Pathology/Lab Coding Alert

In addition to relative value units (RVUs), which are the basis for calculating Medicare payments for physicians, the annual CMS Physician Fee Schedule contains valuable direction for coders. Pathology practices can glean much information from the Fee Schedule , including details about Medicare coverage status, technical and professional components and modifiers, and whether the procedure is paid under the physician or Clinical Lab Fee Schedule. Labs can increase coding effectiveness and accuracy by using this information correctly.
Medicare Payments Determined by RVUs
"RVUs are a value assigned to a physician service based on the resources required to carry out the procedure," explains Laurie Castillo, MA, CPC, CPC-H, CCS-P, member of the National Advisory Board of the American Academy of Professional Coders, and president of Physician Coding and Compliance Consulting, Manassas, Va. Prior to the resource-based assignment of relative value, procedures were priced based on historical data of reasonable charges. CMS phased in the new way of calculating reimbursement over five years, meaning fee schedules during that time had several extra columns labeled either "fully implemented" or "transitional." Because the resource-based RVUs are fully implemented in 2002, this year's fee schedule is much shorter, containing no transitional columns.
 
"Calculating the national Medicare payment for a pathology service is fairly simple using the fee schedule," says Jan Rasmussen, CPC, owner of Professional Coding Solutions in Eau Claire, Wis. Because all RVUs are fully implemented, coders select the total facility (column L on the fee schedule) or total non-facility (column K) RVU for the appropriate CPT code and multiply that by the 2002 conversion factor, which is $36.1992 for all services.
 
"Some people are confused by the facility/non-facility distinction," Rasmussen says. She explains that the facility RVU reflects a service provided in an inpatient or outpatient setting (hospital, emergency room, skilled nursing facility and ambulatory surgical center) where the physician has no overhead such as rent, nursing staff, utilities, etc. A non-facility RVU reflects a service provided in a non-facility setting, like a physician office.
 
For example, 85097 (Bone marrow, smear interpretation) has a total non-facility RVU of 2.72 and a total facility RVU of 1.4. Multiplied by the conversion factor for 2002, this means that the national Medicare payment for a bone marrow smear interpretation is $98.46 for non-facility, and $50.68 at a facility. "The primary difference between the two costs is shown in the RVUs from columns G (non-facility) and I (facility)," Rasmussen says. "The work (column F) and malpractice (column J) RVUs are generally the same for facility and non-facility." 
 
To calculate the Medicare payment rate for a service in a particular geographic region, practices must consult the 2002 Geographic Practice Cost Indices (GPCI), which is part of the [...]