Why Pathologists and Labs Should Not Celebrate the Proposed Medicare Fee Schedule

August 14, 2015

A review of the proposed Medicare fee schedule shows pretty nice increases for some specialties — independent laboratory went up by 9% and pathology went up by 8%.

Before we all run off to celebrate this victory, let’s take a closer look.  We must understand these changes are based on certain CPT codes classified by individual provider type and totaled by aggregate.  This does not mean these providers will actually see 8-9% increases in revenue — remember, just because CPT code pricing goes up or down, it does not always mean more or less money.

Also, because this is a proposed fee schedule, we find it imperative to wait until the federal register releases its final document in November to see what changes will actually take place. It is then very important to take these actual fees and build a detailed revenue projection for each individual practice.  Don’t forget, these changes from Medicare will also likely be implemented by all the commercial payers.

Here is an example of why things look so rosy for pathologists and independent laboratories when in fact the changes are nominal.

The CPT code 88342 for TC Immunohistochemistry Antibody Specimen details our example very clearly. 88342 is the technical component of this test.  If you look at the proposed change, it shows this going up 31.10%.  Nice increase right?

Not so fast. Several years ago this code was cut 52%, and last year the description was changed on this code to say per specimen instead of per block. In most cases, the billable volume of these tests has decreased. So when it is all said and done, this 31.10% increase is really just a nominal bump that tries to recover from a larger loss of revenue over the past few years.

In the global view, this code increase helps to calculate out a total increase of 9% for labs, but it is a false victory.  In the end the bottom line for these providers is still much lower than it was several years ago.

The proposed increases for the professional side of the codes are actually going up about 1.4%. This means considering inflation, practices still lose money.

In summary, it is important not to get too tied into the proposed changes and to read deeply into the documents.  The bottom line is this: it will be harder to make money in the pathology world over the next few years. This is why so many practices are tightening their belts and increasing their billing diligence.

Mick Raich is the President of Vachette Pathology. He can be reached for comment at mraich@vachettepathology.com or 517-486-4262.

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