cap.org v. # Economic Impacts on Academic Surgical Pathology Stanley Robboy, MD, CAP President Richard Friedberg, MD, PhD, Chair, Council on Gov’t & Professional Affairs

Notice of Faculty Disclosure The individual below has disclosed the following financial relationship with a commercial interest: Richard Friedberg, Consultant, EmpiraMed Inc. The individual below has no relevant financial relationship to disclose: Stanley Robboy, MD

© 2013 College of American Pathologists. All rights reserved. Payment & Advocacy 3

© 2013 College of American Pathologists. All rights reserved. Key Pathology Issues in 2013 PFS SGR & Physician Payment 100+ New Molecular Codes LDT Oversight Physician Quality Reporting System HIT/Meaningful Use GME funding Future payments: ACO, New paths 4

© 2013 College of American Pathologists. All rights reserved. Payment Changes PC $43 in 1992 $36 in 2012 $30 by 2014 if MedPac 17.7% cuts enacted PC 23% RVU increase with 2009 revaluation

© 2013 College of American Pathologists. All rights reserved. Payment Changes in 2013 PFS CodePCTC % %-51% %-35% %-52% %+39% %+41% 6

© 2013 College of American Pathologists. All rights reserved. PFS Payment Changes for % Family Doc Increase Overall Pathology Cut -6% 7

© 2013 College of American Pathologists. All rights reserved. Congress and SGR fix Decision pushed to 12/31; ~ 30% cut 10-year freeze now $138 billion, due to reduced spending Previous proposals: MedPAC to cut specialists’ pay by 5.9% for 3 yrs (~18% total), then freeze for 7 years 8

© 2013 College of American Pathologists. All rights reserved. AMA’s SGR Stance Eliminate SGR For next 5 years, provide PFS updates to pace practice costs, while developing new approaches Let physicians choose from various payment options best fitting their practice Reward reducing duplicated services, adverse events, ER visits/hospitalizations 9

© 2013 College of American Pathologists. All rights reserved New Molecular CPT Codes New CPT molecular codes placed on 2013 CLFS CAP helped create codes and urged placement on PFS New CMS HCPCS II G-code for physician interpretation and reporting. 10

© 2013 College of American Pathologists. All rights reserved. Lab Developed Tests Thousands in use…Increased government oversight likely Jurisdiction: CMS or FDA? Companion diagnostics CAP proposed oversight needing minimum administration and time. 11

© 2013 College of American Pathologists. All rights reserved. Future Genomic Leadership Leadership: Positioning Payment: Leading on NGS Regulatory Framework: LDTs Gene Patents: Myriad Case Infrastructure Needs: Clinical Variant Database 12

© 2013 College of American Pathologists. All rights reserved. Pathology PQRS – Part I 62% of eligible pathologists participated. Better than 26% of total eligible MDs Average pathologist bonus: $1564 in measures in place now; 3 new for

© 2013 College of American Pathologists. All rights reserved. 14 Included in CMS 2012 and 2013 PQRS: Breast Cancer Resection -- #99 Colorectal Cancer Resection -- #100 Barrett’s Esophagus -- #249 Radical Prostatectomy -- #250 IHC Evaluation of HER2 for Breast Ca -- #251 Proposed for 2014: Lung cancer (biopsy/cytology specimens) Lung cancer (resection specimens) Melanoma Pathology PQRS – Part II

© 2013 College of American Pathologists. All rights reserved. Value-Based Payment Modifier In 2013, applies only to groups of >100+ members Must cover all physicians by 2018 Relies on PQRS reporting 1% penalty for failure to participate 15

© 2013 College of American Pathologists. All rights reserved. Health Information Technology 2009 Recovery Act catalyzed HIT and Meaningful Use Program targets PCPs; Nearly all pathologists eligible & some academic centers successful Most groups unable to participate, and vulnerable to penalties CAP advocated relief from penalties. Success! ….temporarily. CAP seeks permanent fix in H.R

© 2013 College of American Pathologists. All rights reserved. HIT issues for AP Integrated reports EMR ONC changes Laboratory Orders/Results Interfaces Electronic Delivery of Services Laboratory Results Reporting Key influencers of federal HIT standards 17

