1. cap.org v. # CMS Issues Rule on Medicare Payment Cuts in 2014, Other Significant Developments Jonathan Myles, MD, FCAP, Chair, Economic Affairs Committee Kathryn T. Knight, MD, FCAP, Chair, Federal and State Affairs Committee John Scott, Vice President of Advocacy, Moderator December 4, 2013

2. Six Key Issues Anatomic Pathology Code Revaluations Immunohistochemistry: 88342 (PC & TC) Capping Payment Rates in the PFS at Hospital Outpatient APC Rates Changes to Medicare’s Hospital Outpatient Prospective Payment System Physician Quality Reporting System (PQRS) Clinical Laboratory Fee Schedule (CLFS) SGR and Self Referral © 2013 College of American Pathologists. All rights reserved. 2

3. 2014 Anatomic Pathology Code Revaluations Immunohistochemistry: 88342 (PC & TC) o CMS rejected the CAP’s proposal o Two new G codes established o Changes for the new G codes compared to current CPT code 88342: © 2013 College of American Pathologists. All rights reserved. 3

4. Enhanced Cytology Services: 88112 (PC & TC) o 2014 Reductions In situ hybridization services: 88365, 88367 and 88368 (PC & TC) o Action deferred on revaluation for 2014 but 2015 changes anticipated o Limiting NCCI edits announced for 2014 2014 Anatomic Pathology Code Revaluations (cont.) © 2013 College of American Pathologists. All rights reserved. 4

5. 88305 TC o Additional data review requested in 2013 o CAP’s input resulted in no new cuts for 2014 Prostate Biopsies o New restrictions on billing prostate biopsies specimens o G codes now required for 10 or more specimens Optical Endomicroscopy o No new payment for unique pathology services o Existing codes suggested to bill for this service 2014 Anatomic Pathology Code Revaluations (cont.) © 2013 College of American Pathologists. All rights reserved. 5

6. Change in Medicare Rates for other Top Volume Codes High-Volume Pathology Services © 2013 College of American Pathologists. All rights reserved. 6 HCPCSModDescription 2013 Total Payment2014 Total PaymentTotal % Change 88305 Tissue exam by pathologist$70.09$70.220% 8830526Tissue exam by pathologist$36.74$38.144% 88305TCTissue exam by pathologist$33.34$32.08-4% 88185 Flowcytometry/tc add-on$54.10$53.47-1% 88313 Special stains group 2$67.71$65.59-3% 8831326Special stains group 2$11.91$12.122% 88313TCSpecial stains group 2$55.80$53.47-4% 8831226Special stains group 1$26.54$27.453% 88312TCSpecial stains group 1$71.11$66.66-6% 88312 Special stains group 1$97.65$94.10-4% 8830426Tissue exam by pathologist$11.23$11.412% 88304TCTissue exam by pathologist$33.34$31.72-5% 88304 Tissue exam by pathologist$44.57$43.13-3% 8416526Protein e-phoresis serum$20.07$19.25-4% 8830726Tissue exam by pathologist$82.00$83.762% 88307 Tissue exam by pathologist$297.36$286.94-4% 88307TCTissue exam by pathologist$215.37$203.17-6%

7. Background: o CAP opposed this policy that would have reduced the TC and global payment of 39 pathology codes Outcomes: o CMS halted its plan for 2014 o Agency will revise and reissue a proposal in the future o CMS remains committed to underlying payment policy Next Steps: o The CAP will consult with our coalition partners and Congressional supporters to prevent future implementation Capping Payment Rates in the PFS to Hospital Outpatient APC Rates © 2013 College of American Pathologists. All rights reserved. 7

8. Background: o This bundling proposal was a separate rule from the 2014 PFS Rule and was released as part of the Hospital Outpatient Rule Outcomes: o For 2014 all clinical diagnostic laboratory tests (other than molecular pathology) performed on hospital outpatients are “bundled” into payment for primary hospital outpatient procedures. Next Steps: o The CAP is continuing to analyze the impact of physician pathology services provided to hospital outpatients Changes to Medicare’s Hospital Outpatient Prospective Payment System © 2013 College of American Pathologists. All rights reserved. 8

9. Anatomic Pathology and Bundled Payments o CMS will bundle certain “add on” codes with the initial procedure code Changes to Medicare’s Hospital Outpatient Prospective Payment System (cont.) © 2013 College of American Pathologists. All rights reserved. 9

10. Outcomes: o CMS did not accept CAP’s three new pathology measures o CMS will allow pathologists to qualify for 2014 incentives by reporting on the existing five measures by either claims or registry Next Steps: o The CAP is working with Congress on the SGR to create flexibility for clinical practice improvement activities for pathologists to avoid PQRS penalties o The CAP is meeting with CMS to gain a better understanding on the PQRS measures and will share what we learn in a future webinar Physician Quality Reporting System (PQRS) © 2013 College of American Pathologists. All rights reserved. 10

11. Background: o CMS has long expressed concern that CLFS revaluation is needed o Last June the OIG concluded that Medicare paid 18-30 percent more than other insurers for 20 high-volume lab tests Outcomes: o CMS created a new process to revalue CLFS payment amounts o Reductions to CLFS fees anticipated beginning in 2015 and continuing for five years Next Steps: o CAP will focus on influencing the revaluation process Clinical Laboratory Fee Schedule (CLFS) © 2013 College of American Pathologists. All rights reserved. 11

12. SGR and Self-Referral SGR o House Energy and Commerce Committee passed SGR reform bill o Senate Finance Committee marking up legislation next week o No current proposal includes a method to pay for reform o Congress is considering a short-term patch o The CAP is working to attach our issues to any SGR legislation Self-Referral o Remains a politically charged issue o The CAP believes now is the time to make a major push © 2013 College of American Pathologists. All rights reserved. 12

13. Questions? © 2013 College of American Pathologists. All rights reserved. 13