Enforcement Discretion for New Lab Date of Service Policy
New Exception for a New Exception
This month there were only a few updates to the Medicare Administrative Contractor (MAC) local coverage determinations (LCDs) and coverage Articles. You can see a list of the new or retired policies at the end of this article. In contrast, last month there were numerous updates, including quite a few new draft policies related to the MolDX (molecular diagnostic testing) program which you can read about in the archive article on our website. Another recent change related to molecular diagnostic testing is the new laboratory date of service (DOS) policy. Now there is new direction concerning the new policy, specifically a delay in enforcement of the new policy.
Prior to the new policy, the date of service of a laboratory specimen was the date of collection unless:
- The specimen was stored for more than 30 days before testing or
- The testing was ordered at least 14 days after discharge.
Medicare also requires that hospitals must bill Medicare directly for laboratory testing on inpatients and outpatients. These two rules combined caused hospital labs to have to bill Medicare directly, accept Medicare reimbursement amounts, and then pay the testing laboratory their rates for testing, for high-dollar molecular pathology tests that do not guide treatment provided during a hospital outpatient encounter. Recognizing the operational consequences for hospitals and testing labs, Medicare made an exception to the laboratory date of service policy.
“In the case of a molecular pathology test or an Advanced Diagnostic Laboratory Test (ADLT) that meets the criteria of section 1834A(d)(5)(A) of the Act, the date of service must be the date the test was performed only if the following conditions are met:
- The test is performed following a hospital outpatient’s discharge from the hospital outpatient department;
- The specimen was collected from a hospital outpatient during an encounter (as both are defined 42 CFR 410.2);
- It was medically appropriate to have collected the sample from the hospital outpatient during the hospital outpatient encounter;
- The results of the test do not guide treatment provided during the hospital outpatient encounter; and
- The test was reasonable and medically necessary for the treatment of an illness.
This new exception to laboratory DOS policy will permit laboratories performing ADLTs and molecular pathology tests excluded from the Outpatient Prospective Payment System (OPPS) packaging policy to bill
Medicare directly for those tests, instead of requiring them to seek payment from the hospital outpatient department.” In fact, under the new policy the testing lab must bill for the applicable tests; the hospital can no longer bill Medicare directly for these tests.
This new rule is effective for dates of service on and after January 1, 2018, with an implementation date of July 2, 2018. This means claims received on and after July 2, 2018 for dates of service on and after January 1, 2018 must follow the new rules – the testing lab must bill Medicare directly for affected molecular pathology and ADLT tests. MACs will adjust denials brought to their attention for affected tests performed after January 1, 2018 and denied because the new date of service rules were not yet implemented.
Whether you consider a particular change in healthcare rules good or bad, there are often procedural and system changes necessary to accommodate the new rules. Laboratories and hospitals let CMS know that many of them would not be able to implement the new laboratory DOS exception by the July 2, 2018 implementation date. To allow laboratories and hospitals more time to develop the systems changes necessary to enable the performing laboratory to bill for tests subject to the new laboratory date of service exception, CMS announced July 3, 2018 that they will exercise enforcement discretion until January 2, 2019, with respect to the laboratory date of service (DOS) exception policy. During the enforcement discretion period, hospitals may continue to bill for ADLTs and molecular pathology tests that would otherwise be subject to the new laboratory DOS exception. The enforcement discretion does not prevent testing labs from billing Medicare directly now, in keeping with the new DOS rule, if the hospital and performing laboratory are prepared to do so. However, in no case should both the hospital and the performing laboratory bill for the same test for the same patient.
I personally think the new laboratory date of service rule is a good thing, but I understand, after working in hospitals and laboratories for many years, the need for time to adjust to new rules. I applaud CMS for recognizing this also and allowing the delayed enforcement discretion. I was also glad to discover the CMS Laboratory Date of Service webpage which includes:
- General information on the new lab DOS exception,
- A listing of laboratory test codes subject to the new DOS exception,
- Questions and answers about the new lab DOS rule,
- Announcement of the six-month enforcement discretion period, and
- Questions and answers about the enforcement discretion.
Be sure to share this information with your hospital laboratory so they can start today to prepare if they haven’t already. Christmas, then New Year’s, and then the end of the enforcement discretion period will be here before you know it.
MAC Coverage Updates for the month include:
Article by Debbie Rubio
This material was compiled to share information. MMP, Inc. is not offering legal advice. Every reasonable effort has been taken to ensure the information is accurate and useful.