Pathology/Lab Coding Alert

Only an act of U.S. Congress can help now. Medicare's 2003 Physician Fee Schedule cuts payments to doctors, independent labs and some other providers by 4.4 percent across-the-board. CMS chief Tom Scully claims flaws in the sustainable growth rate (SGR) formula are the sole cause of the negative update and fixing it requires a congressional statutory change.

The Fee Schedule published in the Dec. 31, 2002, Federal Register and effective March 1, 2003 provides procedure payment information that will impact your bottom line. "Because some private insurers have adopted Medicare's Physician Fee Schedule as their basis for physician and laboratory payments, the negative conversion factor update for 2003 and other changes in the final rule very likely will impact the private-sector side of your practice as well," claims Dennis Padget, CPA, FHFMA, president of Padget & Associates, a pathology financial and compliance-consulting firm in Simpsonville, Ky.

Practice Profile Dictates Fee Schedule Impact

Despite the -4.4 percent conversion factor update, CMS claims that independent laboratory anatomic service payments should decrease by a net of only 1 percent, while average pathologist professional-only payments will be hit by the full 4.4 percent reduction in 2003. That's because CMS did not follow through with its June 28, 2002, proposal to overhaul the technical component (TC) practice expense relative value unit (RVU) calculation method, which would have left labs losing 9 percent, and pathologists 6 percent, in 2003.

"CMS'ongoing five-year refinement to the practice expense RVU of individual CPT codes mitigates the projected impact on labs. But the truth is that how your laboratory or professional practice fares under the new fee schedule will depend largely on the profile of services you commonly perform," Padget says.

"Changes in the fee schedule are all over the map, ranging from a 16 percent reduction in total nonfacility RVUs for +88313 (Special stains [list separately in addition to code for surgical pathology examination]; Group II, all other [e.g., iron, trichrome], except immuno-cytochemistry and immunoperoxidase stains, each) to a 129 percent increase for pathologist abnormal Pap smear interpretation (+88141, Cytopathology, cervical or vaginal [any reporting system]; requiring interpretation by physician [list separately in addition to code for technical service])." (The table on page 13, "Medicare Payment Change How Will You Fare?," shows some commonly performed pathology services and the percent change in total RVUs for each procedure for 2002 and 2003.

Because the new rates are not effective until March 1, timing your claim submissions will impact cash flow for services provided in the first months of the year. "Only if a claim is processed before March 1 will Medicare initially pay at the 2002 rates for services provided in January and February," says Stacey Hall, RHIT, CPC, CCS-P, director of corporate coding for Medical Management Professionals Inc., a national billing and management firm in Chattanooga, Tenn. If claims are processed after March 1, Medicare will initially pay at the 2003 rates for January and February services. "Then you'll have to wait for the systems change in the July 2003 quarterly system release to be paid the difference," Hall says.

"Because Medicare will hold any claims billed with new 2003 CPT codes until after March 1, then pay at the 2003 fee schedule rate, coders should continue to use 2002 CPT codes for all January and February claims," Hall says. Medicare Program Memorandum AB-02-181 outlines these rules.