College of American Pathologists
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  88305 TC cut, molecular code decision, PQRS details


CAP Today




November 2012
Feature Story

Julie McDowell

Next year, pathologists will face a 52 percent reduction in the technical component (TC) reimbursement for CPT code 88305 in the surgical pathology family, announced the Centers for Medicare and Medicaid Services in the 2013 physician fee schedule final rule released on Nov. 1. While 88305’s professional component (PC) increased by two percent, this revaluation caused its global payment to go down 33 percent. The agency also revealed in the final rule that the newly developed molecular pathology CPT codes will be placed on the Medicare clinical laboratory fee schedule, as well as details about the expanded Physician Quality Reporting System (PQRS) requirements for providers.

In addition to the TC reduction, the final rule included another two percent in cuts for pathology. This includes a one percent cut to offset the seven percent increase to primary care physicians (spread across all specialties) as part of a multiple-year strategy to encourage care coordination services, and an additional one percent cut to pathology owing to the practice expense methodology change phase-in. There’s also the projected 26.5 percent Medicare physician payment cut under the sustainable growth rate formula (SGR) slated to go into effect on Jan. 1, 2013 if there is no congressional intervention.

Legislators have voted to avert the SGR cut 14 times since 2002, and while Congress is expected to do the same now, the election could affect when and how physician payment is addressed on the Hill. Compounding the problem is the looming prospect of sequestration, which would reduce Medicare provider payment by two percent starting Jan. 1, 2013.

Members of Congress may address the issues of SGR and sequestration in the lame duck session after the election, or they could pass a temporary patch for both and allow the new Congress taking office in January to address the problems.

High-volume code scrutiny

The 52 percent surgical pathology 88305 TC cut was not a surprise, particularly since federal health care agencies are under intense pressure to cut spending. To this end, the health care reform law—Affordable Care Act—directed the CMS to review and revalue all high-volume codes as potentially overvalued services, says Jonathan L. Myles, MD, chair of the CAP’s Economic Affairs Committee.

“The reform law increased CMS’ authority to review high-volume codes from all specialties. Pathology codes are not unique,” he explains, adding that the agency has a particular interest in reviewing high-volume codes that haven’t been reviewed in recent years. “Since the TC of 88305 hasn’t been revalued since 2000, it was a likely candidate for revaluation,” he says.

Furthermore, the initial 2000 revaluation was the first convening of the Practice Expense Advisory Meeting of the American Medical Association Specialty Society RVS Update Committee process. “The practice expense inputs for these codes have never been evaluated in this environment, where there’s such scrutiny on costs,” Dr. Myles says. “All codes—from all specialties—are now undergoing rigorous evaluation.”

In fact, the CMS originally requested in 2011 that the TC as well as the PC of the surgical pathology code family be revalued. The CAP successfully convinced the CMS to limit the review to the TC, as the PC had been revalued in April 2010 (in fact, the CMS increased the PC of 88305 by two percent for 2013). Over the past year, the CAP also worked through the RVS Update Committee process to submit recommendations to ensure fair examination and valuation of the TC.

Next year, the CMS is expected to review the TC and PC of immunohistochemistry and enhanced cytology services as potentially overvalued. This means that any revaluation for these services is unlikely to occur until 2014. “The CAP has been working, and will continue to work, through the RUC [RVS Update Committee] process to minimize the impact on pathologists’ compensation,” Dr. Myles says.

Molecular code placement

In addition to the TC revaluation, the CMS announced that the newly developed CPT codes for molecular pathology services would be on the clinical laboratory fee schedule beginning next year. The agency will not publish national payment rates for these codes; however, as the final rule said, the gap-filling method will determine 2013 reimbursement.

The CAP helped to develop the codes—at the request of CMS—with other stakeholders, including the AMA, the Association for Molecular Pathology, the American College of Medical Genetics and Genomics, and the American Clinical Laboratory Association. However, citing differences of opinion within the stakeholder community about whether these codes require a physician interpretation, the CMS elected to place these codes on the clinical laboratory fee schedule. The agency did create a new HCPCS II G-code for use by physicians, specifically pathologists, asserting that physician interpretation of these tests is sometimes medically necessary. But the G-code is an interim approach, and the agency will be monitoring its use.

“College leaders have worked for the past three years to demonstrate the professional requirements of these molecular pathology tests,” Dr. Myles says. “By establishing a G-code in the final physician fee schedule, CMS recognizes that physician interpretation of these tests is sometimes medically necessary. Moving forward, we will continue to advocate for placement of these CPT codes on the physician fee schedule, and analyze the various reimbursement options under consideration by CMS.”

PQRS expansion

In addition to the coding and payment changes, the CMS is expanding the PQRS program next year, as detailed in the final physician fee schedule rule.

By participating successfully in 2013, providers will receive a 0.5 percent bonus of total 2013 Part B allowed charges in 2014. In addition, providers who participate will avoid a 1.5 percent deduction in overall Part B Medicare payments in 2015. Pathologists can participate by reporting on three quality measures (or all that apply if there are not three applicable measures). There are five CAP-developed quality measures that pathologists may choose to report.

Other important PQRS changes beginning next year include new group reporting options. Group practices with two or more members may report on measures for all the practice’s patients as a group through a registry, with all members of the group getting credit regardless of which individuals provided the service. In addition, providers in group practices of 100 or more will be subject to a value-based payment modifier adjustment in 2015 determined by their 2013 PQRS participation.

The final physician fee schedule rule contains other significant changes and additions to the PQRS that are likely to influence individual participation. Download expert analysis of the 2013 PQRS changes from the CAP webinar recorded on Nov. 15 and available at A detailed analysis of the PQRS changes will be published in the December issue of CAP TODAY.

2013 Medicare payment changes

  • 88305 TC cut by 52 percent for 2013.
  • Cost of seven percent family physician increase spread across all specialists with one percent cut to pathology (part of multiple-year strategy to encourage care coordination services).
  • Additional one percent cut to pathology due to practice expense methodology change phase-in.
  • Total six percent cut to pathology after including change in pathology code values—most notably the TC revaluation, together with primary care and practice expense methodology change.
  • Projected 26.5 percent cut due to SGR (Congress expected to avert cut).
  • TC grandfather termination confirmed.

Julie McDowell is editor of the CAP’s Statline. For information on pathology payment issues, visit the Medicare 2013 Physician Fee Schedule Resource Center ( This online re-source also features a replay of the two-part webinar series, “Confronting New Medicare Payment Realities.” Part 1 is how 2013 reimbursement changes will affect pathologists; part 2 is what CAP members need to know about 2013 Physician Quality Reporting System changes. The webinars were recorded live on Nov. 14 and 15 and are online at