CMS Adds IDTFs to Payment Manual

Payment Matters Newsletter

June 11, 2008

By: Robert E. Mazer


Over the past few years, independent diagnostic testing facilities (IDTFs) have received increased attention from CMS. The likely root causes of this attention are their tremendous growth in number, and the agency's perception that standards are necessary to ensure quality care and to avoid payments for services that are not properly documented or are not medically necessary.

The 2007 Medicare physician fee schedule final rule substantially revised regulatory requirements for IDTFs. Most of the changes related to certification standards, including requirements related to an IDTF's physical site and diagnostic equipment, telephone, liability insurance, technical staff, and medical records storage. CMS apparently believed these regulatory changes were insufficient. Shortly after they became effective, the agency published manual provisions that included additional requirements.

Protests followed, and these manual provisions were rescinded before their requirements went into effect. However, CMS amended the regulatory certification requirements for IDTFs yet again in the 2008 Medicare physician fee schedule rule. As part of those changes, CMS prohibited an IDTF from sharing a practice location or certain diagnostic testing equipment with a medical practice or other Medicare-enrolled individual or organization. (This requirement does not apply to hospital-based and mobile IDTFs, other existing IDTFs were given until January 1, 2009 to comply.)

Medicare Claims Processing Manual Revisions

There have been fewer developments related to Medicare payment issues. CMS stated that its new anti-markup rule (application generally delayed until January 1, 2009; see Payment Matters) would not apply to an IDTF so long as it did not order the diagnostic test. However, on May 16, 2008, CMS added Chapter 35 to the Medicare Claims Processing Manual ("MCPM") addressing IDTFs (Transmittal 1504). The new chapter reiterates IDTF regulatory requirements related to Medicare coverage and payment policies, including test ordering. It also addresses transtelephonic and electronic monitoring services, slide preparation facilities and radiation therapy centers. Finally, the new chapter addresses application of more general Medicare payment requirements to IDTFs. Unfortunately, the chapter's provisions which are related to an IDTF's ability to bill Medicare for test interpretations leave the issue murky, Jan. 9, 2008

Coverage and Payment Policies

The MCPM provides that

  • An IDTF may be at a fixed location or may be a mobile entity, but it must be independent of an attending or consulting physician's office and of a hospital.
  • IDTF general coverage and payment rules apply when an IDTF furnishes diagnostic procedures in a physician's office — an arrangement that the 2008 fee schedule changes may effectively limit to mobile IDTFs starting January 1, 2009.
  • IDTFs may not bill for any CPT or HCPCS code that is solely therapeutic.
  • IDTFs that furnish "designated health services" ("DHS") must comply with the federal self-referral prohibition ("Stark Law"). Claims for payment for DHS resulting from a prohibited self-referral can be denied, and refund demands can be made for Medicare payments that were previously made to an IDTF.
  • Procedures that are to be performed by an IDTF must be specifically ordered in writing by the treating physician (or other authorized practitioner), i.e., the physician who is furnishing a consultation or treating the patient for a specific medical problem and who will use the test result in managing the patient's problem. The ordering physician must specify the diagnosis or other reason for the test. An IDTF's supervisory physician cannot order tests unless he or she is the patient's treating physician and had a relationship with the patient before the tests were performed. An IDTF may not perform additional procedures that were not ordered by the treating physician based on the IDTF's own protocols.

Monitoring, Slide Preparation and Radiation Therapy Facilities

Transtelephonic and electronic monitoring services are considered IDTFs. Because CMS has not established personnel policies for individuals furnishing services in these facilities, Medicare carriers have been provided discretion in determining whether its personnel have sufficient qualifications to perform the required services. Carriers are required to confirm that entities which submit claims for specified services (involving postsymptom rhythm strips and presymptom memory loops) have a person available on a 24-hour basis to respond to telephone inquiries.

Slide preparation facilities and radiation therapy centers are not considered IDTFs. They are required to enroll separately with their Medicare contractor.

Application of General Medicare Policies

The MCPM confirms that IDTFs are required to submit the National Provider Identification ("NPI") assigned to the ordering physician on their Medicare claims.

The MCPM is unclear regarding the requirements that an IDTF must satisfy in order to bill for interpretations performed by physicians who it does not employ. To some extent, this may reflect the agency's traditional distinction between an entity's "purchase" of a service from another person or entity, and its submission of a claim for a service performed by another individual based upon that person's "reassignment" of his or her right to bill Medicare for the service. The MCPM includes one provision for submission of Medicare claims for purchased interpretations and a second provision for claims for off-site interpretations performed by independent contractor physicians. Both provisions require satisfaction of the same regulatory requirements. However, in addressing submission of claims for services of independent contractor physicians that are performed on the premises of the facility billing for those services, the MCPM refers to different criteria.

The MCPM would appear to indicate that an IDTF can bill Medicare for an interpretation that it purchased from an independent physician or medical group — or an interpretation that was performed by such a physician off-site — only if three conditions are satisfied:

  1. the ordering physician or medical group is independent from the IDTF and the physician or medical group performing the interpretation;
  2. the physician or medical group performing the interpretation did not see the patient; and
  3. the IDTF performed the technical component of the test.

However, if the independent contractor performed the interpretation on the IDTF's practice site, then these three requirements need not be satisfied. The IDTF could bill Medicare for the physician's interpretation if it was furnished under a contract with the interpreting physician, the IDTF and interpreting physician were jointly and severally liable for any Medicare payment that the IDTF received, and the interpreting physician had unrestricted access to the IDTF's Medicare claims for related services.

Ober|Kaler's Comments

In our view, satisfaction of these requirements should be sufficient even if the independent contractor physician performed the interpretation off-site. While a previous version of the MCPM provision addressing submission of services of independent contractor physicians was limited to services performed on-site, Congress subsequently eliminated this requirement. There is nothing in the current language of the MCPM provision or related Medicare regulation that restricts its application to on-site services. Nonetheless, when Medicare regulations and manual provisions are unclear or an entity seeks to use a billing arrangement which might be at odds with Medicare's published policies, it is generally prudent to seek the Medicare carrier's guidance. To the extent that the carrier's advice seems erroneous, contacting CMS may then be appropriate.

For Further Information

Medicare regulations addressing IDTFs are at 42 C.F.R. § 410.33. CMS interpretive guidance regarding Medicare payment issues is included in Chapter 35 of the MCPM. Agency guidance regarding IDTF standards and enrollment can be found in Chapter 10 of CMS' Medicare Program Integrity Manual. Your Medicare carrier's website may include locally-established policies for IDTFs.

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