A new proposed Medicare fee schedule has been released and it brings more bad news for pathologists. Medicare is proposing an estimated impact of -5% for the specialty of pathology and a -26% for independent labs. The only other specialty taking a hit this large is radiology. This dire proposal is driven by a decrease on the technical component (TC) for many CPT codes.
What does this mean? First this means more trouble for independent labs. These dermatology labs and small anatomic pathology labs took a significant loss last year with the 88305 TC cut. Many are hanging on hoping for a small increase in the 88305 TC rate. Sadly there is another proposed 7% decrease in the 88305 TC rate. Most of these labs have gone on significant cost cutting sprees. This can only be expected if you lose 33% of your revenue. These labs have lost Medicare money and money from managed care plans as they followed the Medicare cuts. The extra 2% pay cut from the sequester did not help any either. Few businesses can survive a 33% cut in their revenue stream. Often this is their margin and losing this means taking drastic measures to stay in business.
Although these labs seldom do 88307 or 88309 type cases, the 88305 TC, 88342 TC and other codes cut will hurt these labs significantly. (Although it can be argued that 88342 CPT codes is the crux of the volume based billing issue. I personally have seen cases where 88342 x 24 is billed.) We must know that many payers have already limited the volume on this code. Now the volume will be limited and the payment rate cut also.
These changes in the last few years seem to be designed to prevent non-pathology groups from billing for pathology, i.e. urology, gastroenterology, etc. If this is the case then Medicare has thrown out the baby with the bath water as these changes have hurt all pathologists and further forced the practice of pathology to be viewed as a commodity.
It should also be noted that there are 1%-2% proposed cuts for the professional component of many of the CPT codes also. This means a total of 3%-4% decrease in the revenue for these codes if you add in the sequester cut.
Granted the government is losing money and needs to cut costs. The current Accountable Care Organization (ACOs) bundled payment model is the latest effort proposed to accomplish this task. Perhaps the issues with ACO’s (many hospitals are dropping out of their pioneer ACO models) has driven Medicare back to the chopping block and revived the practice of cutting individual CPT codes as a stop-gap measure to prevent rising costs for these services.
If we look at radiology we can see a proposed future and it is not pretty. In radiology, the payment for some CPT codes is actually tiered, for example they get paid 100% on the first view, 75% for the second view and 50% for all other views. Imagine if the government built a tiered payment for pathology cases that have multiples. For example, 88305 x 5 would get paid on a similar tiered system.
Medicare seems to be trying to equalize the cost for global pathology services. By decreasing the technical component they are making the physician fee schedule equal to the Ambulatory Patient Classification (APC) rate. This makes perfect sense to them; why pay more to a hospital for this than to an independent lab. In my opinion these are the questions left unanswered:
When will the hospitals decide to leave the histology business and outsource this work? Who will take up this volume? What happens if Medicare cuts the (APC) rate for an 88305 also? How will the 88342 TC cut affect non-pathology practices such as Urology? Where is the tipping point that forces this work back to community pathologists? Many of these labs are down to paying their pathologists $15.00 per case. Are we poised on the cusp of an $8.00 pathology case? Does this eliminate the non-pathology lab margin? What will the national labs do when their shareholders find that anatomic pathology is no longer profitable? Could the big three be looking to divest themselves of this loss leader? The payers are lowering their rates at a very quick rate, when do pathologists start saying no to this pay cut? When are hospital based groups going to gain leverage to remove themselves from low paying contracts?
As we know this is only the proposed fee schedule. Perhaps there will be major changes by the time the actual fee schedule is produced. From what I can tell these decreases are likely to stick in one form or another as the government struggles to find a way to decrease its costs and reduce the volume of work performed.
Overall, we could see an area where no one wants to do histology work. If the profitability in this area continues to fall who will want to do this work? The groups, labs and hospitals that do survive these cuts are going to be the businesses that are proactive and aggressively approach this change. Those that are passive are going to watch change steamroll them into nonexistence.
Mick Raich owns Vachette Pathology and works with pathologists, laboratories and hospitals nationwide in the area of strategic management, and revenue cycle management.
