Corporate Compliance

Note: Clarification of reference (non-patient) laboratory testing

Medicare Insider, May 12, 2009

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CMS released Transmittal 1729 to the Claims Processing Manual this week, implementing provisions of the Medicare Improvements for Patients and Providers Act (MIPPA) regarding payment of reference laboratory tests performed at a Critical Access Hospital (CAH). Although directed at CAHs, this is a good opportunity to review the rules for reference lab billing for OPPS hospitals as well. This is a common area of confusion for hospitals because of the definition of non-patient in the context of reference lab services. See Claims Processing Manual, Chapter 16, Section 40.3, as revised by Transmittal 1729, and Benefit Policy Manual, Chapter 6, Section 70.5. 

The issue relates to lab tests performed on specimens collected outside the hospital and sent to the hospital for testing. For OPPS hospitals, effective January 1, 2008, CMS clarified that if a patient is a registered outpatient for any service at the hospital on the same day the hospital receives a reference lab specimen, the lab test on that specimen is nonetheless considered a hospital outpatient service, not a non-patient reference lab service. This is true even if the lab specimen is received under circumstances that would normally indicate a reference lab service (i.e., collection by a separate provider). 

Effective July 1, 2009, the CAH guidance matches the OPPS hospital guidance. The transmittal also goes on to add that if the sample is collected outside the hospital by an employee of the CAH or at a CAH provider-based facility, then it will also be treated as a hospital outpatient service rather than a reference lab service. Formerly, the patient had to be physically present in the CAH at the time of specimen collection for the service to be considered a hospital outpatient service eligible for reimbursement at the higher 101% of cost basis for CAH hospitals. Otherwise, as a reference lab service, it would be payable under the lower clinical diagnostic laboratory fee schedule.

Hospitals should pay careful attention to identifying patients who are actually outpatient, rather than non-patients, within the guidance in the Claims and Benefit Policy Manuals. This represents a revenue opportunity for hospitals that are billing tests as non-patient reference lab services because of the manner in which they received the specimen, when in fact the service should be billed as a hospital outpatient service.


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