Labs and Pathologists Launch Blitz to Fight AP Cuts in 2014

Laboratory and pathology groups are launching an all-out blitz to fight proposed drastic payment cuts to anatomic pathology (AP) services in 2014. The Centers for Medicare and Medicaid Services (CMS) is proposing to compare payment rates for AP services under both the Physician Fee Schedule (PFS) and the Hospital Outpatient Prospective Payment System (HOPPS) and set reimbursement rates according to whichever is lower. CMS estimates that the change would cut payment for AP services provided in independent laboratories by an average of 26 percent; some of the most common AP services would be cut by nearly 75 percent. CMS proposed the change as part of its PFS rule for 2014, issued July 8. The American Clinical Laboratory Association (ACLA) argues that the use of HOPPS data is flawed because it only contains lump, aggregate lab cost reporting from hospitals—not from independent labs. This is problematic for two reasons, says ACLA:

• »HOPPS lab cost data are not broken down into lab services categories. In other words, the lump sum of lab costs includes not only AP service costs but also costs associated with other lab services billed under the Clinical Lab Fee Schedule, such as basic blood chemistry. CMS must apportion lab costs between categories based on a set of assumptions, rather than reported data.

• »HOPPS data are not broken down to the service-code level by nature of the fact that the HOPPS assumes a bundling approach when reimbursing for hospital claims.

Overstepping Authority The College of American Pathologists (CAP) agrees that the proposal is flawed, noting that it fails to take into consideration the technical costs associated with specific individual codes and fails to recognize the distinct costs of physician services.

TOP 10 REDUCTIONS TO PATHOLOGY SERVICES (Based on Volume and Proposed Change)
CPT CODE	COMPONENT	DECRIPTION	PROPOSED CUT
88307	Global	Tissue exam by pathologist	-50%
88342	Global	Immunohistochemistry	-27%
88312	Global	Special stains group 1	-46%
88313	Global	Special stains group 2	-45%
88112	Global	Cytopath cell enhance tech	-22%
88185	TC	Flow cytometry/TC add-on	-75%
88309	Global	Tissue exam by pathologist	-30%
88173	Global	Cytopath eval fna report	-25%
88367	Global	Insitu hybridization auto	-60%
88108	Global	Cytopath concentrate tech	-39%
Source: The College of American Pathologists

  CAP also believes that CMS is overstepping its authority in proposing to pay for physician services using hospital-based payments. “By law, CMS is required to base physician payments on the resources required to perform the service,” says CAP in a position paper. “Hospital payments are not determined using such a resource-based approach.” CAP says it supports the existing American Medical Association Resource Utilization Committee (AMA-RUC) process for valuing physician service codes, noting that the process involved many stakeholders, including CAP. “The AMA-RUC has shown itself to be accurate and fair and has been thoroughly vetted over many years.” The proposed 2014 cuts focus largely on Medicare technical component and global payments. Of the 211 codes impacted, the 39 pathology services account for nearly 70 percent of the cuts from this proposed policy change. The top 10 pathology services that would be cut by the proposal encompass services for cancers such as breast, bladder, esophageal, lung, digestive, colon, prostate, thyroid, and leukemia. The Takeaway: CMS’s proposal to tie Medicare AP payment to hospital outpatient rates is flawed and would have serious consequences for independent laboratories.