This is my opinion of some of the current changes. The cost for billing your anatomic pathology work just went up; as payments for services decease the cost for billing has to decrease equally. If billing costs do not decrease at a rate even to the decrease in payments then in fact your billing costs went up. Look at the facts: If your billing cost is 5% on an 88305GB that paid $105.86 then you paid $5.30 to get this claim paid.
FY 2013 MPFS Final Rule, released Nov. 1, 2012, CMS announced a 33% reduction to the global payment of an 88305. Now the same 88305GB now pays at $70.46 in 2013 but it still costs you $5.30 to bill. This is now 7.9% of the total payment. This means you are paying an extra 2.9% for billing. This may not seem much but on a practice that collects $10M a year this costs about $290,000 per year.
How are you going to handle this increased cost? Many independent labs are saying that they are not changing billing and that they are going to see how it plays out. These labs have a strong local presence in their communities and have a given mission statement to support their local economy. This is very admirable. Some labs will choose to out-source billing and use the savings to increase efficiencies in the lab, increase marketing presence, or drive managed care contracting.
My opinion is that no matter what your business is you must choose the path of least resistance to stay competitive. Failure to do this leads to issues that defeat the business. The key in any business is creating a profit margin. Those companies that can do this survive and those that don’t fail.
I can see the writing on the wall for self- billing. The 2013 MPFS Final Rule cut the clinical lab fee schedule 4.5% and slashed the global charge 33% on 88305. These cuts are significant obstacles to overcome. I fear some labs won’t survive this change.
If you consider the current out-sourced billing world you will see that these services are offering quality outcomes at very reasonable prices. These billers have huge economies of scale. They all have large proprietary billing platforms built specifically for pathology and lab billing. Plus they can take advantage of the cost savings that come from off shoring the manual part of billing and data entry for example. These variables allow them to bill more efficiently and at a lower price than most in-sourced services. As a person who has reviewed and audited pathology and laboratory billing processes and results for the last ten years I can comment that there are some very effective in-sourced billing sites. But, if you consider the future of further cuts from Medicare and managed care plans, and the proposed increase in the minimum wage and the burdens that come with the billing process changes, i.e. the point of service changes self-billing is going to become more arduous in the future. Like independent labs, only the most efficient billing operations will maintain profitability.
The bottom line is this: Most labs or groups that do their own billing have costs between 7% and 15%. A realistic outsourced cost is around 5.5% or 6%.
I often hear labs say their billing costs are 3% or 5%, although this number may be true, usually these labs have lab people double shifting as billing people. Furthermore when audited their costs are found to be to be significantly more. It is not unusual to find these labs are actually paying 10%-15%. The highest I have seen is over 22%. (This lab saved about $500,000 when they fixed their billing costs.) Here is a simple overview if you lower your costs down to 6% from 15%. This calculation looks at a lab that collects $4M per year:
Lab gross collections: $4,000,000.00 Billing costs: at 6% $240,000
Billing costs: at 7% $280,000
Billing costs: at 8% $320,000
Billing costs: at 10% $400,000
Billing costs: at 15% $600,000
As you can see the benefits are obvious and please note this is only the cost benefit, it does not include an average of 2%-4% increase in revenue from using a new outsourced provider. A lab that collects $4M a year may find an additional $80,000 to $160,000 a year in revenue, add this to the costs savings and you can clearly cover the entire loss from the payment decreases. We have numerous labs that have moved through this process. It is the only way to stay profitable and make a margin.
Mick Raich is a revenue cycle consultant who owns Vachette Pathology, and Stark Medical Auditing. He can be reached at firstname.lastname@example.org or at 866-407-0763 or 517-403-0763.
In a conversation today I spoke with Steven Weinstein, a partner with the international law firm K&L Gates. We discussed the group of class action lawsuits filed over the last several months against Blue Cross and Blue Shield Association and its 38 licensees. The litigation, now consolidated in federal court in Birmingham, Alabama, will be an antitrust battle against all the licensees for “having allegedly divided and allocated among themselves health insurance markets throughout the nation to eliminate competition.”
You may remember that there were a series of class action lawsuits against the the Blues several years back. The various Blues entities ultimately settled for more than $130 million and were given a very broad release [see Rick Love MD vs. Blue Cross and Blue Shield Association].
