The Observatory

June 18, 2015

Industry News

AACC urges CMS to delay enforcing regulations that could limit diabetes patients' access to testing. The American Association for Clinical Chemistry (AACC) has sent formal comments to the Centers for Medicare and Medicaid Services (CMS) addressing CMS' proposal to enforce more stringent regulatory requirements for testing with blood glucose monitors. AACC endorses CMS' effort to improve patient care by ensuring these devices are used appropriately, but recommends creating a transition period that would give hospitals sufficient time to adjust to the new requirements and prevent the disruption of rapid, point-of-care blood glucose results for patients.


Mayo Clinic-led research team identifies master switch for cancer-causing HER2 protein. Herceptin has been touted as a wonder drug for women with HER2-positive breast cancer, an aggressive form of the disease that is fueled by excess production of the HER2 protein. However, not all of these patients respond to the drug, and many who do respond eventually acquire resistance.

A team of researchers led by Mayo Clinic has found a promising way to circumvent this obstacle. They identified a small site in the HER2 protein that enables it to form a molecular switch that sets off a cascade of events that turn normal cells cancerous. The researchers showed that disrupting this site can stem the growth of breast cancer cells, even more effectively than drugs currently used in the clinic. Their study is published in the Journal of the National Cancer Institute.

“This study is the first to look at the specific sequences for dimerization of HER2 as a possible anti-cancer target,” says the study's senior author, Ruth Lupu, PhD. “This finding could be beneficial not only for breast cancer but also for other cancers with abnormal HER2 levels, such as ovarian, stomach, and prostate cancer.”

Infectious Disease

Researchers reverse bacterial resistance to antibiotics. Researchers in evolutionary biology and mathematics from the University of California Merced and American University have developed a method of cycling antibiotics to cope with increasingly resistant bacteria. The scientists combined lab work with mathematics and computer technology to identify optimal strategies for antibiotic cycling, an approach in which a handful of different antibiotics are used on a rotating basis.

The researchers found a way to return bacteria to a pre-resistant state. In a study published in PLOS ONE, they show how to rewind the evolution of bacteria and verify treatment options for a family of 15 different antibiotics used to fight common infections. Their work could have major implications for doctors attempting to keep patient infections at bay via cycling.


The editors of MLO thank Donna Beasley, DLM(ASCP), a member of the MLO Editorial Advisory Board, for letting us know about an inaccuracy in an article published in the May 2015 issue. The article “Bundled payments can shape the financial futures of pathologists and clinical laboratories” (page 28) includes some information that was superseded by a later transmittal from the Centers for Medicare and Medicaid Services (CMS). Thank you, Donna, for keeping MLO up-to-date!

These two paragraphs from the May article comprise the section in question:

– In circumstances when separate billing is allowed, a 14x bill type should be used. Separate billing on the 14x bill type is allowed in two situations: first, when a hospital provides only lab tests to the patient and the patient does not receive any other hospital outpatient services during the same encounter; and second, when a hospital provides lab tests that are clinically unrelated to other hospital outpatient services provided during the same encounter and the lab tests are ordered by a practitioner different than the one who ordered the original outpatient services. In this case, the lab tests are billed on a 14x bill type, and the other outpatient services are billed on a 13x bill type.

– This requirement is made more onerous by the fact that the transmittal warns that it is the hospital's responsibility to determine when lab tests can be billed separately on a 14x claim as opposed to when they must be bundled on a 13x bill type. Hospitals must be vigilant in identifying the incorrect claims.

Donna explains, “When separate billing is allowed under the OPPS rule, (and there are several conditions outlined in the final rule which allow this), the outpatient lab test would be billed separately on a 13X bill type and an L1 modifier attached. This lets CMS know this is not a bundled outpatient lab and can be billed and reimbursed separately by the Clinical Laboratory Fee Schedule (CLFS).

The article mentions CMS Transmittal R2845CP, issued in December 2013, which provided the basis for the information in the article. But there was a later transmittal that changed the Final Rule and made the statements erroneous—CMS Transmittal R2971CP, issued on 5/23/14 effective July 1, 2014.

Here are the relevant passages from that transmittal:

Outpatient of OPPS hospital—For hospitals paid under the OPPS, beginning January 1, 2014 outpatient laboratory tests are generally packaged as ancillary services and do not receive separate payment. Only in the following circumstances, they are eligible for separate payment under the CLFS. It is optional for a hospital to seek separate payment under the CLFS.

(1) Outpatient lab tests only – If the hospital only provides outpatient laboratory tests to the patient (directly or under arrangement) and the patient does not also receive other hospital outpatient services on that day. Beginning July 1, 2014 report on TOB 13X with modifier L1.

(2) Unrelated outpatient lab tests – If the hospital provides an outpatient laboratory test (directly or under arrangement) on the same date of service as other hospital outpatient services that is clinically unrelated to the other hospital outpatient services, meaning the laboratory test is ordered by a different practitioner than the practitioner who ordered the other hospital outpatient services, for a different diagnosis. Beginning July 1, 2014 report on TOB 13X with modifier L1.

Non-Patient (Referred) Laboratory Specimen—A non-patient is defined as a beneficiary that is neither an inpatient nor an outpatient of a hospital, but that has a specimen that is submitted for analysis to a hospital and the beneficiary is not physically present at the hospital. All hospitals (including Maryland waiver hospitals and CAHs) bill non-patient lab tests on TOB 14X. They are paid under the clinical laboratory fee schedule.