Knowledge Base Category -

In 1999, CMS proposed a policy to pay only the hospital for the technical component (TC) of physician pathology services furnished to hospital patients. However, various legislative provisions since then have continued to delay the implementation of this provision. Under these delays, the independent or pathology laboratories providing the technical component of pathology services for covered hospitals have continued to bill Medicare directly. Covered hospitals are those hospitals that had an arrangement with an independent laboratory that was in effect as of July 22, 1999, under which the laboratory furnished the TC of physician pathology services to fee-for service Medicare beneficiaries who were patients of the hospital.

The Tax Relief Act of 2012 again extended the moratorium on this policy through June 30, 2012. Effective July 1, 2012, the moratorium expires and only hospitals can bill for the TC of physician pathology services furnished to hospital inpatients or outpatients. Pathologists and independent laboratories that provide the TC of physician pathology services furnished to hospital patients may no longer bill for and receive Medicare payment for these services, effective for claims with dates of service on and after July 1, 2012.

Medical Management Plus, Inc. has received numerous questions concerning this requirement. Following are several questions and answers to help hospitals understand the implementation of the rule.

1. Is this change for certain? It is always possible that Congress will pass legislation extending the moratorium again prior to July 1, 2012. However, at this time, the regulation is expected to begin July 1.
   
2. Which hospitals are affected? Hospitals that were covered under the grandfather clause of the original regulation (see definition of covered hospitals above), send their pathology specimens to an independent or pathology laboratory for processing and allow the processing laboratory to bill Medicare directly.
   
   
3. Note that some larger hospitals may provide pathology processing services in the hospital laboratory and bill Medicare directly for these services. Some other hospitals may send pathology specimens out for processing, but may already bill Medicare directly by choice or because they do not meet the definition of a covered hospital.
4. What types of services are involved? Physician cytopathology and surgical pathology technical component services for hospital inpatients and outpatients. Tissue specimens removed during an inpatient or outpatient surgical procedure are processed prior to the microscopic evaluation/interpretation by a pathologist. This processing is the technical component of pathology services and includes such services as embedding the tissue specimen, slicing thin tissue sections, preparing and staining the pathology slides. See the 88xxx CPT codes paid under APCs 0342, 0343, and 0344 on the Outpatient Prospective Payment System (OPPS) Addendum B for the affected codes. Note that pathology TC services provided during surgery, such as frozen sections, would also be included when these are performed and billed to Medicare by the pathology laboratory.
   
5. How will hospitals be reimbursed by Medicare for these services? For hospital inpatients, Medicare payment is made under a DRG payment which includes any pathology services provided to the patient. The pathology services will be paid under the Outpatient Prospective Payment System (OPPS) APCs for hospital outpatient services.
   
6. How will hospitals know what CPT codes to bill for each patient? Since each patient specimen may require different pathology testing, it is best to have the processing laboratory provide the hospital the applicable CPT codes for each case. The hospital and laboratory providing the TC should develop a process for timely exchange of this information in order not to delay hospital billing. Pathologists may request additional testing in order to make a definitive diagnosis of a pathology specimen, so remember to address add-on or late charges.
   
7. How will the independent/pathology laboratory be paid for its services? The hospital and independent/pathology laboratory will have to negotiate a financial agreement where the hospital pays the processing laboratory for its pathology TC services. The hospital will have to consider the reimbursement it will receive for outpatient services versus the cost of TC services plus any other costs for providing the service (such as handling, supplies, billing cost, etc.) The testing laboratory will have to consider its total costs versus the payment amount from the hospital. The parties will also have to consider whether payment is per CPT code, per case, per specimen, etc.
   
8. Does this affect the pathology professional charges? No, pathologists will continue to bill and be reimbursed by Medicare Part B directly for their professional services.

The following flowchart illustrates the process.

Medicare Hospital Dialysis Services 

CMS Transmittal 2455 released April 26, 2012 informs hospitals about the correct billing of acute dialysis services for Medicare inpatients and outpatients.

HCPCS code G0257 is only to be billed for hospital outpatients with ESRD. G0257 is not to be reported for hospital inpatient services billed under Part B (12x type of bill) or for hospital outpatients who do not have ESRD. HCPCS code G0257 is used for hospital outpatients with ESRD when the criteria listed below from the Medicare Claims Processing Manual, chapter 4, section 200.2 is met.

“Payment for unscheduled dialysis furnished to ESRD outpatients and paid under the OPPS is limited to the following circumstances:

• Dialysis performed following or in connection with a dialysis-related procedure such as vascular access procedure or blood transfusions;
• Dialysis performed following treatment for an unrelated medical emergency; e.g., if a patient goes to the emergency room for chest pains and misses a regularly scheduled dialysis treatment that cannot be rescheduled, CMS allows the hospital to provide and bill Medicare for the dialysis treatment; or
• Emergency dialysis for ESRD patients who would otherwise have to be admitted as inpatients in order for the hospital to receive payment.”

HCPCS code G0257 may only be reported on Type of Bill (TOB) 13X (hospital outpatient service) or TOB 85X (Critical Access Hospital). Effective for services on and after October 1, 2012, claims containing HCPCS code G0257 will be returned to the provider for correction if G0257 is reported with a type of bill other than 13X or 85X (such as a 12x inpatient claim).

Hospitals should report HCPCS code 90935 (Hemodialysis procedure with single physician evaluation) for the following hospital dialysis services.

• Hospital inpatients with or without ESRD who have no coverage under Part A, but have Part B coverage. The service must be reported on a Type of Bill 12X or Type of Bill 85X.
• Hospital outpatients who do not have ESRD and are receiving hemodialysis in the hospital outpatient department. The service is reported on a TOB 13X or l 85X.

CPT code 90945 (Dialysis procedure other than hemodialysis (e.g. peritoneal dialysis, hemofiltration, or other continuous replacement therapies)), with single physician evaluation, may be reported by a hospital paid under the OPPS or CAH method I or method II on type of bill 12X, 13X or 85X.

For complete information see the transmittal at the link above or the MLN Matters Article MM7732.