Digital pathology coding and documentation requirements in dermatology

By Faith C. M. McNicholas, RHIT, CPC, CPCD, PCS, CDC, Senior Manager, Coding and Reimbursement, May 1, 2025

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Digital pathology has transformed dermatologists’ and dermatopathologists’ services by enabling remote review and consultations, improved diagnostic accuracy, and streamlined workflows. However, with these advancements come specific coding and documentation requirements necessary for compliance with Medicare, Current Procedural Terminology (CPT^®) guidelines, and private payer policies. Understanding the correct coding and documentation for digital pathology services in dermatology ensures appropriate reimbursement and minimizes audit risks.

The role of digital pathology in dermatology

Traditional histopathology involves physical slide preparation and transportation of those slides to the laboratory, while digital pathology converts glass slides into high-resolution digital images for remote interpretation and consultation. The rise of whole-slide imaging (WSI) and artificial intelligence (AI)-assisted diagnostics has further expanded digital pathology’s role in dermatologic practice.

CPT coding for digital pathology in dermatology

The American Medical Association (AMA) created CPT Category III add-on codes 0751T-0763T and 0827T-0856T to capture and report additional clinical staff work and service requirements associated with digitizing glass microscope slides for primary diagnosis. These codes help dermatopathologists, pathology practices, and laboratories providing digital pathology digitization procedures to appropriately report these services. The Digital Pathology CPT instructions section was also revised to include clarifying information that each Category III add-on code is reported as a one-to-one unit of service for each primary pathology service (Category I) code(s) (CPT codes 88300 – 88348).

The CPT coding guidelines describe the process of slide digitization as scanning glass microscope slides by clinical staff and capturing whole-slide images (either in real time or stored in a computer server or cloud-based digital image archival and communication system) for digital examination for pathologic diagnosis. This is distinct from direct visualization through a microscope. The guidelines also point out that static digital photographic and photomicrographic imaging or digital video streaming of any portion of a glass microscope slide on mobile smartphone and tablet devices does not constitute a digital pathology digitization procedure.

CPT coding guidelines further prohibit reporting Category III codes solely for archival purposes (e.g., after the Category I service has already been performed and reported), solely for educational purposes (e.g., when services are not used for individual patient reporting), solely for developing a database for training or validation of AI algorithms, or solely for clinical conference presentations (e.g., tumor board interdisciplinary conferences).

Digitization of glass microscope slides also enables remote examination by the dermatopathologist and/or in conjunction with the use of AI algorithms. Category III add-on codes 0751T-0763T, 0827T-0856T may be reported in addition to the appropriate Category I service code when the digitization procedure of glass microscope slides is performed and reported in conjunction with the Category I code for the primary service.

Dermatopathologists interpreting digital images should report the appropriate pathology service CPT Category I code in conjunction with digital pathology-specific Category III code, where applicable. For example, when the digitization of glass microscope slides for level IV, gross and microscopic examination of surgical pathology slides is performed, the encounter would appropriately be reported with +0753T, digitization of glass microscope slides for level IV, surgical pathology, gross and microscopic examination in conjunction with CPT Category I code 88305, surgical pathology, gross and microscopic examination.

Similarly, when the digitization of glass microscope slides for level III, gross and microscopic examination of surgical pathology slides is performed, this encounter would appropriately be reported with +0752T, digitization of glass microscope slides for level III, surgical pathology, gross and microscopic examination in conjunction with CPT Category I code 88304, Level III - Surgical pathology, gross and microscopic examination.

Reporting slide digitization during pathology consultation

When second-opinion or consultative pathology is sought (CPT codes 88321-88325) and the slides are digitized, the appropriate digitization codes should be reported in conjunction with the primary consultation code. For example, digitization of referred slides prepared elsewhere is reported with CPT Category I code 88321, Consultation and report on referred slides prepared elsewhere as well as +0838T, Digitization of glass microscope slides for consultation and report on referred slides prepared elsewhere, when the digitization of glass microscope slides is performed.

