CMS Delays Diagnostic Test Markup Prohibition

FOR PROVIDERS

CMS Delays Diagnostic Test Markup Prohibition

The Centers for Medicare and Medicaid Services ("CMS") has delayed until January 1, 2009 the effective date of significant portions of the new Medicare prohibition on the markup of diagnostic tests.

On November 27, 2007 CMS published new regulations that prohibit ordering physicians from marking-up the price of either the professional or technical component of diagnostic tests if the tests are either: (1) performed at a site other than the "office of the billing physician or supplier"; or (2) purchased from an outside supplier. This new regulation significantly expands Medicare's traditional markup prohibition, and would force many physician practices to either disband their in-office diagnostic testing, or operate such testing at a net loss.

After publishing the rule CMS realized that the rule could limit patient access to diagnostic testing. In addition, CMS admits that whether or not testing is performed in the "office of the billing physician" is difficult to determine under the rule. For instance, the rule did not address whether an imaging center on a different floor of the same medical office building where the physician practice performs its other services would be considered the "office of the billing physician." The agency says they plan to provide additional guidance to define the "office of the billing physician."

Consequently, CMS has delayed for one year the effective date of much of the new anti-markup rule. The anti-markup rule will not apply to the professional component of diagnostic testing in 2008. In addition, the rule will not, for 2008, apply to technical diagnostic testing merely because the testing is performed in space other than the "office of the billing physician."

But CMS has not delayed the entire markup rule. The markup prohibition applies currently to the technical component of diagnostic tests that a physician purchases from an outside supplier. Furthermore, CMS refused to delay the application of rule to anatomic pathology testing furnished in space meeting the definition of a "centralized building" under Stark, but not in the same building as the physician's main practice. Pathology "pod" labs were CMS' core concern, and the agency would not delay the rule to combat what they view as an abusive practice.

This delay provides many physician groups with one year of additional time to operate in-office diagnostic testing without the Medicare markup prohibition. But it clearly remains the intention of CMS to implement the markup prohibition in full as of January 1, 2009.

Physician groups should utilize the additional time to review the finances and structure of their in-office diagnostic testing and prepare for full implementation of the new Medicare anti-markup rule.

CMS Delays "Stand In The Shoes" For Academic Medical Centers And Tax-Exempt Integrated Delivery Systems

The Centers for Medicare and Medicaid Services (CMS) will delay the application of the "stand in the shoes" provision of the Stark II Phase III final rule to academic medical centers (AMCs) and nonprofit integrated health systems for one year. Announced November 15, 2007 in a final rule (72 Fed. Reg. 64161), CMS stated that the delay was necessary to re-evaluate any unintended impacts of the "stand in the...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT