Pathology/Lab Coding Alert

Don’t miss change to PAMA implementation.

Your pathology practice or clinical lab can expect significant payment changes that you need to know based on the 2019 Medicare Physician Fee Schedule (MPFS) final rule.

The rule should provide “dramatic improvements for clinicians and patients,” according to Sema Verma, CMS Administrator, and “move us closer to a healthcare system that delivers better care for Americans at lower cost,” according to Alex Azar, Health and Human Services (HHS) Secretary, in the CMS press release on the rule.

That’s the official view, but you should read on to get our expert perspective on some laboratory-specific details of the rule.

Expect Physician Pay Changes

The schedule-wide MPFS pay change comes in the form of the 2019 conversion factor (CF) increase to 36.0391, compared to the 2018 CF of 35.9996. The change is based on the budget-neutrality adjustment required by law, which accounts for changes in procedure codes’ relative value units (RVUs).

Coder tip: “The conversion factor, multiplied by a code’s RVU, gives you the Medicare fee, which may then have a regional adjustment,” explains R.M. Stainton Jr., MD, president of Doctors’ Anatomic Pathology Services in Jonesboro, Ark. The code’s RVU is the total of physician work, practice overhead, and malpractice expense.

Bad news: CMS estimates that overall, the 2019 MPFS changes will result in a two percent decrease in pay to pathologists and independent laboratories, despite the CF increase.

Caveat: The actual payment impact for your specific lab could vary from that two percent projection depending on the specific procedures and volumes you perform.

Study the following table to see codes that will have MPFS payment changes of at least 15 percent this year.

*National non-facility amount, CF 36.0391
+National non-facility amount, CF 35.9996

TC leads changes: You’ll notice in the table that much of the payment change involves the technical component of pathology procedures. The TC pay change in turn impacts the global fee. For instance, the 28 percent pay boost to 88346-TC that you see in the table results in a global-fee boost of 17 percent; the 63 percent boost to 88358-TC results in a global-fee increase of 34 percent; and the 32 percent increase in 88381-TC results in a global-fee boost of 25 percent. Some TC payments decline in 2019, such as G0416-TC that has a 19 percent pay decrease, leading to a 11 percent cut for the global fee.

Independent labs hit harder: Because pathologists often bill only for the professional component of many of the codes with the biggest 2019 payment variance, independent labs that bill the TC or global service may see a bigger bite out of their bottom line for these services. The saving grace for independent labs may be the larger percent of revenues billed on the Clinical Laboratory Fee Schedule (CLFS), so that PFS payment rates have less overall impact.

Greet Policy Update for CLFS Payment Rate

Although the MPFS doesn’t list fees for clinical lab services, the 2019 final rule addresses laboratory-community concerns about the procedure for calculating CLFS payment rates.

How we got here: The Protecting Access to Medicare Act (PAMA) required CMS to calculate new CLFS payment rates based on fee and test-volume data submitted by clinical laboratories. The new CLFS payment rate for each test in 2018 was set as the weighted median of private payer rates submitted by “applicable laboratories” between January and March of 2017 for data collected January through June of 2016.

Reaction: Stakeholders responded to the 2018 CLFS with official statements to CMS expressing concern that the data from “applicable laboratories” was not representative. For instance, American Clinical Laboratory Association (ACLA) president Julie Khani stated that CMS “ignored Congress’s instructions to gather commercial price information from all sectors of the clinical laboratory market,” and American Society for Clinical Laboratory Science (ASCLS) then-president Debra Rodahl pointed out that CMS collected 90 percent of the data from independent laboratories, while 44 percent of laboratory services to Medicare came from hospital and physician office labs.

Policy change: The 2019 MPFS final rule states that CMS will make changes to lab-test data collection policies. As of Jan. 1, 2019, the applicable-laboratory definition will include hospital labs that receive at least $12,500 in CLFS revenues filed on CMS form 1450 14x bills. These revenues reflect hospital outreach payments, which are often at higher rates. Coupled with the removal of some Medicare Advantage revenues from the data collection, these policies respond to some industry concerns about CLFS repricing, and may better reflect market rates for clinical laboratory tests.

“We appreciate CMS making changes in the final rule to increase representation of hospital outreach laboratories in the next round of data collection and reporting,” Khani stated in a response to CMS. “This initial step recognizes the flaws in the agency’s approach to implementing PAMA and represents a starting point in advancing a more sustainable, competitive market for millions of seniors who depend on clinical diagnostics for their health.”

Current dates to remember:

• Jan. 1, 2019 through June 30, 2019: data collection period
• Jan. 1, 2020 through March 31. 2020: data reporting period
• Jan. 1, 2021: effective CLFS rate based on preceding dates.