New Trend Threatens Pay For Pathology Part A Services

Growing cadre of hospital administrators want to avoid paying for Part A services.

CEO SUMMARY: Each year, more hospitals adopt an aggressive stance and attempt to eliminate or greatly reduce the compensation paid to their pathology groups for Medicare Part A technical services. There is a surprising reason why an increasing number of hospital administrators suddenly have the confidence to tackle the Part A compensation issue in such a forthright manner.

ASK THE MAJORITY of pathologists about who’s winning the battle over Medicare Part A technical compensation and you’ll invariably get one answer—hospitals!

Although the trend for hospitals to shrink Part A compensation has been around for a number of years, it has intensified during the last 24 months.

Recently THE DARK REPORT surveyed pathology practices around the country. This informal survey uncovered a surprising reason why hospital administrators are increasingly willing to demand substantial reductions or outright elimination of Medicare Part A compensation to pathologists.

In a growing number of situations, those hospital administrators agitating for change are ex-employees of Columbia/HCA Healthcare Corporation. Now working in not-for-profit hospitals, they believe they have justification for the types of compensation arrangements, or lack there-of, that they want to offer pathologists serving these hospitals.

This is a disturbing trend for the pathology profession. Columbia/HCA took extremely aggressive positions against compensation to pathologists for Medicare Part A technical services during the Rick Scott regime, which ended in July 1997.

Pathologists Will Attest

As many pathologists working at Columbia/HCA hospitals during this time period will attest, Columbia’s senior executives pushed their regional vice presidents to encourage the reduction or elimination of compensation for Medicare Part A technical services to pathologists and certain other hospital-based physicians.

Columbia/HCA’s corporate policy was to allow the individual hospital CEO to handle this sensitive issue as appropriate to the needs of his/her facility. But Columbia was not shy about emphasizing the lack of compliance interest by either HCFA or the OIG on this issue.

Hospital administrators working for Columbia/HCA learned this mind set. Rightly or wrongly, the information they use to justify severe reductions or total elimination of pathology Part A technical compensation continues to drive their thinking today.

Effectively, Columbia/HCA trained a sizeable number of the hospital industry’s senior administrators and CEOs to think aggressively about pathology Part A compensation. The numbers tell the tale.

Flooding Into Not-For-Profits

At its peak, Columbia/HCA owned more than 320 of the nation’s 5,000 non-government, acute care hospitals. Since the summer of 1997, ex-Columbia hospital administrators have flooded into the not-for-profit hospital segment in two ways.

First, normal turnover of hospital CEOs and senior administrators within these 400+ facilities has been significant. Second, Columbia/HCA sold almost 100 hospitals to other operators during the past year. Administrators of these ex-Columbia facilities are now owned by different hospital systems.

So it should not surprise pathologists that this flood of Columbia/HCA-indoctrinated hospital administrators increasingly wants to hit on pathology Part A agreements. The “Rick Scott philosophy” taught them to do this.

Fundamental Threat

THE DARK REPORT believes this flood of ex-Columbia hospital CEOs and administrators will trigger a fundamental threat to the long-established principle that pathologists who provide technical services to the hospital are entitled to fair compensation.

If, in coming years, a sizeable number of the nation’s 5,000 hospitals enact onerous Part A agreements with pathologists, it will create the very justification that HCFA regulators might use to subsequently “ratify the decision of the marketplace” and undermine existing Medicare guidelines for compensating pathology Part A services.

Even as this trend intensifies and expands across the country, it seems that both the pathology community and its professional associations have failed to fully respond to the dangerous impact this will shortly have upon pathologist-hospital relationships.

In the absence of concerted action by the pathology profession, THE DARK REPORT sees the marketplace now establishing new parameters for pathology Part A technical compensation. Once 1,000 or 2,000 hospitals successfully negotiate to totally eliminate Medicare Part A technical compensation with pathologists, the pathology profession will have lost much of its ability to argue from a position of strength.

After all, if it reaches a point were a majority of hospitals already pay little or no compensation to pathologists for these services; and pathologists participated in the negotiations to reduce this compensation, then pathologists may be judged to have already ceded this battle, one hospital and one pathology practice at a time.

Bright Spot In The Battle?

Is there a bright spot in this battle? THE DARK REPORT believes so. In its survey of pathology practices, it located a small number of enthusiastic pathology practices which are developing win-win Part A agreements with their hospitals.

Successes by these pathology practices prove there is an effective way to productively respond to the hospitals’ demands and needs concerning Medicare Part A pathology services.

In future issues of THE DARK REPORT, and at the upcoming private Pathologist Income Symposium in Scottsdale on November 12-13, 1999, some of these pathology groups will present case studies and success stories about their Part A arrangements.

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