CMS Finalizes Plans to Package TC of Ancillary Services Under Hospital Outpatient Payment

The Centers for Medicare and Medicaid Services (CMS) has finalized its proposal to package the technical component of certain ancillary services, including many anatomic pathology services, into a single payment for services provided in hospital outpatient departments or freestanding surgical centers (ambulatory surgical centers). The agency will package certain ancillary services when they are integral, ancillary, supportive, dependent, or adjunctive to a primary service. The initial set of services to be packaged under this ancillary service policy are the services assigned to ambulatory payment classifications (APCs) having an APC geometric mean cost (prior to application of status indicator Q1) of less than or equal to $100. Services that are significant for pathologists include those assigned to APC 352 (Level 1 Pathology) and APC 433 (Level II Pathology). Services that fall under APC 0345, Transfusion Laboratory Procedures, also are subject to the packaging policy. The packaging policy applies only to the facility payment for the technical aspect of the services and does not affect the Physician Fee Schedule payment to the pathologist for the physician work in performing pathology services. The $100 geometric mean cost limit for the APC is part of the methodology of establishing an initial set of conditionally packaged ancillary service APCs and is not meant to represent a threshold above which a given ancillary service would not be packaged but as a basis for selecting an initial set of APCs that would likely be updated and expanded in future years. According to CMS, the ancillary services that will be packaged are primarily minor diagnostic tests and procedures that are often performed with primary services, although there are instances where hospitals provide such services alone and without another primary service during the same encounter. The College of American Pathologists opposed the packaging policy, saying it would increase administrative burdens, provide disincentives for medically necessary services, and lead to disruptions in patient care.

PATHOLOGY SERVICES SUBJECT TO PACKAGING UNDER HOPPS (PARTIAL LISTING OF PATHOLOGY CODES)
LEVEL I PATHOLOGY (APC 0342)
CODE	DESCRIPTOR	GEOMETRIC MEAN
88304	Tissue exam by pathologist	$41.07
88112	Cytopath cell enhance tech	$42.94
88305	Tissue exam by pathology	$59.71
88173	Cytopath eval fna report	$60.82
88312	Special stains group 1	$63.13
88313	Special stains group 2	$74.82
88365	In situ hybridization (FISH)	$124.88
LEVEL II PATHOLOGY (APC 0433)
88307	Tissue exam by pathology	$175.74
88331	Path consult, frozen section one block	$98.82
88342	Immunohistochemistry antibody stain	$128.92
88120	Cytp, urine 3-5 probes, manual	$137.91
88121	Cytp, urine 3-5 probes, computer-assisted	$162.53
88360	Tumor immunohistochemistry, manual	$144.39
88361	Tumor immunohistochemistry, computed assisted	$143.42
88184	Flow cytometry, technical component only, first marker	$316.97
Source: Centers for Medicare and Medicaid Services

  Payment Update CMS will update the Hospital Outpatient Prospective Payment System (HOPPS) market basket by 2.2 percent for calendar year 2015. The increase is based on the projected hospital market basket increase of 2.9 percent minus both a 0.5 percentage point adjustment for multifactor productivity and a 0.2 percent adjustment required by the Affordable Care Act. CMS will continue to implement the statutory two percentage point reduction in payment for hospitals failing to meet the hospital outpatient quality reporting requirement by applying a reporting factor of 0.980 to the HOPPS payments and all applicable services. Takeaway: Pathologists who provide services in hospital outpatient settings may need to adjust their provider agreements to ensure they receive payment from the hospital for some services that now will be packaged into a single payment. Side Box: The final HOPPS rule is available at www.cms.gov. Click on Medicare, and then click on Hospital Outpatient PPS.