Anti-Markup Provision - Medicare

[Guest guest]

I guess this actually doesn't affect me for labs since I don't bill any pass through labs for Medicare.

But I do perform pass through Xray charges for Medicare -- but I guess I'll have the Xray owners do the Technical Component charge and I'll just do the Professional Component charge from now on.

Locke, MD

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67558 & sk= & date= & pageID=2> & sk= & date= & pageID=2Anti-markup ruleThe anti-markup rule has been adjusted slightly for 2009. It appears thatMedicare will not subject services to the anti-markup provision in two

circumstances.First, if the physician supervising the TC and/or performing theprofessional component (PC) has provided 75% or more of his/her servicesthrough the billing person or entity for the past year and is expected to

continue to provide 75% or more of his/her services through the entity forthe next 12 months, the anti-markup will not be applied. If the performingentity does not meet this first requirement, a second definition will be

applied. Under this alternative definition, the anti-markup rule will notapply for services provided in the " same building " in which the orderingphysician provides substantially all care to his/her patients. The physician

supervising the TC and/or performing the PC of the service must be anemployee or independent contractor for the practice.http://www.aapmr.org/hpl/regulation/faq_antimarkup.htm

FAQs: Anti-Markup Provision of 2009 Medicare Physician Fee Schedule FinalRule1. What is the anti-markup rule?The anti-markup rule prohibits a physician or supplier who orders and bills

for diagnostic tests from marking up its charge to Medicare for those testsif they were performed or supervised by a physician who does not share apractice with the ordering/billing physician. Instead, Medicare can only be

billed the physician or supplier's " net charge. " The definition of " shares apractice " is thus critical to application of this policy. In the final rule,CMS adopts two tests for determining whether a physician " shares a practice "

with the ordering/billing physician or supplier. The first is the 75% test(Q 4); the second is the " same building " test (Q 5). You only need to meetone to be exempt from application of the anti-markup rule.

2. When does the anti-markup rule take effect?January 1, 2009Snip/snip<http://www.aafp.org/online/etc/medialib/aafp_org/documents/policy/fed/comme

nts/mfs0807.Par.0001.File.../8-24-07HerbKuhnCMS.pdf>www.aafp.org/online/etc/medialib/aafp_org/documents/policy/fed/comments/mfs0

807.Par.0001.File.../8-24-07HerbKuhnCMS.pdfLetter from AAFP.Physician Self-Referral ProvisionsCMS proposes to make a series of changes to the physician self-referralrules, commonly known

as the Stark rules. These include:ô€¸ An anti-markup provision of the technical and professional components ofdiagnostic tests, which essentially requires a physician who purchased theprofessional or technical component of a diagnostic test to charge Medicare

no more than he or she paid the entity from whom the test was purchasedThe Academy has followed the self-referral issue for many years and hasconcerns about some ofthe changes proposed in this rule. In general, these changes will make it

even more difficult forphysicians to participate in legitimate business ventures without the fearof inadvertent violations.Indeed, the proposed changes and " clarifications " to the self-referral

rules-referral rules are sweeping in theirscope, and in some cases, they appear to ban arrangements that CMSexplicitly permitted a fewyears ago. We are concerned that the proposed new rules will make it much

harder for physiciansto stay in small and independent practices, since the new rules make itharder and harder for smallphysician groups to join together to provide ancillary services that none ofthem can provide

independently. <http://www.cap.org/apps/docs/advocacy/cms_anti-markup_presentation.ppt>www.cap.org/apps/docs/advocacy/cms_anti-markup_presentation.ppt

Interesting presentation which explains partly why Medicare is doing this.2008 CMS Anti-Markup Rule and Effect on Pod Labs N. Henkes, MD, FCAP Chair, Professional Affairs Committee

Growth of Pod Labs " Getting Around Medicare… ome companies have figuredout a way to let doctors bill Medicare for off-site lab work. It involvesdoctor groups creating a " condo " or " pod " lab. " Armstrong, Wall

Street Journal, 9/30/05What is a Pod Lab?• Turnkey operation located off-site from the physician office• Usually built in groups of 5 since Medicare allows 1 pathologist to

oversee 5 labs• Technical employees leased from operator• Pathologist is an independent contractor and rotates among the multiplelabs• Ex., Uropath12-10-04 OIG Advisory Opinion 04-17 on pod labs concludes " the proposed

arrangement could potentially generate prohibited remuneration under theanti- kickback statute " CMS Anti-Markup Rule• Applies to both the TC and PC ordered by the billing physician and

performed by another physician outside of the " office " of the billingphysician • The anti-markup does not apply if the billing physician is not theordering physician• The anti-markup applies if the test is ordered by the billing physician or

a physician related by common ownership or control (e.g., group practicemembers)CMS Anti-Markup Rule• The crux is the site of the service• It does not matter if the service is performed by a physician who is an

independent contractor, a partner, or an employee• Caution: If you are an independent contractor and you reassign payment toanother physician or group, you remain jointly and severally liable foroverpayments made by Medicare for the billed physician services

