Few Options for Pathology Groups Facing Anthem’s Payment Cuts

FACED WITH DEEP CUTS in payment for anatomic pathology professional component services from Anthem Inc., pathologist have only a few options in how they can respond, according to consultants who work with AP groups.

“These are dire cuts to anatomic pathology reimbursement,” said one consultant who asked not to be named. He suggested that small regional pathology labs have only three options: close or sell to competitor labs, cut back on staff to reduce costs, or drop out of Anthem’s network.

Some Path Groups Will Close

“First, some pathology groups will be forced to close or sell,” explained the consultant. “Second, some labs will cut costs by laying off staff. They’ll start with the billing staff, but they also may need to let a pathologist go too. Third, some labs will just leave the Anthem network. In all three scenarios, Anthem members get hurt.

“In that second group, in which the labs cut costs, many pathology groups will struggle because cutting costs is difficult today,” he added. “Equipment and reagents are more expensive than they’ve ever been.

“Also, it is increasingly expensive to hire pathologists coming out of residency,” said the consultant. “The cost of running a pathology laboratory is always rising, but the reimbursement is going in the opposite direction.”

For those labs forced to go out of network, Anthem will have a provider vacuum it needs to fill. “While the large national labs are good at what they do, they don’t always have the local or regional relationships needed to deliver the fastest results to referring physicians,” the consultant said. “To fill any holes in Anthem’s network, some local and regional pathology labs may be able to contract with Anthem or subcontract with the large national labs, but that remains to be seen.

“Most patients are unaware of this, but referring physicians know they can get answers within 24 hours or even the same day from the anatomic pathologists in their town,” he commented. “That’s important in terms of providing quality patient care.

“Take the example of a referring physician who removes a suspicious lesion,” he added. “That physician can get an accurate diagnosis the next day or maybe sooner from a local pathologist. I’m not sure the national laboratories can do that for all pathology services in all local communities.”

When referring physicians and anatomic pathologists have close relationships that they’ve built up over many years, they can work together to improve patient care, the consultant said. Conversely, the opposite also is true, he added.

Quality Care vs. Patient Harm

“Those local relationships result in quality care,” he said. “When a referring physician can ask his or her pathologist about a report the pathologist wrote, that alone can be the difference between quality care and potential harm to a patient.

“With large national labs, that personal relationship between the local physician and the local pathologist is diminished,” he added. “When working with the national labs, referring physicians may need to call an 800 number and might not get a response the same day.

“Health plans don’t understand that in some cases, their referring physicians need to have an immediate and correct answer from the pathologist,” he added. “In the case of a patient with cancer, that patient can’t wait until his or her next office visit. After the biopsy specimen is collected, physicians and patients need to know within a day or two at the most.”

Patients suffer when a pathology group is forced to drop out of an insurer’s network or when it lays off a pathologist, because such disruption may lead to poor quality care. “Disruption in a long-standing relationship can increase the possibility of a patient getting a misdiagnosed cancer or a false negative,” the consultant said. “Or, that general pathologist who is not a specialist may say the lesion or tumor is undeterminable and the patient should return in six months. In many cases, that might be bad advice.

Sub-specialist Pathologist

“Meanwhile, the specialized pathologist would identify that lesion or tumor exactly on day one, eliminating the need to wait for the next office visit,” he added. “We know what can happen in six months: that cancer could spread.”

Another consultant commented about the deep cuts Anthem is making. “Anthem has a view of pathologists that is unlike that of other insurers,” said the second consultant who also asked not to be named. “For its billing purposes, Anthem has two types of pathologists. In one group are independent pathologists who play by the rules and don’t try to bill outrageous amounts.

“The second group has tried to compete by commanding rates that are two, three, and four times higher for some anatomic pathology codes,” the second consultant explained. “In my opinion, Anthem is targeting this second group. It’s similar to what Aetna did four or five years ago when it trimmed its AP network to reduce costs by having members use in-network pathology groups or the large national labs whenever possible.”

AP as Ancillary Service Is New Payer Strategy

ONE PATHOLOGY CONSULTANT HAS AN UNUSUAL THEORY about Anthem’s Strategy to deeply cut anatomic pathology (AP) professional component (PC) payments while moving AP to an ancillary service.

“By categorizing the anatomic pathology professional component as an ancillary service, Anthem may believe it can cut what it pays for AP services,” commented Mick Raich, CEO of Vachette Pathology, in Sylvania, Ohio. “When Anthem puts all AP labs under the ancillary services category, it doesn’t have to pay the higher rates that it has been paying for the professional components of AP services.

“Next, by putting anatomic pathology professional groups under the ancillary fee schedule, Anthem then has a single fee schedule for all clinical laboratory and anatomic pathology services,” noted Raich. “Doing so allows Anthem to pay whatever rate it chooses.”

Bill to Curb Surprise Billing

In addition, Raich said, Anthem may hope Congress will pass a bill to limit surprise billing. “A national surprise billing law will have a benchmark rate for out-of-network care,” Raich said. “Some health insurers may favor that law because they believe the benchmark out-of-network rate set by that law would be lower than what they’re paying now for out-of-network care.

“If there is a low benchmark rate for out-of-network care and health insurers reset all of their contracts before the law goes into effect, what insurers pay for out-of-network care will be even lower than what they pay now,” Raich explained. “If that happens, a federal surprise billing law could remove any option that any physicians—including anatomic pathologists—will have to negotiate for higher rates.”


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