Pathology/Lab Coding Alert

Follow status indicator for separate pay.

As the Outpatient Prospective Payment System (OPPS) bundles more and more lab and pathology services into Ambulatory Payment Classifications (APCs), you need to understand what you can do to mitigate a negative impact on your bottom line.

Look at the following questions and answers to get a handle on how the OPPS packaging might impact your lab or pathology practice.

Question: What services does CMS “package” into APCs, and why?

Answer: Packaging includes items and services that are typically integral, ancillary, supportive, dependent, or adjunctive to a primary service, explains Michael A. Granovsky, MD, FACEP, CPC, President of LogixHealth, a national coding and billing company based in Bedford, MA. The reason for creating these larger payment bundles is to keep the APCs from functioning as a fee schedule for individual services, and instead incentivize efficient care for hospital outpatients.

Packaged services can include both clinical lab tests and the technical component of pathology services under certain circumstances. In those cases, Medicare pays the outpatient facility at the APC rate for all the services in that category, instead of paying you using the Medicare Physician Fee Schedule (MPFS) rate for the technical component of pathology services or the Clinical Laboratory Fee Schedule (CLFS) rate for clinical lab tests.

Question: What lab tests does CMS package into APCs, and under what circumstances?

Answer: When the hospital provides outpatient services to treat a specific condition and a lab test is part of that treatment, the APC rate includes the lab test. This year, CMS stepped up clinical lab test bundling for the duration of the outpatient stay, rather than just packaging lab tests provided the same day as the primary procedure. That means the bundling is now effective per claim, rather than per day.

CMS assigns a status indicator, Q4, for lab tests that are conditionally packaged. This means you won’t get separate payment for a Q4 lab test reported on a claim with another service having a status indicator of J1, J2, S, T, V, Q1, Q2, or Q3. But you can get payment for the lab test if it is “unrelated” to the primary service. Just report the lab test with an L1 modifier indicating that it is unrelated, such as a test ordered by a different physician for a different diagnosis from the outpatient procedure, or a stand-alone test provided without any other outpatient service.

Good news: All molecular pathology tests are now exempt from the lab test bundling rule, even future tests that don’t currently have a code. Also, CMS will pay separately for preventive laboratory tests rather than bundling them into an APC for a primary service.

Question: Are any pathology services packaged in APCs, and if so, how does it impact pay?

Answer: Yes, CMS packages the technical component of some pathology services. For instance, in 2015, CMS conditionally packaged level 1 and 2 pathology services (88300, Level I - Surgical pathology, gross examination only … and 88302, Level II - Surgical pathology, gross and microscopic examination …) into APC 5671 and 5672 respectively. In 2016, the bundling extends to levels 3 and 4 pathology services (88304 and 88305), as CMS creates two new APCs for those services (5673 and 5674).

CMS only packages the technical component of a pathology exam performed on the same date as a surgical procedure (“T-packaged”). The Q2 status indicator will alert payers that they should separately pay for the pathology exam if it is not performed in conjunction with a surgical procedure. CMS also stated in the 2016 OPPS final rule that it will not package expensive pathology services into APCs involving less expensive (surgical) procedures.