Cause and Effect

Recently, CMS announced they will be cutting their payment for the UroVysion Bladder Cancer Test.  This represents a classic business process at work.  Even though the Federal Government is a large bureaucratic agency, they still have a capitalistic approach, they respond to market changes just like any other industry, it just takes them longer.

CPT code 88367 has been changed to 88121 and cut by 56%, CPT code 88368, has been changed to 88120 and slashed by 41%.  This is exactly what was expected as the volume of these codes has risen and their popularity continues to increase.  The real question may be “How is this going to affect those practices that bill for these tests?” and “How are they going to respond to this market change?” 

Living in an agricultural region, this change reminds me of the fluctuations in the corn market in recent years.  When the corn by-product ethanol took off, my small town benefited from the new ethanol plant that was built.  This plant brought jobs and commerce to the town and all of the farmers were ecstatic that their corn would now have more value.  I spoke with many of them about monitoring their capital growth.  I was worried that they would take the inflated price of $7.00 per bushel and expand their operations based on this, thinking that the “gold rush” would last.  When you buy a $400,000 tractor you’d better plan on a long-term payment plan.  Some listened and others went “bust” when the price plummeted to $3.50 a bushel. 

Most businesses are the same no matter what they sell or provide.  Markets change and fluctuate, and businesses must be able to handle these changes and maintain margins necessary to weather the storm. The low cost provider is always the first to fail. 

Consider the UroVysion payment change.  Understanding that some practices are operating with profit margins that are so slim, this change may cause catastrophic failures. 

Many pathologists have heard me speak about “working smarter and not harder.”  These groups wonder why I rant so loud against Part A cuts and managed care contract decreases.  It is our job to defend our practices’ profit margins and to keep them from being the low cost provider; to keep them from suffering and being unprepared for the changes that inevitability will come.