Laboratory Administration & Management of Pathology Practices
Management of pathology practices
Billing terminology

Topic Completed: 1 November 2014

Minor changes: 1 October 2019

Copyright: 2014-2019,, Inc.

PubMed Search: Billing terminology[TI]

Nat Pernick, M.D.
Page views in 2019: 714
Page views in 2020 to date: 524
Cite this page: Pernick N. Billing terminology. website. Accessed September 18th, 2020.
  • 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
Current procedural terminology (CPT codes)
International classification of diseases, 9th revision, clinical modification (ICD-9)
Medicare - part A
  • 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
  • See Vachette article for details
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
  • 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
Client billing
  • 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 nonpathologist to bill for pathology services are legal
Marketing your pathology practice
  • May not appear obvious for pathology practices but considered necessary by many to (Arch Pathol Lab Med 1995;119:655):
    1. Keep current clients from switching to other groups
    2. Get new clients, either for expansion or to replace clients that go out of business, get smaller or switch to other groups
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