CMS Anti-Markup Rule• For individual billing physicians the " office " is space where thephysician regularly furnishes patient care• For group practices the " office " is space where the group provides

substantially the full range of services• CMS has declined further definition of the " office " at this time butwill clarify in FAQs to be posted on their websiteCMS Anti-Markup Rule

• The anti-markup limits payment to the lesser of (1) Net Charge, (2) ActualCharge, or (3) Medicare Fee Schedule• The Net Charge is the amount paid to the supplier of the service exclusiveof overhead

• Overhead includes costs of space, equipment, billing and collection, andother administrative overheadCMS Anti-Markup Rule• Billing physician cannot recoup overhead• CMS: " If billing [physicians] were able to recoup overhead incurred for

TCs and PCs that are performed at sites other than their offices, theeffectiveness of the anti- markup provisions would be undermined, becausethere would be an incentive to overutilize to recover the overhead incurred

for purchasing or leasing space. " CMS Anti-Markup Rule• The Net Charge cannot take into account the cost of equipment or spacethat is leased to the performing physician by the billing physician

• Ex., If the fee schedule for the PC is $100 and the performing physicianrents space from the billing physician for $50 per test and charges thebilling physician $100 per test, CMS says that the net charge for the PC is

$50CMS Anti-Markup Rule• Ex., if a physician or technician is paid an aggregate monthly or annualfee, the net charge may be the aggregate compensation paid divided by thenumber of tests performed

• The responsibility/liability of determining the net charge is with thebilling physician• Net charge can be calculated in any reasonable manner, CMS will issueclarification in FAQs on their website

CMS Anti-Markup Rule• CMS suggests that billing physicians that incur difficulty in calculatinga net charge should restructure their arrangements or let the supplier billfor their own services

• CMS states that " [physicians] that do not wish to incur the cost ofbilling without being able to mark up the TC or PC, should structurearrangements so that the anti-markup provisions do not apply "

Example #1 from CMS• Facts: A urology group contracts with a leasing company that supplies atechnician and a pathologist to perform testing on prostate samples. Allwork is done at a space that the urology group rents exclusively for the

sole purpose of providing pathology services for the group ' s patients.• Outcome: Anti-markup provisions apply to both the TC and the PC, eventhough the space qualifies as a " centralized building " under the Stark

Law.Example #2 from CMS• Facts: Same as Example 1, except that the TC is performed by a technicianthat is an employee of the group practice and the PC is performed by apathologist who is an independent contractor of the group practice.

• Outcome: The anti-markup provisions again apply to both the TC and the PC.It does not matter that the technician is an employee and the pathologist isan independent contractor because the work was not performed in the office

of the billing group practice.Example #3 from CMS• Facts: A physician in a group practice orders a diagnostic test and atechnician who is a part-time employee of the group performs the test in the

group ' s office. A physician who is an independent contractor of the groupperforms the PC in the group ' s office.• Outcome: The anti-markup provisions do not apply to the group ' s billingof the TC or the PC because they are performed in the office of the billing

physician.Example #4 from CMS• Facts: Same as Example 3, except that the independent contractor physicianperforms the PC in his or her home and reassigns the right to payment forthe service to the group.

• Outcome: The group ' s billing of the TC is not subject to the anti-markupprovision but the group ' s billing of the PC is subject to the anti-markupprovision because the work was not performed in the office of the billing

physician.Example #5 from CMS• Facts: A group practice orders a diagnostic test from an independentlaboratory. The lab performs the test and contracts with a physician toperform the PC. The lab bills Medicare for both the TC and PC .

