[Histonet] In House Labs in WSJ

Tue Apr 10 13:21:48 CDT 2012

The Wall Street Journal served up a timely article for us.
You'll see both sides of the argument below. One side is right.

DLS

HEALTH INDUSTRY
April 9, 2012, 7:22 p.m. ET
Prostate-Test Fees Challenged

By CHRISTOPHER WEAVER
Doctors in urology groups that profit from tests for prostate cancer
order more of them than doctors who send samples to independent
laboratories, according to a study Monday in the journal Health
Affairs.

The study found that doctors' practices that do their own lab work bill
the federal Medicare program for analyzing 72% more prostate tissue
samples per biopsy while detecting fewer cases of cancer than
counterparts who send specimens to outside labs.

Hiring pathologists boosts revenue for a practice and creates a
potential incentive to increase the number of tests ordered, said Jean
Mitchell, a Georgetown University economist and author of the study.

That fewer cancers were detected—21% versus 35% for those sent to
external labs, according to the study—suggests "financial incentives"
may play a role in decisions to order the tests, Ms. Mitchell said.

Some urologists said the research doesn't necessarily indicate
financial motives. Urologists in larger group practices that have
in-house pathologists may be more aggressive in testing because they
seek to catch cancer earlier, said Steven Schlossberg, a Yale urologist
who heads a health-policy panel for the American Urological Association
and wasn't involved in the research. Also, Dr. Schlossberg noted, the
figures, which cover 36,261 biopsies from 2005 through 2007, are five
years old.

The study was financed by the College of American Pathologists and the
American Clinical Laboratory Association. It is the last salvo in a turf
war between laboratory companies and physician groups that have opened
their own labs to conduct tests.

Regulators and economists scrutinizing the growing costs of health care
have targeted a range of related activities by doctors, known as
self-referrals.

Although a set of 1990s-era laws, named for their proponent, Rep. Pete
Stark (D., Calif.), ban doctors from referring patients to most
companies in which they have a financial interest, urology groups can
enter the pathology business because of an exemption for certain
services performed within physicians' offices. The pathologists and
other groups are lobbying Congress to end the exemption.

At issue in the study is a quirk of billing for lab procedures. Labs
get paid based on the number of jars used to hold specimens from a
prostate biopsy. Doctors can choose to put several specimens in one jar
or put each in its own jar, potentially boosting lab fees, which
averaged about $104 a jar in 2010, according to the study.

Urologists in practices with in-house pathologists sent 11.4 jars per
biopsy for testing versus 5.9 jars per biopsy for other doctors in 2005.

Some doctors say that separating the samples can help them better map
any cancer.

In addition, urologists in recent years have been taking more samples
during a biopsy to better identify the location of any cancer, said John
Hollingsworth, an assistant professor of urology at the University of
Michigan. The standard number of samples taken doubled to 12 over the
last decade, he said.

The Health Affairs study's conclusions are "largely around billing
practices, not around clinical practices," said George Kwass, a
pathologist based in Massachusetts and board member of the College of
American Pathologists. Urologists who team up with pathologists appear
to bill more, he said, leading to potential waste.

Urology groups are consolidating, and increasingly moving into the
pathology business. One large practice based on New York's Long Island,
Integrated Medical Professionals, opened its lab in 2010 to control
costs and because doctors encountered errors in outside test results,
said the group's chairman, Deepak Kapoor.

"We don't make a fortune on pathology," Dr. Kapoor said.

But lab businesses are seeing revenue vanish. Texas pathology group
ProPath stopped getting prostate tissue from large urology groups more
than four years ago, said executive director Krista Crews, when these
clients began doing lab work in-house. The group still gets referrals
from small, one and two-doctor practices, she said.

Large laboratory companies are worried about the trend, too. Quest
Diagnostics Inc. DGX -2.52%said in its latest annual filings that if
physicians, including urologists as well as gastroenterologists and skin
and cancer doctors, continued to "internalize" testing services, it
could reduce the company's sales.

Write to Christopher Weaver at christopher.weaver <@t> wsj.com

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