Pathology/Lab Coding Alert

Plus: Physician signatures, cytology rates on the line.

Welcome to another round of tense waiting to see if you'll get a dramatic reduction in 2012 Medicare payments for your pathology services. "The calendar year 2012 physician fee schedule [PFS] conversion factor is $24.6712," notes the Physician 2012 Medicare fee schedule Final Rule, printed in the Nov. 28 Federal Register, and that could mean a big cut in your pay.

Look for Congressional Relief

The conversion factor (CF), scheduled to go into effect Jan. 1, 2012, amounts to a dismal 27.4 percent cut compared to the current rate of $33.9764. CMS acknowledges that this massive cut may not be set in stone, stating, "While Congress has provided temporary relief from these reductions every year since 2003, a long-term solution is critical. We will continue to work with Congress to fix this untenable situation so doctors and beneficiaries no longer have to worry about the stability and adequacy of their payments from Medicare under the Physician Fee Schedule."

Physician advocacy organizations were quick to decry the cuts. "Payments for Medicare physician services have fallen so far below increases in medical practice costs that there is a 20 percent gap between Medicare payment updates and the cost of caring for seniors," said AMA president Peter W. Carmel, MD, in a Nov. 1 statement.

Even CMS officials agreed that the 27.4 percent cut would be devastating, but remained hopeful that the government might rectify the situation before the pay cuts kick in. "This payment rate cut would have dire consequences that should not be allowed to happen," said CMS administrator Donald Berwick, MD, in a Nov. 1 statement. "We need a permanent SGR fix to solve this problem once and for all. That's why the President's Budget and his Plan for Economic Growth and Deficit Reduction call for permanent, fiscally responsible reform and why we are committed to working with the Congress to achieve a permanent and sustainable fix."

Recall 2011 fix: Last December, Congress voted to stave off a 25 percent cut to your Medicare pay. But that vote kept the cuts at bay only through Dec. 31 of this year -- and that date is right around the corner. Effective January 1, your Medicare pay is set to drop again based on the new 2012 Fee Schedule information, unless Congress intervenes to reverse the cuts.

Evaluate RVU Changes

The CF is only part of your payment equation -- it's the multiplier you use with relative value units (RVUs) to determine pay for a specific service. That means you need to anticipate revised RVUs for procedures your pathologist performs.

The 2012 PFS updates RVUs for the following codes that might impact your lab:

Non-gyn cytopathology

• 88106 (Cytopathology, fluids, washings or brushings, except cervical or vaginal; simple filter method with interpretation) updates to work RVU of 0.37 (was 0.56 in 2011)
• 88108 (Cytopathology, concentration technique, smears and interpretation (e.g., Saccomanno technique) updates to a work RVU of 0.44 (was 0.56 in 2011)

Fine needle aspiration (FNA)

• 88172 (Cytopathology, evaluation of fine needle aspirate; immediate cytohistologic study to determine adequacy for diagnosis, first evaluation episode, each site ) assigned a work RVU of 0.69 (was 0.60 in 2011).

Other codes considered for 2012 RVU changes held steady, such as 88120 (Cytopathology, in situ hybridization (e.g., FISH), urinary tract specimen with morphometric analysis, 3--5 molecular probes, each specimen; manual) and 88121 (... using computer-assisted technology) which remain at 1.20 and 1.00 work RVUs, respectively.

Overall RVU impact: For pathology practices, CMS expects average revenue to fall by 2 percent overall based solely on 2012 practice expense (PE) RVU changes. For independent labs, which receive approximately 85 percent of their Medicare revenues from clinical lab services that are not paid on the PFS, expect an average revenue decline of 3 percent, based on PE RVU changes.

'Grandfather' Will Go

If your independent lab is operating under arrangements with a covered hospital that allows you to bill Medicare directly for the technical component (TC) of pathology services (the "grandfather exception"), prepare to change your billing starting Jan. 1

The PFS states, "Absent additional legislation, for services furnished after December 31, 2011, an independent laboratory may not bill a Medicare contractor for the TC of physician pathology services for fee-for service Medicare beneficiaries who are inpatients or outpatients of a covered hospital."

Here's why: CMS states that "payment for the costs of furnishing the pathology service (but not its interpretation) is already included in the bundled inpatient stay payment to the hospital." In other words, CMS believes that Medicare makes a duplicate TC payment to the independent lab that bills the Medicare contractor instead of the hospital for the TC service.

Physician Signature on Clinical Lab Requisition

When the 2011 PFS added a physician signature requirement for clinical diagnostic lab tests, massive provider confusion resulted in implementation delays. Now the 2012 PFS takes it back.

According to the 2012 PFS final rule, CMS will "reinstate our prior policy that the signature of the physician or NPP is not required on a requisition for a clinical diagnostic laboratory test paid under the [Clinical Laboratory Fee Schedule] CLFS for Medicare purposes."

Questions remain: Be alert for any CMS direction regarding signature requirements for surgical/cytopathology specimens, which have historically shared the signature exemption under the clinical diagnostic lab test rule. Watch future editions of Pathology/Lab Coding Alert for a full discussion of the issue.