College of American Pathologists
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Unwelcome changes averted in fee schedule final rule

2004 Medicare relative values for pathology services

December 2003
Carl Graziano

For pathology, the Jan. 1 start of the 2004 Medicare physician fee schedule may be as noteworthy for the changes that don’t take place as for those that do.

For the second year in a row, CAP advocacy convinced the Centers for Medicare and Medicaid Services to put off adjustments to pathology relative values, or RVUs, until an evaluation of a College-sponsored practice expenses study is complete. Also averted were potentially damaging flow cytometry payment changes in 2004 that the CMS suggested in its Aug. 15 fee schedule proposed rule. Instead, the agency agreed to work with the College, CPT Editorial Panel, and AMA/Specialty Society RVS Update Committee before revising coding and payment.

The positive news and other important changes for physicians and laboratories came in the 2004 Medicare physician fee schedule final rule, published Nov. 7 in the Federal Register.

The rule extends for an additional year a moratorium on a CMS plan to calculate pathology technical components as the difference between global and professional component values. Last year, the College won the moratorium for 2003 so it could lead a study of independent laboratory technical component practice expenses, which it contends are undervalued in RVU calculations. Without the moratorium, the recalculation would have cut payments this year to hospital-based pathologists by two percent, or about $12.6 million, and by eight percent, or about $30.4 million, to independent laboratories.

The College completed its study of independent laboratory practice expenses earlier this year and submitted it for review to a CMS contractor, The Lewin Group. In the Nov. 7 final rule, the CMS said Lewin "recommended acceptance" of the study data and that the agency would evaluate the data in the 2005 fee schedule proposed rule and present the data for comment.

The moratorium will, for the second year in a row, hold steady total Medicare allowed charges for pathology services, notwithstanding changes to the Medicare fee schedule conversion factor. As expected, the final rule included a significant reduction-4.5 percent-in the 2004 factor. But congressional approval late last month of sweeping Medicare prescription drug legislation will avert that cut and replace it with minimum 1.5 percent increases in 2004 and 2005.

The final rule eased concerns raised when the CMS, in the Aug. 15 proposed rule, declared as "inappropriate" pathologists’ reporting of professional components for flow cytometry, saying the treating physician makes the diagnosis. Further, the CMS said, the current system of allowing flow cytometry payment on a per-marker basis "may encourage the performance of more markers than may be medically necessary because the pathologist determines what markers to perform and when to perform them." Instead, the CMS said, the markers might be more appropriately paid on a per-panel basis.

With regard to pathologists’ reporting of professional components for flow cytometry, the College conceded that the numerical monitoring of certain characteristics, such as lymphocyte subpopulations to evaluate immunocompetency, "does not usually require the pathologist to report the professional component," according to its Oct. 7 comments submitted to the CMS. As an alternative, the College suggested modifying flow cytometry codes in the CPT immunology section to include additional markers commonly performed in immunocompetency and transplant assessment that do not require interpretation: "B cells; total count," "Natural Killer (NK) cells; total count" and "Stem cells (ie. CD34); total count."

But the College strongly objected to the suggestion of per-panel payment for markers. The CMS, in its proposed rule, noted concern that 88180, "Flow Cytometry; each cell surface, cytoplasmic or nuclear marker," allows professional component payment for markers on an individual basis, and said that per-marker payment for flow cytometry technical components and per-panel payment for professional components would "more accurately reflect the actual practice of flow cytometry."

In its Oct. 7 comments, the College countered, saying, "The interpreting pathologist combines a review of morphology and a review of each multiparameter histogram with supplied clinical information to arrive at a final diagnosis. Each antibody run requires correlation to the nonimmunologic parameters (cell size and granularity) as well as correlation of cell population between different cytoplasmic and surface markers. Although all of these data and individual interpretations are condensed into a single combined interpretation for the sake of the treating clinician, it is not appropriate to lump these individual assessments into a single code."

The College suggested modifying the CPT anatomic pathology flow cytometry section to split the first marker from additional markers to allow for re-evaluation of the work relative value units by the AMA/Specialty Society RVS Update Committee. Specifically, under the College’s proposal, 88180 would be designated as being for the "first marker," and a new, related code would be used for each additional marker.

The College’s call for further evaluation of the issue outside the regulatory process appeared to pay off: In the final rule, the CMS said, "We will work with CAP, the CPT and RUC to develop appropriate coding and payment policies for flow cytometry."

"We’re encouraged to see that CMS recognizes our input as a valid expert resource on issues such as this," says Mark S. Synovec, MD, chair of the College’s Economic Affairs Committee. "We’re looking forward to working with the agency on this and other pathology coding and payment concerns." The College met twice in the past several months with top-level CMS officials, including administrator Tom Scully, to discuss pathology coding. In the meetings, CAP representatives stressed the importance of pathology services to patient care and its willingness to work with the agency.

Also in the final rule, the CMS valued new and revised codes associated with tumor morphometry and immunohistochemistry. In response to CMS concerns and national correct coding initiative edits for these services when performed with automated cellular imaging, the College recognized a need for revisions. The CMS’ revised relative value units reflect recommendations made by the RVS Update Committee. The agency said in the final rule that the values are interim for one year. The College will ask that the CMS and a multispecialty panel revisit the issue before the values are made final.

The 2004 fee schedule also includes RVUs for the professional interpretation of new CPT code 85386, which describes a new lab technology for coagulation/fibrinolysis assessment of the viscoelastic properties of blood clot, as well as new CPT code 88112, which was added to the cytopathology section to describe new cellular enhancement technologies that allow both concentration and enrichment of cytology specimens. These and other CPT coding changes for 2004 will be discussed in detail in CAP TODAY in January 2004.

The final rule includes a provision to rebase the Medicare economic index, which the CMS uses to update physician payment rates.The revisions increased the weight given to the costs of professional liability coverage in the 2004 fee schedule update. The final rule also makes a change in the weights given to the physician work, practice expense, and malpractice relative value units to match the new Medicare economic index weights. As a result, more weight now will be given to the malpractice RVUs, which are increased nearly 20 percent, while the physician work RVUs are reduced by 0.57 percent, and the practice expense RVUs are reduced by 0.77 percent.

The CMS was scheduled to revise the geographic practice cost indices, or GPCIs, in the 2004 final rule. But because the work and practice expense GPCIs rely primarily on special tabulations of U.S. census data not yet available, the CMS revised only the malpractice GPCI component for 2004. This change will be phased in as required by law, implementing half the change next year and the remaining half in 2005. During this two-year phase-in, the CMS will continue to monitor local malpractice markets, work with state insurance departments, and collaborate with the RVS Update Committee to obtain the most current and best malpractice premium data available. As better data are obtained, the CMS plans to review, propose changes to, and revise the malpractice GPCIs as appropriate.

Carl Graziano is CAP manager of government communications.