The College of American Pathologists urges CMS to reject steep projected reimbursement decreases, revaluations of surgical pathology codes, and the shift of software analyses to the Physician Fee Schedule.
The College of American Pathologists (CAP) submitted formal comments urging the Centers for Medicare and Medicaid Services (CMS) not to advance proposed Medicare payment policies that could substantially reduce reimbursement for pathology and laboratory services under the calendar year 2027 Medicare Physician Fee Schedule (PFS).
“Pathologists diagnose cancer and many other serious diseases, providing critical information that guides treatment and patient care,” says Qihui “Jim” Zhai, MD, FCAP, CAP president, in a release. “In our comments, we urge CMS not to advance proposed payment changes that could sharply reduce Medicare reimbursement for pathology services based on analyses that do not fully reflect the complexity of pathology practice.”
Zhai adds in a release, “These services are essential to patients, physicians, and the health care system. Additional reimbursement cuts could undermine access to timely, accurate diagnostic services and affect the pathology practices and laboratories that provide them. Any future changes to reimbursement should follow the established, clinically informed review process and be informed by physician expertise and meaningful stakeholder input to avoid unintended consequences for patient care.”
Projected Declines in Allowed Charges
In a Sept 14, 2026, comment letter addressed to CMS administrator Mehmet Oz, MD, CAP highlighted that CMS’s Table D-B5 estimates a 34% drop in total allowed charges for pathology, falling from $1.178 billion in 2026 to $777 million in 2027. For independent laboratories, the table reports an estimated 31% decline from $551 million to $380 million across facility and non-facility settings.
According to CAP, the organization could not identify any policy proposal, utilization assumption, or methodological change in the proposed rule to justify reductions of this scale, suggesting the published figures may represent a reporting or methodological error that CMS must review and clarify before finalizing policies.
Pushback on Surgical Pathology Revaluations
The comment letter also addressed recommendations from the Maryland Health Care Commission (MHCC), which nominated 13 CPT codes as potentially misvalued, including surgical pathology codes 88305 and 88307, based on claims data from the 2023 Maryland All-Payer Claims Database. CMS solicited feedback on whether to alter physician times and corresponding work relative value units for the entire 88305 code family.
CAP urged CMS against making these revisions, stating that the MHCC analysis failed to evaluate service intensity or account for specimen diversity, noting that code 88305 includes 63 specimen types in its descriptor and 88307 includes 39. Furthermore, CAP noted that the provider-days identified by MHCC as exceeding eight hours of intraservice time represented only 2.9% of analyzed provider-days for 88305 and 0.4% for 88307. CAP attributed apparent anomalies to billing arrangements such as Medicare reassignment and multi-day diagnostic workflows rather than actual individual physician practice time.
Additionally, CAP criticized reliance on a 2016 Urban Institute study cited by MHCC that reported a median intraservice time of two minutes for code 88305, noting the figure was derived from an unrepresentative convenience sample of 23 observations without clinical review by pathologists.
Opposition to Shifting Software Analyses to PFS
CAP expressed strong opposition to CMS’s proposal to transition 10 HCPCS codes describing Software as a Medical Service (SaMS) laboratory analyses from the Clinical Laboratory Fee Schedule to the PFS. CMS proposed contractor-pricing the stand-alone algorithmic services under the PFS on the grounds that they do not require examination of human material in a CLIA-certified laboratory.
According to CAP’s letter, incorporating SaMS technologies into the budget-neutral PFS would force software tools to compete with physician services for statutorily constrained resources, introduce beneficiary cost-sharing, and fail to provide stable reimbursement for software developers. CAP advocated for keeping the services on the Clinical Laboratory Fee Schedule while CMS collaborates with industry stakeholders to establish an independent, budgetarily separate payment structure.
Interoperability and Duplicate Testing Concerns
Responding to a CMS Request for Information regarding duplicate laboratory testing and digital health interoperability, CAP warned against blunt utilization controls. The association opposed broad Medicare Administrative Contractor edits, arbitrary time-based frequency caps, or requiring performing laboratories to certify clinical justifications for repeat orders placed by treating physicians. CAP pointed out that standard laboratory claims do not capture clinical context such as acute patient deterioration, therapeutic monitoring, or confirmatory testing.
Regarding digital pathology and image exchange, CAP reported from its 2025 Practice Leaders Survey that only 15% of pathology practices report using digital pathology or whole slide imaging for primary diagnosis, with most of those practices using it for less than half of their surgical case volume. Given the high technical costs and early stage of consensus standards, CAP urged CMS to provide positive financial subsidies, grants, and technical assistance rather than establishing penalties or conditioning Medicare payment on immature digital standards.
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