Management of Pathology Practices

September 2007

Management Home Page


Costly Coding and Documentation Errors

By Chappy Manning, RN, CPC

Pathology Service Associates, LLC


With expanding regulations and declining reimbursement, it’s easy to understand why many physicians are frustrated and find themselves yearning for a simpler process.  It is more important than ever for pathologists to have well-trained staff to stay informed of current guidance and to regularly solicit independent audits.  A review by an independent expert is an opportunity for the physician group to look in the mirror and critique their documentation, coding and billing practices from an outside perspective.


Often, just making a few minor revisions can go a long way toward streamlining the process and improving the bottom line.  To assess your group’s practices, ask yourself the following questions.  If you can answer yes to all five, you’re well on your way.

1. Is the requisition properly completed?

Would your lab accept a specimen requisition without the patient’s name or description of the specimen?  The same protocol should be followed if the requisition is missing diagnosis information.  Knowing the patient’s signs and symptoms or the clinician’s diagnosis may be critical to getting paid.


All Clinical Lab tests, all Pap tests, and some anatomic pathology specimens (those with normal or negative findings) must be assigned ICD-9 codes from the referring physician’s reason for testing.  As stipulated in the Balanced Budget Act, the referring physician is required to provide diagnostic information to the testing entity at the time the test is ordered.  Diagnosis codes cannot be assigned based on clinical lab findings, because they are not interpreted by a physician.


2. Do you reference the current CPT manual?

Most surgical specimens are specifically listed in the 88302-88309 section of CPT, often in multiple levels. But unless you are very familiar with the manual, it is easy to assign the wrong code.


Who would think to look under the “B” section to find synovial cyst? But that’s where you’ll find it, listed under Level III as “Bursa/synovial cyst.” 


Pay close attention to the descriptors used to differentiate the specimens at different levels.  Using these distinguishing terms in your report leaves no doubt as to the correct code.


Remember also that CPT-4 manuals are updated annually.  Make sure you use the current edition.


3. Do you have hospital standing orders for clinical lab tests requiring professional interpretation?


Medicare lists as payable under Part B approximately 20 clinical lab tests that may require a pathologist’s interpretation.  If you are providing any of these professional services, such as immunoelectrophoresis or fibrinolysin screening, make sure you meet Medicare’s three criteria, and bill the clinical lab code with a 26 (professional component) modifier.  Reimbursement averages $16 to $20 per test, making them worth the extra effort.  Two requirements - issuing a written narrative report and the exercise of medical judgment - are likely already being met.  But make sure you have a hospital standing order, or you receive an order for the professional interpretation of the test with each request.  Having a “lab policy” requiring professional interpretation of these tests is not sufficient.


4. Have you investigated reimbursement of new procedures?


This is not, strictly speaking, a coding/documentation issue, but it is costly and results in denials and lost dollars if not appropriately addressed.  Before purchasing new equipment or offering new services to your clients, make sure you can add the new CPT codes to your contracts for satisfactory reimbursement, and investigate whether Medicare or other payers have national or local coding determinations (NCDs or LCDs) associated with the service.  You want to find out before you make a large capital investment if your largest payer considers the associated service “investigational,” or severely limits diagnoses for which they will cover the service.


5. If applicable, does documentation support addition of -59 modifier?


CMS’ initiative to control improper payment for Part B claims led to the NCCI edits.  Billing certain code pairs for the same patient, same date of service, requires the addition of -59 modifier for both services to be paid.  Because of the high potential for abuse, the OIG has identified the -59 modifier as a priority for investigation.  It is imperative for pathologists to document appropriately when medically necessary to perform both methodologies in cases that Medicare considers “duplicate testing.”  Coders must be able to review reports and determine whether the -59 modifier is warranted.  If you are simply adding a -59 modifier to the codes and re-billing when denied as “service not separately billable,” then you may want to find a good attorney!




An outside expert analysis may be the most effective way to get the real measure of your group’s performance, but ongoing self-examination and education is critical to simplifying your procedures while improving collections.


Chappy Manning, RN, is the Billing Support Services, Coding Coordinator for Pathology Service Associates (PSA), LLC and is certified by the American Academy of Professional Coders.  For more information, please contact PSA at 800-832-5270 or visit