Payment for Pathology Services
A.Payment for Professional Component (PC) Services
Payment may be made under the physician fee schedule for the professional component of physician laboratory or physician pathology services furnished to hospital inpatients or outpatients by hospital physicians or by independent laboratories, if they qualify as the
re-assignee for the physician service.
B.Payment for Technical Component (TC) Services
1.General Rule
Payment is not made under the physician fee schedule for TC services furnished in institutional settings where the TC service is bundled into the facility payment, e.g., hospital inpatient and outpatient settings. Payment is made under the physician fee schedule for TC services furnished in institutional settings where the TC service is not bundled into the facility payment, e.g., an ambulatory surgery center (ASC).
Payment may be made under the physician fee schedule for the TC of physician pathology services furnished by an independent laboratory, or a hospital if it is acting as an independent laboratory, to non-hospital patients. The physician fee schedule identifies physician laboratory or physician pathology services that have a TC service.
2.TC Services Furnished by Independent Laboratories to Hospital Inpatients and Outpatients
*For services furnished on or after July 1, 2012, an independent laboratory may not bill the Medicare contractor (and the Medicare contractor may not pay) for the TC of a physician pathology service furnished to a hospital inpatient or outpatient.
*For services furnished prior to July 1, 2012, payment may be made under the fee schedule, as noted below, for the (TC) of pathology services furnished by an independent laboratory to hospital inpatients or outpatients.
CMS published a final regulation in 1999 that would no longer allow independent laboratories to bill under the physician fee schedule for the TC of physician pathology services. The implementation of this regulation was delayed by Section 542 of the Benefits and Improvement and Protection Act of 2000 (BIPA). Section 542 allows the Medicare carrier to continue to pay for the TC of physician pathology services when an independent laboratory furnishes this service to an inpatient or outpatient of a covered hospital. This provision is applicable to TC services furnished January 1, 2001 through June 30, 2012.
For this provision, a covered hospital is a hospital that had an arrangement with an independent laboratory that was in effect as of July 22, 1999, under which a laboratory furnished the TC of physician pathology services to fee-for-service Medicare beneficiaries who were hospital inpatients or outpatients, and submitted claims for payment for the TC to a carrier. The TC could have been submitted separately or combined with the professional component and reported as a combined service.
The term, fee-for-service Medicare beneficiary, means an individual who:
*Is entitled to benefits under Part A or enrolled under Part B of title XVIII or both; and
*Is not enrolled in any of the following: A Medicare + Choice plan under Part C of such title; a plan offered by an eligible organization under §1876 of the Social Security Act; a program of all-inclusive care for the elderly under
§1894; or a social health maintenance organization demonstration project established under Section 4108 of the Omnibus Budget Reconciliation Act of 1987.
In implementing Section 542, the contractors should consider as independent laboratories those entities that it has previously recognized as independent laboratories.
An independent laboratory that has acquired another independent laboratory that had an arrangement of July 22, 1999, with a covered hospital, can bill the TC of physician pathology services for that hospital’s inpatients and outpatients under the physician fee schedule.
An independent laboratory that furnishes the TC of physician pathology services to inpatients or outpatients of a hospital that is not a covered hospital may not bill the carrier for the TC of physician pathology services during the time §542 is in effect.
If the arrangement between the independent laboratory and the covered hospital limited the provision of TC physician pathology services to certain situations or at particular times, then the independent laboratory can bill the carrier only for these limited services.
The contractor shall require independent laboratories that had an arrangement, on or prior to July 22, 1999 with a covered hospital, to bill for the technical component of physician pathology services to provide a copy of this agreement, or other documentation
substantiating that an arrangement was in effect between the hospital and the independent laboratory as of this date. The independent laboratory must submit this documentation for each covered hospital that the independent laboratory services.
C.Physician Laboratory and Pathology Services
Physician laboratory and pathology services are limited to:
*Surgical pathology services;
*Specific cytopathology, hematology and blood banking services that have been identified to require performance by a physician and are listed below;
*Clinical consultation services that meet the requirements in subsection 3 below; and
*Clinical laboratory interpretation services that meet the requirements and which are specifically listed in subsection 4 below.
1.Surgical Pathology Services
Surgical pathology services include the gross and microscopic examination of organ tissue performed by a physician, except for autopsies, which are not covered by Medicare.
Depending upon circumstances and the billing entity, the contractors may pay professional component, technical component or both.
2.Specific Hematology, Cytopathology and Blood Banking Services
Cytopathology services include the examination of cells from fluids, washings, brushings or smears, but generally excluding hematology. Examining cervical and vaginal smears are the most common service in cytopathology. Cervical and vaginal smears do not require interpretation by a physician unless the results are or appear to be abnormal. In such cases, a physician personally conducts a separate microscopic evaluation to determine the nature of an abnormality. This microscopic evaluation ordinarily does require performance by a physician. When medically necessary and when furnished by a physician, it is paid under the fee schedule.
