Pathology/Lab Coding Alert

Big surprise: Another rate cut is coming.

The Centers for Medicare & Medicaid Services (CMS) proposed rule for the 2025 Medicare Physician Fee Schedule (MPFS) has dropped, and providers may not be excited about the news within. The proposed rule, which was published officially at the end of July, is 2,248 pages, and features strategies for improving care for specific health and social conditions as well as adjustments to big-picture business aspects of providing medical care.

Here are some of the proposed MPFS highlights for the path/lab specialty, along with some analysis to help you prepare for what could be in store for 2025.

Prepare for These Possible Financial Changes

One of the big takeaways is the change in rate: The average payment rates may be reduced by 2.93 percent compared to the average amount being paid in calendar year (CY) 2024. The proposed conversion factor for CY 2025 is $32.36, a decrease of $0.93 from CY 2024.

Interestingly, CMS estimates the proposed CF decrease will not significantly impact independent laboratories and pathology facilities. Both are projected to see no change in their nonfacility, facility and total charges.

Look for These RHC Lab Services To Be Reduced

The proposed rule also contains provisions for the approximately 5,462 Medicare-certified rural health clinics (RHCs) to reduce the number of lab services they perform. This measure aims not only to reduce costs to RHCs directly but also to eliminate services that can be performed by facilities that often own the RHC. Additionally, the proposal will help to eliminate services that do not reflect current medical practice and that are infrequently performed at the RHC.

To do this, CMS is proposing to streamline the number of lab services RHCs have to perform to the following:

1. Chemical examinations of urine by stick or tablet methods or both (including urine ketones)
2. Blood glucose
3. Examination of stool specimens for occult blood
4. Pregnancy tests
5. Collection of patient specimens for transmittal to a certified laboratory for culturing

Not only will this reduce the financial burden for RHCs performing lab services, but 5 above acknowledges that modern lab techniques no longer require RHCs to perform primary culturing, which “is an outdated microbiology practice … due to modern lab techniques.” Instead, CMS now wants RHCs to “collect specimens using appropriate collection and storage techniques and send them to a certified laboratory without initial culturing.”

The proposed rule also includes provisions to reduce hemoglobin and hematocrit (H&H) blood tests from the list of lab services RHCs are currently required to perform. This is again due to the “financial and physical burdens associated with maintaining the lab equipment that is used for laboratory tests that are ordered infrequently” such as H&H. More, “H&H blood tests are typically performed as part of a comprehensive blood count (CBC) and are not ordered separately in accordance with current clinical standards of practice.”

However, under these new proposals, RHCs would still be required “to provide prompt access to a Medicare or Medicaid participating provider or supplier that can furnish an H&H laboratory test and any additional and specialized diagnostic and laboratory services the RHC is not equipped to perform.”

But Beware Grim Realities

Despite the proposal to ease the financial burdens placed on RHC labs, if the rule is finalized, it will mark the fifth consecutive year that CMS has reduced its payments. Meanwhile, predictions about the Medicare Economic Index (MEI), which is a measure of practice cost inflation, show it may increase by 3.6 percent, further widening the gap

between the cost of delivering care versus what Medicare pays for that care.

“Practices cannot continue to absorb rising costs while their payment rates dwindle. The Medicare Physician Payment Advisory Commission (MedPAC) and the Medicare Trustees have issued warnings about the dangers of repeated Medicare cuts and how they threaten access to care. As one of the only Medicare providers without an inflationary payment update, physicians have waited patiently for this change. Medicare physician payment declined 29% from 2001 to 2024, adjusted for inflation,” says Bruce A. Scott, MD, president of the AMA, in a release about the proposed rule.

You can read the entire proposed rule and submit public comment through Sept. 9.