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CMS Finalizes OPPS Rule Packaging Pathology Services Ordered for Hospital Outpatients

Written by: Karen Lovitch and Lauren Moldawer*

As part of the Outpatient Prospective Payment System (OPPS) Rule issued last week, the Centers for Medicare & Medicaid Services (CMS) finalized its proposal to conditionally package certain ancillary services assigned to APCs with a “geographic mean cost” of $100 or less.  This change, which will take effect on January 1, 2015, will apply to the technical component of most anatomic pathology services.  Because the hospital’s payment for the primary procedure will cover these services, the hospital may no longer bill for them separately.  But physicians can continue to seek reimbursement under the Medicare Physician Fee Schedule for the professional component of the service.

Although CMS excluded preventative services, certain psychiatry and counseling-related services, and low-cost drug administration services from this new rule, the list of APCs to be packaged for 2015 covers a variety of laboratory, anatomic pathology, diagnostic imaging, and other ancillary services.  For example, level I and II pathology (APCs 0342 and 0443), transfusion laboratory procedures (APC 0345), and phlebotomy and minor vascular access device procedures (APC 0624) appear on the list, which may be found on page 216 of the pre-publication OPPS final rule.

According to CMS, this decision is consistent with its long-standing policy of packaging items and services that are “integral, ancillary, supportive, dependent, or adjunctive to a primary service.”  CMS clarifies that by “conditionally packaging” these services, facilities can continue to bill these services separately when the service is provided separate and apart from the primary service.

This reimbursement change is part of an effort by CMS to pay for outpatient services based on larger bundles of services.  For example, prior to January 1, 2014, clinical diagnostic laboratory services were not included in the APC payments made under OPPS.  Before that time, hospitals could bill and receive payment from Medicare for clinical diagnostic laboratory services provided to hospital outpatients pursuant to the Medicare Clinical Laboratory Fee Schedule.  As part of the OPPS final rule for 2014, CMS finalized its proposal to package laboratory tests that, like the ancillary services covered in the 2015 OPPS final rule, are “integral, ancillary, supportive, dependent, or adjunctive to a primary service or services provided in the hospital outpatient setting.”  We note, however, that CMS exempted molecular pathology tests in the CPT code ranges 81200-81383, 81400-81408, and 81479.  This change followed on the heels of the elimination of the so-called grandfather clause, which allowed a hospital to bill Medicare separately for technical component services if the hospital had an agreement with an independent laboratory for the provision of those same services as of July 22, 1999.  As explained in a prior post, as of June 30, 2012, hospitals can no longer take advantage of this exception to the rule requiring hospitals to seek reimbursement for this service under OPPS.

Some commenters asserted that packaging payment for these services could adversely affect patient access because hospitals will not have an incentive to perform them in conjunction with other services because they cannot obtain separate payment.  In response, CMS stated that it will monitor service utilization trends in hospital outpatient departments.  Independent laboratories should take note of this reimbursement change because it not only could result in lower utilization of their services and but also could lead hospital clients to seek changes to their laboratory services agreements.

*Lauren is a law clerk, acting under the guidance and supervision of Members of the D.C. office.

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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.