HCR: Reasonable Cost Payment for Clinical Lab Tests Extended

The Patient Protection and Affordable Care Act (PPACA), signed into law by President Obama on March 23, re-institutes reasonable cost payment for clinical lab tests performed by hospitals with fewer than 50 beds in qualified rural areas as part of their outpatient services for cost reporting periods beginning on or after July 1, 2010 through June 30, 2011. For some hospitals, this could affect services performed as late as June 30, 2012.

The Centers for Medicare & Medicaid Services (CMS) issued Change Request (CR) 6873 on April 2 to provide contractors with billing instructions.

According to the CR, the Medicare Zip Code File is to be used to identify “qualified rural areas” (i.e. one with a population density in the lowest quartile of all rural county populations).

The following text has been added to Pub. 100-04, Medicare Claims Processing Manual, Chapter 16 – Laboratory Services, section 30.3:

Exception: Reasonable cost reimbursement has been provided for outpatient clinical laboratory tests furnished by hospitals with fewer than 50 beds in qualified rural areas for cost reporting periods beginning on July 1, 2004 through 2008 (per the following legislation: Section 416 of the Medicare Modernization Act (MMA) of 2003, Section 105 of the Tax Relief and Health Care Act (TRHCA) of 2006, and Section 107 of the Medicare, Medicaid and State Children’s Health Insurance Program (SCHIP) Extension Act of 2007). Section 3122 of the Patient Protection and Affordable Care Act re-institutes the above reasonable cost provisions for cost reporting periods beginning on or after July 1, 2010, through June 30, 2011.


Medicare patients are not liable for any deductible, coinsurance, or any other cost-sharing amount.

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