2009 PFS Changes Anti-Markup Payment Limitations

Contractors will soon process Medicare claims for diagnostic tests subject to the anti-markup payment limitation based on new rules outlined in the 2009 Physician Fee Schedule (PFS).

The anti-markup payment limitation applies to the technical component (TC) and professional component (PC) of diagnostic tests performed or supervised by a physician who does not share a practice with the billing physician or supplier. Once referred to as “purchased diagnostic tests,” the Centers for Medicare & Medicaid Services (CMS) will gradually update references of such tests in the Internet Only Manual to “anti-markup test(s).”

Note: The anti-markup provision does not apply to independent labs payable under the Clinical Laboratory Fee Schedule.

Payment to the billing physician/supplier (less the applicable deductibles and coinsurance paid by or on the behalf of the beneficiary) for the TC or PC of a diagnostic test may not exceed the lowest of the following amounts:

  • The performing supplier’s net charge to the billing physician/supplier
  • The billing physician or supplier’s actual charge
  • The fee schedule amount for the test that would be allowed if the performing supplier billed directly

According to CMS, the net charge must be determined without regard to any charges that reflect the cost of equipment or space leased to the performing supplier by the billing physician/supplier. The anti-markup payment limitation does not, however, apply if the performing physician “shares a practice” with the billing physician/supplier.

Effective July 1, contractors will determine whether a performing/supervising physician shares a practice with the billing physician/supplier based on:

1. The “Substantially all Services” requirement: If the performing physician (who supervises the TC, performs the PC, or both) furnishes substantially all (at least 75 percent) of the professional service through the billing physician/supplier, none of the physician’s diagnostic testing services will be subject to the anti-markup payment limitation.

If the performing physician does not meet this requirement, then contractors will consider:

2. The “Site of Service” test: Only TCs conducted and supervised and PCs performed in the “office of the billing physician or other supplier” by a physician owner, employee, or independent contractor of the billing physician/supplier will avoid application of the anti-markup payment limitation.

Billing Instructions

CMS has instructed contractors in Change Request (CR) 6371, issued Feb. 13, to allow more than one test subject to the anti-markup payment limitation to be billed. When billing for multiple tests, however, remember to submit the total anti-markup service amount for each service.

For electronic claims with multiple anti-markup tests, remember to include line level total anti-markup amount information. Otherwise, contractors will assume the claim level service facility location information applies to a billed diagnostic service with modifier 26 (Professional component) or TC (Technical component).

When using paper claim Form CMS-1500 to report diagnostic services subject to the anti-markup payment limitation, bill each component of the test separately. Paper claims submitted for more than one diagnostic service with either a 26 or TC modifier and item 20 checked (indicating that an anti-markup test is being billed) will not be processed.

Global billing is not acceptable for anti-markup claims. Each component must be billed separately.

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