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2009 Medicare Physician Fee Schedule and the Assault on Ordering Physicians Billing for Diagnostic Imaging

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Alan G. Gilchrist
Foster Swift Health Care Law Report
December 2008

On October 30, 2008, CMS released the Medicare Physician Fee Schedule Final Rule effective January 1, 2009.

The new anti-markup rules, contained in that Fee Schedule, will have the greatest impact on physicians.

Background

The 2008 Medicare Physician Fee Schedule expanded the scope of diagnostic tests by applying the anti-markup prohibition to both the technical and professional components when billed by the ordering physician.  As the rationale for this change, CMS indicated that physicians were performing diagnostic tests in their offices that traditionally would be performed at hospitals.  CMS was concerned that sophisticated diagnostic tests were now being performed in physicians' offices with increased costs to the Medicare program.

However, CMS issued a notice delaying the implementation of the rule until January 1, 2009, so that it could respond to the many public comments criticizing the rule.  CMS has now issued its new rule.

The New Rule

The new rule provides that claims submitted for the technical or professional components of the diagnostic tests are subject to the anti-markup provisions if:

  1. the billing physician for either was the one who ordered the diagnostic test; and
  2. the diagnostic test is performed by a physician who does not share a practice with the billing physician.  Under the rule, the performing physician for the technical component is the physician who supervised the test and the performing physician for the professional component is the physician who performed the interpretation.

The performing physician will be deemed to "share a practice" with the billing physician and, therefore, is not subject to the anti-markup rule if one of the following two tests is met:

  1. if the performing physician performs substantially all (at least 75%) of his professional services through the billing physician; or
  2. if the services are performed in the office of the billing physician.  "Office" is defined as any medical office space in which the ordering physician regularly furnishes patient care and includes space where the billing physician furnishes diagnostic testing if the space is located in the same building where the ordering physician regularly renders care.  "Building" is defined as a building with the same street address but excludes all exterior spaces, such as parking lots.

If a diagnostic test is subject to the anti-markup rule, the payment to the billing physician is limited by the performing physician's net charge to the billing physician.

Impact

As to the technical component, since most imaging services require only a general level of supervision, it is likely that physician practices would be able to satisfy this shared practice test by simply designating one of their own physician members to act as a general supervising physician.  This is because physician practices are not subject to the more stringent physician proficiency requirements imposed on IDTFs, which typically require a radiologist perform supervision.

As to the professional component, however, these services performed by independent contractor radiologists will be subject to the anti-markup rule since it is unlikely that the radiologist will be performing 75% of their professional services through the billing physician practice or perform professional interpretations on site at the office of the billing physician.  The ordering physician may bill for the professional component without a markup or the interpreting radiologist may separately bill for the services.