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What the new Anti-Markup Rule means for your practice
Physicians should carefully review their diagnostic imaging arrangements for compliance with the new regulations.
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 Alan E. Reider |  Allison Weber Shuren |
On Nov. 18, the Centers for Medicare and Medicaid Services published its final physician fee schedule for 2009 in the Federal Register.
The fee schedule finalized regulations regarding the anti-markup and re-assignment rules for diagnostic tests (the “Anti-Markup Rule”). The Anti-Markup Rule went into effect Jan. 1. These regulations significantly affect how physicians and physician practices provide diagnostic imaging services to their patients. Physicians are advised to review their arrangements for compliance with the finalized rule.
Anti-Markup Rule
The Anti-Markup Rule prohibits a billing physician or other supplier from marking up either the technical component (TC) or professional component (PC) of a diagnostic test ordered by the billing physician or other supplier (or ordered by a party related to such physician or other supplier through common ownership or control) unless the performing physician “shares a practice” with the billing physician or other supplier. If the performing physician shares a practice with the billing physician or other supplier, the Anti-Markup Rule would not apply for that diagnostic test. CMS adopted a “shares a practice” standard to ensure that there is sufficient nexus between the billing physician/supplier and the performing physician.
There are two alternative options under which a performing physician may be deemed to share a practice with the billing physician or other supplier. The first alternative is referred to as the “substantially all” test, and the second alternative is referred to as the “site of service” test. CMS states that physicians should first analyze all arrangements under the substantially all test. Each component of the diagnostic test should be analyzed separately.
If the Anti-Markup Rule applies, the payment to the billing physician or other supplier (less the applicable deductibles and coinsurance paid by the beneficiary or on behalf of the beneficiary) for the TC or PC of the diagnostic test may not exceed the lowest of the following amounts:
- The performing supplier’s net charge to the billing physician or other supplier;
- The billing physician or other supplier’s actual charge; or
- The fee schedule amount for the test that would be allowed if the performing supplier billed directly.
‘Substantially all’ test
The Anti-Markup Rule does not apply when the performing physician provides substantially all of his/her professional services for the billing physician or other supplier. The performing physician is the physician who supervises the performance of a diagnostic test or is the physician who performs the professional interpretation of a diagnostic test. “Substantially all” means that the performing physician performs at least 75% of his or her professional services for the billing physician or supplier.
This requirement is satisfied if the billing physician/group has a reasonable belief at the time the claim was submitted that (1) the performing physician has provided substantially all of his/her professional services through the billing physician/group for the 12 months before the submission of the claim (including the month in which the service was performed) or (2) the performing physician will provide substantially all of his/her professional services through the billing physician/group for the next 12 months after the submission of the claim (including the month in which the service was performed).
For example, a physician practice has several office locations where physicians see patients. The practice has a centralized location where it performs all of the diagnostic imaging tests for its patients. The physician practice contracts with a radiologist to supervise the technologists performing the diagnostic imaging test and to perform the professional interpretation of that test. The radiologist is employed by the physician practice on a full-time basis. The Anti-Markup Rule would not apply to this circumstance.
It is important to remember that this alternative is not a location-based test. Rather, it is a test that evaluates the contractual relationship between the billing physician/supplier and the performing physician.
Site of service test
If the billing physician/supplier cannot meet the substantially all test, it should evaluate the next alternative. The Anti-Markup Rule does not apply if: (1) the performing physician is an owner, employee or independent contractor of the billing physician and (2) the TC or the PC is performed in the same office, billing physician or other supplier. Under the site of service test, the performing physician does not need to meet the substantially all/75% test. The performance of the TC means both the conducting and supervision of the TC under this site of service test.
The office of the billing physician or other supplier is any medical office space in which the ordering physician/supplier regularly furnishes patient care and includes space where the billing physician/supplier furnishes diagnostic testing services if the space is in the same building. For a physician organization, this space is where the ordering physician provides substantially the full range of patient care services that the ordering physician provides generally.
For example, a physician has an office located on the first floor of a medical office building. In his office, he performs the full range of services that he provides generally (and thus the space meets the criteria for the ‘‘office of the billing physician or other supplier’’). The physician orders a diagnostic test, which is conducted by a technician and supervised by a radiologist with whom the physician has an independent contractor relationship in an office located in the basement of the medical office building. The radiologist also performs the PC of the test in that office. The radiologist reassigns her right to bill for the TC and the PC of the test to the physician. The Anti-Markup Rule does not apply because the TC and the PC were performed in the office of the billing physician or other supplier.
It is important to remember that this alternative is not a contractual relationship test. Rather, it is a test that evaluates where the TC or the PC is performed.
Physicians should carefully review their diagnostic imaging arrangements for compliance with the new Anti-Markup Rule, including independent contractor and employment relationships, personal services agreements, lease arrangements, and other arrangements with all providers and suppliers of diagnostic imaging services.
- Nicole Liffrig Molife, JD, can be reached at Arnold & Porter LLP, 555 12th St. NW, Washington, DC 20004; 202-942-6611; fax: 202-942-5999; e-mail: nicole.liffrig@aporter.com.