CMS Estimates 2016 PFS to Have Positive Impact on Pathology, Independent Labs

While laboratories await a final rule for the 2016 Clinical Laboratory Fee Schedule implementing the Protecting Access to Medicare Act, the Centers for Medicare & Medicaid Services (CMS) recently released the 2016 Physician Fee Schedule final rule, the first physician fee schedule issued since the Sustainable Growth Rate repeal. CMS predicts that the changes in the physician fee schedule will have a positive impact for pathology services and independent laboratories, 8% and 9% respectively. CMS predicts that for pathology, work relative value units (RVU) changes and Practice Expense RVU changes will each have a 4% positive impact. For independent laboratories, CMS predicts a 1% impact due to Work RVU changes and a 7% positive impact due to Practice Expense RVU changes. CMS indicates the 1% and 7% don’t precisely equal the 9% predicted due to rounding.

In evaluating the practice expense and work RVUs for pathology services, as we mentioned in our coverage of the proposed rule (see National Intelligence Report, July 23, 2015, p. 1), CMS discussed the potential effect of block numbers and batch size on those expenses. CMS proposed standard times for certain clinical labor activities related to pathology services and stated it believed certain activities require the same time commitment regardless of the service they are performed in connection with and regardless of the number of blocks or the batch sizes involved. CMS held fast to that position in the final rule noting that in reviewing recommendations it didn’t find information that convinced the agency that some tasks “take significantly more or less time depending on the individual service for which they are performed.” CMS further explained: “We developed the proposed standard times based on our review and assessment of the current times included for these clinical labor tasks in the direct PE input database. We believe that clinical labor tasks with the same work description are comparable across different pathology procedures.” The agency therefore finalized standard times for several clinical labor tasks it believed did not depend on number of blocks or batch size. It continues to seek public comment, however, on other clinical labor tasks that might be affected by block number or batch size. The block and batch size issue was also discussed in connection with prostate biopsy reimbursement under G0416 with CMS accepting the RUC’s recommendations for practice expenses but soliciting evidence regarding “typical batch and block size used in furnishing this service” because it received comments that the typical batch and block size can be “significantly lower” than accounted for in the RUC recommendations.

On a related note, several commenters stated CMS’s estimated per-minute labor cost inputs are too low for laboratory technicians (L033A), cytotechnologists (L045A) and histotechnologists (L037B). “The commenters stated that the complexity of many laboratory services demands highly-skilled, highly-trained, certified, and experienced personnel who typically must be paid higher wages than the current rates provided by CMS.” CMS responded, however, that the clinical labor costs per minute are based on data from the Bureau of Labor Statistics and the agency believes “that it is important to update that information uniformly among clinical labor types and will consider updating the clinical labor costs per minute in the direct PE database in future rulemaking.”

CMS also finalized changes to the Self-Referral law we discussed in our coverage of the proposed rule, implementing knowledge CMS has gained through the self-disclosure protocol. Those changes address physician recruitment, requirements for written agreements, the definition of remuneration, and time share arrangements.

While CMS did increase work values for add-on codes for immunohistochemistry and in situ hybridization services, College of American Pathologists noted in its Oct. 30 STATLINE that a 24% discount from the base code for the add-on services was also included and asserted that “these reductions should not be taken for the add-on services,” criticizing “arbitrary calculations” and “urg[ing] the agency to accept the RUC recommendations that relied on survey data.”

Takeaway: CMS asserts that the physician fee schedule provides good news for pathologists and independent labs but criticisms regarding decisions on factors affecting reimbursement still remain.