• Outcome: The lab is not subject to the anti-markup provisions because thelab did not order the test. It does not matter where the physician performsthe PC.=============================

http://physicianlaw.foxrothschild.com/2008/12/articles/medicare/changes-to-m

edicare-antimarkup-rules-effective-january-1-2009/Home <http://physicianlaw.foxrothschild.com/> > Medicare<http://physicianlaw.foxrothschild.com/articles/medicare/> > Changes to

Medicare Anti-Markup Rules Effective January 1, 2009Changes<http://physicianlaw.foxrothschild.com/2008/12/articles/medicare/changes-to-

medicare-antimarkup-rules-effective-january-1-2009/> to MedicareAnti-Markup Rules Effective January 1, 2009Posted on December 2, 2008 by Todd<http://www.foxrothschild.com/Attorneys/Attorney.aspx?id=2060>

Does your practice bill Medicare for diagnostic tests?If so, you have until January 1, 2009 to make sure your arrangements complywith the now very complicated anti-markup rule. The Centers for Medicare and

Medicaid Services (CMS) published the Final Medicare Physician Fee Schedulefor 2009 in the Federal register on November 19, 2009. Among other thingsaddressed in the Fee Schedule regulations are clarifications of the

diagnostic testing anti-markup rule.Prior to the 2009 Fee Schedule changes, the anti-markup rule provided thatif a physician or other supplier bills for the technical component (TC) orprofessional component (PC) of a diagnostic test that was ordered by the

physician or other supplier and the diagnostic test was either purchasedfrom an outside supplier or performed at a site other than the office of thebilling physician or other supplier, the payment to the billing physician or

other supplier (less the applicable deductibles and coinsurance paid by thebeneficiary or on behalf of the beneficiary) for the TC or PC of thediagnostic test may not exceed the lowest of the following amounts:

• The performing supplier's net charge to the billing physician or othersupplier;• The billing physician or other supplier's actual charge; or• The fee schedule amount for the test that would be allowed if the

performing supplier billed directly.In the 2009 Fee Schedule, CMS has now clarified that the anti-markupprovisions will not apply to the TC or PC of a diagnostic test where theperforming physician shares a practice with the billing physician or other

supplier. With respect to a TC or PC of a diagnostic testing service, theperforming physician is considered to share a practice with the billingphysician or other supplier if either of the following is met:

(Alternative 1) He or she furnishes substantially all (at least 75 percent)of his or her professional services through the billing physician or othersupplier; or(Alternative 2) The TC is conducted and supervised, or the PC is performed,

in the office of the billing physician or other supplier. For purposes ofAlternative 2, the " office of the billing physician or other supplier " isdefined as the same building where the ordering physician performs

substantially the full range of patient care services that the orderingphysician generally provides.=========================http://www.cms.hhs.gov/Transmittals/Downloads/R419OTN.pdf

Anti-Markup ProvisionsSection 1842(n)(1) of the Social Security Act (the Act) requires us toimpose a payment limitation on certain diagnostic tests where the physicianperforming or supervising the test does not share a practice with the

billing physician or other supplier. This statutory provision was codifiedin §414.50 of our regulations to apply an " anti-markup " payment limitationto the technical component (TC) of a diagnostic test (other than a clinical

diagnostic laboratory test) that is purchased from an outside supplier. Inthis final rule with comment period (73 FR 69799), we finalize changes to§414.50, including alternative methods to satisfy the statutory requirement

that, in order to avoid application of an anti-markup payment limitation ona diagnostic test, the physician who performs or supervises the diagnostictest must share a practice with the billing physician or other supplier.

Because the revisions to the regulations in §414.50 would apply ananti-markup payment limitation on purchased diagnostic tests (because theyare, by nature, not performed by a physician who shares a practice with the

billing physician or other supplier), we eliminated this duplicativecategory of tests to which the payment limitation would apply. Thus, weremoved all references to the term " purchased diagnostic test. "

The anti-markup payment limitation will not apply if the performingphysician " shares a practice " with the billing physician or other supplier.As set forth in §414.50(a)(2), there are two alternative methods for

determining whether a performing/supervising physician shares a practicewith the billing physician or other supplier. Under the first alternative,if the performing physician (that is, the physician who supervises the TC or

performs the PC, or both) furnishes substantially all (at least 75 percent)of his or her professional services through the billing physician or othersupplier, none of the physician's diagnostic testing services will be

subject to the anti-markup payment limitation. If the performing physiciandoes not meet the " substantially all services " requirement, a " site ofservice " analysis may be applied on a test-by-test basis to determine

whether the anti-markup payment limitation applies. Under this " site ofservice " test, only TCs conducted and supervised in 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 or othersupplier will avoid application of the anti-markup payment limitation. The 9 " office of the billing physician or other supplier " is any medical office

space, regardless of the number of locations, in which the orderingphysician or other ordering supplier regularly furnishes patient care, andincludes space where the billing physician or other supplier furnishes

diagnostic testing, if the space is located in the " same building " (asdefined in §411.351) in which the ordering physician regularly furnishespatient care. If the billing physician or other supplier is a physician

organization (as defined in §411.351), the " office of the billing physicianor other supplier " is space in which the ordering physician providessubstantially the full range of patient care services that the ordering

physician generally provides. With respect to the TC, the performingsupplier is the physician who supervised the TC, and with respect to the PC,the performing supplier is the physician who performed the PC.

