Did CMS Err in Issuing New Anti-Markup Rules?

CMS commentary creates uncertainty about whether technical component supervision is needed

CEO SUMMARY: In the latest anti-markup rules that took effect on January 1, CMS may have unintentionally stated that the anti-markup rule doesn’t apply when a pathologist is reviewing histology slides. While the rule itself is unclear, the commentary that accompanies the rule says that supervision is not required. This ambiguity has been noticed by experts. It means that pathologists, lab directors, and their attorneys must act carefully to ensure compliance.

DID THE FEDERAL Center Medicare & Medicaid Services (CMS) make a mistake when it issued its latest anti-markup rules?

According to Jane Pine Wood, a health law attorney with McDonald Hopkins, a national law firm, some health care lawyers have observed a discrepancy in new physician anti-markup rules which took effect on January 1, 2009. It appears that, unintentionally, CMS may have stated that the anti-markup rule doesn’t apply when a pathologist reviews histology slides. Wood’s colleague, Rick L. Hindmand, agreed. He notes that experts are asking questions about this aspect of the new anti-markup rules.

As with many CMS rules, the issue is complicated by several factors. First, the rule became effective on January 1 and so has been in place only a short time. Second, the rule-making staff at CMS recently experienced turnover when lawyers who drafted the new anti-markup rules went into private practice. Third, changing the rule could require a revision and a comment period, which could take a number of months at a minimum. In the meantime, there is uncertainty about CMS’ intent under the new anti-markup rules.

“If you read the language of the rule—literally as it is currently written and in effect as of January 1—the anti-markup rule applies if the test is performed by a physician who does not share a practice with the billing physician or billing supplier,” Hindmand said. “And, when it comes to the case of the technical component (TC), CMS defines a performing physician as a physician who supervises the technical component. So, if there is no supervision, it can be construed that this situation doesn’t fall within this anti-markup rule because the test is not supervised by another physician.

Supervision at Issue

“Here’s my understanding of the problem,” he said. “Relevant language in the anti-markup rule statute applies to diagnostic tests which are: 1) not personally performed; or, 2) not supervised by either the billing physician or by another physician in the practice. The rule that took effect on January 1 applies the anti-markup restriction if the test is supervised or performed by a physician who doesn’t share a practice. In its commentary on this rule, CMS indicated that, if the procedure or test in question does not require supervision under Medicare standards, than the anti-markup rule doesn’t apply.

“The commentary also indicates that CMS believes anatomic pathology was covered under the anti-markup rule,” added Hindmand. “So there is essentially an open issue about whether the technical component (TC) is covered for anatomic pathology services. To the extent that the services don’t require supervision, there is some uncertainty as to whether the anti-markup rule applies.

Arguments on Both Sides

“Knowledgeable people now argue that—as the rule is written now—the professional component (PC) of anatomic pathology may not be covered because of the way the rule and the commentary is drafted,” he observed. “If the anti-markup rule doesn’t apply, then clearly that would be a huge change.

“This change can be seen clearly when the current rule, effective on January 1, 2009, is compared with the revised anti-markup rule that took effect on January 1, 2008. The 2008 rule applied to anatomic pathology and not to other services,” said Hindmand. “So by that logic, it seems clear that CMS was not intending to exclude anatomic pathology as it asked for comments this fall as part of the process of revising the anti-markup rule. Revisions that resulted from this process were incorporated into the anti-markup rule which became effective on January 1, 2009.”

Wood explained that, by itself, the anti-markup rule is relatively clear. What raises these questions is the commentary that CMS includes when it issues a rule. “The commentary for this anti-markup rule implies that anatomic pathology services are covered,” she said. “But there is arguably no supervision requirement under Medicare for histology processing because CLIA doesn’t cover histology processing. Thus, if Medicare doesn’t have a supervision requirement, that raises the question that maybe the anti-markup provision doesn’t apply.

“Although this position is not clearly outlined in the regulation, it’s contained in the commentary,” she added. “The commentary does not carry the same weight as the regulation. But the commentary influences how the government interprets the regulation itself. The regulation itself could be read that way or not. In fact, you could argue both sides of the issue.

“So, the fact that you can argue both sides lends credence to the argument that maybe the anti-markup rule doesn’t apply to histology processing,” Wood said. “But that doesn’t appear to be the government’s intent.

“During the comment period before the new anti-markup rules became effective, some experts requested that CMS require CLIA-level supervision for all anatomic pathology tests,” stated Hindmand. “But CMS rejected that idea. CMS said it was not changing the supervision standard. It stated that the supervision standard is whatever is contained in the Medicare rules. However, no supervision requirement can be found in the Medicare rules for histology processing.

Easier To Understand

“In making these revisions last fall to the proposed regulations in the 2009 Medicare Physician Fee Schedule, CMS said it was attempting to simplify the rules,” Hindmand said. “As published in the Federal Register on November 19, 2008, these proposed regulations revised the Medicare anti-markup rules applicable to all professional and technical component diagnostic services.

“In general, CMS did succeed in making the rules easier to understand,” he commented, “particularly for ordering group practices that provide and bill for the technical component of diagnostic testing services, including anatomic pathology. The rules provide two alternative tests that pathologists would apply to determine if the anti-markup rule applies.”


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