November 2, 2012

2013 Medicare Physician Fee Schedule

The final 2013 Medicare Physician Fee Schedule (released yesterday, November 1, 2012) contains a 52 percent cut for the highest volume technical component anatomic pathology code, CPT Code 88305-TC. This reduction, which will be effective January 1, 2013, brings the payment in line with the Medicare outpatient APC payment rate for the same service. The 88305-TC has been acknowledged by most observers as being over-priced by Medicare and a reduction was expected. However, the size of the reimbursement cut is greater than most have anticipated. The professional component (CPT Code 88305-26) will be increased by two percent. Overall, Medicare reimbursement for the global 88305 anatomic pathology services will be reduced by one-third.

This change will also impact rates paid by commercial third party payors. Many payors base their rates on a percentage of the Medicare Physician Fee Schedule and others will adjust their rates not tied to the Medicare Physician Fee Schedule to reflect this rate change.

The high reimbursement rate under the Medicare Physician Fee Schedule has been a major impetus for the in-sourcing of histology laboratories by referring physicians, and they will now see the value of their investments and their self-referrals significantly diminished. This significant cut in the Medicare reimbursement rate for CPT Code 88305-TC will be a game changer for the in-sourcing of pathology services by referring physicians. It is possible that some in-sourced histology laboratories will attempt to in-source the professional component in an effort to offset the amount of technical component reduction.

New molecular codes have been placed on the Medicare Clinical Laboratory Fee Schedule, rather than the Medicare Physician Fee Schedule. A new professional interpretation G code has been added to the Medicare Physician Fee Schedule. Although this is a controversial decision by the Centers for Medicare and Medicaid Services, the placement on the Clinical Laboratory Fee Schedule means Medicare patients will not have a co-insurance payment and the services will not be subject to the Medicare anti-markup restrictions.

There are two other adjustments which will negatively impact pathologists. There will be a one percent reduction to pathology reimbursement to help fund the increase in reimbursement rates for family physicians. There will also be a one percent reduction in pathology reimbursement due to the practice expense methodology change phase-in.

The final rule also provides that pathologists who participate in the Physician Quality Reporting System (PQRS) and meet all PQRS requirements will get a .5 percent bonus of Medicare Part B allowed charges for 2013 and avoid a 1.5 percent reduction of Part B allowed charges in 2015.

Please feel free to contact Jane Pine Wood or Rick Cooper if you have any questions. 

Jane Pine Wood


Richard S. Cooper


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