Management of Pathology Practices

January 2005


The Basics of Auditing Your Pathology Billing (II)

by Mick Raich, Vachette Pathology


In our first installment we discussed the issues surrounding charge capture and insuring that all of the work you perform is actually billed.  This article will cover the topics of fee schedules, sliding fee schedules, client billing and the various types of billing that can be involved.  The next article will include strategies for revenue generation including, part A negotiations, managed care contracting and marketing options.


During any audit process it is always necessary to review the client’s fee schedule.  Even in this time of managed care agreements and “allowed amounts” there are still numerous reasons to review the fee schedule.


The first thing audited is the type of work performed.  Do you perform your own Bone Marrow biopsies?  Are these included on the fee schedule?  Does the group pull their own FNAs and are these included on the fee schedule?  What about the adequacy code for FNAs?  What about the new code covering Bone Marrow Aspiration?  I still find a fair number of groups that have missed codes in their fee schedule. 


Finally I always look at the blood bank codes and the Medicare clinical codes.  Again numerous groups have told me they are compensated for all Medicare work through their part A agreement, and are not even aware that these codes are billable.


Next I review the group’s fees.  Are they fair and adequate?  Are some fees too high or too low?  What is a fair fee?  In some areas this fee may be three times Medicare and in another area this may be very low.  Remember the fee schedule should be based on what the payers are willing to pay.  Why have fees that are lower than the payers allowed amounts?


Many groups have a discounted or sliding fee schedule.  This is a fee schedule where there are discounts placed on a CPT price by volume.  For example:


88305-26       (1 to 5)                        = $200 each

88305-26       (6-10)                          = $150 each

88305-26       11 and above            = $100 each


The key to sliding fee schedules is to keep the fee above your costs and above the current Medicare payment for the service. 


Some practices have client bill relationships.  This is where they are actually allowing the referring physician to bill for their services.  This is typically the case in areas where there is a very competitive environment.  There are numerous Dermatopathology practices that use client billing arrangements. This is also practiced by many large and regional labs.  The overall value and ethics of this practice are quite debatable and I am not a supporter of such practices as it devalues the effort of pathologists.


Mick Raich is the owner of Vachette Pathology, a pathology specific practice management firm.  The firm provides practice management, billing auditing, managed care negotiations and marketing services to pathology practices across the nation.  You can contact him with questions at or toll free at 866-407-0763, website