Pathology/Lab Coding Alert

Check out these steep IHC and ISH increases.

Unlike some other specialties, things are looking up for pathology and independent laboratories in this year’s Medicare Physician Fee Schedule (MPFS) final rule.

Good news: With the Sustainable Growth Rate (SGR) annual adjustment gone, you’re not facing across-the-board double-digit pay cuts as you have in past years.

More good news: You can expect Medicare’s allowed charges to increase by 8 percent for pathology practices, and 9 percent for independent labs, according to CMS’s estimations set forth in the final rule.

Read on to learn more about what’s in store for your 2016 pathology and laboratory MPFS pay.

Expect Conversion Factor Reduction

In the Protecting Access to Medicare Act of 2014 (PAMA), Congress set a target for adjustments to misvalued codes in the fee schedule for calendar years 2017 through 2020, with a target amount of 0.5 percent of the estimated expenditures under the MPFS for each of those four years. Subsequently, the Achieving a Better Life Experience Act of 2014 (ABLE) accelerated the application of the target by specifying it would apply for calendar years 2016 through 2018, and increasing the target to 1 percent for 2016.

If the net reductions in misvalued codes in 2016 are not equal to or greater than 1 percent of the estimated expenditures under the fee schedule, a reduction equal to the percentage difference between 1 percent and the estimated net reduction in expenditures resulting from misvalued code reductions must be made to all PFS services.

Impact: CMS didn’t meet the 2016 one percent goal for misvalued-code payment reductions ordered by Congress. In fact, CMS estimated the CY 2016 net reduction in expenditures resulting from adjustments to relative values of identified misvalued codes to be 0.23 percent. To make up the difference, CMS will reduce the conversion factor by 0.77 percent.

Tip: The conversion factor (CF) is the multiplier that payers apply to relative value units (RVUs) to come up with the dollar payment amount for services. A change to the CF will therefore impact payments across the board for all services, whether or not the fee schedule alters the RVUs for a particular procedure.

That’s not all: CMS also has a mandate for a 0.5 percent scheduled annual increase as part of the Medicare Access and CHIP Reauthorization Act (MACRA), and a 0.02 percent reduction required by budget neutrality. Combine those with the -0.77 update, and that “leads to a net decrease of 0.3percent to the 2016 Medicare conversion factor, with the Final Rule publishing a 2016 CF of $35.8279,” says Michael A. Granovsky, MD, FACEP, CPC, President of LogixHealth, a national coding and billing company based in Bedford, MA. That’s compared to the 2015 CF of 35.9335.

Cheer These RVU Increases

You can attribute the positive 8 to 9 percent final rule update for pathologists and independent labs almost exclusively to increases in Relative Value Units (RVUs) for certain immunohistochemistry (IHC) and in situ hybridization (ISH) services, with much of the increase stemming from the technical component of these procedures.

Not all: Although pay for certain qualitative IHC services increase by as much as 48 percent (88344, Immunohistochemistry or immunocytochemistry, per specimen; each multiplex antibody stain procedure), pay for many of the quantitative IHC services actually decrease in 2016, such as 88361 (Morphometric analysis, tumor immunohistochemistry [e.g., Her-2/neu, estrogen receptor/progesterone receptor], quantitative or semiquantitative, per specimen, each single antibody stain procedure; using computer-assisted technology), which decreases by 12.3 percent.

Resource: See Table 1 for a glance at MPFS pricing for select lab and pathology services that change significantly in 2016.

AbsorbThis Prostate Biopsy Loss

Despite increasing the RVUs for prostate biopsy code G0416 (Surgical pathology, gross and microscopic examinations, for prostate needle biopsy, any method), payment for the service will decrease in 2016.

Here’s why: CMS now prices the code based on the assumption that the typical number of specimens for a prostate biopsy case ranges from eight to ten. Pricing for G0416 was initially valued based on the assumption that the typical case might involve examination of up to 20 specimens.

That means payment for G0416 declines by 18 percent this year, changing from $649.32 in 2015 to $533.84 in on the 2016 PFS.

Compare: If you charged for each prostate biopsy specimen using 88305 (Level IV - Surgical pathology, gross and microscopic examination … Prostate, needle biopsy …), as you do for most non-Medicare payers, just seven prostate biopsies would earn you almost the full G0416 pay. That’s because 88305 pays $74.16 in 2016, so seven biopsies would garner $519.12. 

Table 1: Select Pathology MPFS Pay Changes