Pathology/Lab Coding Alert

In a clarification issued as program memorandum B-01-50, CMS amended its earlier instruction (AB-01-47) regarding documentation required for independent laboratories to qualify for the technical component (TC) grandfather exception. Section 542 of the Benefits Improvement and Protection Act of 2000 (BIPA) allows certain qualifying independent laboratories to continue to bill Medicare directly for the TC of physician pathology services for certain hospital patients until Jan. 1, 2003. Although many laboratories have taken the grandfather exception to continue their TC billing practices, others have had difficulty providing adequate documentation to qualify.
 
Independent laboratories can only qualify for the TC grandfather exception in their billing to a covered hospital, which is one that had arrangements with an independent laboratory in effect as of July 22, 1999. Under these arrangements, a laboratory furnished the TC of physician pathology services to fee-for-service Medicare beneficiaries who were hospital inpatients or outpatients and submitted claims for payment for the TC to a carrier.
 
The CMS clarification affects only the documentation, not the criteria required for a laboratory to qualify for the grandfather exception. To qualify for the TC grandfather exception, independent laboratories were originally instructed to forward a copy of the agreement or other documentation to [your] carrier to confirm that an arrangement was in effect between the hospital and [an] independent laboratory as of July 22, 1999. However, CMS has clarified this requirement based on comments it received advising that not all such agreements were written; some were oral, and not all agreements could be found.
 
CMS now states that an attestation will suffice to meet the documentation requirement if no written agreement is available. The elements of an effective attestation include the legal name, mailing address, and Medicare billing numbers of each entity, as well as the Clinical Laboratory Improvements Amendments number for the laboratory. The attestation must include a statement that on July 22, 1999, this arrangement existed between this laboratory (or a predecessor independent laboratory) and the hospital.
 
Legislation is under consideration in the U.S. Congress that would establish a permanent TC grandfather exception. The current regulation, under section 542 of BIPA, expires Jan. 1, 2003. The proposed Physician Pathology Service Fair Payment Act of 2001 (S. 730, H.R. 1451) would allow laboratories providing TC services to hospitals to direct-bill Medicare permanently if they had such arrangements in place as of July 22, 1999. Language instituting a permanent TC grandfather exception has also been included in the Addressing Rural Health Care Disparities Act of 2001 (S 1030, H.R. 2157).
 
Note: To access program memorandum B-01-50, go to www.hcfa.gov/pubforms/transmit/B0150.pdf (you will need Adobe Acrobat available free at www.medville.com).