Pathology/Lab Coding Alert

MPFS Final Rule:

See How Medicare Pay 2021 Impacts Your Lab

Expect conversion factor hardship.

CMS released the final 2021 Medicare Physician Fee Schedule (MPFS) and it’s chock full of items that will impact your lab or pathology practice’s bottom line in the coming year.

Topping the list is the final rule’s 2021 conversion factor (CF) of $32.41, a decrease of 10.2 percent from the 2020 CF of $36.09. The move is required for budget neutrality, primarily to offset the increase in pay for certain E/M procedures — which are services labs and pathologists don’t provide.

Provider groups are concerned that the 2021 MPFS will exacerbate the financial challenges physicians are already facing during the COVID-19 pandemic, according to Mary I. Falbo, MBA, CPC, CEO of Millennium Healthcare Consulting Inc. in Lansdale, Pennsylvania.

“Due to the ongoing public health emergency related to the COVID-19 pandemic, it is especially important Congress take steps to alleviate the CMS’s looming 2021 payment reductions to all non-evaluation and management (E/M) services,” said Patrick Godbey, MD, FCAP, president of the College of American Pathologists (CAP) in a statement encouraging congress to pass legislation to halt the 2021 Medicare cuts.

Late breaking update: Congress did address the 2021 payment cuts in the Consolidated Appropriations Act (CAA) of 2021 passed after the MPFS final rule, and CMS posted an updated fee schedule on Jan. 5 just before press time with a CF of 34.89.

That’s not all: Check out the following rundown of other MPFS changes you need to know for your lab.

Prepare for Procedure Pay Decrease

The final rule’s estimated impact on total allowed charges by specialty has bad news for clinical labs and pathologists. Pathology practices can expect a 9 percent pay reduction, and independent labs can expect a 5 percent pay decrease in 2021. That’s based on changes to relative value units (RVUs) for specific procedures and the CF reduction.

Those values may be different for your specific lab or pathology practice depending on the mix of procedures you perform. Also, remember that independent laboratories receive about 83 percent of their Medicare revenues from services paid on the Clinical Laboratory Fee Schedule (CLFS).

Math tip: The national CF is what you use when calculating payment, says Kelly D. Dennis, MBA, ACS-AN, CAN-PC, CHCA, CPMA, CPC, CPC-I, owner of Perfect Office Solutions in Leesburg, Florida. You multiply the CF by the total RVUs for a procedure to determine the national payment amount, to which local contractors apply a geographic adjustment to determine your pay.

More than 40 percent of the lab/pathology codes paid on the 2021 MPFS see a 10 to 15 percent pay reduction compared to 2020, while only about 13 percent show any pay increase. The following table shows the biggest winners and losers.

* MPFS National Facility Amount: 2021 values use adjusted Jan. 5 CF of 34.89.

Bright spot: Based on industry recommendations for the potentially misvalued code G0452, CMS increased the physician work RVU from 0.37 to 0.93 for molecular pathology interpretation service. Remember that the MPFS lists code G0452 with modifier 26 (Professional component), so you should bill the code with that modifier when a physician (MD or DO), not a laboratory scientist, interprets the results of a molecular pathology Tier 1 or Tier 2 test.

Expect Delay in CLFS Fee Updates

The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides some reprieve for labs regarding the ongoing repricing of the CLFS.

Back story: The Protecting Access to Medicare Act (PAMA) mandated that CMS base CLFS pricing on the weighted median of private payer rates reported by “applicable laboratories.” The law established a three-year schedule for data collection and reporting periods and payment rate updates. The act also specified a phase-in of payment reduction caps at 10 percent for three years and 15 percent for the subsequent three years.

The CARES Act provided the following relief from some of these schedules:

  • Next data reporting period will be delayed to Jan. 1, 2022 through March 31, 2022 instead of the scheduled Jan. 1, 2020 through March 31, 2020 (which would have taken effect Jan. 1, 2021)
  • Applicable percentage payment rate increase for 2021 is 0 percent (you’ll get the same pay as 2020), not the maximum phase-in amount of 15 percent reduction
  • The applicable 15 percent payment reduction cap will apply to CYs 2022 through 2024, rather than the scheduled 2021 to 2023
  • Payment rate comparison for 2022 will be based on data collection period Jan. 1, 2019 through June 30, 2019 instead of scheduled collection period Jan. 1, 2020 through March 31, 2020.

Beware NCD House Cleaning

CMS evaluated several “outdated or obsolete” National Coverage Determinations (NCDs) for removal effective Jan. 1. Although none of the lab-related NCDs made the cut in the MPFS final rule (and are therefore still in effect), CMS promised future consideration to modify or delete these NCDs:

  • NCD 110.14 - Apheresis: Despite the agreement that the NCD is outdated, commentators requested that CMS not delete the coverage determination, but rather update it to reflect current medical practice and ensure consistent access to care. CMS agreed not to delete the NCD, but said that the agency will “take more time to consider the specific issues raised by commentators.”
  • NCD 190.1 - Histocompatibility Testing: CAP opposed removing this NCD, noting that the results of histocom­patibility testing “are one of the most important decision points in donor selection and post-transplant immune suppression monitoring.” CMS is retaining the policy, with plans for further consideration for an update.
  • NCD 190.3 - Cytogenetic Studies: Commentators urged CMS to keep this policy to ensure consistency of coverage for cytogenetic studies that are still in widespread use in conjunction with newer technologies such as next generation sequencing. CMS did not delete 190.3, and will consider updating the policy or suggesting it for removal again next year.

Bottom line: As one expert says, 2021, is going to be a doozy for medical coders. “It feels like a ‘wait and see’ year to me. I think we will continue to see all kinds of changes in the way healthcare is provided in the next year or two,” says Marcella Bucknam, CPC, CCS-P, COC, CCS, CPC-P, CPC-I, CCC, COBGC, revenue cycle analyst with Klickitat Valley Health in Goldendale, Washington.

Resource: You can access the MPFS published in the Dec. 28, 2020 Federal Register at www.federalregister.gov/documents/2020/12/28, scroll down to CMS rules. You can also access the Jan. 4 updated RVU file at www.cms.gov/medicaremedicare-fee-service-paymentphysicianfeeschedpfs-relative-value-files/2021.