Revised Anti-Markup Rule

On October 31, 2008, CMS issued its final version of the revised anti-markup rule. Effective January 1, 2009, the anti-markup rule's payment limitation applies in all cases where: 1) either the technical component (TC) or professional component (PC) of a diagnostic test is performed or supervised by a physician who does not share a practice with the billing physician or other supplier ("Billing Entity") and 2) the Billing Entity ordered the test. There are two alternative analyses to determine if the performing or supervising physician "shares a practice" with the Billing Entity.

Alternative 1: The parties share a practice if the performing physician (doctor who supervises the TC or performs the PC or both) performs substantially all (75%) of his/her professional services for the Billing Entity.

  • The performing physician must have performed at least 75% of his/her professional services for Billing Entity for previous 12 months or must be expected to provide at least 75% of his/her professional services for the Billing Entity in the next 12 months.

If the performing physician fails to meet Alternative 1, try Alternative 2.

Alternative Test 2: The parties share a practice if the performing physician (doctor who supervises the TC or performs the PC or both) performs (or supervises) the TC and/or PC in the office of the Billing Entity.

  • The diagnostic TC and/or PC are in the office of the Billing Entiy if they are performed in the same building as the space where the ordering physician or supplier regularly furnishes patient care. Such patient care should include substantially the full range of services generally provided by the ordering physician.
  • Billing Entities may have more than one "office".
  • Shared or leased space arrangement for diagnostic tests are permitted so long as such space is in the same building where the ordering physician performs substantially the full range of services generally provided by him/her.
  • The performing (or supervising) physician must be an employee or independent contractor of the Billing Entity.

Where the anti-markup rule applies, the Billing Entity may bill only for the lowest of the following: 1) performing physician's net charge to the Billing Entity, 2) the Billing Entity's actual charge, or 3) the fee schedule amount allowed if the performing physician billed for the test directly.

Other Items

1. CMS did not amend the In Office Ancillary Services exception of Stark.

2. CMS rejected the proposed rule that would have required all physician offices that perform diagnostic tests to become certified as independent diagnostic testing facilities (IDTF).

3. CMS adopted a new rule that prohibits any Medicare DME payment for CPAP sales to a supplier or provider who is affiliated with a provider who administers or interprets home sleep tests or furnishes home sleep test devices. In other words, providers who administer, interpret or sell home sleep tests cannot also, directly or indirectly, receive Medicare reimbursement for CPAP sales.

Providers of attended facility-based sleep tests are still permitted to receive Medicare reimbursement for CPAP sales, so long as other regulations (e.g., Stark law) are met.