Technical/Professional Billing Triggers Strong Opinions

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IT’S A TREND WHICH IS GAINING THE NOTICE of growing numbers of pathologists. Physician groups are taking steps to directly engage pathologists to diagnose cases.

The term “TC/PC” is often used to describe situations where two different providers provide the technical component (TC) and the professional component (PC) and each bills separately for its work.

The TC/PC trend is unwelcome to the anatomic pathology profession and has generated letters to THE DARK REPORT. Here is the latest, written in response to another letter about TC/PC published on May 22, 2006 by THE DARK REPORT.

Letter To The Editor

Dear Editor,

I describe the letter which appeared in the May 22 issue of THE DARK REPORT regarding TC/PC as one of self-interest and mixing fact with fiction.

But, let me make this crystal clear: I, too, am not a supporter of TC/PC. However, no real purpose is served in mashing TC/PC by mixing facts with fiction.

In recent years, a number of laboratories have approached office-based physicians and proposed a split TC/PC business agreement. The laboratory would provide technical component services, send the slides to the client, and file claims for the TC directly with payers.

It was up to the physician group to make its own arrangements for pathology services. In many states, the physicians have contracted with a pathology provider to read the slides at a discounted fee, then the physician group marks up the fee and bills payers directly for the professional component.

Another type of business arrangement is where the physician group builds its own histology laboratory and performs the technical component in this physician office lab (POL). It can then contract with a pathology provider to read the slides and diagnose the cases. In such situations, the physician group will bill for the technical component. But, depending on how it has contracted for the pathology services, it may or may not be submitting claims for the professional component.

Both of these PC/TC situations have plenty of potential to generate compliance problems. The pathology profession is certainly knowledgeable about the risks and compliance concerns that can result from a poorly-structured business relationship.

Although I agree with potential kick- back issues described in the May 22nd letter to the editor, such as providing advisory and consulting services and full- function laboratory software at little or no cost, I believe the following may offer a more unbiased presentation of the facts:

•Complying with Stark’s in-office ancillary exception is not a complex, complicated or bureaucratic process for physician groups. In simplest terms, it is keyed to these points:

•the laboratory must be wholly owned by the practice
•the laboratory can only serve the patients of the practice
•a pathology group is contracted to provide services at market rates
•the pathology group provides services within the practice’s laboratory

This ancillary exception is always tagged with the term “Stark” as to imply that something maybe wrong with having an in-office laboratory. Few in the industry realize that there are 106,000 CLIA registered in-office laboratories in the country today!

Granted, the vast majority of these physician office labs (POLs) are clinical rather than anatomic laboratories. It is also reasonable to expect over time that a few of the existing in-office clinical laboratories would expand into anatomic testing and require pathology services. For comparison, there are about 8,600 CLIA registered hospital laboratories and about 5,200 CLIA registered independent laboratories.

It is also important to point out that pathologists’ market rates are rates which the pathologists accept for their work. No one should be under the misperception that these are deemed by dictate to be Medicare professional component fees or a multiple of those fees, as some pathologists would wish.

•Not far behind in stoking the flames of fiction is the notion, in that published letter, that “the patient’s best interest
is often forgotten “(by not) referring the pathology services to the most qualified pathologist…instead find(ing) a local pathologist willing to work on a part-time basis.”

If those statements in the letter are pondered for a brief moment, many may see the folly in them. Where is the most qualified pathologist found? Should a pathologist who is working part-time automatically be classified as “not qualified?”

Consider this: most tissue diagnoses are done in the hospitals of this country by pathologists in average group sizes of three to four pathologists. Very few tissues are sent out of these hospitals for diagnosis by a “most qualified” pathologist. Does this imply that every one of those hospital pathologists is an expert in all of the tissues diagnosed? Or that all tissue-specific cases go only to the tissue-specific expert in the group? I suspect few believe either scenario is reality.

And, how about the part-time pathologist? In most cases that part-timer is a partner or member in a pathology group at a hospital who goes to the specialty physicians’ practice laboratory on a rotating basis to diagnose cases. It may very well be that the same pathology group diagnosed cases for the practice before they installed their own anatomic laboratory or entered into a TC/PC agreement. Implied in the “part-timer” tag is someone unqualified to diagnose cases. Unfortunately, this is woefully wrong.

•Of course, raising the liability issue is always a good scare tactic to toss into the mix. If attention was paid to the above paragraph on the part-time pathologist, it should be clear that the quality of the diagnoses and, hence, the risk of liability is mitigated. In that particular situation the risk is little different than it was prior to entering into a TC/PC relationship or installing an in-office anatomic laboratory. The liability issue is raised because the impression is implied that a part-time pathologist is going to ride into town from somewhere, diagnose the cases and ride out of town that afternoon, maybe never to be heard from again. Mixing these scare tactics with fact does not serve anyone’s agenda well.

•I’m surprised the letter did not go right to the heart of the matter on TC/PC business arrangements between a physician group and pathologists who have agreed to provide professional component services, often at a substantial discount. That is, besides the fact the TC/PC agreement hurts the pathologists who used to have that business (at no discount), no one talks about bringing out the big club to use on specialty physicians and pathologists. That club is found in E- 6.10 of the American Medical Association’s (AMA) Code of Ethics. It reads as follows:

“When services are provided by more than one physician, each physician should submit his or her bill to the patient and be compensated separately, if possible. A physician should not charge a markup, commission, or profit on the services rendered by others.” (my underline.)

Simply put, it is unethical for a specialty practice physician to do TC/PC where the PC portion of the billing from a pathologist is marked up. Does anyone know of a physician who was booted out of the AMA for this ethics infraction?

Probably not. Unless the AMA actively enforces its own Code of Ethics, or federal or state legislation is enacted, TC/PC will continue to exist. Of course, pathologists at the local level could refuse to be a party to TC/PC, but that is highly unlikely. There are too many dollars at stake to do that in these days of falling reimbursement and shrinkage of pathologists’ incomes.

Thanks for your interest in keeping this topic in the forefront of the industry.

Truly yours,

Name Withheld by Request

Editor’s Response

For the pathology profession, a major sore point about the emergence of TC/PC business agreements is that physician groups, seeking a pathologist to do only the professional component, are shopping for the lowest price.

With the concept of “client billing” long established and legal in many states, it is not surprising that specialty physicians, like urologists and gastroenterologists, would want to mark up the pathology professional service, just as they always have done with clinical laboratory testing—often provided in earlier years by the local clinical labs owned by the same pathology groups now being asked to discount their professional fees.

Further, the economic incentives behind TC/PC arrangements encourage physicians to treat pathology services like a commodity and base buying decisions mostly on lowest price. This is certainly a most unwelcome development for the pathology profession. —Editor


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