Management of Pathology Practices

February 2010

Management Home Page 


Another Pay Cut for Pathology Practices and Laboratories

 By Mick Raich, Vachette Pathology


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.


For example, the RVU for an 88305-26 in 2008 was 1.04. This was multiplied by the 2008 conversion factor of $38.08 ($38.08 x 1.04) to come up with the payment of $39.60.  In 2008, $39.60 was the national payment for this CPT code. 


Take a look at this trend:


CPT Code     2008   CF                   Payment

88305-GB      2.79    $38.08            $106.24

88305-TC      1.75    $38.08              $66.64

88305-26       1.04    $38.08              $39.60


CPT  Code    2009   CF                   Payment

88305-GB      2.88    $36.06            $103.85

88305-TC      1.85    $36.06              $66.71

88305-26       1.03    $36.06              $37.14


CPT Code     2010   CF                   Payment

88305-GB      2.82    $36.06            $101.68

88305-TC      1.80    $36.06              $64.90

88305-26       1.02    $36.06              $36.78


Total Loss from 2008 to 2010

88305-GB      $4.56

88305-TC      $1.74

88305-26       $2.82


As you can see, the numbers are shifting downward and in the end, groups are losing more money.  The bigger issue to note here is that most of the commercial insurance plans pay practices based on a percentage of Medicare.  So if the numbers go down for Medicare, then the numbers will go down in the national arena.  As this happens, slowly and surely, your practice continues to make less money.  


The only option to reverse this trend is to renegotiate your managed care contracts or to cancel the managed care contracts and become non-participating, which many practices are doing.


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.