When consultation and report on referred material requiring preparation of slides is performed, report CPT Category I code 88323 with Category III code +0839T when the digitization of glass microscope slides is performed.

When comprehensive consultation is performed that includes a review of records and specimens, with a report on referred material, report CPT Category I code 88325 with Category III code +0840T when the digitization of glass microscope slides is performed.

Pathology consultation during surgery of the first tissue block specimen with frozen section(s) is reported with CPT Category I code 88331 as well as Category III code 0841T when the digitization of glass microscope slides is performed. Each additional tissue block with frozen section(s) is reported with CPT Category I CPT code 88332 as well as Category III code +0842T when the digitization of glass microscope slides is performed.

The initial single antibody stain specimen of immunohistochemistry or immunocytochemistry is appropriately reported with CPT Category I code 88342, as well as Category III, code +0760T when the digitization of glass microscope slides is performed.

Subsequently, each additional single antibody stain procedure is reported with CPT Category I code 88341 as well as Category III code +0761T when the digitization of glass microscope slides is performed.

Each multiplex antibody stain procedure is reported with CPT category I code 88344 in conjunction with Category III code +0762T when the digitization of glass microscope slides is performed.

Documentation requirements for digital pathology

To ensure proper reimbursement and compliance, dermatologists must adhere to specific documentation standards before the slide(s) are digitized. Key requirements include:

• Patient information, including patient’s full name, date of birth, and medical record number;

• Date of specimen collection and biopsy location;

• Specimen details including a description of the technique used to obtain the tissue specimen (e.g., shave, punch, incisional, or intra-operative technique);

• Clinical indication for biopsy (e.g., rule out melanoma); and

• The digitization process including where the data are stored.

The laboratory must document the conversion process, specifying the technology and software used for digitization as well as:

• Slide tracking information (e.g., barcode IDs) for chain-of-custody compliance;

• Interpretation and findings;

• Dermatopathologist’s diagnostic report, including any AI-assisted analysis;

• Clinical correlation, when applicable; and

• Consultation and remote review.

Medicare and private payer considerations

Medicare and private insurers may have varying policies regarding digital pathology reimbursement.

Although Medicare will generally cover medically necessary dermatopathology services, it may not reimburse for digitization costs separately unless explicitly allowed.

On the other hand, some private payers may recognize and reimburse digital pathology services. However, dermatologists and dermatopathologists should verify specific payer coverage and reimbursement policies and, where necessary, obtain prior authorization before providing the service.

Compliance and audit risks

It is important to note that failure to meet AMA CPT coding and payer documentation requirements may result in claim denials and lead to inadvertent audits. Common compliance pitfalls to look out for include:

• Lack of clear documentation for digital processes in the digital pathology workflow may result in reimbursement denial by the payer;

• Improper use of AI in pathology reports: AI should supplement, not replace, the pathologist’s diagnostic statement;

• Inappropriate CPT code selection and/or omitting necessary modifiers, where appropriate, can lead to payment reductions or outright claim denials and/or payment recoupments;

• Digital pathology platforms must ensure secure transmission and storage of patient data and specimens. Failure to maintain HIPAA compliance can be a source of many frustrations including claim denials and exclusion from providing the service.

Future trends in digital pathology coding

As the AMA and Centers for Medicare and Medicaid Services (CMS) continue to update CPT and HCPCS codes to accommodate digital pathology advancements, dermatologists should monitor the:

• Expansion of AI-specific CPT codes;

• Increased payer recognition of digital pathology services;

• The potential for remote digital pathology to be incorporated into telemedicine frameworks.

Digital pathology enhances dermatologic care by improving diagnostic accuracy and accessibility. However, proper coding and documentation are essential to secure appropriate reimbursement and maintain compliance. Dermatologists and dermatopathologists must stay updated on evolving CPT codes, payer policies and guidelines, and documentation best practices to accurately report digital pathology services when performed. By adhering to these guidelines, dermatologists and dermatopathologists can fully leverage digital pathology while minimizing audit risks and ensuring high-quality patient care.

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