their proposals that they say would exclude non-pathologists from anatomic pathology work. They admit that pathologists changed the troubling language in their proposals, but only after other physicians complained. Dermatologists point to other evidence that makes them question the intent of at least some pathologists. Even as officials with the CAP insist that they have no intention of restricting scope of practice, the organization’s president seemed to suggest exactly that. Although CAP president Dr. Kass’s April president’s column focused largely on the need for direct billing laws at a state level, one suggestion toward the end of the article shows why some dermatologists are wary. In the column, she plainly states that “. . . we need state-based action to prohibit non-pathologists from billing for pathology services.” (The column is on the CAP Web site at www.cap.org/apps/docs/cap_today/feature_stories/pres_column_04_04.html.) CAP officials repeatedly say that if individuals draft resolutions and bills that call for only pathologists to perform anatomic pathology, they are acting on their own and not representing the policies of the CAP. But when dermatologists see the organization’s president encouraging members to work together to “prohibit non-pathologists from billing for pathology services,” they are understandably concerned. When Steve Feldman, M.D., Ph.D., Professor of Dermatology, Pathology and Public Health Sciences at Wake Forest University in Winston-Salem, N.C., read that statement, it confirmed his worst fears. He had already been closely following developments in South Carolina and Ohio, and any doubts about pathologists motivations were confirmed upon reading those remarks. “This kind of uncollegiality, going behind peoples’ backs and trying to cut them out, it’s going to infuriate people,” Dr. Feldman explained. “I don’t think people are aware of what the pathologists are trying to do, but when they become aware, the pathologists could be in a heap of trouble.” Ironically, pathologists are raising the ire of dermatologists with legislation that many say they would support. Many of the dermatologists interviewed for this story, for example, generally agreed that they don’t support the idea of marking up services performed by other physicians and passing those charges on to patients. They note that the practice contradicts guidelines from the AMA and the AAD. On a more practical level, many commercial payers simply don’t allow it. While Brett Coldiron, M.D., Clinical Assistant Professor of Dermatology at the University of Cincinnati, opposed the resolution that went before the state medical society, he said he doesn’t buy arguments that dermatologists should be paid a separate fee for processing lab results and notifying patients. He said dermatologists already receive payment for this in their evaluation and management fee for seeing the patient. “I don’t think it’s enough work to justify a separate charge,” he said. Even in South Carolina, Jim Chow, M.D., a dermatologist and Mohs surgeon who worked to stop the original language of the bill from being passed by the state legislature, said that the number of dermatologists who mark up pathology services was dropping, even before the legislation was drafted. Philip Werschler, M.D., F.A.A.D., said he questions the ethics of marking up services provided by other physicians because he feels like he’s already fairly compensated for the care of the patient who is undergoing lab work. “The system is screwy and full of errors,” he explained, “but we all have to play by the rules until we change them.” He also likes the collegiality that comes from working with local pathologists and dermatopathologists. “I’m a big believer in using your local referral base,” he explained. “If I have a question, I enjoy the opportunity to pick up the phone, call the pathologist and walk over to the office to look at the slide together. Support for Direct Billing Not all dermatologists, however, agree that direct billing is inherently bad. And that makes the direct billing initiatives being proposed by pathologists that much more threatening. Dermatologists point out, for example, that those initiatives can produce unintended consequences that can hurt both physicians and patients. Legislation that would require direct billing was introduced several years ago in North Carolina. At first blush, said Phillip Williford, M.D., Associate Professor of Dermatology and Director of Dermatologic Surgery at Wake Forest University, the bill seemed reasonable. While he doesn’t think that marking up other physicians’ services just to make a profit is necessarily a good idea, the issue became less black and white when he started to think about it. “A lot of managed care systems were demanding that people send their slides to some pathologist in Timbuktu who spent three seconds looking at a slide,” he said. “Instead of sending back a diagnosis, they would give a description of what they saw, which was oftentimes worthless.” These obvious descriptions have raised a red flag and given some dermatologists concern about the skill set of some of the large pathology labs. While pathologists