NEW YORK – Two Medicare administrative contractors have begun requiring healthcare providers to explain the necessity of any pathology claims that include codes for the digitization of glass slides, raising the concern that such policies could add to labs' workloads or even slow the adoption of digital pathology.
The MACs, First Coast Service Options and Novitas Solutions, which are jointly held by GuideWell Source, began requiring on Aug. 5 any claims submitted with CPT codes for digitization of glass microscope slides to include explanations of why digitization is reasonable and necessary. GuideWell officials confirmed the MACs have enacted that requirement for multiple regions and said in a statement, "We frequently review data of all services billed to the Medicare Program and, if warranted, provide education and/or update our policies to reflect current evidence for determining medically reasonable and necessary services."
On their websites, First Coast and Novitas said a reasonable and necessary service could include digitization of a slide for consultation instead of mailing the slide, especially in cases of urgent need, as well as the preservation of irreplaceable pathology materials.
As labs adopt digital pathology technologies and procedures, they still need to create glass slides that will be scanned for analysis by pathologists and algorithm-driven software. The restrictions enacted by First Coast and Novitas relate to 13 CPT Category III digital pathology codes that took effect Jan. 1, 2023, and describe the work associated with digitizing glass microscope slides for use in diagnosis.
The Category III codes are optional add-on codes that are primarily used to provide data on the use of those digital pathology practices rather than for reimbursement.
Jonathan Myles, who is on the College of American Pathologists' board of governors and speaks for the organization on pathology payment policy, said CAP developed those add-on codes with requirements that they be used and reported only in connection with reaching a diagnosis in an individual patient, and CAP believes First Coast and Novitas are exceeding the limitations necessary to ensure appropriate use. CAP officials have been seeking a meeting with the MACs to talk about the codes, how they are used, how they should be used, and why the MACs implemented the payment policy.
"From what I have seen, they haven't given a rationale for why," Myles said.
While someone may submit a claim with a request for payment under the Category III code, he said that decision should be made on an individual basis. In the meantime, the decision by the MACs may raise awareness of the billing codes but also could increase administrative burden.
CPT Category III codes are temporary codes assigned to emerging technologies, services, and procedures. When the digital pathology codes gain widespread use, CAP will work with the American Medical Association to convert them to Category I codes that correspond to procedures and services that are commonly performed and submitted for reimbursement, Myles said.
Digital pathology has been gaining ground in clinical labs in recent years, though the high cost of converting microscopy slides to a digital form and lagging reimbursement have been among headwinds to adoption. Cancer genomics firms have been taking advantage of opportunities they see to apply artificial intelligence-backed software to the images and data that become available as labs make the switch, while the pathology space has become a leading adopter of AI technologies in healthcare through its expanding use of pattern recognition software.
In the current landscape, according to some pathology billing experts, payment practices under the new digital pathology CPT codes have been inconsistent among MACs, Medicaid, and commercial payors.
Jeanette Gray, revenue cycle director at pathology firm ProPath, said in a webinar hosted last week by the American Pathology Foundation that her lab has been seeking payments for the additional costs of slides that are interpreted digitally and is submitting claims under primary Category I CPT codes, incorporating the Category III add-on codes, and including digitization charges that are based on the average cost per slide.
Gray said she has heard some MACs are paying the full amounts submitted by labs for slide digitization, while others deny claims for those services as ineligible for payment. Her lab submits claims to Novitas, which has been denying entire claims or requesting patient records in response to use of the digitization codes, and Medicaid has been denying claims with statements that such claims are ineligible for reimbursement or not included in the fee schedule.
Some commercial payors have also denied claims as incidental to the primary procedure or otherwise non-covered, while other commercial payors are issuing partial to full payments or applying portions to the patient's coinsurance or deductible, she said. Several large insurers contacted for comment did not provide details on their reimbursement policies.
"You have to pay attention to your denials for these codes and make sure they didn't deny the whole claim," she said.
Brenda Cox, principal of the pathology consulting firm Cox Consulting, said on the webinar that pathology labs are encouraged to use the codes, but they might not receive payment for claims under those codes, which are used to account for costs of technical work associated with slide digitization including IT, storage, equipment, and facility costs. Such add-on codes may be eligible for payment or acceptance if they are attached to a Category I CPT code that is eligible for payment.
"The codes are intended to represent the additional technical cost that are above and beyond your routine cost for all of the traditional histopathology and histology processes," Cox said.
David Klimstra, chief medical officer for artificial intelligence-driven software firm Paige, said First Coast appears to be the first MAC to put out such payment guidance related to reimbursement for slide digitization, adding that the MAC's intent is unclear to him. It could be taken to suggest the company will provide some reimbursement for slide digitization, or it could mean that once the Category III codes are converted to Category I codes, it will only pay for the services if labs demonstrate they are medically necessary.
That conversion typically takes years of data collection to show that a technology is in widespread use, he said. Any decisions now by MACs and private insurers not to pay for slide digitization become a bigger concern if they maintain those positions following the conversion to Category I codes and reimburse only for niche applications.
"Getting reimbursement for digital pathology, even if it's a relatively small amount, would be a major assistance to advancing this technology," he said.
Klimstra said digital pathology has other economic benefits that will ultimately drive its adoption, and reimbursements for scanning slides would aid in that. His company is focused on securing reimbursement for use of AI tools.
Gray said on the webinar that in response to the decisions by First Coast and Novitas, pathology labs may want to implement practices related to documenting the reasoning for slide digitization, consult with their internal compliance departments about that documentation, and audit claim denials. If labs are receiving denials on their digitization codes, she said they will want to ensure the primary CPT codes are still processed.
She said the slide examination turnaround times in her lab have declined by about one day since it began implementing digital pathology technology and practices. Consultations are also faster and less expensive when they don't require couriers. She also noted that digital pathology has the potential to reduce errors and improve workflow by increasing the flexibility of work schedules.
"With the shortage of pathologists today and as reimbursement continues to decline for us, you know, our industry really needs to find ways to be more efficient," she said. "Digital pathology is one of those ways."