For services furnished prior to January 1, 1999, contractors pay separately under the physician fee schedule for the interpretation of an abnormal pap smear furnished to a hospital inpatient by a physician. They must pay under the clinical laboratory fee schedule for pap smears furnished in all other situations. This policy also applies to screening pap smears requiring a physician interpretation. For services furnished on or after January 1, 1999, contractors allow separate payment for a physician’s interpretation of a pap smear to any patient (i.e., hospital or non-hospital) as long as: (1) the
laboratory’s screening personnel suspect an abnormality; and (2) the physician reviews and interprets the pap smear.
This policy also applies to screening pap smears requiring a physician interpretation and described in the National Coverage Determination Manual and Chapter 18. These services are reported under codes P3000 or P3001.
Physician hematology services include microscopic evaluation of bone marrow aspirations and biopsies. It also includes those limited number of peripheral blood smears which need to be referred to a physician to evaluate the nature of an apparent abnormality identified by the technologist. These codes include 85060, 38220, 85097, and 38221.
Contractors pay the PC for the interpretation of an abnormal blood smear (code 85060) furnished to a hospital inpatient by a hospital physician or an independent laboratory. For other hematology codes, payment may be made for the PC component if the service is furnished to a patient by a hospital physician or independent laboratory. In addition, payment may be made for these services furnished to patients by an independent laboratory.
Blood banking services of hematologists and pathologists are paid under the physician fee schedule when analyses are performed on donor and/or patient blood to determine compatible donor units for transfusion where cross matching is difficult or where contamination with transmissible disease of donor is suspected.
The blood banking codes are 86077, 86078, and 86079 and represent professional component only services.
3.Clinical Consultation Services
Clinical consultations are paid under the physician fee schedule only if they:
a.Are requested by the patient’s attending physician;
b.Relate to a test result that lies outside the clinically significant normal or expected range in view of the condition of the patient;
c.Result in a written narrative report included in the patient’s medical record; and
d.Require the exercise of medical judgment by the consultant physician.
Clinical consultations are professional component services only, i.e., there is no TC service. The clinical consultation codes are 80500 and 80502.
Routine conversations held between a laboratory director and an attending physician about test orders or results do not qualify as consultations unless all four requirements are met. Laboratory personnel, including the director, may from time to time contact attending physicians to report test results or to suggest additional testing or be contacted by attending physicians on similar matters. These contacts do not constitute clinical consultations. However, if in the course of such a contact, the attending physician requests a consultation from the pathologist, and if that consultation meets the other criteria and is properly documented, it is paid under the fee schedule.
EXAMPLE: A pathologist telephones a surgeon about a patient’s suitability for surgery based on the results of clinical laboratory test results. During the course of their conversation, the surgeon asks the pathologist whether, based on test results, patient history and medical records, the patient is a candidate for surgery. The surgeon’s request requires the pathologist to render a medical judgment and provide a consultation. The pathologist follows up his/her oral advice with a written report and the surgeon notes in the patient’s medical record that he/she requested a consultation. This consultation is paid under the fee schedule.
In any case, if the information could ordinarily be furnished by a nonphysician laboratory specialist, the service of the physician is not a consultation payable under the fee schedule.
See the Program Integrity Manual for guidelines for related data analysis to identify inappropriate patterns of billing for consultations.
4.Clinical Laboratory Interpretation Services
Only clinical laboratory interpretation services, which meet the criteria in subsections C.3.a, c, and d, are billable under the physician fee schedule. These codes have a PC/TC indicator of “6” on the Medicare Physician Fee Schedule database. These services are reported under the clinical laboratory code with modifier 26. These services can be paid under the physician fee schedule if they are furnished to a patient by a hospital pathologist or an independent laboratory. Note that a hospital’s standing order policy can be used as a substitute for the individual request by the patient’s attending physician.
Contractors are not allowed to revise CMS’s list to accommodate local medical practice. The CMS periodically reviews this list and adds or deletes clinical laboratory codes as warranted.
D.Global Billing
Billing globally for services that are split into separate PC and TC services is only possible when the PC and TC are furnished by the same physician or supplier entity. For example, where the PC and the TC of a diagnostic service are provided in the same service location, this is reflected as the address entered into Item 32 on CMS Form 1500, which provides the ZIP Code to pay the right locality/GPCI. In this case, the physician/entity may bill globally. However, if the PC and the TC are each provided in different service locations (enrolled practice locations), the PC and the TC must be separately billed.
Merely applying the same place of service (POS) code to the PC and the TC does not permit global billing for any diagnostic procedure.
