Medicare physician fee schedule: Advocacy pays off, though 2014 CMS cuts will sting

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Charles Fiegl

January 2014—A grassroots effort that mobilized pathologists around the country, and subsequent pressure from pathologists’ congressional representatives, beat back plans to limit non-hospital Medicare payments. But other pay changes instituted by the Centers for Medicare and Medicaid Services have created significant concerns for physicians and laboratories.

In the final 2014 Medicare physician fee schedule published Nov. 27, the CMS halted its plan to limit certain payment rates in the fee schedule by lowering them to Hospital Outpatient Ambulatory Payment Classification rates. Pathologists and other specialties advocated strongly against this policy because it would have cut pay for 39 pathology services billed for non-hospital patients by as little as four percent and as much as 80 percent. In addition, the policy change would have circumvented a well-respected and established process with the AMA’s Specialty Society Relative Value Scale Update Committee, a physician-driven decisionmaking process that provides the CMS with relative value recommendations supported by data reflecting the costs of performing services in physician practices.

One of the services that would have been capped by this proposal was 88367, in situ hybridization, which is commonly performed in a non-facility setting. The service requires a DNA probe kit that costs physicians $157. While the fee schedule rate for 88367 in 2013 was roughly $260, the CMS proposed to cap the total payment at $103—a 60 percent cut and $54 below the cost of the probe kit.

The CMS responded to evidence like this by halting its plan, but the agency said it will revise and submit a similar proposal in the future. This issue could come up again before 2015.