Technical/Professional Billing Has Risks for Labs, Doctors

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IT’S A HOT TOPIC ACROSS THE ANATOMIC PATHOLOGY PROFESSION. Increasing numbers of physician groups are hiring laboratories to perform the technical component of an anatomic pathology case and engaging pathologists to diagnose the cases. This phenomenon is often called TC/PC, to represent how the technical component (TC) is being performed and billed independently of the professional component (PC). The following letter was written in response to a letter on this subject published in the February 27, 2006 issue of THE DARK REPORT.

Letter To The Editor

Dear Editor,

I read with interest your February 27, 2006 issue and the letter to the editor regarding technical/professional billing for anatomic pathology services (AP). While the letter was accurate and factual, I believe that it may have not painted a full picture of the risks and benefits of what is generally known as TC/PC billing.

We agree that most simple TC/PC billing arrangements raise little risk of the laboratory violating federal law. However, these types of arrangements do raise serious concerns for the local non-pathology practice providing the professional component. And there are cases where the laboratory or the pathologist may place themselves at risk of violating compliance laws and regulations. One example would be the consulting and advisory services often provided by laboratories for little or no charge to physician group practices engaging in TC/PC billing.

Finally, the letter did not consider the impact of TC/PC billing on the quality of care provided to the patient, ultimately the most important consideration in what we do as healthcare providers.

The writer of that letter, while noting that a growing number of physician groups are establishing TC/PC arrangements, particularly in certain regions of the East, did not address the many issues faced by a physician group practice engaging in these types of arrangements.

For example, prior to billing for the professional component of pathology services, the practice must ensure that its arrangement with a local pathologist complies with the Stark law’s in-office ancillary exception. This compliance requires a complicated, case-by-case, fact-specific determination which can only be addressed by counsel for the physicians’ practice.

Furthermore, compliance requires that the pathologist—whether employed or contracted—must perform the interpretation inside the practice’s office or in space controlled and used exclusively by the physician practice.

In addition, arrangements paying the pathologist on a “per slide” basis” risk violating the fee-splitting laws currently on the books in many states. As a result, physician practices are well-advised to at least seek specialized legal counsel on this issue and, in many states, should obtain a written opinion from their state’s licensure authority prior to paying any pathologist in this fashion.

We have also seen many laboratories providing extensive consultation services to assist local practices’ efforts to provide and bill for the professional component. These efforts often include helping the practice purchase necessary equipment and assisting the practice to engage and train a pathologist.

Most importantly, we have also seen laboratories providing physician practices with access to expensive, full-function laboratory information software at little to no charge. This is clearly an inappropriate kickback to the physicians’ practice because it is intended to induce the referrals of the technical component to the laboratory.

Finally, by relying on an employed or contracted pathologist, the physician practice exposes itself to increased exposure to malpractice risks associated with the pathologist’s professional interpretation.

Similarly, it appears that the patient’s best interest is often forgotten when structuring such TC/PC arrangements. Instead of referring the pathology services to the most qualified pathologist, the practice looks to find a local pathologist willing to work on a part-time basis in the practice.

As always, I want to express my appreciation for the role that THE DARK REPORT plays in providing insightful, timely, and important information to the pathology community. By publishing these letters and encouraging more public discussion, I believe you have started an important dialogue regarding TC/PC billing. However, for the writer of the February 27 Letter to the Editor to state that there is little compliance risk tells only the story of the laboratory’s risk in this type of arrangement. It does not tell the story of the serious concerns faced by a physicians’ practice involved in a TC/PC arrangement involving their patient referrals.

Sincerely,
William W. Curtis
Chairman and Chief Executive Officer
CBLPath, Inc.
Ocala, Florida

Editor’s Response

It is relevant for readers to know that CBLPath, Inc. was the company which filed a request for an opinion with the Office of the Inspector General (OIG) on the subject of “anatomic pathology laboratory condominiums.” This resulted in OIG Advisory Opinion 04-17, which was a negative ruling for the specific business arrangement as presented. (See TDR, January 3, 2005.)

This background adds understanding to the comments of Mr. Curtis, since his executive team and legal counsel spent about one year in discussions with the OIG as the OIG did its research prior to issuing Advisory Opinion 04-17. They have recent experience at responding to compliance issues the OIG considered relevant in the business model of the anatomic pathology lab condos.

THE DARK REPORT invites others with information, comments, or opinions to join this discussion. Until the OIG issues more specific guidance, or takes enforcement action against laboratories and physician groups engaged in TC/PC arrangements it considers to be non-compliant, there will be labs and physicians willing to push compliance boundaries.

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