United States: CMS May Decide To Permit Labs To Bill For Certain Tests Provided To Outpatients

In the recently published proposed rule related to the CY 2018 Hospital Outpatient Prospective Payment System (OPPS), the Centers for Medicare & Medicaid Services (CMS) announced that it is considering changes to the regulation governing the date of service (DOS) for clinical laboratory and pathology specimens. The DOS rules are important to laboratories and hospitals because they dictate which party must bill Medicare for certain laboratory testing performed on stored specimens collected during a hospital procedure but ordered after the patient has left the hospital. If revisions are ultimately finalized, the proposal could have significant business implications for independent laboratories and hospitals.

With few exceptions, the Medicare payment amount associated with an outpatient encounter covers all services provided during the outpatient stay, including any clinical laboratory diagnostic test (CDLT) as well as the technical component (TC) of anatomic pathology (AP) services (the professional component is one of the aforementioned exemptions). Prior to CY 2014, a hospital could bill Medicare for CDLTs ordered during an outpatient stay if the corresponding CPT codes appeared on the Medicare Clinical Laboratory Fee Schedule (CLFS). As explained in a previous post, this policy changed in CY 2014 when CMS decided to package certain CDLTs under OPPS. Under this policy, a hospital can receive separate reimbursement for CDLTs associated with an outpatient stay only if the CDLT at issue is:

  • the only service provided to a beneficiary on a claim;
  • a preventive service;
  • a molecular pathology test; or
  • an advanced diagnostic laboratory test (ADLT), as defined under the Protecting Access to Medicare Act of 2014 (see this post for more information about the definition of ADLT).

The packaging policy does not, however, cover the TC of AP services provided to a hospital outpatient. In most circumstances, Medicare has required a laboratory to bill the TC back to the hospital, but the hospital can bill Medicare for the TC under OPPs. In a previous post, we discussed a legislative exception to this rule that Congress declined to extend back in June 2012.

Depending on the DOS, CDLTs and the TC of AP services may be subject to the packaging policy even if ordered after the patient has left the hospital. Generally speaking, the DOS for a CDLT and the TC of AP services is the date of collection, but a different set of rules apply to stored specimens (e.g., tissue collected during biopsy procedures occurring in the hospital). For a test performed on a specimen that has been stored for 30 calendar days or less, the DOS is the date the test was performed only if:

  • the test was ordered by the patient's physician at least 14 days after discharge;
  • the specimen was collected during a hospital surgical procedure;
  • collection of the specimen at any other time would have been medically inappropriate;
  • the results of the test were not used to guide treatment provided during the hospital stay; and
  • the test was reasonable and medically necessary for the treatment of an illness.

This regulatory provision, implemented in CY 2007, is known in the lab industry as the "14-Day Rule." All other testing associated with specimens stored for less than 30 calendar days is subject to the packaging policy, which means that the laboratory must bill the hospital rather than Medicare for those services.

The proliferation of molecular pathology testing technology, coupled with the implementation of the packaging policy a few years ago, has strained relationships between many hospitals and laboratories. What often happens is that an oncologist or other physician sees a patient following a biopsy procedure conducted during an outpatient stay, and that physician orders molecular pathology testing in an effort to determine the patient's course of cancer treatment based on his or her genetic markers. Upon receipt of the test order, the laboratory obtains the stored specimen from the hospital. In some cases, the test order meets the requirements of the 14-Day Rule, and the laboratory can bill Medicare directly for the testing. But for various reasons that is not always the case, and the laboratory has no choice but to bill the hospital for the services. The hospital is then unhappy about bearing the expense of testing that is ordered after, and is unrelated to, the outpatient stay.

With this backdrop in mind, laboratory stakeholders have provided feedback to CMS regarding the "operational issues the current laboratory DOS policy creates for hospitals and laboratories with regard to molecular pathology tests and laboratory tests they expect will be designated by CMS as ADLTs." While these particular tests are not subject to the packaging policy (and thus hospitals can bill and receive payment at CLFS rates), laboratories still cannot seek payment from Medicare directly for any testing ordered within 14 days of discharge, and many hospitals are resistant to billing Medicare for testing performed by an unaffiliated laboratory. The proposed rule details a number of additional concerns with the current DOS policy, including decreased beneficiary access to necessary laboratory tests and therapies that could result from a hospital delaying the submission of test orders to avoid application of the 14-Day Rule.

In recognition of the issues raised by stakeholders, CMS is considering potential modifications to the DOS policy that would allow laboratories to bill Medicare directly for certain laboratory tests excluded from the packaging policy. CMS proposed three potential approaches:

  • creating an exception to the DOS rules that would allow laboratories to bill separately for molecular pathology tests and ADLTs, even if ordered within 14 days of the patient's discharge, as long as certain other conditions are met;
  • applying the above exception ONLY to ADLTs because the same "access to care" concerns may not exist for molecular pathology tests (which, according to CMS, hospitals may perform); and
  • adding an exception to the "under arrangements" rules for molecular pathology tests and ADLTs excluded from the OPPS packaging policy.

Comments on the proposed rule are due by September 11, 2017. CMS will issue the final OPPS rule for CY 2018 before the end of CY 2017, but it is unclear whether it will include final changes to the DOS policy.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Ryan J. Cuthbertson
Karen S. Lovitch
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.