Vachette Pathology

Recently the 2010 National Physician Fee Schedule Relative Value File was released. This file shows us the Relative Value Unit (RVU) for each CPT code that is billed. The RVU is multiplied by a Conversion Factor (CF) to get the payment for that CPT code. This is how Medicare (CMS) determines what you get paid.

For example the RVU for an 88305-26 in 2008 was 1.04. This was multiplied by the 2008 conversion factor of $38.08 ($38.08 x 1.04) to come up with the payment of $39.60.  In 2008, $39.60 was the national payment for this CPT code.

Recently, we sent information which reflects the CPT coding changes, additions and deletions for
2010. The purpose of this document is to provide further clarification on Medicare’s decision to
eliminate payment on physician consultation services and a focused review of two NCCI edit changes Per CMS’ latest version of the National Correct Coding Initiative (NCCI), the following first two items have been modified

1.) The unit of service for “special” stains (88312-88313) and immunohistochemistry (88342,
88360 and 88361) will be per block. When it is medically necessary and reasonable to
perform the same stain on more than one specimen or more than one block of tissue from the
same specimen, additional units of service may be coded and billed.

In some ways, hospitals are in the driver’s seat when negotiating a contract with community pathologists who want to provide pathology services and laboratory direction for patients at a hospital. More than one pathology group is often knocking at the hospital’s door to do business, and hospitals control the Part A payment for the professional component of clinical pathology services.

But contracting acumen and savvy bargaining skills can boost pathologists’ odds of getting and keeping favorable hospital agreements. And pathology groups that become highly valuable players to a hospital’s administrators and medical staff may have a special ace up their sleeves at contract renewal time.

“A lot of contract negotiation is just jousting,” says consultant Mick Raich, president and CEO of Vachette Pathology, Blissfield, Mich. As bargaining chips, provisions are put into the contract that the hospital is likely to remove when the wrangling begins, such as asking the hospital to pay for part of the cost of a pathology assistant or second opinions, he says.

In many cases hospitals allow pathology groups to purchase the technical component of the histology lab. In this case the pathology group purchases the technical component at a fair market price and then bills a global charge to insurance carriers. The group is responsible for paying the hospital for the agreed-upon rate for each technical charge billed out. This can be done for all carriers with the exception of the government payers unless the purchasing lab is grandfathered in under certain CMS rules.

The reason some groups chose to have the ability to bill the technical component is that this process allows the pathology practice to garner more revenue and to help the hospital understand the direct revenue available from this technical work.

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Last week I attended a meeting in D.C. where Rep. Pete Stark, D-CA, was speaking on the national healthcare plan. This was an interesting experience as I received a first hand look at how the new plan may play out. At this point there is nothing written in stone, but you can be fairly certain something will be passed on this issue and it looks like it will take place before Thanksgiving.

One of the more interesting things I heard was the concept of a “productivity adjuster” being included in this 800-page bill. The idea of a productivity adjuster seems to be something that was created by the government to echo the private insurance industries budget-neutral adjustment model. The overall goal here is to keep costs from rising by changing the payment formula to keep payments the same year to year. This means they are actually paying less for those that are more efficient. In fact you can argue this is in essence a non-productivity adjuster.

The new healthcare plan also has some interesting concepts concerning productivity. The government is strongly pushing a “pay-for-performance” platform; however, under their proposal, this is a pay for non-performance plan. Those that are more efficient-the top performers-will be paid less under the plan for their effort, not more. This eliminates the motivation to become more efficient, as one’s compensation is not rewarded but negatively impacted.