Pathology
Reports, Codes and Billing

Q: In order to obtain speedy and accurate pathology reports, we’ve decided to add a pathologist to our practice. How will this change the coding habits of our practice? A: More and more dermatologists are bringing a dermatopathologist into their practices or are redefining their relationships with outside reference labs regarding how pathology services are purchased and billed. Before we take a look at the various options, let’s quickly review the most common codes and modifiers used in conjunction with pathology billing. The CPT Codes The CPT codes for pathology most commonly used by dermatologists range from 88300 through 88332. The most frequently used codes include the following: 88304: Level III - Surgical pathology, gross and microscopic examination. • Abscess • Anus, Tag • Bartholin’s Gland/Cyst • Cartilage, Shavings • Conjunctiva-biopsy/Pterygium • Hematoma • Pilonidal Cyst, Sinus • Skin, Cyst/Tag/Debridement • Soft Tissue, Debridement • Soft Tissue, Lipoma • Vein, Varicosity. 88305: Level IV - Surgical pathology, gross and microscopic examination. • Lip, Biopsy/Wedge Resection • Skin, other than Cyst/Tag/Debridement • Soft tissue, other than Tumor/Mass/Lipoma/Debridement • Tongue Biopsy. The Modifiers TC — Technical Component. (This refers to the technical component of the pathology service that involves the preparation of the slide. This service is usually performed by a technician.) -26 Professional Component. (This refers to the professional component of the pathology service that involves the reading of the slide by the dermatopathologist.) Billing Scenarios Basically, four scenarios represent how dermatology practices bill with respect to pathology services. They are: 1. No billing for pathology services. In this scenario, the practice sends tissue specimens to an outside reference lab that performs both the technical and professional services (referred to as the global service) and bills the insurance carriers or patients directly. In this scenario, there is no “pass-through” billing. Pass-through billing means that the dermatology practice buys the service(s) from a lab at a discounted price, marks up the cost of the service(s), and then passes the increased charge on to the patient or insurance carrier through direct billing from the practice. 2. Pass-through billing. Here, the practice makes money by purchasing the technical component, the professional component, or both. The practice marks up the cost of the purchased service and passes the increase on to the patient or insurance company by billing the pathology service(s) directly to the insurance company. Some carriers are now establishing up policies that prohibit practices from pass-through billing. Some states have anti-mark up legislation in effect prohibiting physicians from making money by marking up purchased laboratory and/or pathology service. Medicare does not allow pass-through billing. 3. Purchased service billing. Medicare allows the physician to purchase the technical component of the pathology services from an outside reference laboratory. The purchasing of the technical component is only allowed if the practice reads its own slides. In this scenario, there are two options: a. The technical component is billed by the laboratory and the practice only bills for the professional component. b. The technical component is billed by the physician who purchases it. In this scenario, the physician can bill Medicare only the exact amount charged to the practice for the technical component by the outside lab. In other words, if the laboratory charges $10 for the slide prep, then the practice can only bill Medicare $10 for the technical component. • No mark-ups are allowed. • The technical component must be billed on a separate claim form. It can’t be billed on the same claim form that contains the billing for the professional component. • No global billing is allowed if either component is purchased. Global billing refers to billing the pathology service with no modifiers. 4. Global billing. In this scenario, the practice has its own in-house laboratory, a High-Complexity CLIA certification, and not only employs physicians who read the slides, they also make their own slides. No portion of the pathology service is purchased. Billing is done directly from the practice and no modifiers are needed when billing for pathology services. Billing Myths and Musts In this section, some billing myths and musts are covered that should guide billers to quality billing for these types of services. 1. Myth: The codes are subject to the multiple surgery reduction rule. This is incorrect. These are laboratory services and are not subject to any reductions. Each service will be paid at 100% of the allowed amount regardless of the number of services billed. 2. Myth: The codes have an associated post-op period. There is no global period associated with these services. Therefore, no global modifiers are required. If other services are billed (such as surgery or E/M visits) and these are billed during the postoperative period, a -24 or -79 modifier is required. Pathology services are not subject to global periods and therefore do not require post-op modifiers. 3. Must: These codes are billed in units if multiple services are performed on the same date of service. Example: Four slides are read; the diagnoses are 702.0, 173.3, 173.2, and 216.5. The practice bills globally. You would bill: 88305 x 4 units (only one of the four diagnoses needs to be listed in block 24E regardless that not all four share the identical diagnosis). 4. Myths about the difference between CPT codes 88304 and 88305. Some practices have misunderstood the application of these codes. These misapplications include: a. Using 88304 when the diagnoses are benign and 88305 when the diagnosis is malignant. Wrong! The diagnosis has nothing to do with the code selection. b. Using 88304 when only one slide is ordered and using 88305 when more than one are ordered for the same patient for the same date of service. Wrong! The number of slides obtained has nothing to do with code selection. c. Using 88304 when the service is purchased and 88305 when the service is performed solely in-house. Wrong! How services are billed, whether purchased or not, have already been covered earlier in the article. 5. Myth: You must bill the purchased service in the geographic payment locality where the service was performed. Effective Oct. 22, 2004, Medicare has implemented a temporary change in carrier jurisdictional pricing rules of purchased diagnostic services. The change allows physicians purchasing out-of-jurisdiction tests and interpretations to bill their local carrier for these services. They no longer have to bill the service based on the point of service. 6. Myth: You can bill for consultations performed by outside consultants. It is not uncommon for physicians who read their own slides to occasionally have a second opinion ordered on a challenging or questionable slide. Frequently, these dermatopathologist consultants are in another state and are usually not signed up with the carriers with which the group has contracts. The consulting physician usually does not want to get involved in billing the patient or the patient’s insurance carrier. Consequently, they just send a bill to the physician who ordered the consultation. The consults are usually expensive and so the ordering physician wants to get reimbursed for the cost of the dermpath consultation. So he/she just bills the consultation using his name and provider number. This is not allowed by Medicare whatsoever. Other carriers consider it pass-through billing while others even consider this practice fraud because the provider doing the billing for the service did not actually perform the service and is misrepresenting the services by billing for it under his/her name and provider number. Getting the Rules Straight Adding pathology services to your dermatology practice can be a great source of revenue generation. However, many rules and regulations govern the billing of these services. Familiarizing yourself with and complying with all these regulations is critical to assure a legal and profitable result.