Tessa Quinn
The Anti-Markup Rule was instituted by CMS to reduce overall healthcare expenditures by limiting how much physicians can be reimbursed for diagnostic tests they perform. The rule applies to diagnostic tests that were formerly referred to as purchased diagnostic tests. It prohibits a billing physician or supplier from marking up the Technical Component (TC) or Professional Component (PC) of a diagnostic test unless the performing physician shares a practice with the billing physician or supplier. The rule does not apply if the performing physician is an owner, employee, or independent contractor of the billing physician, and the test is performed in the same office. The anti-markup rule has caused some confusion within physician practices, and its effects have not yet been fully evaluated.
| Characteristics | Values |
|---|---|
| Purpose | To reduce overall healthcare expenditures by placing limits on how much physicians can be reimbursed for diagnostic tests they perform |
| Applicability | The rule applies to diagnostic tests, specifically the technical component (TC) and professional component (PC) |
| Exemptions | When the performing physician 'shares a practice' with the billing physician or supplier, or if the performing physician is an owner, employee, or independent contractor of the billing physician |
| Billing Limitations | The billing for TC or PC of a diagnostic test cannot exceed the lowest of the performing supplier's charge, the billing physician's charge, or the allowed fee schedule amount |
| Confusion | Physicians find the 'substantially all' and 'site of service' tests confusing, especially regarding their application to diagnostic tests |
| Effective Date | January 1, 2009 |
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What You'll Learn
The anti-markup rule and its applicability to hospitals
The Anti-Markup Rule was first instituted by the Centers for Medicare and Medicaid Services (CMS) in 2008, with the goal of reducing overall healthcare expenditures by limiting how much physicians can be reimbursed for diagnostic tests they perform. The rule applies when a physician or other supplier orders and bills for a diagnostic test and either the technical component (TC) or professional component (PC) of the test is performed by a physician who does not "share a practice" with the billing physician or supplier.
The rule prohibits a billing physician or supplier from marking up the TC or PC of a diagnostic test unless the performing physician 'shares a practice' with the billing physician or supplier. CMS has adopted a 'shares a practice' standard to ensure there is a sufficient relationship between the billing and performing physicians. This can be assessed through the ''substantially all' test and the ''site of service' test.
The 'substantially all' test evaluates the contractual relationship between the billing and performing physicians, and the rule does not apply if the performing physician provides at least 75% of their professional services through the billing physician or group. The 'site of service' test looks at where the test is performed and the rule does not apply if the TC or PC is performed in the same office as the billing physician or supplier.
The anti-markup rule applies to diagnostic tests, which are typically billed by pathologists, and it rarely applies to the services they provide. The rule focuses on the relationship between the billing physician and the physician who performed the test, specifically whether they can be said to 'share a practice'.
Overall, the anti-markup rule is intended to prevent physicians from profiting from the TC or PC of diagnostic tests by billing Medicare and then purchasing the tests from another physician or supplier. The rule limits payment to the lowest of the performing supplier's net charge, the billing physician's charge, or the Medicare fee schedule amount for the test.
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The 'substantially all' and 'site of service' tests
The Anti-Markup Rule, which came into effect on January 1, 2009, prohibits a physician who bills for diagnostic tests from increasing the charge to Medicare if the tests were performed or supervised by a physician who does not "share a practice" with the billing physician.
The 'substantially all' test states that the Anti-Markup Rule does not apply when the performing physician provides at least 75% of their professional services through the billing physician/group for the past or next 12 months. The rule is focused solely on the relationship between the billing physician and the physician performing the test, and location is not a factor.
The 'site of service' test states that the Anti-Markup Rule does not apply if the performing physician is an owner, employee, or independent contractor of the billing physician, and the TC or PC is performed in the same office, billing physician, or other suppliers. The performance of the TC means both the conducting and supervision of the TC under this site of service test. The 'office of the billing physician or other supplier' is interpreted to mean any space in which the billing physician regularly provides patient care services. This may include medical space where the billing physician performs diagnostic tests, as long as the space is in the same building.
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The impact of the anti-markup rule on pathologist billing
The Anti-Markup Rule prohibits a billing physician or other supplier from marking up either the Technical Component (TC) or Professional Component (PC) of a diagnostic test ordered by the billing physician or other supplier. The rule applies only when the ordering physician also bills for a diagnostic test.
The new Anti-Markup Rule, however, exempts pathologists from its scope, as they typically do not order the tests. It also extends the purchase price limitation to both technical and professional component services. This means that pathologists can now bill Medicare globally for services that previously had to be split-billed and subject to a purchase price limitation.
