PFS Final Rule Delivers Payment Cuts for Pathology: Additional Impacts and Potential Challenges for 2024

The Centers for Medicare & Medicaid Services (CMS) final 2024 Medicare Physician Fee Schedule (PFS) has put iron clad policies into action with several changes impacting laboratory and pathology stakeholders effective January 1st. As usual, the proposed rule outlines potential updates to a variety of policies and provisions that dictate payment for many services across healthcare included in the Quality Payment Program (QPP), the Merit-Based Incentives Payment System (MIPS), and Advanced Alternative Payment Models (APMs). Stakeholders can brace for payment cuts that will likely impact the bottom line of stakeholders across the nation throughout 2024 unless legislation is passed that provides a reprieve.

Proposed Conversion Factor Brings Payment Consequences

For 2024, the pathology community should prepare for a finalized payment cut of two percent. The 2024 conversion factor derived for the fee schedule’s payment formula is $32.7375, which reflects a 3.39% decrease from the 2023 conversation factor. Specifically, The College of American Pathologists (CAP) notes, “This decrease can largely be attributed to the implementation of the E/M add-on code G2211 and a 1.25% reduction in payments offered by the Consolidated Appropriations Act, 2023.”

During the proposed rule, the American Clinical Laboratory Association (ACLA) warned, “This cut is likely to have an adverse impact on recruitment and retention of qualified physicians in critical specialties. There is a dangerous shortage of pathologists, with an unprecedented number of unfilled pathologist openings.”

However, there is a glimmer of hope on the horizon as the CAP acknowledged that their advocacy paid off when it comes to clinical labor rate adjustments, which will aid to mitigate the coming cuts for pathology.

A Rally for Clinical Labor Rate Advocacy Pays Off

The CAP received a win for 2024, showcasing the power of advocacy and the payoffs of working with CMS. The CAP pressed for a 12 percent increase in the cytotechnologist clinical labor rate employed in practice expense methodology. CAP utilized wage survey data in its advocacy believing that it “more accurately reflects cytotechnologist education, job duties, workforce shortages, and recruitment challenges.”

CMS was persuaded by the argument and enacted a two-year phased-in increase effective 2024. CAP touted the victory stating, “This increase adds to the CAP’s previous clinical labor rate advocacy. Notably, the CAP had advocated for an increase to the histotechnologist clinical labor rate used by the CMS in their practice expense methodology. The increase was finalized in 2023 and pathology continues to be benefit in this final rule as it is implemented over a three-year period. As a result, many pathology services will experience an increase to the TC and global payments in both 2024 and 2025.”

New Add-On Code Will Bring Consequences to Budget Neutrality Adjustments

As outlined in the proposed rule and now established in the final rule, a new E/M code will have wider impacts on healthcare professionals including those working in pathology and laboratory sectors come 2024. The new E/M add on code, G2211 was designed for “ongoing, longitudinal patient care.” Physicians may utilize this code by

reporting it separately in addition to office/outpatient visits for new or existing patients. The code may be included regardless of whether the E/M visit is completed using telehealth since CMS has permanently cemented the code within the Medicare telehealth list.

According to the CAP, “The CMS is not restricting the code’s use to certain specialties and assumes that, on average, physicians will report G2211 with 38 percent of eligible E/M visits in 2024.”

Primary care specialties are more likely to use this code as opposed to other specialties. However, this add-on code follows a consequential trend. By devoting more spending to primary care, all physician payments suffer broader cuts. Even more, CAP stresses that “Specialties that do not utilize the new code see larger cuts as a result of its implementation. The CMS said code G2211 reflects the time, intensity, and practice expense required to build longitudinal relationships with patients and address most of their health care needs with consistency and continuity over long periods of time.”

As a consequence of budget neutrality requirements, the increased primary care spending will yield a two percent “across-the-board” slash to all physician payments. Even more, the CAP warns in their analysis that “These cuts are expected to worsen over time as the CMS anticipates utilization of G2211 to grow to 54% of eligible E/M visits.”

Within primary care, CMS asserts that the code accounts for resources that contribute to holistic, patient-centered care and accomplishes grouping illness or injury treatment with the management of acute and chronic health coordination of specialty care with those on a clinical care team. In 2021, CAP and others were successful in lobbying Congress to postpone G2211 payment, when CMS first tried to create payment for this code.

G2211 is potentially problematic, with CAP arguing that the code enables duplicated billing since the work of G2211 is already encompassed in established E/M CPT code set. CAP has a legacy of successfully implementing changes with CMS noting that they worked with the agency to delay payment for G2211 in 2021 and asserts it “will continue its advocacy efforts to protect the value of pathology services.”

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Information Sources:

https://www.federalregister.gov/documents/2023/11/16/2023-24184/medicare-and-medicaid-programs-cy-2024-payment-policies-under-the-physician-fee-schedule-and-other

https://www.cap.org/advocacy/latest-news-and-practice-data/november-2-2023

https://www.acla.com/wp-content/uploads/2023/09/ACLA-Comments-on-2024-PFS.pd

https://www.cap.org/advocacy/latest-news-and-practice-data/july-13-2023