and dermatologists alike said that for the most part, large labs that process anatomic pathology work do a good job, the model these labs use — handling large volumes of slides at low costs — can cause problems. Dr. Williford recalled some of the reports he saw that his colleagues had received. “They would reflect the lack of the reading ability of the reading pathologist, who didn’t really understand dermatopathology well enough to give a differential diagnosis. A lot of people have the sense that reading these slides is like reading stop signs, that it will be red and have letters on it. But there’s a real art to it, and particularly in areas like melanocytic lesions, deciding whether something is a melanoma or not is not always straightforward.” Dermatologists who wanted to send their slides to labs they thought offered better quality circumvented the system by outsourcing the service themselves and then billing for it themselves. Some of the practices would then charge a small administrative fee — about $5 — to cover their administrative costs. While dermatologists considered the defeat of the bill a victory, Dr. Williford said it has at times been a mixed blessing. While physicians in his state can still indirectly bill for services like pathology to avoid shoddy labs chosen by health plans, Dr. Williford acknowledged that some physicians have other motives. “The problem is that there are people who use that kind of arrangement to make a margin,” he said, “which is probably not right.” Despite that type of abuse, Dr. Williford said he’s also not ready to outlaw the practice in all instances. “I don’t necessarily have a problem marking up these services nominally,” he explained, “because there are some costs involved in billing and keeping records, and practices have to make a margin to avoid losing money on these services. When does the margin cover costs and when does it become a money producer? I don’t know.” An Issue That’s Sure to Resurface As dermatologists examine the direct billing initiatives coming from pathologists, some who would normally support such efforts find their stance shifting. “If it was just a direct billing issue, I think there might be some sympathy for the pathologists,” said Dr. Feldman. “But when they go and try to cut out other physicians” like dermatologists from doing work they’re qualified for through training, he said, “I lose all sympathy for them.” Dr. Feldman, along with several dermatologists interviewed for this story, also said the direct billing initiatives raise issues of control. “The problem is when somebody forces clinicians to do something they don’t want to do,” Dr. Feldman said. “Clinicians have their patients’ best interest at heart, and they’re trying to get a reading from someone they trust.” Dr. Chow, who is Associate Director of Dermatology and Dermatologic Surgery and Associate Clinical Professor of Surgery at the University of South Carolina School of Medicine and who led the effort to have the wording in his state’s bill changed, said that negotiations with pathologists over the bill left him questioning the motives of at least some from that specialty. He said that sponsors of the bill agreed to drop the wording he found troubling only when he showed that he had the influence to have the bill killed. When the language was changed and the bill was still defeated, legislators quietly attached it to another bill and passed it unnoticed. He described the whole affair as “sneaky” and said that he feels like he must be vigilant to prevent similar legislation from appearing in the future. Dr. Coldiron, the dermatologist who helped defeat the Ohio resolution, said he is convinced that the language of the original resolution was no mistake. He pointed out that indirect billing, which the bill allegedly aimed to prevent, was almost nonexistent in his state, at least among dermatologists. He said he thinks pathologists were trying to grab a larger piece of the anatomic pathology pie to make up for the battering many are taking from large labs. As a result, he is certain that the resolution he helped defeat in the spring is just a sign of things to come. “Something will come out in the legislature next year,” Dr. Coldiron predicted. “You know they have a bill in the wings. They were hoping to get the endorsement of the Ohio State Medical Association so the bill would breeze through.” He said he’s not worried that pathologists may next take their case to the Ohio legislature. Dermatologists have been put on notice, he said, and are ready to respond. “The legislature will have hearings,” he explained, “and we’ll line people up to blast this bill.” That sentiment was echoed by other dermatologists, who say they’re keeping an eye on bills and other proposals that come from pathologists. And perhaps just as important, they urge their colleagues to do the same. “We need to sound the horn that these initiatives are out there, that dermatologists need to keep their eyes open for them,” said Dr. Coldiron. “It was caught in South Carolina 2 days before it was going to pass. If everybody knows this legislation is coming, they can testify against it before it passes.”
