Focus On: Physician Fee Schedule: CMS Proposes Increase in FISH Payment, Review of LCD Process for Lab Tests

Independent clinical laboratories would see a 3 percent increase in their Medicare physician reimbursement under proposed changes to the Physician Fee Schedule (PFS) announced July 3. Pathologists, meanwhile, would see an overall increase of about 1 percent. In terms of specific codes, most proposed payments for major codes are up 1 percent to 5 percent. Based on the initial proposed relative value units (RVUs) for fluorescence in situ hybridization (FISH), the technical component for both manual and automated is set to increase about 30 percent, yielding a total increase of 22 percent for both automated and manual FISH. For labs that perform a great deal of FISH testing (such as NeoGenomics), this could have a significant positive impact on their bottom lines, according to analysts with William Blair, an equity research firm based in Chicago. “This should at least offset the impact of [National Correct Coding Initiative] edits made in 2014, which stated that only one FISH probe can be billed per procedure; previously, each probe has been billable,” write the analysts in a research note July 7. Key changes proposed in the rule are detailed below. Local Coverage Determinations The Centers for Medicare and Medicaid Services (CMS) notes that the Protecting Access to Medicare Act (PAMA), enacted earlier this year, requires Medicare Administrative Contractors to issue coverage policies with respect to clinical diagnostic laboratory tests in accordance with the process for making a local coverage determination (LCD). CMS says it will examine the current LCD implementation process. In addition, CMS will examine the Molecular Diagnostic Services Program launched by Palmetto GBA in 2011. The agency notes that it believes the “pilot’s designs and some of the lessons learned from the pilot can be applied to all diagnostic laboratory tests.” Further, CMS says that it believes a process that ensures transparency and stakeholder participation can be achieved without utilizing the current LCD process in its entirety. “Some key aspects of the process should be maintained, such as allowing public comment on draft LCDs and requiring MAC responses to public comments,” writes CMS. Prostate Biopsy Codes CMS is proposing to use only one code (G0416) to report prostate biopsy pathology services, regardless of the number of specimens. The agency proposed to require the use of the revised G0416 and deletion of the remaining prostate biopsy G codes. In addition, CMS believes that this service is potentially misvalued for 2015 and seeks public input on the appropriate payment level of G0416 for next year. Transparency CMS also proposes to enhance transparency in PFS rate setting. The agency says it intends to implement a process by 2016 to allow all misvalued code revisions to go through notice and comment rulemaking before being adopted. CMS proposes to do this by making all changes to RVUs made available in the proposed rule beginning in 2016 for codes that CMS receives Relative Value Scale Update Committee (RUC) recommendations on by Jan. 15 of the previous year. The agency will create G codes for codes that it does not receive RUC recommendations for in time, which would effectively delay changes to reimbursement for a year. The transparency enhancements may be due to pressure from Congress. In separate letters sent to the agency this year, members of the Senate and House had asked that CMS place information on modification of physician codes in the proposed fee schedule, rather than just in the final rule. CMS says the new process “will be more transparent and allow for greater public input prior to payment rates being set.” Linking Pathology Payment to HOPPS CMS again discusses a proposal to link payments made under the PFS to those made in hospital outpatient settings. The agency last year had proposed to compare payment rates for anatomic pathology services under both the PFS and the hospital outpatient prospective payment systems (HOPPS) and set reimbursement according to whichever is lower. However, CMS decided not to finalize the proposal for 2014 and said it would take more time to fully consider all comments and develop an alternate proposal. In this year’s proposed rule, CMS references its expanded legal authority under the PAMA to review payments based on differences across sites of service. The agency is specifically seeking comments on utilizing hospital cost data for use in valuing the practice expense payment for physician services. Misvalued Codes CMS includes in the rule a new list of services that it plans to re-examine as part of its expanded authority in the “misvalued codes” initiative. Among the codes to be re-examined is CPT 88185, an add-on code used to bill the technical component of flow cytometry. The list also includes 80 codes from other specialties based on reviewing high-expenditure services. New Quality Measures CMS proposed to add three new pathology measures created by the College of American Pathologists (CAP) to the 2015 Physician Quality Reporting System (PQRS). Two of the pathology measures are related to lung cancer and the other is for melanoma. With the anticipated addition of the three measures, pathologists would have a total of eight PQRS measures in 2015. Value-Based Modifiers According to the proposal, the value-based modifier (VBM) penalty for unsuccessful participation in the PQRS will increase to 4 percent while the potential modifier bonus could be 4 percent or higher for high-quality, low-cost eligible professionals. The VBM would apply to all physicians, but groups with nine or fewer members will not be subject to a negative adjustment if they successfully participate in the PQRS. Groups with 10 or more are subject to quality tiering and may face penalties even when they do successfully participate in the PQRS. CAP has proposed that pathologists’ VBM be tied to the performance of their hospitals in 2015 so that the modifier applied by CMS in 2017 better reflects the value pathologists bring to their patients. Comments will be accepted on the proposed rule until Sept. 2. A final rule should be published by Nov. 1. Takeaway: The proposed PFS rule for 2015 contains no major surprises. Some of the proposed changes may have a slightly positive effect on labs’ and pathologists’ bottom line.