It is likely that the Blues will now use their past release from the Love settlement to try and prevent the antitrust lawsuits from going forward. This case has numerous details and could possibly lead to a favorable result for providers. (Isn’t this reminiscent of the large labs cutting prices to gain market share in California?)
It may be in your best interest to contact Mr. Weinstein about the above or any other payor disputes you may have questions about. He is not involved with the antitrust lawsuit but is knowledgeable about it. Mr. Weinstein has 20 years of experience in payer disputes and related litigation and will be willing to assist you further. He can be reached at 305.5393353 or at Steven.Weinstein@klgates.com.
We have found that some independent labs are now seeing commercial payers applying the TC (technical component) Grandfather Clause and the non-payment of the technical component of hospital inpatients and outpatient to these labs. The payers are now using the exact same reasoning as Medicare which presumes the payment for the TC is paid via a DRG, therefore the payer does not need to pay the technical component portion of this global bill. Some payers are actually quoting the Medicare regulations as their reasoning to deny these claims. How do you fix this? First, you need to review your contract; this change may not be covered by the current contract. Second, you need to open up discussions with the payers to educate them on this process and the fact that you are actually performing this work.
The other option is that you could go back to the hospital for pass through compensation for this work; again this will lead to a series of conversations. Be advised that the hospital administrators will be blindsided by this request for more cash.
Medicare is moving to forward with their denials of incomplete claims. In phase one of this current missive they issued a warning stating the claims failed to meet NPI requirements. In phase two these claims will be denied. What this means is simply this: Ordering and referring MDs must have an enrollment record with Medicare and their NPI and legal name must be posted on the claim. You must use the individuals ordering providers NPI not their group NPI. The following messages will be on the claims:
- N264 Missing/incomplete/invalid ordering physician provider name
- N265 Missing/incomplete/invalid ordering physician primary identifier
Again this is another reason to have a solid denial report from your billing agent and it is important for them to actually work this denial report. This is another reason why your practice management firm should review these denial reports each and every month.
California Introduces a Bill to Keep Pathologists Forefront in ACOs
California is proposing a bill that would mandate that each ACO create a Clinical Laboratory Advisory Committee and that this committee include a physician who is the director of the clinical laboratory providing services to the ACO. This keeps pathologists and their efforts directly involved in the ACO process. This is called State Bill 264 in California. What is your state doing?
New HIPPA Rules Affect Patient Billing
A new rule goes into effect this week that can change your self-pay billing in a very unique way. As of March 26th. Consider this a patient who pays out of pocket can now request that their insurance NOT be billed. The biller has to comply with this request. If you do not comply with this request it is not a HIPPA violation.
Independent Labs Fighting Medicare to Get Paid.
If an independent labs bills an encounter on the same dote of services as the patient has an outpatient encounter they are not getting paid. Several labs have contacted Medicaid about this issue and are fighting the battle to get paid for these services. It seems that CMS has erroneously tied this payment to the TC Grandfather Clause as part of their hospital bundling edits. The only real recourse at this time is to appeal each claim on an individual basis.
Sequester Payment Changes
Please note the sequester cuts do not actually affect the CMS fee schedule only the actual amount paid. Therefore the payment amount and the fee schedule amount will differ. Also the decreased amount will be taken after the deductible and co-pay are taken therefore the patient will actually have a larger co-pay and deductible.
Credit Card Numbers in-house
Many physicians are now choosing to gather credit card information upfront and requesting permission to put the patient balance on these cards. This has some compliance and legal issues, for example are your employees bonded? This is an excellent way to get that pesky co-pay or deductible paid in full.
It seems Tricare wants all claims submitted with a Department of Defense identification number yet has not given these numbers to all their members. Therefore your claims may be denied if you submit them with the new Department of Defense number until all cards are distributed. You will still need to request Sponsor’s SSN.
Value Based Payment Modifier (VBPM)
The Patient Protection and Affordable Care Act (ACA) required that Medicare (CMS) have guidelines in place for a value based payment. This new modifier will be based on the quality and the cost of care to patients. It will be rolled out to select physicians and then expanded to all physicians on 2017. Your VBPM will be tied to your PQRS data.
