CMS Delays Portions of the Anti-Markup Rule Until January 1, 2009
By: DAVID M. GLASER
December 2007
On Friday, December 28, 2007, the Centers for Medicare and Medicaid Services (“CMS”) announced that it would delay portions of the anti-markup rule until January 1, 2009. The formal announcement will not to be published until January 3, 2008. In the meantime, you may find the CMS release here. The wording of the announcement is rather confusing. The notice says that CMS will delay the anti-markup rule:
“except with respect to the technical component of a purchased diagnostic test and with respect to any anatomic pathology diagnostic testing services furnished in space that is utilized by a physician group practice as a ‘centralized building’ (as defined [in Stark]) for purposes of complying with the physician self-referral rules; and does not qualify as a “same building” [under the Stark rule.]”
The statement that the delay will not apply to “the technical component of a purchased diagnostic test” is not entirely clear. However, the final rule applies to two categories of diagnostic tests, those that are “purchased from an outside supplier,” and those that are “performed at a site other than the office of the billing physician or other supplier.” It appears that when CMS says that the rule will apply to “the technical component of a purchased diagnostic test” as of January 1, 2008, it is referring to tests “purchased from an outside supplier.”
Assuming that this is correct, many of the most troubling effects of the new rule will be delayed for a year, taking effect January 1, 2009. For example, the portion of the rule that deems tests performed offsite by a clinic employee to be equivalent to purchased tests is delayed. This means that as long as the clinic is providing the level of supervision required by the Medicare supervision rules, the clinic need not provide the “full range” of physician services at the location where the diagnostic services are performed to be able to bill Medicare more than the clinic pays the technician for the test.
Implementation of the rule is also delayed until January 1, 2009 for interpretations. Without the delay, when a physician performed an interpretation at home, or anyplace else away from the clinic, the clinic would have been prevented from billing Medicare more than what the clinic paid the physician. (A full discussion of the anti-markup rule is available in Fredrikson & Byron’s Webinar on the topic. Please click here for more information.)
There are definite indications that the delay may result in some permanent changes to the rule. In the notice of the delay, CMS recognized that the definition of “office of the billing physician or other supplier” “may not be entirely clear and could have unintended consequences.” The purpose of the delay is to permit CMS to study the issue further. Therefore, physicians may wish to wait before making any radical changes to comply with the delayed portion of the rule.
The announcement still leaves CMS’s position on leased technicians unclear. Under the anti-markup statute, if a physician supervises the delivery of a diagnostic test, the physician is considered to be performing the diagnostic test. Under the statute, and recent CMS policy, when a physician supervises leased employees, the physician is considered to be performing the test. However, the new rule defines an outside supplier as someone who is “not an employee of the physician.” In telephone calls, CMS has indicated that when a leased technician provides the test under the supervision of the billing physician, the test is not “purchased.” Neither the text of the final rule nor its preamble comment on this point. This issue is important, because if the leased technicians are considered to be “outside suppliers,” then as of January 1, 2008, CMS is taking the position that the physician/clinic is prohibited from billing Medicare more than the physician/clinic pays the technician. The anti-markup statute states quite clearly that it applies only when the test is not supervised by the physician or another physician with whom the physician shares a practice. Given the clarity of the statute, there is reason to hope that CMS will continue to permit physicians to bill the full Medicare fee schedule when the physician is supervising leased technicians, but any physician using leased technicians will want to monitor CMS’s position closely and would be well-advised to consult with legal counsel to better understand how courts handle situations where CMS’s interpretation of a statute appears inconsistent with the statute’s text.
If you have any questions about the anti-markup rule, please feel free to contact any member of Fredrikson & Byron’s Health Law Group.