In cases where a physician does not share a practice with the billingphysician or other supplier, either under the " substantially all services " or " site of service " test, the anti-markup payment limitation will apply.

Payment to the billing physician or other supplier (less the applicabledeductibles and coinsurance paid by or on behalf of the beneficiary) for theTC or PC of the diagnostic test may not exceed the lowest of the following

amounts:(i) The performing supplier's net charge to the billing physician or othersupplier.(ii) The billing physician or other supplier's actual charge.(iii) The fee schedule amount for the test that would be allowed if the

performing supplier billed directly (§414.50(a)(1)).The net charge must be determined without regard to any charge that reflectsthe cost of equipment or space leased to the performing supplier by thebilling physician or other supplier (§414.50(a)(2)(i)).

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Overview of Current RulesMedicare currently imposes a prohibition on " marking up " prices charged toMedicare by physicians who purchase diagnostic tests from third-partysuppliers. Under the current rule, a physician who bills for a " purchased "

test—i.e., a diagnostic test performed by an outside supplier—may chargeMedicare only the amount the physician paid for the test. Diagnostic testsinclude the technical component of X-rays, MRIs, anatomical pathology, sleep

laboratory, and many additional services other than clinical laboratorytests.Under the current anti-markup rule, Medicare's payment to the physician(lessdeductibles and co-insurance) may not exceed the outside supplier's net

charge, the physician's actual charge or the Medicare fee schedule amount.The rule requires the physician to identify the supplier and indicate thesupplier's net charge for the test. Payment is denied if the information is

notprovided.Notably, the anti-markup rule applies only to physicians and not to other " suppliers " under the Medicare program. Suppliers are generally defined asanyentity other than physicians and providers. These may include hospitals,

skillednursing facilities, comprehensive outpatient rehabilitation facilities andcertainother entities. Thus, the current rule does not apply to IDTFs.In the proposed 2008 Medicare Physician Fee Schedule published in July 2007,

CMS laid out anti-markup rule changes that focused primarily on theemployment status of the persons performing the tests. The fee schedulefinalrule, however, goes well beyond the original proposal—adopting changes that

will impact physicians, group practices, IDTFs and other suppliers ofdiagnosticservices.Changes Under New RulesThe fee schedule final rules change the regulatory scheme governing

diagnosticservices in significant ways. Specifically, the rules do the following:Expand theanti-markup provision beyond the technical component of purchased diagnostictests to include the professional component (the physician services involved

ininterpreting the test).Expand the anti-markup rule's application to physician organizations, IDTFsandother " suppliers " of diagnostic tests.Shift the compliance focus away from whether the test was performed by an

outside supplier, to whether a test was ordered by the physician or supplier(orby a related party under common ownership or control).Limit the locations where a diagnostic test ordered and billed by physician

or aphysician organization may be performed. The new rule requires the test tobeperformed solely in an " office " in which " substantially the full range ofpatientcare services " are furnished by the physician organization.

Apply the anti-markup provisions to all diagnostic tests, including many notcurrently defined as " designated health services " under the Stark law toinclude,for example, electromyography services and sleep laboratory services

furnishedoutside of a hospital.Prohibit fixed-site (i.e., non-mobile) IDTFs from sharing or subleasingtheiroperations, thereby prohibiting physician groups from operating office-basedimaging centers and IDTFs in the same space—even though the Stark rule

permits the operation of " shared " facilities.New Anti-Markup Rule DetailsThe new anti-markup rule may apply when a physician or other supplier, suchas an IDTF, bills for the professional or technical component of a

diagnostic test(other than clinical laboratory tests), and the test was ordered by thephysician,supplier, or a party related to the billing physician or supplier by commonownership or control. In such cases, anti-markup provisions will apply if:

Thetest is purchased from an outside supplier (as in the current rule).The test is performed at a location other than the " office of the billingphysicianor other supplier. " The anti-markup rule defines the " office of the billing physician or other

supplier " as the medical office space where the physician or supplier regularlyfurnishespatient care. However, the rule defines the office of " physicianorganizations " (defined as solo practice physicians, physician practices and group

practices)more narrowly as the " space in which the physician organization providessubstantially the full range of patient care services that the physicianorganization provides generally. "

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