A Closer Look at Medicare’s Proposed Changes to the Physician Fee Schedule and How It Affects You

In July, the Centers for Medicare and Medicaid Services (CMS) released what is known as the Physician Fee Schedule Proposed Rule, or PFS, for calendar year 2022.

Pathologists and laboratory professionals need to pay attention to the PFS—the document where CMS sets the payment rates to reimburse pathologists and laboratories for their services. Private insurers often look to Medicare to set their own payment rates. So if Medicare rates go down, private insurers’ rates often go down as well.

This affects laboratory personnel as well as pathologists. Health systems’ leadership looks at which departments are the cost centers and which bring in the income. If revenues are tight, healthcare facilities tend to be more conservative on pay, raises, staffing, etc. Lab personnel are, in part, paid by the Medicare rates (PFS, CLFS, Inpatient Prospective Payment Systems, etc.); they should be aware it impacts pay and laboratory staffing decisions.

All this is to say: Pay attention to the PFS proposed rule, and the feedback that ASCP has provided back to CMS. The PFS comes up for review once a year and it is important that laboratories stay abreast of any changes or revisions.

CMS has nearly 2,000 pathology and laboratory codes together. Factor in all of the codes for medicine, there are literally tens of thousands of codes that set rates for medical services. There is a legal requirement for CMS to update the payment rates every year. However, it cannot possibly adjust all the codes each year, so it adjusts a subset.

Part of the rationale is to prevent Medicare from overpaying (or underpaying) for medical services. As an example, say the cost of a new genetic test is originally priced at $1,000. The following year, another company creates a competing new technology that costs $200. Medicare should not continue to pay $1,000 for the initial genetic test if there is suitable technology that costs much less.

It is advantageous for pathologists and medical laboratories to be aware earlier of the direction in which Medicare payments are heading as it allows them to better respond to a changing market conditions in terms of how to staff, how to market services and how to determine a fiscally appropriate response. 

ASCP has responded to CMS’ proposed changes to the PFS for two important reasons. The society advocates for appropriate payment helps to ensure the laboratory has enough resources to provide quality patient care and to try to ensure that payment rates better reflect the costs of maintaining a quality workforce.

Below is a synopsis of the PFS Proposed Rule and ASCP’s Comments:

Overview of PFS Issues 

• Physician Self-Referral Regulatory Update 
• Pathology Consult Codes 
• Clinical Labor Wage Update 
• Medicare Reimbursement for Innovative Technologies 
• Legislative Fixes 

Physician Self-Referral 

• CMS to update Physician Self-Referral (Stark) rules  
• ASCP urged CMS to exempt anatomic pathology services from Stark Law’s In-Office Ancillary Services exception 
• ASCP urged CMS to require the AP specimens to be processed in a Clinical Laboratory Improvement Amendments (CLIA)-certified high complexity lab (processing of specimens exempt under CLIA) 
• Specimen processing should only be performed under supervised by CLIA-sanctioned professionals (e.g., board certified pathologist) and performed by individuals meeting CLIA’s HC personnel requirements   

 Clinical Pathology Clinical Consult  

• CMS will accept 4 new pathology clinical consult codes (80XX0, 80XX1, 80XX2, and 80XX3)  
• CMS proposal for payment rate does not reflect the AMA-RUC recommendations 
• ASCP urged CMS to accept the full RUC recommendations 
• Promise of new codes for practice of pathology 

Clinical Labor Wage Update 

• CMS proposing to update Medicare PFS clinical labor costs 
• CMS to use BLS data 
• Proposal Could pose financial challenges for some pathologists 
• ASCP urged changes in rule to minimize impact of changing payment rates 

 Paying for Innovative Technology (possible miscellaneous category) 

• CMS sought comments on Medicare reimbursement for application of innovative technology 
• ASCP urged CMS to provide appropriate reimbursement for the cost of new technologies, such as digital pathology, MAAAs tests.

Read ASCP’s full comments to the PFS proposed rule here.