It is imagined that this VBPM will be tied to your payment and can affect your payments in a positive or negative way depending on your performance. A negative performance could affect your payments as much as -1%. Please note a group that has not meet their PQRS requirements can have their payments lowered an additional -1.5%.
New HIPPA Rules Affect Patient Billing
A new rule goes into effect this week that can change your self-pay billing in a very unique way as of March 26th. Consider this, a patient who pays out of pocket can now request that their insurance NOT be billed. The biller has to comply with this request. If you do not comply with this request it is now a HIPPA violation.
The cost for billing your anatomic pathology work just went up; as payments for services decrease, the cost for billing has to decrease equally. If billing costs do not decrease at a rate even to the decrease in payments, then in fact your billing costs went up. Look at the facts:
|88305GB paid from 2012 CMS $105.86||Billing cost: $5.30||$5.30/ $105.86 = Billing cost of 5%|
|88305GB paid from 2013 CMS $70.46||Billing cost: $5.30||$5.30/ $70.46 = Billing cost of 7.52%|
If your billing cost is 5% on an 88305GB that paid $105.86 then it cost you $5.30 to get this claim paid.
FY 2013 Medicare Physician Fee Schedule (MPFS) Final Rule, released Nov. 1, 2012, CMS announced a 33% reduction to the global payment of an 88305. Now the same 88305GB pays at $70.46 in 2013, but still costs you $5.30 to bill. This is now 7.52% of the total payment. This means you are paying an extra 2.52% for billing. This may not seem like much but on a practice that collects $10M a year this costs about $252,000 per year. Here are some examples of the changes by CPT code.
How are you going to handle this increased cost? Many independent labs are saying that they are not changing billing and that they are going to see how it plays out. These labs have a strong local presence in their communities and have a given missions statement to support their local economy. This is very admirable. Some labs will choose to out-source billing and use the savings to increase efficiencies in the lab, increase marketing presence, or drive managed care contracting.
My opinion is that no matter what your business is, you must choose the path of least resistance to stay competitive. Failure to do this leads to issues that defeat the business. The key in any business is creating a profit margin. Those companies that can do this survive and those that don’t fail. Some labs will fail as this recent change in payments has erased any margin in their current business model.
I can see the writing on the wall for self- billing. The 2013 MPFS Final Rule cut the clinical lab fee schedule 4.5% and slashed the global charge 33% on 88305. These cuts are significant obstacles to overcome.
If you consider the current out-sourced billing world, you will see that these services are offering quality outcomes at very reasonable prices. These billers have huge economies of scale. They all have large proprietary billing platforms built specifically for pathology and lab billing, plus they can take advantage of the cost savings that comes from off shoring the manual part of billing, data entry for example. These variables allow them to bill more efficiently and at a lower price than most in-sourced services.
As an expert who has reviewed and audited pathology and laboratory billing processes and results for the last ten years, I can comment that there are some very effective in-sourced billing sites. But, if you consider the future of further cuts from Medicare and managed care plans, the proposed increase in the minimum wage and the burdens that come with the billing process changes, i.e. the point of service changes, self-billing is going to become more arduous in the future.
Mick Raich is a revenue cycle consultant who owns Vachette Pathology. He can be reached at email@example.com or at 866-407-0763.
The latest word from CMS on how to code prostate biopsies seems designed to let us know that this change is here to stay. (Remember this actually started last January with a CMS notice that required a special code for 88305 x 5 to be billed as G0416.
Now in January of 2013, the National Correct Coding Initiative (NCCI) policy manual was updated to include the HCPCS codes G0416-G0419. Simply put, this is a sliding fee schedule built on the number of 88305’s performed on prostate needle biopsies. This means 88305 is billed out as normal up to nine specimens for these cases. Then these codes come into play.
• 10-20 specimens are billed as G0416
• 21-40 specimens are billed as G0417
• 41-60 specimens are billed as G0418
• 60+ are billed as G0419
Please note this is only for prostate needle biopsy cases.
This is only for government carriers. Commercial carriers are not billed this way.
