Anne Pontius joins J. Baugh to discuss operating an in-office laboratory. Anne weighs out the pros and cons of doing your own testing in-house versus using a commercial laboratory.
Speaker 1: You are listening to Your Practice Made Perfect. Support, protection, and advice for practicing medical professionals brought to you by SVMIC.
J. Baugh: Hello everyone and welcome to this week's episode of Your Practice Made Perfect. My name is J. Baugh and I'll be your host for this episode. Today we're going to be talking about operating an in-office laboratory. And to help us with this topic, we have Anne Pontius with us. Anne welcome.
Anne: Thank you J. I appreciate being here.
J. Baugh: Well, it's good to have you. Anne, can you tell us a little bit about your background and how long you've been at SVMIC?
Anne: Sure. I've been at SVMIC for 10 years now. Prior to that I had a consulting business. It was called Laboratory Compliance Consultants, and I did that for about 18 years. And during that tenure I also was privileged to be the president of the Clinical Laboratory Management Association. So I've spent most of my career in the laboratory world.
J. Baugh: Yeah, it sounds like you have a lot of great experience that will help us be able to work through the issues that we're going to talk about today. So let me ask you this. Some physicians have their laboratories in their office and use those, and some physicians send tests out to a commercial laboratory rather than having it done in-house. So why would a physician want to do laboratory testing in their office when they could send the tests out to a commercial laboratory?
Anne: Well, there's several reasons why a physician might want to do in-house testing. When a physician has a laboratory in their office, we call those POLs, Physician Office Laboratories. So you'll hear me refer to them as POLs.
J. Baugh: Okay.
Anne: The first and foremost reason to bring testing in-house is because you're going to be able to provide better patient care. And that can come in waves of continuity of care, it can come because you have a better turnaround time for that test result, and it also helps with the patient to give them convenience as to where they get their testing done. So they don't have to leave one facility and go to another. Oftentimes when that happens, the patient just, for whatever reason, doesn't go to that other facility and get the testing.
J. Baugh: Right.
Anne: Sometimes in a physician office we can actually get a more accurate result than if you send that result out to a commercial laboratory. And the reason for that is because there might be fewer steps involved in the process. And when you have fewer steps in the process, there's less opportunity for error. So for instance, if we were doing an INR test by point of care, and we call the test that you can do right there at the patient's side, we call that point of care. So if we did a point of care test, we'd prick the finger, get a drop of blood, put it in the analyzer, and in about three minutes you'd have a result, and you'd be able to provide the patient face-to-face education, and they would be very compliant in that scenario. But if you do the venous draw and then send that blood out to a commercial laboratory, you now have the paperwork that goes with that process. You have to spin that blood down and process it, or you have to just make sure its temperature is correct and that you then bag that up and you have a courier that'll come take that bag.
And during that process they have to make sure the temperature is maintained and that it doesn't get lost in the process. And then when you get it to the other laboratory, you want to make sure at that laboratory they don't mix up that specimen. So you can see that in the commercial area there are a lot more steps involved and a lot more opportunity for error. Where in the point of care, the physician office, sometimes we have less of those opportunities for error and therefore we get a more accurate result.
J. Baugh: Okay.
Anne: I'll ask physicians when they're getting ready to set up an office lab, what's your motive in doing this? And if they're talking about better patient care and they feel like they can get a good test result then I'm happy. But if the first thing that comes out of their mouth is, "I want to make a profit." Then I back up a step.
J. Baugh: Right.
Anne: There's no reason why an in-office lab or POL should lose money. But that certainly shouldn't be the motive for getting into the physician office lab business.
J. Baugh: So we talk about having a laboratory inside a physician's office and when you talk about mixing things like that together, it makes me think about a law that I really don't want to think about much because it's so complicated. And that's to talk about the Stark Law. So let me ask you this. Doesn't the Stark Law prohibit a physician from referring a laboratory test to a facility that the physician has maybe an ownership interest in or an investment in, or some sort of a compensation relationship with? How does the Stark Law work when it comes to having a laboratory that is inside a physician's office?
Anne: Well you're right, the Stark Law can be very complicating. And so I always encourage physicians as they're going down this road to find an attorney that understands these rules. Just to make sure that they are not in noncompliance, that there's no problems here. The wonderful thing about Stark that they did for physician office labs, though, was they created what's called an exemption. And that exemption permits the physician to own and operate that laboratory within his own practice for his own patients or if it's a group they can do the testing for all the physician's patients within that group. So that's enabled the offices to have in-office testing.
J. Baugh: Okay. So this is in a situation where someone has tried to get creative with the Stark Law and kind of bend it in such a way that maybe we can allow something like this. It's specifically stated in the Stark Law that there is an exception for an in-office laboratory, is that right?
