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Stay up-to-date with 2008 pathology billing changes

APCs Weekly Monitor, December 21, 2007

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QUESTION: Is it true that as of January 1, 2008, pathologists will no longer be able to bill Medicare for the technical component (TC) of services for hospital patients?

ANSWER: The TC of physician pathology services refers to the preparation of the slide involving tissue or cells that a pathologist will interpret. In contrast, the pathologist's interpretation of the slide is the professional component (PC) service. If the hospital pathologist furnishes this service for a hospital patient, it is separately billable. If the independent laboratory's pathologist furnishes the PC service, it is usually billed with the TC service as a combined service.

In the calendar year (CY) 2000 Physician Fee Schedule (PFS) final rule, CMS stated that it would implement a policy to only pay the hospital for the TC of physician pathology services furnished to hospital patients. For inpatients, hospitals will receive no additional funds, as CMS has already included the costs in the DRG reimbursement. For outpatients, hospitals will assign a HCPCS code, and Medicare will reimburse hospitals based on the fee schedule.

Prior to the implementation of this provision, any independent laboratory could bill the carrier under the PFS for the TC of physician pathology services for hospital patients. As CMS stated in the CY 2000 PFS final rule, this policy has contributed to the Medicare program paying twice for the TC service-first through the inpatient prospective payment rate to the hospital where the patient is an inpatient, and again to the independent laboratory that bills the carrier-instead of the hospital-for the TC service.

Therefore, in the CY 2000 PFS final rule, CMS specified that for services furnished on or after January 1, 2001, carriers would no longer pay claims to the independent laboratory under the PFS for the TC of physician pathology services for hospital patients. Ordinarily, Medicare implements the provisions in the PFS final rule in the following year. However, in this case, Medicare delayed the change by one year (until January 1, 2001), at the request of the industry, to allow independent laboratories and hospitals sufficient time to negotiate arrangements. Moreover, CMS' full implementation was further delayed by the Medicare, Medicaid, and State Children's Health Insurance Program (SCHIP) Benefits Improvement and Protection Act of 2000, which directed them to continue paying independent laboratories for the TC of physician pathology services for hospital patients through CY 2006.

Subsequent to publication of the CY 2007 PFS final rule with comment period, the Medicare Improvements and Extension Act under Division B of Title I of the Tax Relief and Health Care Act (MIEA-TRHCA) was enacted. Section 104 of the MIEA-TRHCA provided for an additional one year extension to allow carriers to continue paying independent laboratories under the PFS for the TC portion of physician pathology services furnished to patients of a covered hospital.

Consistent with this legislative change, CMS is amending specifying that for services furnished after December 31, 2007, an independent laboratory may not bill the carrier for the TC of physician pathology services furnished to a hospital inpatient or outpatient. CMS will delay implementation of this provision in 2008 only if legislation is enacted requiring a further delay.

Baring any last minute legislation, (it has been rumored that legislation will be drafted, but as of early December there was nothing pending) on January 1, 2008, pathologists will no longer be able to bill Medicare for the TC of services for hospital patients. They will likely contact the hospital to begin negotiations for payment of services. At this time, the change only impacts Medicare patients. The pathologists will continue to bill the TC for their services to other third-party payers.

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