Corporate Compliance

Note from the instructor: Billing Outpatient Laboratory Services - TOB 131 vs. TOB 141

Medicare Insider, March 4, 2014

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This week’s note from the instructor is written by Debbie Mackaman, RHIA, CHCO, regulatory specialist for HCPro, Inc.
Since the implementation of the calendar year (CY) 2014 Outpatient Prospective Payment System (OPPS) final rule, there has been much confusion and discussion regarding the requirement to bill certain outpatient lab services on Type of Bill (TOB) 141 rather than TOB 131. Under the new OPPS packaging rules, reimbursement for most outpatient lab services is bundled into other separately payable services on the outpatient claim, excluding molecular pathology.
As of January 1, 2014, date of service, CMS expanded the use of TOB 14X to allow separate billing and payment at Clinical Laboratory Fee Schedule (CLFS) rates for hospital outpatient laboratory tests. However, this change is not only counterintuitive for facilities, it also creates major operational issues.
Historically and by definition, TOB 14X is for non-patient (specimen only) lab services where the patient does not receive outpatient services on the same date of service. Prior to January 1, 2014, the non-patient lab services were easy for hospitals to identify and systematically direct the claim to process under TOB 141. Under the new billing guidance, hospitals have had to create back-end processes and in some cases, separate review by staff to identify if the outpatient lab should be billed on TOB 141 to receive separate reimbursement under the “exceptions” guidance provided by CMS.
According to the Medicare Claims Processing Manual Transmittal 2845, lab tests may be (or must be for a non-patient specimen) billed on a 14X claim in the following circumstances:
  1. Non-patient laboratory specimen tests; non-patient continues to be defined as a beneficiary that is neither an inpatient nor an outpatient of a hospital, but that has a specimen that is submitted for analysis to a hospital and the beneficiary is not physically present at the hospital;
  2. Beginning in 2014, when the hospital only provides laboratory tests to the patient (directly or under arrangement) and the patient does not also receive other hospital outpatient services during that same encounter; and
  3. Beginning in 2014, when the hospital provides a laboratory test (directly or under arrangement) during the same encounter as other hospital outpatient services that is clinically unrelated to the other hospital outpatient services, and the laboratory test is ordered by a different practitioner than the practitioner who ordered the other hospital outpatient services provided in the hospital outpatient setting. In this case the lab test would be billed on a 14X claim and the other hospital outpatient services would be billed on a 13X claim.
In addition to the operational and compliance concerns that have been created under this new guidance, another issue surfaced. A former student, Melinda McCaslin of Solders + Sailors Hospital in Wellsboro, Pa., raised the question regarding the rural sole community add-on payment that certain hospitals receive when lab is billed on TOB 131. If the hospital must bill their “lab only” or “unrelated lab” on TOB 141, the add-on payment may not be triggered which could be a significant reduction in revenue depending on outpatient lab volumes. Although CMS stated in the OPPS final rule that the application of the rural adjustment for rural sole community hospitals would remain the same and that some APCs had been recalibrated to accommodate this change, it would appear that billing certain outpatient lab under TOB 141 would prevent the add-on payment from being generated as this bill type is only paid under the CLFS. McCaslin later confirmed that their hospital was not receiving their additional payment in these types of situations.
I inquired with CMS in regards to what appeared to be a lack of payment for the rural sole community adjustment for lab. After several emails back and forth, it was alluded that there may be a change in this OPPS policy in the near future. The CMS representative indicated that the use of a modifier on TOB 131 may replace the requirement to report outpatient lab on TOB 141. Shortly after the response I received from CMS, a letter was posted to the National Uniform Billing Committee (NUBC) website that indicated this change may be forthcoming.
I found several of the NUBC’s statements in the January 21 letter to CMS worthy of noting:
  • “…writing on behalf of the members of the National Uniform Billing Committee (NUBC) to express our concern about a recent Centers for Medicare & Medicaid (CMS) action that alters the official definition and purpose of an NUBC data element (as indicated in the Official UB-04 Data Specifications Manual (UB-04 Data Set)).“
  • “Unless the situation is corrected, the NUBC plans on filing a HIPAA complaint with CMS OESS for failure to adhere to the HIPAA standards.”
  • “Even if CMS had done so, the rule making process is not applicable to an external code list that is not within the purview of CMS to arbitrarily change. The NUBC has a change request process that CMS, in this instance, did not follow.”
CMS provided a written response to the NUBC February 18 and indicated that it has requested a modifier to be created for “lab only” and “unrelated lab” situations and that hospitals would be directed to return to billing under TOB 131 once the modifier was approved. This modifier would be retroactive to January 1, 2014, dates of service; however, CMS indicated in its letter to the NUBC that billing instructions to hospitals would probably not be published until the July quarterly OPPS update transmittal.
Hospitals should continue to bill using TOB 141 until CMS provides further instruction. At this time, it is unknown if hospitals will need to rebill certain TOB 141 claims using the new modifier or if the MACs will reprocess these claims for them. Based on the issues discussed above, it is my best guess that providers will be responsible to rebill claims because MACs will not be able to identify which labs are truly non-patient services appropriately billed on TOB 141 and those that are truly outpatient labs that had previously been billed on TOB 131. Stay tuned!

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