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2013 Medicare Physician Fee Schedule: Issues of Interest to Independent Laboratories

Yesterday the Centers for Medicare & Medicaid Services (CMS) published a final rule with comment period implementing the Medicare Physician Fee Schedule for 2013, and it covers a number of  issues of interest to independent laboratories.  Most importantly, payment for the technical component of surgical pathology (CPT Code 88305) will decrease by about 52% as of January 1st, if the conversion factor remains the same.   Although payment for the profession component will rise by 2%, and CMS noted the Obama Administration's commitment to preventing the 26.5% reduction based on the Sustainable Growth Rate methodology from taking effect, these measures are cold comfort for the laboratory industry.  The College of American Pathologists has posted an informative Special Report providing details about other pathology payment changes.

In an apparent attempt to address a controversial policy announced by Palmetto GBA in August 2012, CMS revised the description of HCPCS code G0416 (surgical pathology; gross and microscopic examination for prostate need saturation biopsy sampling, 1-20 specimens) to cover 10-20 specimens.  According to CMS, this change will  "better reflect the interaction of this service, and associated RVUs, with billing for surgical pathology."  This change is open for public comment.  Laboratories presumably may now use 88305 if billing for less than 10 jars, but this revision does not address the confusion created by Palmetto GBA's policy - or the NCCI edit on which it is based - because those statements seemed to say that laboratories must use G0416 regardless of collection methodology (and not just in the case of saturation biopsies).

CMS also provided guidance regarding the 101 new CPT codes for molecular pathology services.   Stakeholders have differed on whether CMS should place these codes on the Clinical Laboratory Fee Schedule or on the Physician Fee Schedule.  CMS settled the issue by announcing that the codes would remain on the Clinical Laboratory Fee Schedule for CY 2013 but admitted that a physician interpretation may be medically necessary in some cases to produce a meaningful test result.  CMS thus created G0452 (molecular pathology procedure; physician interpretation and report), which will be a clinical laboratory interpretation service paid off of the Physician Fee Schedule.  CMS intends to monitor utilization to ensure appropriate use.

Finally, as expected, CMS implemented a change to 42 C.F.R. § 415.130(d) to confirmed that as of June 30, 2012, an independent laboratory is prohibited from billing Medicare for the technical component of certain pathology services provided to patients of hospitals that qualified for grandfather protection.  A prior post provides additional details regarding the expiration of legislation that authorized this exception to the rule that most services provided to hospital patients must be billed by the hospital.

These changes undoubtedly represent CMS's ongoing efforts to cut costs and likely signal more cuts to come.

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Karen S. Lovitch

Chair, Health Law Practice & Co-Chair, Health Care Enforcement Defense Practice

Karen advises industry clients on regulatory, transactional, operational, and enforcement matters. She has deep experience handling FCA investigations and qui tam litigation for laboratories and diagnostics companies.