CSP Banner
Cal Path Facts

Quick Links
California Society of Pathologists
One Capitol Mall Suite 320
Sacramento, CA 95814 
Tel : 916-446-6001
Fax :  916-444-7462

Balance Billing Litigation Update

On Dec. 2, the Sacramento Superior Court finalized its order in the CMA-led lawsuit seeking to invalidate the Department of Managed Health Care's "balance billing" regulation. The CSP is not a party to this litigation but are closely involved with the CMA in this litigation. Consistent with its preliminary ruling, the court determined that the regulation is valid, but only insofar as it seeks to define balance billing as an unfair billing pattern. The court did not address whether the DMHC can enforce the regulation against providers, despite the DMHC's public assertions that this regulation "prohibits" balance billing. The DMHC, however, has indicated that it intends to use its definition to take an enforcement action against a provider that balance bills.  The Department recognizes that at that point its authority to take an enforcement action can be challenged. While our attorneys believe the DMHC is wrong, they understand that physicians have stopped balance billing because of the ambiguity of the DMHC's authority. 
Accordingly, CMA attorneys are reviewing the ruling with appellate specialists to determine the best strategy for an immediate appeal. The legal team cannot file an appeal until a formal judgment is entered (probably a week from now)--thereafter they have 60 days to file an appeal. Additionally, the CMA legal team is actively exploring separate litigation avenues to challenge the DMHC's authority to prohibit balance billing or take any enforcement action based on this regulation. 
While the court's ruling is a setback, there are important questions left open which must be answered in the next round. We will keep you updated as CMA's litigation efforts move forward.
It is important to note that the DMHC regulation only applies to emergency services provided to enrollees of an HMO plan.
Legislature Continues to Seek Budget Deficit Solution
The Legislature is now in yet another Special Session called by the Governor to attempt to address the state's growing budget deficit. The current year deficit is estimated at $15 Billion with the deficit for the next 12-19 months estimated at over $40 Billion in an annual budget of $120 Billion. Many estimate that the state may not have sufficient cash to pay it bills in February or March of next year. The Governor has been unable to rally any of this party for a proposal that includes both cuts and tax increases to address part of the mid-year budget deficit.
Republicans yesterday unveiled a proposal for budget cuts and fund transfers of approximately $23 Billion but containing no tax increases. That proposal has met with string opposition from both the Governor and the Democratic leadership. Another version crafted by the Democrats to address part of the deficit was passed on a majority vote but the Governor has announced his intent to veto that package of bills. A compromise is still not yet in sight.
Pathology Issues under the Palmetto Medicare Transition
The CSP has continued to work closely with Palmetto representatives to address problems with pathology payments. Individual provider enrollment issues due to NHIC issues and legacy NPI provider numbers have been addressed on a case by case basis. If your group is having those types of issues please contact the CSP.
The CSP also met on 12/5/08 with Dr. Lurvey, the Medical Director of NHIC, prior to his presentation to the CSP Practice management Forum held during our Annual Meeting. There were three specific areas of concern that we addressed:
(1) Immunohistochemistry and Flow Cytometry (LCD - L28260) Pathology groups have been getting denials for payment on both of these procedures based upon lack of ICD-9 justification. This LCD policy when implemented by NHIC did not use the ICD-9 justifications as edits correctly recognizing that the CPT codes listed in the LCD, for example 88342 (IHC) are broadly used to evaluate non-neoplastic conditions such as infectious disease processes and the impracticality of developing and maintaining an all inclusive list of ICD-9 codes. It appears that Palmetto has been using this policy with the ICD-9 edit even though the previous LCD was limited to neoplastic conditions and did not use the ICD-9 edits. As a result these claims are being denied even when the claim does not exceed the numerical limit of 10 or 20 respectively and has been occurring since Sept. 2nd transition. We recommended that the ICD-9 edits be removed and that denials be reprocessed without the need to re-submit those claims.
(2) LCD L28264 on genetic testing- There was no prior policy with NHIC and apparently this LCD was used in Hawaii by Noridian and implemented as part of the J1 conversion without California CAC review. We agree that these tests should not be reimbursed as a screening test. This policy appears to have been established limited to defining specific clinical indications and criteria for only two types of cancers; Hereditary Breast/Ovarian cancer (BRCA1 & BRCA2 tests) and for Hereditary Colorectal Cancer and Polyposis Syndromes (Mismatched gene repair gene tests). 
The LCD references generic laboratory molecular testing CPT procedure codes (83890 through 83912) used to bill for many different molecular PCR assays which include for example rapid diagnosis of infectious diseases, hypercoagulable states, neuromuscular and metabolic disorders that can be further defined with use of genetic testing modifiers (in appendix section of CPT book). For example the modifier for BRCA1 is -0A, -0B and for mismatched repair genes is -0J, -0K, -0L. 
The LCD was set up for coverage of only two common entities with listing of ICD-9's that support medical necessity of only those two and does not define in the LCD genetic testing modifiers.  As you would expect from the limited ICD-9 listing, claims for testing for all other medically necessary PCR testing is being inappropriately denied as failing the ICD-9 edit. The LCD is being misapplied to most molecular testing.  Similar to the IHC Flow cytometry LCD problem it is impractical to develop and maintain an up to date comprehensive ICD-9 list in this rapidly evolving filed of medicine. Palmetto should encourage the use of molecular testing modifiers for the specific assays referenced in the LCD to facilitate identifying those cases in which the LCD coverage criteria and limitations apply.    
We recommended that the ICD-9 edits be removed.       
(3) LCD L28251 for Cytogenetic Studies-This policy does not contain all the necessary ICD-9 justifications and has resulted in inappropriate denials since the transition. We will be submitting a list of additional ICD-9 codes that we recommend be added.
We will provide updates on changes and fixes to these issues as they occur. We have requested that claims that have been denied on IHC/Flow be automatically reprocessed to obviate the need to submit new claims.