Pathology Updates

Complex Lab Test Demonstration Project

CMS on July 5 released several documents covering the complex lab test demonstration project authorized by §3113 of the Affordable Care Act. A complex lab test for these purposes is defined as “an analysis of gene protein expression, topographic genotyping, or a cancer chemotherapy sensitivity assay.” The CPT codes that describe such tests include 83890-83914 (molecular diagnostics), 86294-86304 (tumor immunoassay), and several others.

In general, Medicare’s standard date of service rules stipulate that a clinical lab test that’s ordered by the treating physician within 14 days of a patient’s discharge from a hospital can only be billed by the hospital—the performing laboratory must bill the hospital, and the hospital bills Medicare. During the demonstration project period, participating laboratories “may bill Medicare directly for a complex clinical laboratory test which is ordered by the patient’s physician less than 14 days following the date of the patient’s discharge from the hospital or [critical access hospital].” The objective of the demonstration project is to evaluate the permitted change in performing laboratory billing arrangements on “access to care, quality of care, health outcomes, and expenditures.”

Participation in the demonstration project is voluntary. Laboratories that elect to participate and to bill Medicare directly for complex lab tests for hospital patients must submit claims for such tests with “a Project Identifier 56 for a test that appears on the Demonstration Test List.” (CMS hasn’t yet said exactly where within the standard Form CMS-1500 format the project identifier is to appear.) Heads-Up: If a participating laboratory wishes to bill Medicare for a complex lab test that doesn’t appear on the Demonstration Test List, it must file a request for a temporary G-code from CMS no later than August 1.

Proposed Reversal of Requesting Physician Signature Policy

In the Nov. 29, 2010 Federal Register CMS published a policy change that would “require a physician’s…signature on requisitions for clinical diagnostic laboratory tests paid under the [clinical laboratory fee schedule]” starting Jan. 1, 2011. Some people, including the author of Pathology Service Coding Handbook, believe that CMS expects this policy change to apply to requisitions for surgical pathology and cytopathology services as well, although the College of American Pathologists holds a contrary position based on verbal input from CMS.

Pressure from the laboratory industry and others caused CMS to delay implementing the new policy well into 2011. Now CMS has published a proposed rule that “would retract the policy [it] finalized in the [11/29/10 Federal Register] and reinstate the prior policy that the signature of the [requesting] physician…is not required on a requisition for Medicare purposes for a clinical diagnostic laboratory test paid under the CLFS.” {Federal Register, June 30, 2011, pgs. 38342-38347} The comment period on this proposed rule ends at 5:00pm (EDT) August 29.

Proposed Release of Physician Paid Claim Data

The Medicare paid claims data for each individual physician in your practice would be subject to release by CMS to “qualified organizations” if a proposed rule in the June 8 Federal Register goes into effect. According to CMS Administrator Dr. Donald Berwick, the release of this data will “make it easier for employers and consumers to make smart decisions about their health care.” Furthermore, he asserts that physician paid claim data mining by eligible organizations “will result in higher-quality and more cost-effective care [and make] our health care system more transparent [which in turn] promotes competition and drives costs down.”

We believe that granting ill-informed and uninformed laymen access to Medicare paid claims data for individual pathologists would be a grave mistake. Pathologist “performance” and quality of care based on CPT procedure and ICD-9-CM diagnosis codes would be subject to diverse and erroneous interpretation. The comment period for this proposed rule closes at 5:00pm (EDT) August 8.

CMS Proposes to Eliminate TC-Bundling “Grandfather” Exception

CMS is once again proposing to eliminate the ability of independent laboratories to directly bill Medicare Part B for the technical component (TC) of anatomic pathology procedures for certain qualifying hospital inpatients and outpatients. The hospital TC-bundling “grandfather” exception was first introduced by Congress via §542 of BIPA-2000. If CMS’s wish finally comes true, the change in independent laboratory billing arrangements will go into effect Jan. 1. The College of American Pathologists is expected to petition Congress for another extension of the hospital TC-bundling “grandfather” exception beyond its current expiration date of Dec. 31, 2011.

New PQRS Pathology Codes for 2012

CMS’s proposed rule for the CY2012 physician fee schedule, due for publication in the Federal Register sometime next month, includes at least three new Physician Quality Reporting System (PQRS) quality reporting measures for surgical pathologists. They are (1) Barrett’s esophagus (dysplasia is/is not detected in a biopsy diagnosed with Barrett’s esophagus); (2) pT and pN categories, Gleason score, and margin assessment reported for radical prostatectomy specimens; and (3) quantitative Her-2/neu immunohistochemistry result reported with applicable breast cancer specimens. The breast and colorectal cancer PQRS quality measures that have been in effect for surgical pathologists since 2008 will remain available for use in 2012 as well.

Three additional measures developed by the American Society of Breast Surgeons may be reportable by surgical pathologists starting Jan. 1, depending on their final specifications to be announced at a later date. They are (1) preoperative diagnosis of breast cancer; (2) sentinel lymph node biopsy for invasive breast cancer; and (3) biopsy follow-up.

Pathologists who successfully report the breast and/or colorectal cancer PQRS quality measures in 2011 are eligible for a 1% bonus on their total Medicare allowed charges for the year. The bonus percentage will fall to one-half of one percent (0.5%) for the 2012 period.

