CEO SUMMARY: One association representing pathologists says new payment rates that Anthem, Inc., is introducing in 14 states do not cover the costs of performing anatomic pathology and clinical lab testing for the tests in question. Another association says the steep payment cuts threaten the viability of small and rural pathology groups. State-by-state, Anthem is instituting cuts in what it pays for most pathology CPT codes and some clinical lab tests by 50% to 80%. The financial consequences for pathologists will be significant, as Anthem insures 40 million Americans.
PAYMENT CUTS FOR PATHOLOGY SERVICES AND CLINICAL LABORATORY TESTS that Anthem Blue Cross and Blue Shield is implementing do not cover the costs of such testing and threaten the ability of small and rural pathology groups to continue to serve patients, according to letters from two groups representing pathologists.
In July, two national pathology associations—the College of American Pathologists (CAP) and the American Society for Clinical Pathology (ASCP)— sent letters to Anthem sharply criticizing the deep cuts Anthem has made since late last year in payment for pathologists’ services and clinical lab testing in the 14 states where Anthem operates.
ASCP said Anthem welcomed the chance to discuss its new rates and expects to meet with Anthem officials in the coming weeks. CAP said Anthem does not plan to rescind or revisit its fee schedule changes.
In the ASCP’s letter to Anthem President and CEO Gail K. Boudreaux, the pathology association said it was concerned that Anthem’s new payment rates for anatomic pathology services “are unreasonably low and in many cases do not cover the costs of performing these services.” ASCP sent copies of the letter to pathologists in Anthem’s 14 states: California, Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri, Nevada, New Hampshire, New York, Ohio, Virginia, and Wisconsin.
Seeking More Information
In the letter dated July 31, ASCP President Melissa P. Upton, MD, asked for an explanation of the cuts. The society was unable to find any information about why the rates were being reduced so much or about what methodology Anthem used to set such low rates, she wrote.
“Moreover, we are unaware of other medical specialties being affected by such significant rate cuts,” Upton wrote. “We would like to know why pathology and laboratory medicine have been singled out for these cuts. We believe targeting pathology and laboratory medicine reveals a fundamental lack of understanding of the value of these services to patient care.”
As reported earlier, national and state pathology and laboratory groups and pathologists themselves are deeply concerned about the potential adverse financial effects such cuts could have on pathology practices and on laboratory medicine. Pathologists also are concerned about the potential negative effects such cuts could have on patient care and patients’ costs. (See “Anthem’s Cuts in AP Fees Could Put Patients at Risk” and “Few Options for Pathology Groups Facing Anthem’s Payment Cuts,” TDR, Sept. 3, 2019.)
Pathology Payment Cuts
The ASCP had similar concerns, with Upton writing, “As a result, these payment rates could influence pathologists and clinical laboratories to decline to participate in-network with Anthem, increasing the likelihood that patients could be exposed to out-of-network costs.”
In her letter, Upton said Anthem was setting a national uniform rate for laboratory services similar to what Medicare does under the clinical laboratory fee schedule. “Anthem Blue Cross and Blue Shield’s recently announced rates for many high-volume pathology and clinical laboratory services are exceedingly low in comparison to Medicare’s payment amounts,” Upton wrote.
She cited examples of such low payment rates from Missouri and Ohio and compared them with what Medicare pays.
“In Missouri, Anthem announced it will reduce payment for CPT 88305-26 (level IV, surgical pathology, gross and microscopic examination) from $66 to $14.43, a cut of almost 80%,” she said. “Medicare’s rate of $39.64 is almost triple Anthem’s new Missouri rate.
“In Ohio, the payment rate for 88342-26 (immunohistochemistry, antibody, first stain) is being cut from $50.73 to $16.34, almost 70%, while CPT 88342TC is being cut 35% to $29.66,” she added.
“The result is that Medicare’s payment of $37.12 for the professional component will be 127% more than the Anthem rate, while the Medicare TC payment of $71.36 will be 140% more than the Anthem rate.”