So far we are seeing billers bill these cases in various ways. Some billers claim that this is not applicable for their Medicare intermediary. This may be true as every government entity seems to interpret these directions differently.
Our recommendation is to have your biller follow the NCCI policy as we have already heard of Medicare asking for refunds for these cases that are billed otherwise.
I recently attended a symposium on Molecular Diagnostics that focused on the ‘what and why’ of the new Tier coding system. The key issue as described by one of the speakers was no one had any idea of what was being paid with the stacking code system that had been being used prior to 2013. There had to be a system of transparency for payment; thus the tiered system of molecular coding. Tier 1 is specific to particular analytes such as BRAC1, etc., and Tier 2 includes master codes (81400-81408) then descriptor codes that provide detail of the test that was performed. There are also a new set of codes referred to as the MAAA (Molecular Assays with Algorithmic Analyses) codes. These codes list the specific manufacturer of any of the tests that meet the MAAA description. They can be found in Appendix O of the CPT Manual.
Then they had to decide which CMS fee schedule would be appropriate for payment of the testing. Many argued that these codes should be on the PFS due to the nature and complexity of the tests themselves. Still others argued that not every single test required the review and interpretation of a physician. Thus the debate until it was decided that the tests were to be added to the CLAB. This final rule for two reasons: 1) not each test needed to be reviewed by a physician, and 2) if they were placed on the PFS, they would not be able to be reviewed by a PhD.
Finally the pricing… this continues to be a very sticky wicket for everyone – CMS and national payers alike. CMS decided that if the codes could be cross-walked to an existing test or group of tests, use that payment structure. If not, they would need to be gap-filled. Rarely does CMS use the gap-fill structure and never has it been implemented on a scale this grand. This is very daunting to CMS (and MACs) as gap-filling requires them to set a reasonable price for the test. What this means is that what one MAC decides is a reasonable price may be very different from another MAC’s determination. The factors used in setting rates: charges for the tests and routine discounts given to labs purchasing the tests. The goal for CMS is to have prices published by April 2013. Bottom line is that, as of today, no one is getting paid on the new codes. The national payers are waiting for CMS before they make any moves.
The molecular diagnostic realm is moving so fast that CMS is having a hard time keeping up. Expect many changes and possible delays in code implementation and pricing for 2014.
As always, Vachette Pathology is here to answer any questions you may have. Visit our website, www.vachettepathology.com, or call us at 517.486.4262.
Michelle Miller is the Vice President of Vachette Pathology. She is an industry leader in pathology practice management, auditing, and strategizing for hospitals, pathologists, and independent laboratories.
Pathology revenue is evolving in a negative way. Many practices are working harder and collecting less.
Billing companies are changing, the technical component of the 88305 has been cut drastically, and hospital relationships with practices are changing. How are you going to stay profitable? Who is guiding your practice in these tough times?
View the new issues that could be affecting you:
- Molecular Pathology Procedure, Physician Interpretation and Report G0452
- CMS Denies Professional Billing For Pathology Codes
- CMS announcement on claims processing impact of fiscal cliff legislation
Many practices have switched to a small dedicated team of pathology management professionals: Vachette Pathology.
We are the company that works with you and your billing agency to help you stay strong in these times. We guide and manage your practice to make sure your revenue is not failing.
We actively manage, this means we take charge of your revenue stream and make it increase.
Since we are not a billing company our only goal is to increase revenue. We do this by auditing your claims and billing process, negotiating your managed care, Part A, billing and collections contracts.
There are practices right here in Texas that have made a substantial increase in their revenue by working with Vachette.
Stop by our booth at the Texas Society of Pathology 92nd Annual Meeting and ask for a reference.
New in 2013, CMS created CPT code G0452 (molecular pathology procedure; physician interpretation and report), which will be a clinical laboratory interpretation service paid off of the Physician Fee Schedule. While reimbursement on this code is cross-walked to 83912-26 from the 2012 fee schedule, 83912-26 has been deleted from the CPT books. We highly recommend your billing company and coders are aware of this new code, are aware of payer-specific requirements for submitting claims for this new code and to monitor payments from commercial carriers to ensure your claims for CPT G0452 are being properly paid.