Anne: That's correct. So there are about 13 different designated health services under the Stark regulation. And those types of services are prohibited when there is a financial relationship. It can be a compensation relationship or an investment relationship.
J. Baugh: Okay.
Anne: So laboratory services is a designated health service, but the exemption allows for the in-office testing. What physicians have to be careful about is allowing patients to get tests done in their office for physicians that are outside of their practice. So they can only do the testing for those patients that are part of their practice that they're seeing and that they're overseeing that kind of testing.
J. Baugh: That's good to know because like we both said, the Stark Law is so complicated that it's good that we go ahead and address that, and as you said, if a physician is thinking about doing this, they need to contact an attorney who has a specialty in working with the Stark Law because it is so complicated. But now that we know that there is this exemption for having a laboratory inside a physician's office, we know that it's legal to do that if it's set up properly. I'm assuming that in addition to that Stark exemption, that there are other rules that would apply in a situation in which a physician has an in-office laboratory. What are some of those rules that physicians need to consider other than the Stark Law?
Anne: Just starting out. A lot of physicians are concerned about the money side of it, so we're not going to go into a lot of detail about billing for laboratory services. But it is important to know that there are specific rules for billing, particularly if you're dealing with Medicare and Medicaid services. A lot of it has to do with medical necessity and making sure that you have paired up a diagnostic code with a procedural code and that it is an allowable service under those payments groups. Aside from the billing rules, then we have CLIA. CLIA is the Clinical Laboratory Improvement Amendments of 1988, and it actually became effective in 1992. So these rules have been out there for a very, very long time and you would think that it would be easy for everybody to understand them and comply with those rules, but that's just not the case.
J. Baugh: Yeah, I'm sure that's true, and I'm guessing that it's gotten more complicated over time. That's what usually happens with this type of legislation. Something happens down the road and more gets added to it and there are more questions and so I'm sure it's pretty difficult to work through all of that.
Anne: Well, it can be. And one of the interesting things about CLIA though is it hasn't evolved a lot over time, but the laboratory industry is constantly changing and constantly updating. And so we're trying to fit today's atmosphere into some rules that are pretty archaic for the times of healthcare today. So for a physician office laboratory to operate, they need to have a CLIA certificate, and certificates are based on the type of testing that the laboratory is going to perform. Test or categorize by the FDA. They're going to look at those tests and they're going to make a determination about how complex it is to run that test and get a result. Some of them are going to be very easy, and they're going to label those as wave test and then there's going to be tests that are moderately complex. They call those moderate and then highly complex tests. So it uses a lot of judgment, a lot of techniques, specialized technique to perform those tests.
Then based on those types of tests you bring into your facility to run, you have to then figure out what kind of certificate you want. You fill out an application with CLIA and you can get an application of accreditation. And that means another entity such as the College of American Pathologists or COLA is an accreditation agency and they will collect fees and they will do inspections in lieu of CLIA. So it gives the end users some choice as to who they want to have come do their inspections. So you can get a certificate of accreditation, which means another entity will be doing the inspections and collecting fees, or if you're doing just wave test in your office you can get a Certificate of Waiver. If you're doing moderate or high complex tests, then you would get a Certificate of Compliance. So those are the types of certificates you can get.
And there's one other certificate out there. It's called a PPMP and that's a Provider Perform Microscopic Procedures. And that particular certificate allows for physicians and Advanced Practitioners to perform certain microscopic procedures and all wave test. Both the waived and the PPMP certificates do not have routine inspections, but there's still rules that you have to follow. So you have to follow what the manufacturers says for operating that procedure, which could include doing QC. And both the waived and the PPMP laboratories can get inspected and are subject to following those rules that the manufacturer says. And if they don't, they could be shut down. But if they're doing any kind of testing like CBCs or chemistries, most likely they're going to be doing a moderate complexity test and they're going to need to get a CLIA certificate of compliance.
J. Baugh: Okay. So we've talked a little bit about CLIA and what that is and about the different types of certificates that are available and which certificates apply to different types of testing that is being done in the lab. So once a facility gets one of these certificates, then what kind of rules do they have to adhere to?
Anne: Well CLIA has five main pillars, and those are personnel, quality control, proficiency testing, documentation and quality assurance. The personnel rules are sometimes the hardest to adhere to and there are separate rules for a moderate complexity laboratory and separate ones for a high complexity laboratory. And for the different roles that CLIA has defined, such as laboratory director, testing personnel, clinical consultant, technical consultant. All of these roles have very specific qualifications and they also have very specific responsibilities. And it's also noted that for all the accreditation agencies and for the CLIA inspections, the personnel requirements seem to have the highest number of deficiencies because there are also evaluations that must take place with your testing analyst. So there are a lot of very detailed rules that go along with the personnel requirements. And sometimes physicians believe that they've got their MD, so surely they are qualified to run any kind of laboratory that is out there.
