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Management of Pathology Practices
Revised: 15 February 2010
Copyright: (c) 2004-2010, PathologyOutlines.com, Inc.
The articles below have been written or adapted exclusively for PathologyOutlines.com. They reflect the views of the authors, and not necessarily those of PathologyOutlines.com. Contributors have paid a fee to appear on this page. The Management chapter below is a compilation of information from various sources, including those listed under Primary References.
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Another Pay Cut for Pathology Practices and Laboratories, by Mick Raich, Vachette Pathology, posted 15 February 2010
Recently, the 2010 National Physician Fee Schedule Relative Value File was released. This file shows us the Relative Value Unit (RVU) for each CPT code that is billed. The RVU is multiplied by a Conversion Factor (CF) to get the payment for that CPT code. This is how Medicare (CMS) determines what you get paid. Rest of article
Payor Relationship Management Strategies and Trends: A Revenue Cycle Management Perspective, by Leigh Polk, PSA, LLC, posted 31 January 2010
Pathology practices are often surprised at how frequently claims are reimbursed at less than contracted rates. This issue has become more prevalent during these tough economic times when payors are also looking to control costs. There are several effective solutions available to pathology practices who want to avoid claim denials and this pattern of underpayment for other claims. Rest of article
Underpayment of Pathology Technical Component, by Mick Raich, Vachette Pathology, posted 20 January 2010
In many cases, hospitals allow pathology groups to purchase the technical component (TC) of the histology lab at a fair market price. The pathology group then bills a global charge to insurance carriers and pays the hospital the agreed-upon rate for each technical charge. This process allows the pathology practice to garner more revenue, and to help the hospital understand the direct revenue available from this technical work. Rest of article
FTC "Red Flags" Rule Compliance, by John R. Outlaw, PSA, LLC, posted 15 May 2009
The Federal Trade Commission has announced that the enforcement of the new “Red Flags Rule” will be delayed until August 1, 2009, to give creditors and financial institutions, who have low risk of identity theft, more time to develop and implement written identity theft prevention programs. Rest of article
How the New Anti-Markup Rules May Change Your Practice, by Michelle Miller and Mick Raich, Vachette Pathology, posted 15 May 2009
Given the current business environment for laboratory and pathology practices, it is imperative that they be aware of any changes that may affect their revenue streams. The new Medicare anti-markup rules present some unique opportunities for laboratories and pathology practice to increase their revenue and at the same time recoup some lost specimen volume. Rest of article
Coding Prostate Saturation Biopsies, by Laura Edgeworth, PSA, LLC, posted 27Apr09
The approval of the 2009 Medicare Physician Fee Schedule brought several changes to the Pathology community. Perhaps one of the most significant changes was the addition of four HCPCS (Healthcare Common Procedure Coding System) codes used to report the surgical pathology examination of prostate saturation biopsies to Medicare. While the Final Rule provided clarification on Medicare’s policies regarding prostate saturation biopsies, this raised additional questions in the pathology community. What is a prostate saturation biopsy? Rest of article
Archive of past articles (in order of posting)
Billing
Auditing your billing
The Basics of Auditing Your Pathology Billing (III), by Mick Raich, Vachette Pathology, posted 5May05
The Basics of Auditing Your Pathology Billing (II), by Mick Raich, Vachette Pathology, posted 5Jan05
The Basics of Auditing Your Pathology Billing (I), by Mick Raich, Vachette Pathology, posted 20Oct04
Billing-general
Billing Contracts verses Managed Care Contracts, by Mick Raich, Vachette Pathology, posted 20Apr09
The New Year Offerings, by Mick Raich, Vachette Pathology, posted 9Mar09
The Tangled Web of Claim Payments - How Managed Care Contracts Kill Your Revenue, by Mick Raich, Vachette Pathology, posted 4Nov08
Pathology takes another pay cut, by Mick Raich, Vachette Pathology, posted 24Oct08
Collaborative Labs and the Underlying Cost to Pathologists, by Mick Raich, Vachette Pathology, posted 3Sep08
Congress Delays Fee Schedule Cuts 6 Months - Or Not?, by John R. Outlaw, PSA, LLC, posted 1Apr08
Pathology Practice Management Issues for 2008, by Mick Raich, Vachette Pathology, posted 13Jan08
Costly Coding and Documentation Errors, by Chappy Manning, RN, CPC, Pathology Service Associates, LLC, posted 5Sep07
Pricing for Pathology Billing (part 2), by Mick Raich, Vachette Pathology, posted 19Apr07
Pricing for Pathology Billing (part 1), by Mick Raich, Vachette Pathology, posted 5Feb07
A Case Study in Increasing Practice Revenue through Managed Care Negotiations, by Mick Raich, Vachette Pathology, posted 24Jul06
Considerations for Outsourcing Billing Operations, by Pathology Service Associates, LLC, posted 31May06
