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Labs entering risky payment game in the new year

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Kevin B. O’Reilly

January 2015—This year will bring a host of regulatory, coding, billing, and payment changes that are going to challenge pathologists and laboratory administrators to move quickly or else face declining revenue and the grim specter of Medicare recovery audits. That was the somber consensus of three experts gathered for a December webinar hosted by The Dark Report.

“It will be a high-stakes game in 2015 because both government and private payers are stacking the deck against clinical labs and pathology groups,” Dark Report editor-in-chief Robert L. Michel said in a statement publicizing the webinar. “Across the nation, Medicare carriers and private health insurers are implementing myriad changes in coverage guidelines and reimbursement for both clinical lab tests and anatomic pathology services, in an effort to reduce their costs.”



Rina Wolf began the session by underlining the uncertain realm in which labs find themselves in 2015. Wolf is vice president of strategic commercialization, consulting, and industry affairs at Xifin, which offers cloud-based billing and revenue-management software.

Perhaps the biggest cause of that unpredictability is the Protecting Access to Medicare Act of 2014, which Wolf said marks “the first substantial change in laboratory reimbursement in 30 years.” Starting Jan. 1, Medicare administrative contractors can now issue a coverage policy on a test only through a local coverage decision, she said. June 30 is the deadline for the Centers for Medicare and Medicaid Services to publish a rule that will establish how labs must report their private payment rates, which will begin sometime in 2016. The CMS will use that information to set new Medicare laboratory pay rates starting in 2017.

Meanwhile, there are 21 new CPT codes for genomic sequencing and multianalyte assays with algorithmic analyses. How these will be paid remains an open question, Wolf noted, with the deadline for determinations being the end of the first quarter of 2015.

“The original intent was that these codes would be specifically for next-generation sequencing, but the actual descriptors apply to any sequencing, even if they are not performed on a next-gen sequencer,” she said. “A number of Medicare contractors have already come out with policies saying that they do not believe that next-gen panels should be covered services.… The question is what are the commercial payers going to do.”
This uncertainty about payment for advanced diagnostics reflects a deeper contradiction that vexes laboratory medicine, Wolf said.

“We continue to be bombarded with kind of a schizophrenic situation where the technology we rely on, and that so many labs have become reliant on to take care of patients, is moving much more quickly than the regulatory and reimbursement environment,” she said. “We see these challenges on coverage and pricing, and the return on investment, against the capability of the science. Nobody wants to move backward from where we are from the patient care perspective.”

Wolf noted other question marks in molecular pathology, such as the FDA’s proposed oversight of laboratory-developed tests, how to standardize review of companion diagnostics, and how or whether to allow for newly actionable alleles in already cleared tests.

Another significant change in the molecular space that took effect Jan. 1 is how Palmetto GBA’s MolDX program will handle panel testing. The Columbia, SC-based Medicare administrative contractor began in November to notify labs about tests that need to be registered as part of a panel. Beginning April 1, MolDX will reject tests for which a separate CPT code is submitted for each biomarker in the panel. Another Medicare administrative contractor, Fargo, ND-based Noridian, plans a similar move, Wolf said.

“This could create a lot of confusion,” she added. “I believe it could encourage the use of panels, which historically have been questioned by [the Department of Health and Human Services’ Office of Inspector General] and CMS.”

On another note, Wolf warned labs to steer clear of murky waters when it comes to certain sales and collections tactics.

“I’m sure all of you have had your sales reps come back and say, ‘We have to do such-and-such’ to compete on things like routinely waiving the patient shares of costs, discounting, capping pricing, or on physician incentives. But we’re also in an environment where that’s becoming incredibly risky,” she said.

For example, payers are increasingly scrutinizing patient collection practices.
“They believe that if you have no intent of actually billing the patient, that makes the payer responsibility zero,” Wolf said. “And it’s important to remember that what you put on your website is not only available to physician clients and patients, but it’s available to the payers who troll these websites.”

She noted that one company’s website indicated that patients were held accountable for a capped $100 fee on a $3,500 test, so the payer said it would only pay the out-of-network benefit of 60 percent based on that $100 quote, rather than the $3,500 price.

“We’re also seeing recoupment requests for money paid over and above what payers deem to be capped prices,” Wolf said. “Whether you’re using a contracted sales force or whatever, as management you’re responsible for whatever brings in payment to your labs.”

Private payers are not the only ones with their antennae held aloft for questionable sales methods.

