CMS finally releases 2014 Final Rule for physician/clinical lab fee schedule


The Centers for Medicare and Medicaid Services (CMS) released its Final Rules for the 2014 Physician Fee Schedule (PFS) and the Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System late in the afternoon on November 27.  From where I am sitting, the news is nothing to jump for joy about.

Way back in July I wrote about CMS’ proposed rules, but my analysis of their potential impact on pathology and laboratory medicine was incomplete. Dr. Bruce Quinn of Foley Hoag, an expert on Medicare policy, was kind enough to submit a comment that filled in the gaps I had left. From Dr. Quinn’s comment:

In the Physician Fee Schedule Rule, CMS proposes to (A) revisit and revalue all Clin Lab Fee Schedule tests – e.g. clinical chemistry tests – over a several year period…Separately, CMS proposes that (B) all services on the Physician Fee Schedule be capped for their technical component at the Hospital Outpatient Rate, (term of art being Ambulatory Pay Category or APC)…Finally, yet a third proposal is to (C) bundle all labs but genetic labs to a hospital outpatient visit fee rather than paying the CLFS labs as additional line items to the hospital.

I am still a novice at reading these 1,000+ page bureaucratic documents, so Dr. Quinn’s expertise was (and still is) very much appreciated.

So let’s look at the 2014 Final Rules in the order Dr. Quinn did.  Note:  This will only be a cursory summary.

Revisit and revalue all CLFS tests

This part begins on page 682 of the PFS/CLFS final rule.  Basically, CMS appears to be moving ahead with this proposal.

Every year, starting in 2014, CMS will analyze data and come up with a list of tests that should be adjusted.  CMS will then solicit comments on the proposed list of tests.

In addition, CMS will allow the public to nominate test codes that should be revalued, although it states “CMS will retain the final authority in determining which test codes move forward through the payment revision process.”

Capping PFS rates at hospital outpatient rates

This part begins on page 73 of the PFS/CLFS final rule.  CMS, for the time being, has scrapped this proposal.

At least in the short term, this was the proposal that had me (and pretty much everyone else) the most worried, because if implemented, it would have meant a large number of pathology codes (88307, 88309, 88342, etc) would have had their technical components (TC) reimbursed at the much lower hospital outpatient rates.

For a large number of tests, this would have meant labs would not have been paid enough to overcome the cost of performing the tests.

I say “for the time being” because CMS included wording that makes it likely it will revisit this proposal in the near future.

Bundle all labs (except molecular tests) to a hospital outpatient visit fee

This begins on page 346 of the OPPS and ASC Payment System Final Rule.

CMS is unfortunately moving ahead with this one, which will be a pretty big problem.

Here is how I described this proposal in one of my Pathology Blawg News Roundups back in September:

In short, instead of reimbursing hospital outpatient and free-standing ASCs for individual clinical lab and anatomic pathology tests, CMS will simply make a bundled payment (akin to a DRG payment for inpatient care) that includes all of the patient’s care at the surgery center, including pathology.

This of course means labs and pathologists will be forced to “negotiate” with hospitals and ASC owners to receive fair compensation out of the bundled payment.  I put “negotiate” in quotes because most likely the surgery centers will do everything they can to keep as much as possible for themselves, and pathology will simply be offered scraps, with little actual negotiation involved.

In addition, the ASCP and the CAP, in their comments to the CMS proposed rule, argued this proposal will have the added effects of creating significant administrative burdens for labs, and will potentially lead surgery centers to forego medically necessary laboratory and pathology tests simply to increase profits.


Even though the worst cuts were avoided, there are some changes to multiple codes.  The CAP has a very comprehensive table that shows the impact on numerous pathology/lab medicine codes.

So, while things could have certainly been worse, there is still not a whole lot to be extremely happy about, and there is always the possibility things could go even further south in the near future.  Remember, CMS did not kill the proposal to cap reimbursement for pathology codes on the PFS at the OPPS levels; it merely put it on ice for now.

CMS is accepting comments on the final rules until January 27, 2014, but they actually take effect January 1st.

As I stated above, I am still a newbie when it comes to reading these documents, so if I missed something, or got something completely wrong, please set me straight by submitting a comment at the bottom of the page.

We’re all in this together, and I want to make sure we all have the most accurate information.

Update:  I have received multiple requests to discuss specific CPT codes, which I will do for Monday’s article.


  1. a path says:

    You should highlight the cuts in IHC

    Also new prostate biopsy codes

  2. DrSTP says:

    Sorry this is confusing we need an actual table with the codes. Let’s start with the 88305 and give us a calculation for that. I came up with -22% for the professional component and -16% overall for the global. Is this correct A? Please verify. Then help us calculate decreases in 88312, 88342, 88331, 88332 and cytology codes. Happy Thanksgiving from Obama and his HHS. You will be lucky to get turkey bones.

  3. Dr. Ben T Over says:

    While all of us are not experts especially myself, this is what I believe I have read.

    88305 PC
    Cut by 24%

    No changes

    10% cut on first IHC per site
    New GCode that pays 40% on each stain following first one.

    Someone please prove me wrong

    • The Pathology Blawg says:

      Based on two analyses I have seen, the 88305 is essentially untouched, and the cuts to the first IHC are significantly steeper than what you have here. I will talk more about these on Monday.

  4. Dr. Ben T Over says:

    Thank you. I think what I was referring to was on page 1286 as far as 88205

  5. Dr. R V says:

    I am no expert but based on the final rule bundling only applies to labs payed under the CLFS and not those payed under the physician fee schedule. The list of add-on and lab codes is available on the CMS website in Addendum P of the proposed OPPS/ASC final rule. Hopefully this means AP is excluded from the OPPS/ASC bundling rules or the outpatient pathology business is doomed.

  6. DrSTP says:

    The prof component is still in jeopardy. SGR, anyone? Frozen sections at surgery centers are in jeopardy. What lab would do frozens at a surgery center for peanuts? Everybody has forgotten about the frozens at these centers. In some states you cannot have frozen labs inside surgery centers. They have to be mobile therefore. The overhead is enormous. The surgery centers should be fighting to stop the bundling as well. This will destroy surgery centers capabilities to do certain cases and attract surgeons. What about lymph node excisions for lymphoma that need flow and IHC? How are you going to bundle that fairly? Every lab should be pulling out now giving 30 days notice to put pressure on surgery centers to help stop this bundling. Surgery centers save so much for the payers compared to hospitals why is the pathology such a big deal for the CMS. CMS has no respect for pathology due to the poor job the Coalition Against Pathology has done promoting us to the public in my opinion.

  7. Communitypath says:

    Has anyone heard anything else about the bundling of payments for anatomic path at ASCs? This would have a huge impact on me. My billing company doesn’t know much yet. Is it going through? January 1 is 4 weeks away and that is not much time to get this figured out both for the pathology groups effected and the ASCs.

    • The Pathology Blawg says:

      Thank you for the question.

      CMS will not be bundling anatomic pathology into ASC payments. At least not this year.

      Please see this post, including Dr. Bruce Quinn’s comment at the bottom, for more info.

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