Of 88305-TC and Other Bad News for Pathology Labs

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BY NOW, VIRTUALLY ALL PATHOLOGISTS ARE AWARE of the announced cut in Medicare reimbursement for the technical component (TC) of CPT 88305. Effective on January 1, 2012, Medicare will pay 52% less for this CPT code.

From the prior level of $69.78, the new reimbursement will be $33.70. As news of this development rippled across the anatomic pathology profession in recent weeks, a variety of comments surfaced.

Pathologists and their practice administrators are attempting to determine what financial impact this lower reimbursement will have on their laboratories going forward. Wall Street analysts want to understand which lab companies will be the winners and the losers as a consequence of this draconian reduction in an important pathology CPT code.

The bad news about 88305-TC comes on the heels of this summer’s decision by Medicare carrier Palmetto GBA to implement a new policy governing Medicare claims for prostate cancer biopsies. The new policy represents about a 50% reduction in reimbursement for a 12-core prostate biopsy. Of course, to these reimbursement cuts must be added the expected reduction in Medicare Part B Clinical Laboratory Fees for fiscal year 2013. When all the formulas are calculated, the overall Part B fee cuts will total about 5%.

These developments call to mind an important point that our Editor, Robert L. Michel, has been making in his public presentations. He notes that, whenever there is not enough money available to pay for healthcare, government health programs do one or more of three things:

1) Pay less to providers.

2) Restrict access via guidelines.

3) Refuse to cover new and/or expensive health services, drugs, lab tests.

Thus, we can see all three dynamics at work in recent years as they pertain to clinical lab and pathology testing. Reduction in fees for 88305 and Medicare Part B lab testing is number one above. The new policy guidelines for Medicare prostate biopsy claims involve restricting access is number two on Michel’s list. The fact that Medicare is only now working to implement 100 new molecular CPT codes after years of feet-dragging illustrates principle three above. My prediction is that we are seeing the front edge of more and deeper Medicare cuts yet to come, using the three approaches listed above.

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