Time to Unwind, and Other Effects of the 2009 MPFS

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Few federal rules for billing and leasing of diagnostic testing equipment and technicians by mobile testing companies will require the restructuring or unwinding of many imaging arrangements prior to the end of 2008. In its payment policies under the Medicare Physician Fee Schedule (MPFS) for calendar year (CY) 2009, published November 19, 2008¹, CMS issued changes to the reassignment rules related to diagnostic tests, known as the Anti-Markup provisions. The Medicare law requires CMS to impose a payment limitation on diagnostic tests where the physician performing or supervising the test does not share a practice with the physician or other supplier that bills for the test. The Anti-Markup prohibition applies to all diagnostic tests except tests paid for under the Medicare clinical laboratory test fee schedule. CMS also issued rules requiring Medicare enrollment and billing by mobile diagnostic testing services while deferring rules requiring physicians furnishing diagnostic tests to enroll as independent diagnostic testing facilities (IDTFs). CMS states the rules are aimed at eliminating abusive arrangements and curbing overutilization caused by the ordering of unnecessary tests.

The Anti-Markup payment limitation has long applied to technical components (TC) of diagnostic tests that physicians purchase from outside suppliers, such as imaging centers. In its CY 2008 MPFS rule, CMS amended the Anti-Markup provisions to apply to the TC of diagnostic tests ordered by the billing physician or other supplier when the TC is either outright purchased or when the TC is not performed in the “office of the billing physician or other supplier”. Such office space was defined as where the billing physician or other supplier regularly furnishes patient care, and for a group practice as where the group provides substantially the full range of patient care services that the group provides generally. The Anti-Markup payment limitation was also imposed on the professional component (PC) of diagnostic tests ordered by the billing physician or other supplier if the PC is outright purchased or if the PC is not performed in the office of the billing physician or other supplier. The Anti-Markup provisions for the TC or PC of a diagnostic test apply only when the billing physician or other supplier has ordered the TC. CMS issued a notice delaying the CY 2008 requirements until implementation on January 1, 2009.

The Anti-Markup payment limitation, when applied, means the Medicare payment (less deductibles and coinsurance) 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/supplier;
  • The billing physician’s/supplier’s actual charge; or
  • The MPFS amount for the test that would be allowed if the performing physician or supplier billed directly.

CY 2009 Anti-Markup Changes

With a few modifications, CMS has adopted both alternatives from its proposed CY 2009 MPFS payment policies for determining whether the performing/supervising physician “shares a practice” with the billing physician or other supplier. Beginning in CY 2009, diagnostic testing arrangements will not be subject to the Anti-Markup payment limitation when:

  • The performing physician (the physician who performs or supervises the TC or performs the PC, or both) performs substantially all (at least 75%) of his professional services for the billing physician or other supplier. This requirement is satisfied if, at the time the claim is billed for the performing physician’s services, the billing physician or other supplier has a reasonable belief that, for the twelve months either preceding or following the month in which the services were performed, the performing physician furnished (or will furnish) substantially all of his professional services through the billing physician or other supplier. This type of arrangement, referred to as “Alternative 1” in the CY 2009 rules, is called the “substantially all professional services” approach; or
  • If the performing physician does not meet the “substantially all professional services” requirement, on a test-by-test analysis the performing physician, who must be an owner, employee, or independent contractor of the billing physician or other supplier, performs the TCs or PCs in the office of the billing physician or other supplier. This alternative, referred to as “Alternative 2” in CY 2009 rules, is called the “site of service” approach.