Pathology/Lab Coding Alert

Accept short-term MPFS pay rescue.

The "Middle Class Tax Relief and Job Creation Act of 2012" has plenty to say that will impact your laboratory or pathology practice. In a "good-news/bad-news" scenario, you can expect an overall physician pay-cut reprieve, but a loss of the "grandfather" exception, which currently allows labs with certain arrangements to bill Medicare for the technical component (TC) of pathology services for hospital patients.

Get the TC-Billing Bad News

Labs with hospital TC outsourcing arrangements in place prior to July 22, 1999 can bill Medicare directly for the TC of pathology services to hospital patients, as opposed to billing the hospital for the service. After extending the grandfather exception through the end of each subsequent year, Congress this year opted to extend the practice only through June 30.

If you have TC grandfather arrangements with hospitals, you'll need to amend your billing practices to bill the hospital, rather than direct-billing Medicare for TC services by the July 1 deadline.

Watch Pathology/Lab Coding Alert for any updates or possible last-minute legislative reprieve before the July 1 grandfather sunset.

Embrace Pay-Cut Reprieve Good News

You've been experiencing the good-news component of the law, in the form of a reprieve from the massive Medicare physician fee schedule (MPFS) pay cut that would have slashed the conversion factor from the current $34.0376 to just $24.6712, which was due to take effect on March 1.

Short term solution: Although medical societies were abuzz with speculation that legislators were working to overhaul the Medicare payment formula system to avoid future reimbursement issues, a long-term solution has not materialized. Instead, under the law, physicians will benefit from a pay freeze through the end of 2012, with hopes that Congress will find a way to repair the Medicare payment system before additional cuts kick in on Jan. 1, 2013.

"Congress had an opportunity to permanently end this problem, which is the sound, fiscally prudent policy choice," said AMA president Peter W. Carmel, MD, in a prepared statement. "We appreciate efforts by members of Congress on both sides of the aisle who publicly supported a framework for a permanent end to this perennial problem. We are deeply disappointed that Congress chose to just do another patch -- kicking the can, growing the problem and missing a clear opportunity to protect access to care for patients."

The agreement will freeze MPFS payment rates at the current amount through Dec. 31, 2012.

Follow CLFS 'It Could be Worse' News

In addition to amending the MPFS, the law reduces payments to laboratories under the Medicare clinical lab fee schedule (CLFS) by 2 percent beginning in 2013. Plus, the reduced rates for next year will become the reset basis for the 2014 CLFS update.

How could it be worse? A 10 percent CLFS reduction had been suggested by the Medicare Payment Advisory Commission (MedPAC), an independent Congressional agency instituted to advise Congress on Medicare issues.