Pathology/Lab Coding Alert

Saved by the bell CMS rescued some hospitals and independent labs from technical component (TC) billing mayhem with an end-of-the-year memorandum. Expecting the TC "grandfather" exception to expire Dec. 31, 2002, many hospitals and labs were relieved to see the CMS Dec. 20, 2002, Program Memorandum AB-02-177 that extended the grandfather for another year.

Section 542 of the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) granted a two-year grace period during which independent laboratories could continue to bill the TC of physician pathology services directly to Medicare Part B for patient care at certain qualifying hospitals. Ahospital qualified for the grandfather exception to TC bundling in its diagnosis related group (DRG) and ambulatory payment classification (APC) Medicare payments if, on July 22, 1999: (a) its histology and/or cytology work was performed at an outside laboratory, and (b) the outside lab billed Medicare Part B for the TC. In all other situations the TC of anatomic procedures is payable only through the hospital.

"The extension is a great reprieve for rural hospitals and labs like ours that serve them," says Stan Werner, MT (ASCP), administrative director of Peterson Clinical Laboratory in Manhattan, Kan. "We can continue to submit one bill to Medicare, rather than split-billing Medicare and the hospital."

If your lab is entitled to bill the TC for a particular hospital, you can continue to bill Medicare for global anatomic pathology services. For example, you can bill Medicare for both the technical and professional component of surgical pathology examination of a breast biopsy (CPT 88305 , Level IV Surgical pathology, gross and microscopic examination, breast, biopsy, not requiring microscopic evaluation of surgical margins) using modifiers -TC (Technical component) and -26 (Professional component). Otherwise you must bill Medicare only for the physician service using modifier -26. Medicare will pay the hospital for the 88305 technical component under the APC rate, and you will have to arrange with the hospital to recover those expenses.