Pathology/Lab Coding Alert

The organizational structure of your practice or lab is key to determining how to bill properly for the technical and professional components of pathology procedural codes , advises Cheryl Schad, BA, CPC, a member of the National Advisory Board of the American Association of Professional Coders.

You have to understand the organizational relationship between the pathologist and the lab, she explains. Coders without a clear picture of that relationship will find it difficult to sort out when to bill globally or separately, using the -26 modifier for the professional component or the -TC or other appropriate modifier for the technical component.

The Health Care Financing Administration (HCFA) says the professional component to any medical service includes the physicians work and overhead expenses involving three types of services:

1. physician interpretation of diagnostic tests;
2. diagnostic and therapeutic radiology; and
3. physician pathology services.

The technical portion includes the cost of equipment and supplies, as well as technician labor involved in completing the work. For example, surgical pathology code 88305 (gross and microscopic examination) would include a technical component that accounts for materials and labor involved in slide preparation, and a professional component that accounts for the pathologists examination of the specimen and the slides.

For medical procedures that include technical and professional components, unmodified CPT codesdescribe both portions, according to Schad, who also is president of Schad Medical Management, a Mullica Hill, N.J., physician reimbursement and consulting firm that specializes in pathology, radiology and family practice. Taken together, the professional and technical parts are referred to as the global service. If the same provider performs both parts of the service, the CPT code describing the service should be reported without modifiers, says Schad.

But thats often not the case for pathology services, she continues. Very often, the laboratory owns the equipment, purchases the supplies, and pays the personnel involved in pathology testing, while an independent pathologist interprets the tests.

For example, if a pathologist consults for a hospital lab and receives referred tissue samples for an opinion on a neoplasm, the appropriate CPT code would be 88323 (consultation and report on referred material requiring preparation of slides). The labs histotechnician would prepare slides using lab resources, and the pathologist would interpret the slides and write a report. The pathologist in this example would report code 88323 using the CPT modifier -26 (professional component)to indicate that he or she provided only the interpretive portion of the service, advises Schad.

To report the histotechnicians salary and lab supplies used in preparing the slides, the laboratory in this example would also report 88323, modified to claim only the technical component of the service. Although CPT does not have a coding convention for the technical component, HCFA requires the use of the modifier -TC (technical component) when only that portion of the service is reported to Medicare. According to the HCFA definition, technical component charges are institutional charges and not billed separately by physicians. For non-Medicare claims, you should check with the insurer involved to determine if -TC is the appropriate modifier, says Schad.

Global vs. Technical or Professional-only Codes

Not all pathology services are global. Some codes represent a professional service only, and some are primarily technical services. You need to go to the third-party payer to determine if the service is considered global or professional only, says Dennis Padget, CPA, FHFMA, president of Padget & Associates, a Kentucky-based pathology and laboratory billing and compliance consulting firm serving more than 150 clients in 25 states. For example, one can look at the RBRVS [relative values] schedule published in the Federal Register to determine if a code can be reported to Medicare with both -26 and -TC, or if it can only be reported unmodified or with -26, he explains.

Although the CPT manual does not specifically indicate which pathology procedures are global and which are only technical or professional codes, it does provide some clues. Any pathology code that specifies a consultation [without sample processing] would be a professional-service-only code, says Schad. This would include codes such as 80500-80502 (clinical pathology consultation), 88321 (consultation and report on referred slides prepared elsewhere), 88325 (consultation, comprehensive) and 88329 (pathology consultation during surgery).

Pathology codes that specify only interpretation are also professional codes, Padget explains. For example code 88291 (cytogenetics and molecular cytogenetics, interpretation and report) is a professional-only code. Similarly, add-on code 88141 is a professional code used to report the interpretation by physician of a Pap smear, and code 85060 is a professional code for a blood smear interpretation by physician with written report.