Upton then compared Anthem’s payment rates in California with the Medicare CLFS rates. “In California, Anthem already cut CPT code 88305-26 (level IV, surgical pathology, gross and microscopic examination) from $36.67 to $24.13, a reduction of almost 35%,” she wrote. “In contrast, Medicare’s rate ($39.64) is almost 65% more than Anthem’s rate.”
Upton also criticized Anthem for making deep cuts in payments for clinical laboratory tests. “Anthem intends to reimburse CPT 80053 (metabolic panel) at $5.99, about half of the revised Medicare CLFS payment of $11.74,” she wrote. “For CPT 85025 (complete blood cell count), Anthem’s rate of $3.68 is only 57% of the Medicare CLFS rate of $8.61. For CPT 80061 (lipid panel), Anthem’s payment ($6.02) is 46% lower than the Medicare amount, $11.23.”
In her conclusion, Upton asked Anthem, “to immediately cease implementation of these reduced payments for pathology and laboratory services,” and she asked Anthem to explain why it changed its fee schedule for pathology and laboratory services, what methodology the insurer used to establish new pathology and laboratory fees, and what economic effects the new rates will have on pathology practices and clinical laboratories in each state.
CAP Outlines Concerns
In its letter, CAP wrote to Paul Marchetti, Anthem’s Senior Vice President, Network and Care Delivery Transformation. Dated July 16, the CAP letter is unsigned. As the ASCP did, CAP had several concerns, the most important of which was the effect on smaller pathology practices.
“While we hope primarily to address issues related to information and notification, the CAP has serious concerns with policies that make it increasingly difficult for pathologists to continue to provide essential diagnostic services to patients and continue to serve the rural and smaller hospitals that have relied on them,” CAP wrote. “Especially for many smaller pathology practices, this kind of significant change could determine the financial viability and continued ability for pathologists to provide care to patients.”
Also, CAP raised the issue of why Anthem was making these changes. “Given the magnitude of this change, the CAP is requesting a more comprehensive explanation of the reasons that led to the new rates and clarification about how Anthem is valuing pathology services,” the letter said.
CAP also was concerned about the short time Anthem gave pathologists between the announcement of the new rates and the implementation date. “On the information front, confusion continues surrounding the context, reasons, and methodology for Anthem’s fee schedule changes,” CAP wrote.
“On a May 3, 2019, phone call with staff from the CAP, Anthem representatives indicated that the changes were necessary to remedy disparity across parts of the network and rebalance rates regardless of setting,” CAP wrote. “However, we have heard differing explanations from CAP members, including that the pathology changes may be tied to increases in evaluation and management (E&M) codes.
“Other CAP members report hearing the rates are meant to mirror those paid to large national laboratories, which would not be sustainable for smaller pathology practices,” the letter added. “There have been questions about multispecialty groups versus single-specialty groups and the scope of the term ‘ancillary service providers.’”
The CAP letter closed with a request for more information. “As a result, we are asking Anthem to provide us with a clear and formal explanation of the changes and the current valuation of pathology services as well as additional guidance and resources on exactly who is impacted by this change and where pathologists can go with concerns or questions,” the letter said.
In response to questions, Anthem stated, “Anthem’s adjustment to office-based lab fee schedules is an effort to address the wide disparity in prices for this service.”
Firm on Payment Cuts
AFTER A CONFERENCE CALL last month with executives from Anthem Blue Cross and Blue Shield, representatives of the College of American Pathologists (CAP) concluded that Anthem does not plan to rescind or revisit its fee schedule changes, according to a report on the CAP website. The report also said Anthem’s executives will “monitor the market response” and suggested that pathologists call their regional network managers to discuss their concerns.
During the call on Aug. 28, CAP pressed its case to have Anthem reverse its new payment cuts. “The CAP argued that the cuts would undermine the viability of pathologists’ practices and limit patient access to care for pathology services, particularly those provided in rural communities,” a CAP spokesperson said. “The CAP also argued that this action could result in quality of care issues and downstream costs for Anthem.”
CAP executives said Anthem’s new rates would be unsustainable for some groups and that pathology practices could close as a result. Representatives from the California and Virginia societies of pathologists also have met with Anthem officials.