Corporate Compliance

Note from Peggy: Out with the old purchased services and in with the new anti-markup tests

Medicare Update for Physician Services, February 4, 2010

Want to receive articles like this one in your inbox? Subscribe to Medicare Update for Physician Services!

Say good-bye to purchased diagnostic tests and purchased test interpretations. And say hello to its new, concise replacement: anti-markup tests.
 
CMS released a transmittal on January 15 that updates the Medicare Claims Processing Manual regarding anti-markup limitation rules. To understand everything, it’s helpful to have a terminology list including the terms’ associated meaning.
 
Anti-markup payment limitation – the lesser of:
  • The performing entity’s net charge. The net charge must be determined without any charges that reflect the cost of the equipment or cost of leased space.
  • The billing entity’s charge for the service.
  • The physician fee schedule allowed amount.
 
Determination that anti-markup payment limitation applies – Entity bills for a diagnostic test that was performed by an entity with which they do not share a practice.
 
Determination that anti-markup payment limitation does not apply – Two tests are used:
 
  • Substantially all services test – If substantially all of the performing entity’s services are furnished through the billing entity (basically they share a practice) then the anti-markup limitation does not apply. If that test fails, consider the next alternative.
  • Site of service or same building test – The professional component (PC) or technical component (TC) is performed in the same office as the billing entity by a physician owner, employee, or independent contractor of the billing entity. This analysis applies on a test by test basis.
 Office of the billing entity –­­ Any medical office space, regardless of the number of locations, in which the ordering physician regularly furnishes patient care. This includes space where the billing entity furnishes diagnostic tests if the space is located in the same building where the ordering entity regularly furnishes patient care.
 
Performing physician or supplier – The entity that either performed or supervised the TC of the test; or if you’re talking about the PC, the entity that personally performed the service
 
Purchased diagnostic test – The old language replaced with anti-markup test or diagnostic tests subject to the anti-markup payment limitation
 
Sharing a practice – Entities are considered to be sharing a practice if substantially all services that the performing physician furnishes are done through the billing entity
 
Substantially all services – At least 75% of the performing entity’s professional services are furnished through the billing entity. The time period for determining at least 75% of the services can be either the 12 months preceding or 12 months following the service. The month in which the service in question was performed is included in the 12 month calculation.
 
Once you have the terminology down, here’s the rule, or at least part of it, as stated in Chapter 1 of the Claims Processing Manual:
 
“A physician or other supplier may bill for the technical component (TC) and/or professional component (PC) of a diagnostic test that was ordered by the physician or other supplier (or ordered by a party related to the billing physician or other supplier through common ownership or control), subject to an anti-markup payment limitation, if the diagnostic test is performed by a physician who does not “share a practice” with the billing physician or other supplier.”
 
When services are reported on the claim that the billing entity did not perform, the performing entity information (name, address, and NPI) is included in block 32 of the CMS 1500 or its electronic equivalent unless a different B MAC from the one who is processing the claim enrolled the performing entity. If the billing entity and the performing entity fall into different B MAC processing jurisdictions, then block 32 should reflect the billing entity’s information and of course, the medical record would accurately reflect who did what. 
 
One would think the universal nature of the NPI would overcome any problems of an NPI appearing in block 32 that falls outside of the processing MAC’s jurisdiction, but that’s what the billing rules are.
 
The anti-markup business (formerly called purchased tests) has been around for a number of years, evolving to include new twists and certainly new lingo. Reading this and previous transmittals on the topic, for me at least, is not a simple task. Once I finally decipher what the transmittal is saying, I often wonder why all of this has to be so complicated.
 
The bottom line is CMS does not want physicians making a profit from billing for diagnostic services that were purchased from another entity who actually performed the service. If you’re reporting services on the claim that you bought from another entity who performed the service, then you have to go through all this rigmarole to figure out if the anti-markup limitation rules apply or not. 
 
Basically, CMS wants to know if you bought the service from somebody else, then how much did you pay for it? If the service is less than the physician fee schedule allowed amount, then that’s how much CMS wants to pay for it, too. 
 
Wouldn’t it be simpler to focus on the medical necessity of the procedure being performed? Assume the tests are ordered and performed appropriately; if we’re comfortable with that, do the Relative Value Units assigned to the procedure accurately reflect the amount of work and the cost of providing the service? If we can say yes to this, then does it matter if the physicians make a profit for medically necessary services that are not overpriced? Why doesn’t CMS simplify the process by saying, “This is the allowed amount for the service that you billed. Compare the fee schedule allowed amount to the billing provider’s charge and pay the lesser of the two.” What’s so hard about that?



Want to receive articles like this one in your inbox? Subscribe to Medicare Update for Physician Services!

    Briefings on The Joint Commission

  • Briefings on The Joint Commission

    Briefings on The Joint Commission will help you with all of your accreditation and survey preparation needs. Every month...

  • PPS Alert for Long-Term Care

    Looking for a tool to make your job easier? PPS Alert for Long-Term Care, exclusively for the RN or MDS coordinator, is your...

  • Strategies for Health Care Compliance

    News and real-life examples to increase the effectiveness of your compliance program. Strategies for Health Care Compliance...

  • Compliance Monitor

    This HTML e-mail newsletter delivers news on Medicare and Medicaid fraud and abuse, as well as recent documents and targets...

  • Case Management Monthly

    This newsletter offers case studies, best practices, and how-to analysis to help case managers move patients through the...

Most Popular

Related Articles