Pathology spared the ’03 relative value cuts
Pap test computer error
2003 Medicare relative values for pathology services
The College has averted targeted Medicare cuts to the relative
values of pathology services in 2003.
In the Dec. 31 final rule for the 2003 Medicare physician fee
schedule, the Centers for Medicare and Medicaid Services granted
the College’s request for a moratorium on a proposed change to the
way the agency calculates pathology professional and technical components
and global service relative value units, or RVUs. During the one-year
delay, the CAP will lead a study of independent laboratory practice
The delay means Medicare payments to hospital-based pathologists
are not affected by changes made to physician service RVUs for 2003
and independent laboratory-based practices will experience a three
percent increase, CMS said in its final rule impact analysis Dec.
20. Without the moratorium the CAP requested, the proposed calculation
changes would have produced a two percent cut in relative values
for hospital-based pathologists and an eight percent reduction in
independent laboratory RVUs.
The CAP successfully argued that CMS’ use of default practice-expenses-per-hour
ratio data underestimates the practice expenses laboratories incur
and, as a result, undervalues the pathology relative values for
direct costs, whether paid to laboratories or to hospital-based
practices for outreach work. CMS uses American Medical Association
survey data for medical specialties, but the AMA does not survey
business entities such as independent laboratories and ambulatory
CMS’ proposed change would have affected pathology technical component
payments most dramatically. As published, the calculation revision
would have forced a one percent drop this year in the 88305 professional
component relative value, a 12 percent cut in the technical component,
and a seven percent reduction in the global RVU.
With the moratorium, the 88305 pathology technical component relative
value remains unchanged. The 88305 professional component relative
value for 2003 will decline by 0.01 relative value units (35 cents)
because, in a move carried out in a budget-neutral manner across
all services, more recent utilization statistics are used.
If the published 4.4 percent reduction to the conversion factor
for 2003 is factored in, CMS predicts, hospital-based pathologists
will suffer a five percent reduction in Medicare payments; independent
laboratories will suffer a one percent reduction. But a mandated
60-day congressional review period means the new rates will not
start until March 1, given the final rule’s Dec. 31 publication
Successes stemming from other College recommendations were evident
elsewhere in the 2003 fee schedule. The results of the past year’s
practice expense RVU refinement process were released in the final
rule and show the technical components for first frozen sections,
flow cytometry cytoplasmic/nuclear marker studies, and immunofluorescent
studies as the big pathology winners for 2003. The 88331 technical
component RVUs will increase 49 percent, 88180 technical component
relative values will go up 136 percent, and 88346 technical components
will rise 32 percent in the new relative value scale. Interpretations
of cytogenetic studies (a professional-component-only RVU) will
see a nine percent boost. But the immunocytochemistry 88342 TC RVU
is down 10 percent for 2003, based on CMS’ consideration of economies
in laboratory personnel use when multiple services are provided
during a single day.
The practice expense refinement process studies the direct cost
inputs (nonphysician clinical personnel and medical equipment and
supplies) used at the time of each service and assigns practice
expense RVUs accordingly, replacing the previously used charge-based
values. As the direct cost data are refined, practice expense relative
values among all services can more closely align with the actual
costs assigned to each service. Because Medicare pays the hospital
for direct cost inputs for hospital patients, the relative values
used in that setting do not benefit as much from the practice expense
refinement process as the values paid in a non-facility setting.
The College and other physician groups, meanwhile, continue to
lobby vigorously to avert the conversion factor cut and replace
it with positive updates this year and in 2004 and 2005. The 60-day
review period for the 2003 fee schedule final rule gives Congress
a window in which to act, and at least one prominent lawmaker already
has signaled his willingness to help physicians. On the 108th Congress’
first day, Jan. 7, Rep. Bill Thomas (R-Calif.) introduced Joint
Resolution 3, which would freeze physician payments at 2002 rates
for one year and nullify the final fee schedule rule. Under the
Congressional Review Act of 1996, Congress may reject a rule by
enacting a joint resolution of disapproval.
At CAP TODAY press time, Thomas’ legislation appeared likely to
pass the House. But it was expected to face a tough fight in the
Senate, which scuttled efforts last year to improve Medicare payments
by failing to approve (as the House had) CAP-backed legislation
that would have increased fees by two percent this year and in 2004
and 2005. The Senate, reluctant to pass piecemeal physician pay
increases and split over prescription drug coverage, adjourned last
year without acting on the issue.
Physicians’ fortunes could improve with the 108th Congress, which
now is Republican-controlled and likely to be more receptive to
Bush administration health initiatives.
Carl Graziano is CAP manager of government communications.