Management of Pathology Practices

October 2008

Management Home Page


Pathology takes another pay cut

By Mick Raich, Vachette Pathology


The State of Illinois stopped paying for the professional component on clinical pathology in order to “live within the appropriate budget.”  An unidentified source from the Illinois Department of Healthcare and Family Services (IDHFS) stated that their lab line was reduced so cuts had to be made.  It was determined that the best area to make these cuts was the reimbursement for the professional component on clinical pathology as “there is no human intervention on the Pathologists’ part.”  It appears the IDHFS has been misinformed or uninformed.


As you may already know, professional component billing for clinical pathology is endorsed by the College of American Pathology, the American Pathology Foundation and the American Medical Association, and is recognized and paid for by Medicare through Part A.


According to CAP and AMA, PC-CP services include:


·          Ensuring that tests, examinations, and procedures are properly performed, recorded, and reported.

·          Interacting with members of the medical staff about laboratory operations, quality, and test availability.

·          Designing protocols and establishing parameters for performances of clinical testing.

·          Recommending follow-up diagnostic tests, when appropriate.

·          Supervising laboratory technicians and advising technicians about aberrant results.

·          Selecting, evaluating, and validating test methods.

·          Directing, performing, and evaluating quality assurance and control procedures.

·          Evaluating clinical laboratory data and establishing a process for reviewing test results before patient reports are issued.

·          Ensuring the hospital laboratory’s compliance with state licensure laws, Medicare conditions, Joint Commission on Accreditation of Healthcare Organization standards, and the CAP Laboratory Accreditation Program and federal standards.


The argument being made that “there is no human intervention on the pathologists’ part” with many tests performed in the laboratory is very misleading.  Pathologists spend a significant amount of time and effort in their role as a healthcare provider to the patient to ensure that each and every test performed in the laboratory is timely and clinically reliable.  Moreover, the pathologist must be available to answer any questions that could come up regarding the results of the test and can and will be held liable if results are improperly reported and the patient suffers injury as a consequence.


This change in reimbursement by the IDHFS alone will cost an individual pathologist in Illinois an estimated $25,000 per year, and it is just a matter of time until your state does the same thing to you.  Although many carriers and government payors are still reimbursing for the professional component on automated lab services, more and more are going the same route as Illinois and will no longer pay for these procedures.  Blue Cross and Blue Shield of South Carolina has recently stopped paying clinicals altogether.  This is bad news for pathologists in states where BCBS continues to pay for clinicals. One of these states is Illinois.  It is even more vital today to start billing for the professional component while you still can to help secure the future of your practice.


A pathologist may spend up to 50% of their time directing the clinical lab.  This is valuable time being spent to assure quality laboratory services which are essential to the diagnosis and treatment of each individual patient.  Pathologists continue to lose compensation for this valuable and appropriately compensated revenue stream.  If no action is taken and commercial and managed care carriers continue to follow the same path as IDHFS, what actions will you take to insure the viability of your practice? 


If you have any questions or would like more information, please contact Mick Raich toll free at 866-407-0763 or e-mail


Mick Raich is the President and CEO of Vachette Pathology.  Vachette Pathology provides practice management and consulting services to over 50 pathology groups nationwide.  Contact: or call 866-407-0763.