As we discussed last week, Medicare allows only the provider that actually performs a test or service to submit a claim for payment. As is often the case with the complex rules and regulations that govern federally funded health care programs, the general rule stated above has many exceptions. The rules and regulations that govern which providers may submit claims are known as the Medicare prohibition of reassignment, or more commonly Medicare’s direct billing rules. The direct billing rules include exceptions for both clinical laboratories and pathologists, however the rules only apply when certain conditions are met.
How the above exceptions apply to hospital laboratories depends entirely on the type of patient receiving testing from the hospital lab. Typically, hospital labs test the specimens of three classifications of patients; inpatients, outpatients, and nonpatients. Each type of patient and the applicable direct billing rules are examined below:
Hospital inpatients are patients that are admitted overnight and covered under Part A of the Medicare program. Medicare Part A pays hospitals based upon a prospective payment system that results in a lump sum payment for all the patient's care based upon the patient's diagnosis/condition. Hospital labs should not bill Medicare for testing performed for inpatients, because the testing is considered part of the prospective payment for the patient's care under Part A, and not separately reimbursable.
Hospital outpatients are patients that are admitted as such, and are typically discharged before the end of the day. A unique rule applies to hospital outpatients and clinical lab services. No matter where the testing for outpatients is performed only the hospital may bill Medicare. In other words, if a hospital sends testing for outpatients to outside reference labs, only the hospital may bill Medicare, and the reference lab must bill the hospital lab.
"When the hospital obtains laboratory tests for outpatients under arrangements with clinical laboratories or other hospital laboratories, only the hospital can bill for the arranged services."
(Medicare Claims Processing Manual, Chapter 16, §40.3)
Please remember that many clinical laboratory tests and the technical component of pathology services are bundled into the Outpatient Prospective Payment System (OPPS) and may not be billed separately. But not all laboratory tests are subject to these bundling rules. We will discuss in detail the OPPS bundling rules in the next CodeMap® Compliance Briefing.
A hospital nonpatient is a patient that is registered as neither an inpatient nor outpatient. An example of a hospital nonpatient is a patient whose blood is drawn at a physician office and then sent to the hospital for testing (e.g., hospital outreach programs). Testing for nonpatients follows the same direct billing rules as those for reference laboratories. This is not surprising, considering hospital laboratory outreach programs are very similar in structure and form to reference laboratories. Bottom line, the 70/30 rule applies to hospital labs when they perform tests for nonpatients.
"When a hospital laboratory performs laboratory tests for nonhospital patients, the laboratory is functioning as an independent laboratory, and still bills the fiscal intermediary."
(Medicare Claims Processing Manual, Chapter 16, §10)
The often confusing part is when a patient is a nonpatient vs. an outpatient. Throughout the healthcare industry, there is a widely held belief that the key distinction is whether the patient has a face-to-face encounter with hospital personnel. The belief is that if the patient does not encounter hospital personnel, the patient is a nonpatient, and if the patient sees a hospital employee for services, the patient is an outpatient. Unfortunately, this belief causes problems if the hospital sends out phlebotomists to collect blood from patients, or if patients come to the hospital or a hospital draw station for specimen collection. In these instance the patients would be classified as outpatients according to the convention that outpatients are beneficiaries that have face-to-face encounters with hospital personnel.
However, specific provisions in the Medicare Benefits Manual address the situation where hospital personnel collect specimens from patients, but offer no other services.
"Nonhospital patients primarily are individuals from whom a specimen had been taken and sent to the hospital for analysis and the patient does not receive hospital outpatient services on the same day. For all hospitals except CAHs and Maryland waiver hospitals, if a beneficiary receives hospital outpatient services on the same day as a specimen collection and laboratory test, then the patient is considered to be a registered hospital outpatient and cannot be considered to be a non-patient on that day for purposes of the specimen collection and laboratory test. However if the non-CAH or Maryland waiver hospital only collects or draws a specimen from the beneficiary and the beneficiary does not also receive hospital outpatient services on that day, the hospital may choose to register the beneficiary as an outpatient for the specimen collection or bill for these services as non-patient on the 14X bill type."
(Medicare Benefits Manual, Chapter 6, §70.5)
The above language indicates that if a hospital employee collects a specimen from a beneficiary, performs lab testing on the specimen, but does not perform any other outpatient services for the beneficiary, the hospital may choose to classify the patient as either an outpatient or a nonpatient.
By way of review, the Medicare Claims Processing Manual states the following concerning coverage of specimen collection procedures:
"A specimen collection fee is allowed in circumstances such as drawing a blood sample through venipuncture (i.e., inserting into a vein a needle with syringe or vacutainer to draw the specimen) or collecting a urine sample by catheterization. A specimen collection fee is not allowed for blood samples where the cost of collecting the specimen is minimal (such as a throat culture or a routine capillary puncture for clotting or bleeding time)."
(Medicare Claims Processing Manual, Chapter 16, §60.1)
No direct billing rules exceptions apply to venipunctures.
"This fee will not be paid to anyone who has not extracted the specimen."
(Medicare Claims Processing Manual, Chapter 16, §60.1)
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