3. How does Medicare reimburse for clinical pathology services? (professional component)

The Medicare program provides reimbursement to their beneficiaries through Medicare Part A DRG, in which payments are made to hospitals rather than via Medicare Part B in which payments are made directly to the pathologist. Approximately 15 years ago Medicare shifted the reimbursement policy for professional component services from Medicare part b to Medicare part A. Medicare allocated the payment for professional component services into its DRG calculations.

4. Can a hospital refuse to pay pathologists for the clinical component of pathology services?

The union between hospitals and pathologists could possibly implicate the Medicare and Medicaid anti-kickback law, especially if the pathologist is required to pay direct or indirect compensation to the hospital as a condition of providing services to the hospitals inpatients and outpatients. Consequently, if the part A payment system is below fair market value, the government could argue that pathologists have paid a kick back to a hospital in exchange for the opportunity to provide medical services for that hospital.
The OIG has argued that a hospital's demand for compensation from its hospital-based physicians could be a violation of the anti-kickback law. In January 1991 the OIG issued an advisory report regarding the financial arrangements between hospitals and hospital-based physicians. This report specifically discusses, "no token" reimbursement to pathologists for part A services in return for the opportunity to perform and bill for part B services at the hospital. The OIG's compliance program also cautions against arrangements with hospital-based physicians which compensate physician's less than fair market value for their services.

Technically, by refusing to pay adequate part A compensation to pathologists, hospitals may be subjecting themselves to anti-kick back criminal and civil penalties.

5. Does the hospital's reimbursement for clinical laboratory services from private insurance companies and private patients include the pathologist's clinical pathology services?

Reimbursement by private insurance companies and patients for the hospital's technical component services generally does not cover the professional medical services of pathologists. The amount paid by patients and private insurance companies to the hospital generally covers only the cost for equipment, salaries and overhead. These technical services are separate from the medical services of a pathologist. Pathologists can bill private patients and other private insurance companies directly, with the exception of Medicare, Medicaid and Tricare, depending on state law. As a result, there is no violation if the pathologist bills and collects for their professional components of clinical pathology services for private patients.