The Anti-Markup Rule does not apply if the performing physician is an owner, employee, or independent contractor of the billing physician, and the test is performed in the same office space. Additionally, it does not apply if the performing physician provides at least 75% of their professional services through the billing physician or group.
State-level anti-markup laws also exist, which can have a significant impact on how pathologists bill for their services. These laws vary by state and may include direct billing laws, prohibiting "pass-through billing" or "client billing," where a laboratory bills the practice group that ordered the test, which then bills the patient.
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The anti-markup rule and diagnostic tests
The Anti-Markup Rule was first instituted by the Centers for Medicare and Medicaid Services (CMS) in 2008, with the aim of reducing overall healthcare costs by limiting the amount physicians can charge for diagnostic tests. The rule applies when a physician or supplier orders and bills for a diagnostic test and either the technical component (TC) or professional component (PC) of the test is performed by a physician who does not "share a practice" with the billing physician or supplier.
The rule prohibits a billing physician or supplier from marking up the TC or PC of a diagnostic test unless the performing physician shares a practice with the billing physician or supplier. CMS has outlined two alternatives for assessing whether physicians "share a practice": the "'substantially all' test and the "'site of service' test. The "substantially all" test evaluates the contractual relationship between the billing and performing physicians, and the performing physician must provide at least 75% of their professional services through the billing physician or group for the past or next 12 months. The "site of service" test focuses on where the test is performed and applies only to TCs conducted and supervised and PCs performed in the office of the billing physician or supplier by a physician owner, employee, or independent contractor.
The Anti-Markup Rule does not apply if the performing physician is an owner, employee, or independent contractor of the billing physician, and the TC or PC is performed in the same office. It is important to note that the rule does not apply based on location but rather on the relationship between the billing and performing physicians. If the billing physician or supplier cannot meet the "substantially all" test, they should evaluate the "site of service" test.
The anti-markup payment limitation will apply if a physician does not meet the criteria for the "substantially all" or "site of service" tests. Payment to the billing physician or supplier for the TC or PC of the diagnostic test may not exceed the lowest of the following amounts: the performing supplier's net charge, the billing physician's charge, or the fee schedule amount for the test if the performing supplier billed directly. The anti-markup rule eliminates the notion of "purchased" tests, focusing instead on the relationship between the billing and performing physicians and the location where the test is performed.
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The anti-markup rule and billing limitations
The Anti-Markup Rule was instituted by the Centers for Medicare and Medicaid Services (CMS) to reduce overall healthcare expenditures by limiting how much physicians can be reimbursed for diagnostic tests they perform. The rule applies to both the Technical Component (TC) and the Professional Component (PC) of a diagnostic test. The TC includes supplies, equipment, and technicians, while the PC involves the physician's interpretation of the TC's results.
The Anti-Markup Rule prohibits a billing physician or supplier from marking up the TC or PC of a diagnostic test unless the performing physician 'shares a practice' with the billing physician or supplier. CMS has outlined two alternatives to determine if physicians 'share a practice': the substantially all test and the site of service test. The substantially all test evaluates the contractual relationship between the billing and performing physicians, and the performing physician must provide at least 75% of their professional services through the billing physician or group. The site of service test focuses on where the test is performed and applies only when the TC is conducted and supervised, and the PC is performed in the office of the billing physician by a physician owner, employee, or independent contractor.
If the Anti-Markup Rule applies, the payment to the billing physician for the TC or PC of the diagnostic test may not exceed the lowest of the following amounts: the performing supplier's net charge to the billing physician, the billing physician's actual charge, or the fee schedule amount for the test if the performing supplier billed directly. This rule eliminates the notion of 'purchased' tests, focusing instead on the relationship between the billing and performing physicians and the location where the test is performed.
The Anti-Markup Rule has caused some confusion within physician practices, and CMS has provided further instructions to contractors to handle tests subject to the rule. The rule's effects have not been fully evaluated yet, but CMS aims to increase physician compliance and reduce healthcare expenditures related to discrepancies in billing practices.
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Frequently asked questions
The Anti-Markup Rule was instituted by CMS to reduce healthcare costs by limiting how much physicians can be reimbursed for diagnostic tests.
The Anti-Markup Rule applies when a physician or supplier orders and bills for a diagnostic test and either the technical component (TC) or professional component (PC) of the test is performed by a physician who does not "share a practice" with the billing physician or supplier.
The Anti-Markup Rule does not apply if the performing physician is an owner, employee, or independent contractor of the billing physician, and the test is performed in the same office space. The rule also does not apply if the performing physician provides at least 75% of their professional services through the billing physician or group.
The Anti-Markup Rule applies to hospitals in the context of diagnostic tests and billing practices. It is important to note that the rule focuses on the relationship between the billing physician or group and the performing physician, as well as the location where the test is performed.
