Inflation Medicare cuts and the pinch point of community pathology revenue

November 10, 2021

By Mick Raich: President, RCM Consulting, Vachette and Lighthouse Lab Services

I live on a working ranch. I raise whitetail deer and this means working with machinery on the weekends; plowing, feeding, running fence, etc. When working with tillers and tractors and heavy machinery one of the key rules is never put yourself in a pinch point. Don’t get between the tractor and attachment at the wrong time, don’t put yourself in danger by being in the wrong place at the wrong time. It takes constant vigilance not to put yourself in danger. 

I believe the revenue world of pathology is currently in a pinch point, an area of extreme danger which will change the industry going forward.

There are two major factors in play.  First, are the recent Medicare cuts in the major CPT 88305-26. The professional component for this CPT is set to go down another 3.7% in January, meaning the code has been cut roughly 8% over the past two years. And this doesn’t mean just Medicare is cutting this fee, we all know all the major payers will follow suit. Imagine an 8% pay cut across the board. Not pretty.

The other factor is inflation. The current rate of inflation is 5.3%, according to the government’s public number. But remember, this number does not include food nor housing. The truth is the CRB Foodstuff index is up 15% this year alone and grocery prices are at a seven-year high. Housing prices are up 17% over one year ago. True inflation may be closer to 10%. Imagine getting an 8% pay cut and prices going up 10% in the same year! 

These two factors show pathology revenue is in a true pinch point. Compensation is going down and inflation is going up, which means real buying power is down. The path going forward will rewrite the average salary for community pathologists. Unfortunately, it appears the golden days of reimbursement are over. 

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