2021 CMS Payment Modifications in Pathology

Since 1992, Medicare has paid for the services of physicians and other billing professionals under the physician fee schedule (PFS). Physicians’ services paid under the PFS are furnished in a variety of settings, including physician offices, hospitals, ambulatory surgical centers, and clinical laboratories. For many diagnostic tests and a limited number of other services under the PFS, separate payment can be made for the professional and technical components of services. The technical component is frequently billed by suppliers like independent diagnostic testing facilities, while the professional component is billed by the physician or practitioner.1

In 2019, the Centers for Medicare & Medicaid Services (CMS) finalized broad changes related to evaluation and management (E/M) services to reduce administrative burden, improve payment rates, and reflect current clinical practice. The health care community supported restructuring and revaluing the office-based E/M codes, which will increase payments for primary care and other office-based services. Unfortunately, by law, any changes to the PFS cannot increase or decrease expenditures by more than $20 million. To comply with this budget neutrality requirement, any increases must, therefore, be offset by corresponding decreases. CMS estimates that the 2021 policies will increase Medicare spending by $10.2 billion, necessitating steep cuts by reducing the Medicare conversion factor.2

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