Medicare Denials of 88363

Some subscribers report ongoing problems getting new molecular pathology sample selection code 88363 paid by Medicare when place of service 21 (inpatient) or 22 (hospital outpatient) is properly assigned to the claim. The typical contractor explanation is that code 88363 is only payable to a hospital under Medicare Part A, which of course is not true. This dilemma is being encountered only in relation to one or two Part B contractors. The problem is solely due to contractor error; CMS coverage policy for code 88363 unquestionably permits payment to pathologists in POS 21 and 22 situations

Revisions to Medicare’s Telemedicine Credentialing Rules

The May 5 Federal Register includes CMS’s final rule affecting hospital and critical access hospital (CAH) credentialing and privileging requirements for telemedicine services. CMS says the new rule removes unnecessary barriers to the use of telemedicine services. Furthermore, CMS expects the new rule to “provide more flexibility to small hospitals and CAHs in rural areas and regions with a limited supply of primary care and specialized providers.” The new rule for hospital and CAH credentialing and privileging of telemedicine services went into effect July 5.

Submitted By: Dennis Padget, President and Founder of DLPadget Enterprises, Inc. & Publisher of Pathology Service Coding Handbook

IRS Delays Enforcement of 3% Withhold Rule

The Internal Revenue Service has announced that it will suspend enforcement of the 3% withhold rule until January 1, 2013.  Originally enacted as part of the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA), this law requires all federal agencies withhold an amount equivalent to 3% of the federal payments made to individuals or corporations providing services to the federal government (including Medicare). The revenues collected through this withhold would be held by the Treasury Department to be applied against a future tax liability that might be incurred by this taxpayer. Although this law was enacted in 2005, enforcement of the law has been delayed by Congress.  Until this most recent announcement by the IRS, the law was slated to take effect on January 1, 2012.  Now that has been delayed until 2013.

The IRS is adopting a $10,000 threshold for the 3% withhold meaning that the government agency (or it's contractor) will only be required to withhold the 3% on payments in excess of $10,000.  The $10,000 threshold applies on a payment-by-payment basis; therefore, if a government entity makes a single payment of $10,000 or more for multiple items or services, the entity must withhold 3% of the payment.

For Medicare, this means that if a physician's practice bills Medicare $3,000 each day for five days for services provided to Medicare beneficiaries during those days, and the Medicare contractor makes a single payment of $15,000 ($3,000 X 5 days), the payment threshold applies to the $15,000 payment.  If, however, the Medicare contractor remits a daily payment to the provider (i.e. $3,000 per day) these multiple payments to the practice will generally not be aggregated in applying the $10,000 threshold.  Because each payment was less than the $10,000 threshold, there would be no withhold. 

Finally, it should be noted that the IRS is adopting certain "anti-abuse" policies to prevent an agency from dividing payments into multiple payments to avoid the threshold.  For example, if a government contractor (MAC, FI, etc.) is scheduled to make a payment to a provider of Medicare services in the amount of $15,000 for services on July 2, 2013, but divides the payment into payments of $7,000 on July 1, 2013, and $8,000 on July 2, 2013, respectively, to avoid withholding, the government entity will be treated as having made a single payment of $15,000 on July 1, 2013.

HBMA and other organizations are actively encouraging Congress to either repeal this law entirely or, at a minimum, repeal this law as it relates to Medicare payments.  Several bills have been introduced in Congress to repeal the 3% withhold but to date, none have been voted on by Congress.

Please be on the lookout for a message from the HBMA leadership on how you can help encourage Congress to repeal this cumbersome and unnecessary law.

Managed Care Announcements
  • In November 2010 Cigna began its gradual transition to operate under its new legal entity name: Cigna Health and Life Insurance Company (CHLIC).

  • Effective July 1, 2011 Great-West Healthcare Participants will be covered under a group Cigna Healthcare Agreement - North Carolina contracted providers.

  • For those provider groups that participate in the CAPE Network; effective December 31, 2011 participation in the CAPE network has been terminated.

  • Palmetto GBA  became the Jurisdiction 11 Medicare Administrative Contractor MAC  for Virginia’s Medicare Part B claims effective March 22, 2011 and Palmetto will become North Carolina’s Medicare Administrative Contractor effective 5-28-2011.  The transition for Virginia’s Part B Medicare claims has been smooth and we expect the transition for North Carolina’s Part B claims to run smoothly as well.  Palmetto will now serve as the Medicare Administrative Contractor for many of the states in which we operate Laboratory, Pathology and Radiology accounts joining those states who already utilize Palmetto GBA as their Medicare Part B Carrier including Ohio, South Carolina and West Virginia.  Palmetto has more enhanced online claim and remittance tools than were available at Trailblazer’s and CIGNA made available for claim status and payment inquiries. 

    Below are some contact telephone numbers for Palmetto GBA Providers which you may find useful and want to make note of:

               Provider Contact Center (PCC)   1-866-830-3043

               Provider Outreach and Education 1-888-414-8592Option 8 

               Palmetto GBA’s Website is  

Quantum Medical Hires Brady Millican as Regional Director of Business Development


Salem, VA (April  18, 2011) – Quantum Medical Business Service is pleased to announce that  H. Brady Millican, of Lakeland, Florida, has been hired as Regional Director of Business Development. 

Millican received his B.A. degree from Washington & Lee University, in Lexington, Virginia.  He has unique experience in the private sector and is a former Officer in the United States Army.  Before joining Quantum, he led a variety of companies under development for a private holding company. His medical business experience ranges from Sales Representative with Dianon Systems, Business Development Director with Ameripath, to leading a degenerative disease research and pharmaceutical company. He served in the United States Army as a helicopter pilot, and is airborne and ranger qualified.