Pathology Takes a Hit in Physician Payment Final Rule

November 08, 2012

CMS has released the final 2013 physician fee schedule; as AGA previously reported, the final rule makes changes to certain payment policies for physician services in 2013. As we dug further into the rule, we found items of concern to practices that own pathology labs.

In its final rule, CMS lowered the technical component (TC) of the surgical pathology code 88305 by 52 percent, although it raised the professional component (PC) by two percent beginning Jan. 1. This change also alters the global payment for this code, which will decrease by 33 percent as a result of this revaluation. As directed by the health-care reform law, CMS has been evaluating high-volume codes from all specialties as potentially overvalued services. CPT code 88305 is not only high volume, but its TC has not been reviewed since initially valued in 2000.

An analysis posted on the AGA website provides the estimated payment amount for CPT code 88305. CMS initially proposed to reduce payment for CPT code 88305 by one percent. AGA plans to address this large discrepancy in our comment letter to CMS in response to the final rule and will request additional information for why they decided to initiate such a large reduction.

Although the final rule is specific to Medicare payments, these cuts will also affect the private market since many times commercial carriers (e.g., Aetna, Humana, United Healthcare etc.), base their payments on Medicare’s relative value unit data. Most commercial carriers/payors set their fees at a percentage of Medicare. It is important to keep this in mind as your practice negotiates contracts with these groups. Additionally:

  1. Keep in mind that although these are reductions to Medicare payments, they could impact commercial carrier fee schedules as well.
  2. If you own a pathology lab or provide services, pay attention to provisions in your contracts with commercial payors for these services.
  3. If your practice has utilization data for pathology services as an internal business line, it may help you when it is time to renegotiate contracts and rates with your commercial carriers.

 Continue to read AGA eDigest and the AGA Washington Insider for the latest updates.

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