Critical Strategies for Negotiating Contracts, by Mark S. Daniels, Audit Quality Inc., posted 4May06
Managed Care Payment Shopping, by Mick Raich, Vachette Pathology, posted 23Mar06
What Two Factors Are Critical to Maximizing Revenue?, by Mark S. Daniels and Ken Brodeur, Audit Quality Inc., posted 14Dec05
Are You Using Your Monthly Billing And Collection Reports Effectively? by Al Sirmon, CPA, CEO, Pathology Service Associates, LLC, posted 3Nov04
Compliance
The Case for Compliance: Why You Need an Effective Compliance Program, by John R. Outlaw, CHC, Chief Compliance Officer, PSA, posted 13 February 2007
Direct billing / POD labs
CMS Continues to Tinker with Anti-Markup Rule, POD Labs and In-Office Histology Labs in the Cross-Hairs, by John Outlaw, PSA, LLC, posted 15Apr09
9.30.2005 - AP Day of Infamy, by Bernie Ness, B J Ness Consulting Group, LLC, posted 17Oct05
The Paradigm Shift in Pathology, by Bernie Ness, B J Ness Consulting Group, LLC, posted 10Mar05
To Bill or Not to Bill, That is The Question (Direct Billing), by Bernie Ness, B J Ness Consulting Group, LLC, posted 26Oct04
Other
Management - general
Staying in the Game: Operating Your Practice as a HealthCare Business, by Randal Sanderson, PSA, LLC – A MED3OOO Company, posted 17Dec08
Hospital Outreach Laboratory For Sale. Who’s Buying Now? by Mick Raich, Vachette Pathology, posted 30Nov08
Marketing
Strategies for Growing the Independent Pathology Practice, by Lisa A. Gryscavage, Vachette Pathology Services, posted 29Aug05
The Proactive Patient, by Leigh Polk, Pathology Services Associates, LLC, posted 19Apr05
We Don’t Need Any Sales Representation, Do We? by Bernie Ness, B J Ness Consulting Group, LLC, posted 13Dec04
Quality improvement
Dissecting the Physician Quality Reporting Initiative (PQRI), by Laura Edgeworth, PSA, LLC, posted 1 April 2008
Anatomic Pathology Practices
See also Computer Systems-AP
Future scheduled topics are employment contracts, laboratory operations, malpractice and quality assurance
Table of contents for Management Chapter
Primary references, management-general
Billing terminology: compliance, CPT codes, ICD9, Medicare-Part A, Professional component billing, RBRVS
Archives of Pathology and Laboratory Medicine (Archives), January 1995 to September 2005
Journal search terms: billing, management, marketing
References: Archives 2004;128:59 (training program for residents)
Billing terminology
Ensuring that testing and billing is in accordance with applicable law
Medicare has two compliance rules for teaching physicians – the CPT code must have a specific modifier for Medicare claims, and physicians must indicate in every medical report that the teaching physician compliance rules were met
References: University of Texas Southwestern, University of Florida
Current procedural terminology (CPT codes)
Five digit codes and descriptive terms for medical services and procedures that physicians perform for payment
CPT codes are owned by the AMA
References: American Medical Association
International Classification of Diseases, 9th revision, Clinical Modification (ICD-9)
Based on the official version of the World Health Organization’s international classification of diseases
Required by law for Medicare, and for all practical purposes, by all medical insurance companies for payment of a claim
Clinician provides a code, as does the pathologist; they may be different (example: clinician-hematuria, pathologist-urothelial carcinoma)
References: list of codes #1; #2
Payments for clinical pathology services rendered by pathologists for services generally, not related to a specific patient specimen
Includes oversight of laboratory, supervising laboratory personnel, reviewing abnormal results, discussion with clinicians
Paid to hospitals by Medicare; hospitals are supposed to pay “reasonable compensation” to pathologists
Professional component billing
Billing a patient for each clinical pathology test/procedure performed for that patient, regardless of whether pathologist performs or reviews the test
Theory is that pathologist does oversight of the laboratory (see Medicare Part A services above), and is entitled to bill patient for these efforts
Resource-based relative value scale (RBRVS)
Standardized physician payment schedule implemented by Medicare in 1992
Payment for a procedure code is calculated as the relative value unit (RVU) multiplied by the conversion factor
The RVU is calculated based on physician work, physician practice expense and the professional liability cost for that procedure code, and each component is adjusted by geographic practice costs
All figures are computed by the federal government
Allows clinicians to charge for pathologist’s services, pay pathologists a discount and keep the difference
Appears to violate Medicare regulations and AMA policy, but still is embraced by many clinicians
Unclear if “pod labs” or other schemes by non-pathologist to bill for pathology services are legal
Marketing your pathology practice
May not appear obvious for pathology practices, but considered necessary by many to (a) keep current clients from switching to other groups, (b) get new clients, either for expansion, or to replace clients that go out of business, get smaller or switch to other groups
References: Archives 1995;119:655
End of Management chapter