But that's not necessarily the case.
You run quality control on every test and that lets you know that the testing analyst and the test itself are running correctly and you can get a good and accurate result. And there's very specific requirements. For every test there is some measure of quality control that must take place and it's important that the POL documents all of that quality control. Proficiency testing is a way for the inspectors to monitor the laboratory over time, and proficiency testing is run by an outside entity. And what that means is that outside entity that you're going to pay money for is going to send you sample specimens and you're going to run those and you don't know what those results are.
And you'll send those results you get back to the proficiency testing provider and they will grade them. And they will send your grades not only back to you but also to the inspectors. And that way the inspectors know whether or not you're doing high quality testing. And you can use those proficiency testing results to help ensure that you've got good quality results coming out of your laboratory. The documentation requirements, I'd like to sugarcoat that and say, "They're easy to do," but that is where the devil's in the details.
J. Baugh: I'm sure that's true.
Anne: And the mantra for the inspectors is, if it's not been documented, it's not been done.
J. Baugh: That's right.
Anne: So you really do need to dig into knowing the details of every one of these pillars that we're talking about because there's documentation requirements for every one of them. And the quality assurance program, that's looking at quality in every aspect of testing. And so when we think about all the aspects of testing, we think not only about the equipment that is giving us a test result, but we also have to think about pre-analytic testing and post-analytic testing.
So the pre-analytic area is going to be the ordering of the test and the processing of the specimen to get it ready to test. And there are very specific rules that accompany pre-analytic testing. And then we have our devices and we have to run that QC on those devices. We have to make sure our personnel are competent when they run that machine. And then after we get a result, we've gotta get that result back into the hands of the physician in a timely fashion, in a way that they can look at the result and then use those results. And that's the post-analytic process. So quality assurance is embedding quality measures throughout the pre-analytic, analytic and post-analytic processes.
J. Baugh: Okay. So it sounds like there are several different areas in which CLIA rules have to be followed, have to be adhered to, and so who is it in the physician's office who's responsible for making sure that everyone complies with all of these rules that you've just talked about?
Anne: Well, whether you're running a moderate complexity laboratory or a high complexity laboratory and even have a waive certificate, whoever is stated as laboratory director, that individual is ultimately responsible for the quality of the tests that are coming out of that facility as well as making sure they're in compliance with all of the regulations. And to check on that laboratory director, we have the inspectors that will come out and do inspections and so the moderate and high complexity laboratories generally get inspected every two years, at least every two years. So they're coming out, they know what rules, depending on the type of tests they're doing, whether it's moderate or high complexity, as to what rules they have to adhere to. And they're going right down their checklist and making sure that they're doing everything that they're supposed to do.
J. Baugh: Okay. Well that's some very good information. Anne, I appreciate you giving us some information about operating an in-office laboratory, and thank you for your time.
Anne: Well, thank you for having me.
Speaker 1: Thank you for listening to this episode of Your Practice Made Perfect with your host J.Baugh. Listen to more episodes, subscribe to the podcast and find show notes at svmic.com/podcast.
The contents of this podcast are intended for informational purposes only and do not constitute legal advice. Policyholders are urged to consult with their personal attorney for legal advice as specific legal requirements may vary from state to state and change over time.
Anne Pontius is a Sr. Medical Practice Consultant in the Medical Practice Services Department of SVMIC. In her 11 years with SVMIC she has provided medical practice business consulting services to physicians and their staff on the implementation of efficient business operations, strategic planning, OIG compliance programs, and regulations associated with CLIA, OSHA and HIPAA. Ms. Pontius has over 40 years of experience in healthcare. She has a BS degree in Medical Technology from UNC-Wilmington and a Master’s in Business Administration from Pfeiffer University. She was the founder and CEO of Laboratory Compliance Consultants, Inc. for 20 years. She is certified in healthcare compliance (CHC) by the Healthcare Compliance Association and is a Fellow in the American College of Medical Practice Executives. She has worked with hospitals, group practices, solo practitioners and academic medical centers. Ms. Pontius is a Past President of the Clinical Laboratory Management Association (CLMA). She has served on several editorial advisory boards and is a professional speaker on several healthcare and physician office business topics.
J. Baugh is a Senior Claims Attorney for SVMIC. Mr. Baugh graduated from Lipscomb University with a Bachelor of Science degree in Accounting and from the Nashville School of Law with a J.D. degree. He is currently licensed to practice as a Certified Public Accountant and as an Attorney in the State of Tennessee. He has been a member of the Claims Department of SVMIC since 2000.