As the story goes that I have heard a couple of versions of, somewhere in Florida in the early 1990s, a urologist or small group of urologists, taking advantage of exceptions in the Stark Law (actually there are multiple parts to this single law) and skirting anti-kickback regulations, started to perform anatomic pathology services and referring those specimens to their laboratories, or themselves.
Folks familiar with this recognize that Stark does allow self-referral of imaging or other diagnostic tests within the practice that is actually ordering or referring the patient for the test. With passage of Obamacare, these groups are suppose to provide a letter to patients and inform them where else in the area these services may be available. Kind of like a restaurant showing you a menu for 3 other restaurants after the restaurant manager referred you to his/her restaurant. Not sure if this happens with any regularity.
Anyways, somewhere in Florida around 20 years ago, in-office pathology was born.
Throughout the 1990s, many urologists had supplemented their revenues through an arrangement with the maker of Lupron, a hormone drug for prostate cancer. Under the arrangement, Lupron producer TAPPharmaceutical Products Inc. sold urologists the drug at a steep discount, while the urologists in turn billed Medicare for the full price.
The arrangement ended in 2001 when several urologists were indicted and TAP Pharmaceutical paid more than $840 million to settle a Justice Department investigation. Deprived of the Lupron profits, some urologists' incomes declined by as much as one-half according to accounts by urologists at that time.
It is thought that declining reimbursements from Lupron that eventually ended in 2001 led at least in part to urologists looking for other sources of revenue.
According to their website, In-Office Pathology was formed in 2004. The site mentions over 45 installations in eighteen states in urology, gastroenterology, dermatology and multispecialty practices. This company also claims "We do it better than anyone else". Laboratory Economics reviews this regularly and almost every issue contains new physician owned laboratories within urology, GI and dermatology
Recently, as I mentioned earlier this week in a post on over utilization within in-office pathology laboratories, in what may come to be called The Mitchell Report (OK, the Other Mitchell Report), a study published by Dr. Jean MItchell, a noted Geogetown economist confirmed with a multi-year study of such practices an increasing number of biopsies with actually fewer cases of prostate cancer detected by those practices.
Besides from perhaps doing more rather than less and violating the principle of "first do no harm" fewer diagnosed cases of prostate cancer also hurts their referral rate to their specialized IMRT centers for treatment but that is for another post on another day…
Since the article on this topic was published that American Urologic Association wrote a letter to the editor in the journal the article appeared in referencing a "turf war" and claiming over the past decade the number of jars for best clinical practices increased from 6 to 12, with one biopsy in each jar. This translates to 12 CPT codes (88305) for the referring physician who will capture the technical and professional component within his/her respective self-owned laboratory.
For more on this story and a copy of the AUA's response and response from In-Office Pathology check out The Pathology Blawg for continuing coverage of the story.
So, what does any of this have to do with digital pathology? A lot.
I can't really say that I have a horse in this race or any "turf" worth getting into a war over in my practice per se. This freight train left the station years ago and I do not begrudge IOL, the urology community or pathologists who are employees or part-owners of these laboratories for trying to make a buck, if done correctly and in accordance with best clinical practices.
One of the real problems here is that the technology to process tissue has become so good one can have a tabletop tissue processor, small stainer and coverslipper and IOP with 350 square feet of office space, some drywall and nails and create a full-service anatomic pathology laboratory. I bet it would be hard to find any of the laboratory information system companies geared toward the outreach/outpatient market who does not have at least one install in an operation such as this.
This is a perfect market for digital pathology. You could create the possibilty to have a team of prostate experts review cases remote from the provider, patient and histology lab and report those findings with web-based LIS systems. For straight TC/PC relationships this would work fine where everyone gets paid for what they are doing. Save the urology or GI group the cost of a pathologist plus additional coverage when that person is attending a prostate pathology meeting or on vacation.
Whole slide imaging could augment the laboratory or completely eliminate the need for pathologists to be onsite beyond some basic medical director functions. Of course the idea here is that some of these urologists and gastroenterologists would want the full global charge capability rather than outsourcing the professional component. Perhaps if they hire the wrong pathologist they might re-think this model as well.
Here is an idea, I can do a one-year endoscopy fellowship for upper and lower GIs, set up an endoscopy center complete with the latest state of the art endoscopes, build a lab in the back of the practice, do my own biospies and read my own biopsies. Would anyone have a problem with that? I saw the patient, I did the gross examination via endoscopy and can correlate it with the slides. Perfect. It turns out that the CPT codes and reimbursements for upper or lower GI endoscopy with biopsy is higher than a UGI or LGI examination without biopsy. Even better. And because it is an invasive procedure, I should take more rather than fewer biopsies to diagnose disease. None of this of course would be driven by financial reasons. It is all evidence-based and presumably my rates of disease detection would go up or I would consider doing fewer biopsies over the course of time (certainly within 3-5 years) if the yield is no greater (or lower) than a control group (self-referring vs. refer to AP lab).