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.

"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 fee schedule. For example, a bone marrow smear interpretation service (85097) provided in Chicago  is calculated as follows:

 

Work RVU x Work GPCI 0.94 x 1.028 = 0.966
 

Practice Expense RVU (facility) x PE GPCI 0.43 x 1.092 = 0.469
 

Malpractice RVU x Malpractice GPCI 0.03 x 1.797 = 0.053
 
 
Add these, for a total of 1.488 RVUs and multiply it by the conversion factor of $36.1992 to yield a payment of $53.86. This same formula can be used to calculate the regional reimbursement for any service based on CPT codes. "Be careful not to just look up your state on the GPCI, because the regional indices are not only broken down by carrier or state, but may also be subdivided by city or other region that represents a different geographical area with varying costs," Rasmussen cautions.

"Column D of the Physician Fee Schedule lists a one-letter status code that provides a great deal of information about how the particular service is paid by Medicare,"  Rasmussen says. The most common status indicator for the pathology section (80048-89399) is X. According to Rasmussen, a status code of X indicates that the service contains no physician part, which for codes in the 80000 range are clinical laboratory tests. Medicare pays these services under the Clinical Laboratory Fee Schedule, which is separate from the Physician Fee Schedule. For this reason, the reimbursement amount is shown as 0 for codes with the X status code, such as 80422 (Glucagon tolerance panel; for insulinoma) and 86738 (Antibody; Mycoplasma).
 
"For pathology services that are reimbursed under the Physician Fee Schedule, the most common status code is A, which means that it is an active code that is reportable and payable under this schedule, if covered," Rasmussen says.
 
"A status indicator of D means that the code has been deleted for this year's fee schedule," Rasmussen explains. For example, 88170 (Fine needle aspiration; superficial tissue [e.g., thyroid, breast, prostate]) and 88171 (Fine needle aspiration; deep tissue under radiologic guidance) have a status indicator of D because they were replaced in CPT 2002 with 10021 (Fine needle aspiration; without imaging guidance) and 10022 (Fine needle aspiration; with imaging guidance). These new codes appear with an A in the status indicator column.
 
Services that are not covered by Medicare, such as 86910 (Blood typing, for paternity testing, per individual; ABO, Rh and MN) and any of the autopsy codes (88000-88099), are indicated by an N in the status code column. CPT codes for which Medicare uses a different code to describe the service are indicated with I in the status column, such as 80055 (Obstetric panel). A status indicator of C means that the service is carrier-priced, with no national or GPCI RVUs given. For example, C appears for some unspecified procedures such as 88199 (Unlisted cyto-pathology procedure) and 89399 (Unlisted miscellaneous pathology test), as well as some new codes such as 88380 (Microdissection [e.g., mechanical, laser capture]).

Columns B and M of the Physician Fee Schedule show whether a service involves a professional and technical component, as well as which modifier to use when reporting those services: either modifier -26 (Professional component) or -TC (Technical component). "Column M is the professional component/technical component (PC/TC) indicator, which has 10 possible numerals representing the professional or technical service status of the code," Castillo says. Column B indicates the appropriate modifier to use if the code involves a technical and/or professional component, as indicated in column M.
 
"To indicate codes that represent only physician services such as a clinical pathology consultation (80500), there is a '0' in the PC/TC column, which corresponds to no modifier in column B," Castillo says. Codes that represent only a physician service but have a separate, associated code that describes the technical component of the service are indicated with a 2 in column M, and also show no modifier in column B. "For example, physician interpretation of a Pap smear (+88141) has a 2 in column M because it is a professional-only service that has a separate code for the associated technical service of preparing the Pap smear (e.g., 88142)," Castillo explains.
 
Codes that represent a technical service but are reported on the Physician Fee Schedule, such as 86585 (Skin test; tuberculosis, tine test), have a 3 indicator in column M. These codes are also not reported with modifiers, as indicated by column B.
 
According to Castillo, laboratory physician interpretation codes are indicated with a 6 in column M, meaning the service is paid under the Clinical Laboratory Fee Schedule, but the pathologist may bill separately for an interpretation, if provided. The service, such as 84165 (Protein; electrophoretic fractionation and quantitation), is not paid on the Physician Fee Schedule, and column B shows that it is billed using the code with no modifier. The physician interpretation of the service is paid under the Physician Fee Schedule and is reported using modifier -26 as indicated in column B.
 
Physician interpretation may be billed only for lab tests listed with 6 in column M of the Physician Fee Schedule. "Codes that are paid under the Clinical Lab Fee Schedule, and cannot have a physician interpretation, are listed with a 9 in the PC/TC column, meaning that the concept is not applicable," Castillo continues.
 
Other diagnostic pathology services that include a technical and professional component but have both portions of the service paid under the Physician Fee Schedule are indicated with a 1 in column M. "Column B shows that the professional component of these codes is to be reported with modifier -26, similar to those with a 6 in column M,"  Castillo says. "However, unlike codes with a 6 in column M, those with a 1 in column M show modifier -TC in column B for reporting the technical component." Reporting these codes without a modifier indicates that the entire service, the technical and professional component, has been provided by the same billing entity.
 
For example, surgical pathology services such as 88305 (Level IV Surgical pathology, gross and microscopic examination) involve a technical component, which includes materials and technologist preparation of slides, and a professional component, which is the patho-logist's examination and interpretation of the specimen. "The technical component is reported as 88305-TC, while the pathologist's evaluation is reported as 88305-26,"  Castillo says. Reporting 88305 without a modifier represents the global service, which includes the technical and professional component.

For most services that hospitals contractually receive for inpatients from independent sources, the hospital must bill for the service and negotiate compensation with the service provider. However, independent laboratories, which qualify for the section 542 "grandfather" exception of the Benefits Improvement and Protection Act of 2000 (BIPA), can continue to bill Medicare directly for the technical component of pathology services. This ruling was described in the Nov. 1, 2001, Federal Register and coincides with the PC/TC and modifier direction given in the Physician Fee Schedule of the same date. "If this grandfather exception expires as scheduled on Dec. 31, 2002, laboratories will no longer be able to bill Medicare directly for the technical component," Castillo says.

CMS updates the Physician Fee Schedule annually, publishing the new document and payment policies in the Federal Register in early November. The Nov. 1, 2001, Federal Register contains the most current fee schedule and instructions, and is available on the Internet at www.nara.gov/fedreg/frindex/fidxwhat.html.
 
Select 2001 from the "daily contents" menu, and then select the appropriate date from the access page. After accessing the Nov. 1, 2001, issue, scroll to Centers for Medicare and Medicaid Services, and open the fee schedule and payment policies in text or PDF format. This issue of the Federal Register also explains payment policies that pertain to the fee schedule.
 
The fee schedule can also be accessed from the CMS Web site at www.hcfa.gov. Select the links for "Stats and Data," then "Public Use Data Files," then "National Physician Fee Schedule Relative Value File" "RVU02" statement at the bottom of the page, download by selecting "file," "accept," and specifying the directory for saving the file. 
 
You may also order a hard copy by calling CMS at 410/786-3000.