Implementation of Medicare’s New Lab Date of Service Rule

on Tuesday, 01 May 2018. All News Items | Outpatient Services | Billing

Always a Challenge!

As I write this article, I realize the word “challenge” appears frequently in my articles. How could it not? Dealing with Medicare is a lot of things, but always a challenge. Especially since Medicare tends to change their guidance often and without warning. Sometimes guidance changes are couched as “clarifications” and sometimes providers wait and hope for additional guidance that seems to take forever to come.  Such is the case with Medicare’s transmittal that manualizes the new laboratory date of service policy from the 2018 Outpatient Prospective Payment System (OPPS) Final Rule. The good news is that this transmittal includes a list of codes to which the new policy applies, which was not clear from the discussion in the final rule.

Prior to the new lab date of service policy, hospitals had to bill Medicare directly for all outpatient laboratory tests unless the test was ordered at least 14 days following the date of the patient’s discharge from an outpatient hospital procedure. This policy created unintentional operational consequences for hospitals and testing laboratories when molecular pathology tests and ADLTs, that are separately paid at the clinical lab fee schedule (CLFS) rate and not under the hospital OPPS rate, were performed on specimens collected during a hospital outpatient encounter. CMS recognized the concerns and in the 2018 OPPS Final Rule, changed the lab date of service policy as follows:

“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.

In the final rule, CMS appeared to exclude some lab tests that now are included according to Transmittal 4000 – the final rule stated, “we are not including ADLTs under Criterion (B), GSP (genomic sequencing procedures) tests, PLA (proprietary laboratory analysis) tests, or protein-based MAAAs (multianalyte assays with algorithmic analyses) in the revised DOS policy at this time.” In CMS’s defense, I think they meant GSP, PLA, and MAAA laboratory tests that are conditionally packaged under OPPS. All ADLT and molecular pathology-type codes that are conditionally packaged laboratory tests codes under OPPS are not included in the new policy – only separately payable molecular path and ADLT test codes with an OPPS status indicator of “A” are included. As noted above, the transmittal includes a list of codes to which the policy applies –-

  • CPTs 81105-81383, 81400-81408, 81410-81479, 81493, 81504, 81507, 81519–81528, 81540-81595, 0004M, 0006M–0009M, 0001U, 0004U, 0008U, 0010U, 0012U–0014U, 0016U–0019U, 0022U, and 0023U. (0004U was deleted effective January 1, 2018, but is included in Medicare’s listing.)

This new policy prevents hospitals from having to bill Medicare directly for these types of tests which encompassed accepting Medicare CLFS payment rates and paying a reference laboratory their charges to perform the tests. Under the new policy, Medicare pays the CLFS rate directly to the testing laboratory. Hospital labs will have to be aware of which tests fall under this policy (testing lab bills Medicare) and which do not (hospital lab bills Medicare directly). Also, hospitals must develop a process to provide the patients’ billing information to the testing lab in order for the testing lab to bill Medicare.

The transmittal is effective for dates of service on and after January 1, 2018, but the implementation date of the transmittal is not until July 2, 2018. I recommend hospitals proceed now with allowing the testing laboratory to bill for the applicable services. Should Medicare deny any payments prior to the implementation date, the transmittal allows for correction of the claim payment when brought to the Medicare contractor’s attention. Alternatively, testing labs may hold such claims until after the implementation date.

The challenge continues as we try to read between the lines, make our best guess, and remain prepared for CMS “clarifications” in order to code, bill and document correctly to meet Medicare guidelines. In my line of work, I guess this translates to job security.

Article by Debbie Rubio

Debbie Rubio, BS, MT (ASCP), is the Manager of Regulatory Affairs and Compliance at Medical Management Plus, Inc.  Debbie has over twenty-seven years of experience in healthcare including nine years as the Clinical Compliance Coordinator at a large multi-facility health system.  In her current position, Debbie monitors, interprets and communicates current and upcoming regulatory and compliance issues as they relate to specific entities concerning Medicare and other payers.  You may contact Debbie at This email address is being protected from spambots. You need JavaScript enabled to view it..

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.

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