“Medicare recovery audits are growing exponentially,” Wolf said. “Pay extra attention to all of your compliance practices, because others are.”

This year also will see major adjustments for anatomic pathology coding. The CMS is deleting the G-codes it had used for immunohistochemistry in 2014, opting for new CPT codes.

“The G-codes were very problematic for everybody,” said Tom Scheanwald in his presentation. He is president and chief operating officer of Toledo, Ohio-based APS Medical Billing, which serves pathology practices, independent labs, and hospital pathology labs nationwide.



CPT code 88342 is for the initial single antibody stain IHC, per specimen. Each additional single stain gets the new 88341 code. Each multiplex stain procedure per specimen is assigned a single unit of 88344. This will apply to all insurers.

When using the 88342 code, medical documentation can make a difference when it comes to getting paid, Scheanwald said.

“88342 is very much tied to medical necessity edits and MUEs [medically unlikely edits],” he said. “If we’re billing the IHC CPT code with a diagnosis code that reflects the patient’s signs or symptoms, or a general lab exam code, and there’s no finding or no abnormality in these cases, the stain may go unpaid as quote-unquote medically unnecessary.”

This is a critical point, Xifin’s Wolf said.

“Documentation is more important than ever if you want to be paid, or you need to appeal. And, in the unfortunate situation that you should ever be audited, it absolutely has to be there,” she said. “We all have to train our clients to document appropriately so that this is in the medical record—it’s for their own protection as well. They can’t put it off and say, ‘Nobody else is asking us to do that,’ because these days that’s definitely not true.”

Scheanwald also discussed new FISH and ISH codes that took effect Jan. 1, as well as the CMS’ new prostate biopsy requirement to bill only one unit of G0416 regardless of the number of specimens submitted or surgical method used.

“That’s for Medicare, and I would expect at some point in time that the Medicare replacement plans, Medicaid, and Tricare also will go along with that,” he said. For non-Medicare payers, the CPT code for these biopsies is 88305, multiplied by the number of specimens.



Medicare’s prostate biopsy change “will affect your revenue,” warned Michelle Miller, vice president at Vachette Pathology, a practice management consulting firm in Blissfield, Mich. The old code used, G0419, allowed as much as $710.37 to be billed for the professional component, compared with $182.58 allowed this year with the new code.

“It’s a huge blow to pathologists providing these services,” Miller said during the webinar.
Yet another revision is for HPV testing, with three old codes (87620, 87621, 87622) replaced by three new ones (87623, 87624, 87625) that distinguish between testing for low-risk and high-risk types.

“This change may be significant on the reimbursement side as payers cover testing for high-risk types but not low-risk types,” Scheanwald noted in a presentation slide. He advised that HPV genotyping be done in conjunction with an abnormal cytology report in order to use these codes appropriately.

Scheanwald also noted that pathologists in 2015 will have two new areas in which to participate in Medicare’s Physician Quality Reporting System—lung cancer and melanoma reporting. (See “CAP proposals on IHC, PQRS accepted for Medicare in ’15,” CAP TODAY, November 2014, page 80.)

The 2014 changes to IHC coding had the biggest impact for labs, Vachette’s Miller said. This year will see some relief with the new IHC CPT codes also reviewed by Scheanwald. Miller offered an example of one specimen with three stains performed. In 2014, using the G-codes, the payment was $55.89. That will rise to $80.20 using the new CPT codes in 2015.

This year, Miller said, the top priority for labs may come with the CMS’ decision to package pathology technical component payments under its hospital outpatient prospective payment system. This will mean another job for laboratories in ensuring they are properly paid for their work, she said.

“As a lab, if you’re performing those services outside the hospital for those patients, you’re going to have to make sure you’re working directly with your hospital to get payment for those services,” Miller said. “You have to make sure you have a dialogue going with them, know what the volume is right now, how to track those charges, and how to get information back in detail to your hospitals to show them what you expect payment for.”

Coming up with that sort of detail will be key, more broadly, to coping with all that 2015 has in store, Miller said. That requires having a laboratory information system and a billing system capable of handling all these adjustments, as well as a system to determine how they will affect the bottom line.

“You need to do some very simple tracking, to see what loss of revenue you’re seeing,” she said. “You need to start working with billers now, or internally, so that you know what your volumes are, that you have a system in place to deal with this—to do impact analysis. You need to see your cost per test and see what you’re paid, so you can look at whether a test will be viable and profitable for you in the coming years.”


Kevin B. O’Reilly is CAP TODAY senior editor.



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