© 2013 College of American Pathologists. All rights reserved. Policy Development o Align Specialty for Joint Advocacy o PRT White Paper o GME Panel at Policy Meeting Legislative activity o HR 6562, HR 6352, S o +15,000 Medicare Supported Residency Slots over 5 years 18 Graduate Medical Education

© 2013 College of American Pathologists. All rights reserved. Workforce & Models of Care 19

© 2013 College of American Pathologists. All rights reserved. Demographics, big changes… Pathologist shortages: o Retirement cliff o Changing skills in demand Aging Population: o % >65 to double in next 15 yrs 20

© 2013 College of American Pathologists. All rights reserved. 21 Net Changes to Pathology Workforce E2019E 2024E 2030E Pathologist Demographics: Retirement Cliff Approaching Pathologists

© 2013 College of American Pathologists. All rights reserved. Pathology = a Report 22 How Other MDs See Us

© 2013 College of American Pathologists. All rights reserved. Transformation of Pathology 23 What is it? Why is it important? Emerge from shadow Affirm value Show new value Secure future

© 2013 College of American Pathologists. All rights reserved. 24 Focus on value, not volume Reassert our role as physician Diversify and expand services Prepare for new payment and delivery models We must change

© 2013 College of American Pathologists. All rights reserved. Beyond Fee for Service Medicare Shared Savings Private Sector Coordinated Care /Clinical Integration Programs CAP ACO White Paper, Resource Center, & ACO Network CAP’s Promising Practice Pathways 25

© 2013 College of American Pathologists. All rights reserved. 26 Value = clinical quality/ cost System transitioning to … o Value vs Fee For Service o Delivery models – coordinated care, population management Consumer health care o Employees now pay > employers o Consumer-directed high deductibles 58% of employers in % of large companies by 2013 Value Transformation

© 2013 College of American Pathologists. All rights reserved. 27 Public Policy Development Policy Roundtable o Pathologists Value in ACOs o Graduate Medical Education o Value Based Pricing of Diagnostics CAP Policy Meeting o New Payment Models, Bundled Payments o P4P, Value-based Pathology o PRT: Graduate Medical Education o Lab Regulation: LDTs, Digital Pathology

© 2013 College of American Pathologists. All rights reserved. Promising Practice Pathways™ Describes new pathologist-driven services and programs Adds clinical value outside of the lab by improving downstream clinical quality and outcomes Generate downstream clinical cost savings 28 TM

© 2013 College of American Pathologists. All rights reserved. 29

© 2013 College of American Pathologists. All rights reserved. 30 Threats Opportunities Population informatics Molecular and genomics Dx Value-based market Others snatch our ‘golden era’ Dx as vendor to be cut Why Promising Practice Pathways?

© 2013 College of American Pathologists. All rights reserved. 31 High-Performance Diagnostic Services Coordinated Population Care Services Patient Diagnostic Services Center High-Performance Pathology for High Value Oncology The Practice Pathways

© 2013 College of American Pathologists. All rights reserved. 32 Source: Community Oncology Practice Impact Report, April ,254 practices impacted over past 4 yrs. Community Oncology Practices Under Financial Pressure

© 2013 College of American Pathologists. All rights reserved. 33 High Accuracy Diagnosis Value Impact: Better outcomes, less unnecessary Rx How: Digital path reviews Collaborate with radiology imaging Oncology Pathway Model

© 2013 College of American Pathologists. All rights reserved. 34 Pathology-Driven Care Decisions Value Impact: Rx better matched for tumor & patient Lower hospital & ER costs Better outcomes How: Personalized medicine + informatics Knowledge services and tools Oncology Pathway, Part II

© 2013 College of American Pathologists. All rights reserved. 35 Later Stage: Clinical Trials & Palliation Value Impact: Improved outcomes if trial effective Better patient options and preferences Avoiding unnecessary end-of-life chemo How: Molecular tumor profiling (Next gen sequencing & informatics) Oncology Pathway, Part III

© 2013 College of American Pathologists. All rights reserved. 36