College of American Pathologists




July 9, 2012
© 2012 College of American Pathologists
Special Report
CMS Advances Payment Reforms in 2013 Proposed Physician Fee Schedule

July 9—Physicians continue to face an ever-tightening Medicare reimbursement environment, as evident by the 2013 Medicare Physician Fee Schedule (PFS) proposed rule released on Friday, July 6.

All non-primary care specialists, including pathologists, are facing a payment reduction under the proposed PFS to offset a new primary care initiative. This reduction, which Medicare estimates will reduce payments to pathologists by 1%, would offset a proposed 7% increase for family physicians to pay for the care required to help a patient transition back to the community following a discharge from a hospital or nursing facility. Pathologists are also facing another 1% cut due to the final year of a four-year transition for change in practice expense (PE) methodology.

It’s important to note that these proposed cuts are separate from the projected 27% payment cut under the flawed sustainable growth rate (SGR) formula slated to take effect on Jan. 1, 2013 (although Congress has acted to avert similar cuts in the past). In addition, there are anticipated 2013 payment changes to the technical component (TC) of the 88305 code family, although the final changes will not be announced until the final 2013 rule is published in November. Over the last year, the College has worked with the AMA/Specialty Society RVS Update Committee (RUC) to examine the direct cost inputs associated with the TC for the 88305 family. This committee makes relative value unit and cost input recommendations to CMS. The agency will announce its determination on these recommendation in November of this year for implementation in January 2013.

The proposed rule also confirmed the expiration of the TC “Grandfather” provision, which ended on June 30. While the College successfully advocated Congress to extend this provision for the past 10 years, lawmakers are not expected to revisit this issue.

Code Placement, Values

CMS indicated in the proposed PFS that it continues to consider placement for the newly developed molecular pathology codes, with preference for only one fee schedule, either the PFS or the clinical laboratory fee schedule (CLFS). The agency presented specific questions related to placement in this proposal. Some of the agency’s concerns about placement center on batch size and utilization of the molecular pathology tests, which the agency believes could inhibit accurate PFS pricing. Therefore, they are proposing that if they place the codes on the PFS, they will allow the Medicare contractors to price the codes because they do not believe they have sufficient information and that prices can vary locally.

The College will be working to answer these questions in coordination with other groups to address the agency’s concerns, and remains hopeful that CMS will place the codes on the PFS. The agency will also be taking comments during the annual CLFS meeting, to be held on July 16. CAP members and staff will be attending this meeting, continuing to recommend to CMS that these codes be paid under the PFS.

In addition to considering placement of these recently developed molecular codes, CMS continues to expand its initiative to review potentially misvalued services. The TC of one pathology service was identified for review—CPT code 88348 Electron microscopy. CMS will continue this work as well as examine options for bundled or episode-based payments, which will be included in a report to Congress scheduled for submission by January 1, 2013.

Also related to payment is CMS efforts to expand its multiple procedure payment reduction policy (MPPR). In last year’s proposed rule, CMS indicated that they were considering expanding the policy to include the TC of all diagnostic tests. In this year’s proposed rule, CMS did decide to expand the MPPR in light of continued growth in ancillary services subject to the in-office ancillary services exception. However, after reviewing all potential services for duplication, pathology services were not included in this expansion. CMS concluded that they would expand the MPPR to cardiovascular and ophthalmology services based on identified duplicative services.

Quality Measures

The proposed rule retains pathology’s 2012 Physician Quality Reporting System (PQRS) measures for use in 2013. In addition, it proposes implementing the value based modifier (VBM) program, which becomes effective in 2015 and can result in either increases or reductions in payments to physicians.

Included in the health care reform law, this program adjusts payments to individual physicians or groups of physicians based on the quality of care furnished to Medicare beneficiaries compared to costs. The VBM program is scheduled to be phased in over three years from 2015-2017; for the first year, the proposed rule would apply the VBM to all groups of physician with 25 or more eligible professionals. The proposed rule also provides an option for these groups to choose how the VBM would be calculated based on whether they participate in the PQRS. For groups of 25 or more not participating in the PQRS, CMS is proposing to set their VBM at a 1% payment reduction. For groups wishing to have their payment adjusted according to their performance on the VBM, the rule proposes a system whereby groups with higher quality and lower costs would be paid more, and groups with lower quality and higher costs would be paid less. Included is a proposed value-based payment modifier option for hospital-based physicians. These physicians can elect to be assessed based on the performance of their facility at which they are based using hospital measures.

CAP will continue to examine these and other issues included in the 2013 proposed physician fee schedule rule and will provide comments to the agency on issues of concern to pathologists. Watch Statline for continued coverage.

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