In a move that could have a significant impact on hospital laboratories, the Centers for Medicare and Medicaid Services (CMS) is moving forward with plans to bundle certain clinical laboratory tests performed in hospital outpatient settings into payment for the primary service. Beginning Jan. 1, 2014, CMS will package laboratory tests “when they are integral, ancillary, supportive, dependent, or adjunctive to a primary service or services provided in the hospital outpatient setting.” To be packaged, the lab tests would have to be provided on the same date of service as the primary service and ordered by the same practitioner who ordered the primary service. Molecular pathology tests are exempt from this packaging policy. A laboratory test will be separately paid when it is the only service provided to a beneficiary on that date of service or the lab test is the same date of service as the primary service but is ordered for a different purpose than the primary service by a practitioner different than the practitioner who ordered the primary service. When a lab test is the only service provided to a beneficiary at the hospital, the hospital can receive separate payment for those lab tests by billing for these services on a 14x claim. Medicare will pay hospitals for those services based on the Clinical Laboratory Fee Schedule payment rate. CMS will move five types of services from line item payment to bundled or packaged payment: (1) drugs used as a supply for a diagnostic test, (2) drugs used as supplies during surgical procedures, (3) clinical diagnostic laboratory tests, (4) procedures described by add-on codes, and (5) device removal procedures. In a change from the proposed rule, CMS did not finalize plans to package ancillary services or diagnostic tests on the bypass list under the Hospital Outpatient Prospective Payment System (HOPPS). This is good news since ancillary services includes most anatomic pathology procedures. CMS says it may review ancillary services and diagnostic tests on the bypass list to determine which may be appropriate for packaging as ancillary services in the HOPPS in future years. Lab tests that are included in this packaging policy range from CPT 80047 to CPT 89332. There are seven pathology codes listed as add-on codes that are also subject to packaging (88177, 88185, 88311, 88314, 88332, 88334, and 88388). The final rule and a full list of codes subject to the packaging policy can be found at www.cms.gov
(click on Medicare, Hospital Outpatient PPS, 2014 final rule. A list of lab test codes and add-on codes subject to packaging is included in Addendum P). It’s unclear just how much this will affect the bottom line of hospital laboratories, say industry experts, who note that further analysis needs to be done. On the one hand, if hospitals believe their labs are not profitable because they can no longer track payment for the tests they perform, they could increase outsourcing to independent labs. However, since the packaging rule applies only to certain tests performed on certain days and only for tests paid by Medicare, it’s possible the impact could be limited.