CMS abandons efficient zip code billing technique for most purchased interpretation services

March 4, 2010

On Jan. 15, CMS issued an update to the Medicare Claims Processing Manual (Change Request 6733) addressing “Payment to Physician or Other Supplier for Diagnostic Tests Subject to the Anti-Markup Payment Limitation.” The transmittal contains an action that may prove to be a major setback for many teleradiology arrangements that operate across state lines.

On Jan. 15, CMS issued an update to the Medicare Claims Processing Manual (Change Request 6733) addressing “Payment to Physician or Other Supplier for Diagnostic Tests Subject to the Anti-Markup Payment Limitation.” The transmittal contains an action that may prove to be a major setback for many teleradiology arrangements that operate across state lines.

Most of this transmittal is not surprising, it’s just putting Medicare’s antimarkup requirements in place. But the issuance has set back a practical and commonsense billing technique that has been permitted by CMS since 2005. For the last five years, an independent diagnostic testing facility (IDTF) or radiologist-owned imaging center that had tests ordered by physicians who had no financial interest in the imaging center could contract for independent contractor interpretation services regardless of location of the interpreting physician and bill the center’s local Medicare carrier (Medicare Administrative Contractor). The only requirement was that the imaging center denote the zip code of the interpreting radiologist so that the claim for the interpretation service would be paid based the correct Medicare geographic practice cost index.

Effective March 15, CMS has replaced its rules permitting zip code billing for what were called “purchased interpretations” with a rule that will permit zip code billing for only those tests “subject to the antimarkup payment limitation.” Only those out-of-state interpretation services subject to the antimarkup payment limitation can be billed to a local Medicare Administrative Contractor (MAC). Only referring physician groups that bill for interpretation services by physicians who do not share their practice can now use this efficient billing zip code billing methodology.

IDTFs and radiology groups that have imaging centers will now be required to take reassignment from the out-of-state radiologists and enroll with and submit their claims to the out-of-state MAC (carrier)-or have the out-of-state interpreting radiologist bill separately. Formerly, IDTFs and radiology groups that have imaging centers could report the zip code of the out-of-jurisdiction interpreting physician when submitting the 1500 claim form to their local MAC. Now, since most of them don’t perform antimarkup tests, they must take reassignment and bill the MAC in the jurisdiction where the interpreting physician performed the service-a hassle indeed.

Here is an example. Because there are no more “purchased interpretations,” an IDTF or a radiologist-owned imaging center that is located in state A and has interpreting physicians in states A, B, and C will have to enroll and bill in states A, B, and C, since it cannot use the zip code of the interpreting physicians located in states B and C with its local MAC in state A. Its other option is to have the out-of-state radiologists bill Medicare separately. Both are major barriers to multistate interpretation services.

CMS has, in my opinion, made a major mistake with this action. Instead of retreating from the zip code billing process that facilitated multistate interpretation services, CMS should be embracing it for all interpretation services, not just for those that had been considered “purchased,” as in the past. Why CMS is closing the door to wider availability of subspecialty expertise by erecting yet another barrier to teleradiology is a mystery.

Mr. Greeson is a partner in the healthcare group of Reed Smith LLP in Falls Church, VA. He can be reached at 703/641-4242 or tgreeson@reedsmith.com.