Conversely, some pathology codes represent technical services. Fundamentally, the codes in pathology that are technical only are mostly cytogenetic codes (88230-88289) and gynecological cytology codes (Pap screening - 88142-88154 and 88164-88167), says Padget.

Although many of the clinical laboratory tests found in the pathology and lab codes (80048-87999) are primarily for the technical component, they are carried out under the medical direction and supervision of a physician, which represents a professional service.

For Medicare, these services are built into the hospitals reimbursement rate, so the pathologist who provides them must seek payment directly from the hospital, Padget points out. Although some payers follow the Medicare principal in this matter, others, such as Medicaid of California, pay separate professional fees for these physician duties, he continues. You need to consult your state Medicaid or other individual payers to get instructions.

In those instances when a pathologist provides an interpretation of a specific clinical laboratory test, the use of modifier-26 would be appropriate to indicate a professional component of that service. For example, if a pathologist interprets and reports on a hemoglobin assay [83020], or a special stain for malaria [87207], the use of modifier -26 would be appropriate, states Padget.

Also, most of the surgical pathology codes (88300-88399) include both a technical and a professional component. For example, if a pathologist examines a nerve biopsy, the appropriate CPT code would be 88305 (surgical pathology, gross and microscopic examination).

According to HCFA (program memorandum B-98-15), the professional component of this code includes the gross and microscopic examination of the specimen by the physician. The technical component, which also would be coded 88305, includes the preparation of the slides, and other usual pre-slide preparation services.

Billing Options Ensure Proper Pay Up

Separating the technical and professional components may require an organizational chart. If a lab is owned and operated by a pathologists practice, one global bill can be sent directly to the patient or insurer, says Padget. And although a hospital lab with a salaried pathologist would bill Medicare for the full service, it would not be a true global billing because different forms are required by HCFA for the technical and professional component. If the lab and the pathologist are independent, some separate billing would be used. This is when appropriate modifiers must be added to separate technical services from professional.

Then the question becomes, who bills whom, explains Padget. The first step is to familiarize yourself with the reporting requirements of Medicare and any insurance companies you deal with.

For non-Medicare patients, one common billing practice is for the pathologist to direct-bill the patient or insurer for the professional components. The lab would bill separately for the technical component, including costs for lab supplies, equipment, and non-physician personnel involved in the service. In this case, each service provider is reimbursed separately, and no payment is transferred between the pathologist and lab.

Another billing option is for the laboratory to bill the patient or insurer for both parts of a service. The pathologist is then reimbursed by the lab for the professional component of the service. Sometimes billing is done the other way around, with the pathologist purchasing the technical component of a service and rebilling the insurer for that portion along with the professional component.

Again, not all of these billing options are available in every circumstance; emphasizes Padget, you have to be familiar with the insurance carriers rules. For example, Medicare has billing regulations for anatomic pathology procedures based on two patient categories:

1. non-hospital patients or hospital patients in a
facility without a histology/cytology lab, or
2. hospital inpatients or outpatients in a facility with a histology lab.

For the second category, the pathologist would bill Medicare only for the professional component, because the technical component must be paid directly to the hospital lab, says Padget.

On the other hand, if a hospital does not have a histology lab but uses a different hospital or independent laboratory to perform patient anatomic pathology procedures, Medicare would reimburse both the technical and professional components to the performing lab, he states. The patients hospital could not purchase the technical component and re-bill Medicare for the service.

This will be changing effective Jan. 1, 2001, according to a HCFA ruling published in the Nov. 2, 1999, Federal Register,advises Padget. At that time, the referring hospital will have to bill the technical component.

Medicare rules are different for a non-hospital patient. Under these circumstances, according to Padget, a physician may purchase the technical component and re-bill Medicare for the service, subject to certain reporting requirements. The physician could not bill globally, but must use appropriate modifiers for the technical and professional component, and designate that the technical component was purchased.

You always have to check with your own carriers, because their reporting and reimbursement policies may vary, advises Padget.