Payment to Physician or Other Supplier for Diagnostic Tests Subject to the Anti-Markup Payment Limitation

• A diagnostic test, payable under the Medicare Physician Fee Schedule (MPFS), is performed by a physician, who does not meet the requirements, described in 42 Code of Federal Regulations (CFR) section 414.50 and in the revised section 30.2.9 of the Medicare Claims Processing Manual, for “sharing a practice” with the billing physician or other supplier. When the anti-markup payment limitation applies, payment to the billing physician or other supplier (less any applicable deductibles or coinsurance) for the technical component (TC) or professional component (PC) of the diagnostic test may not exceed the lowest of the following amounts:  

1. The performing supplier’s net charge to the billing physician or other supplier.
2. The billing physician or other supplier’s actual charge.
3. The MPFS amount for the test that would be allowed if the performing supplier had billed directly.  

• If the physician or other supplier does not order the diagnostic test; or
• If the performing/supervising physician is deemed to “share a practice” with the billing physician or other supplier. There are two alternative methods for determining whether the performing/supervising physician is deemed to “share a practice.” Those alternatives are:  

• If the performing physician (the physician who supervises or conducts the TC, performs the PC, or both) furnishes substantially all (at least 75 percent) of his or her professional services through the billing physician or other supplier, the anti-markup payment limitation will not apply.  

• If the TC or the PC is supervised/performed in the “office of the billing physician or other supplier” by a physician owner, employee, or independent contractor of the billing physician or other supplier, the anti-markup payment limitation will not apply.
• The “office of the billing physician or other supplier” is any medical office space, regardless of the number of locations, in which the ordering physician regularly furnishes patient care. This includes space where the billing physician or other supplier furnishes diagnostic testing services, if the space is located in the “same building” in which the ordering physician regularly furnishes patient care.
• If the billing physician or other supplier is a physician organization, the “office of the billing physician or other supplier” is space in which the ordering physician provides substantially the full range of patient care services that the ordering physician provides generally. With respect to the TC, the performing physician is the physician who conducted and/or supervised the TC, and with respect to the PC, the performing physician is the physician who personally performed the PC.  

• The anti-markup payment limitation will apply if the performing physician does not “share a practice” with the billing physician or other supplier who ordered the test.
• If the anti-markup payment limitation applies, the billing physician or other supplier will be paid for the TC or PC of the diagnostic test (less any applicable deductibles or coinsurance) the lower of: (1) the performing physician’s net charge to the billing physician or other supplier; (2) the billing physician or other supplier’s actual charge; or, (3) the MPFS amount for the test that would be allowed if the performing physician had billed directly.
• The anti-markup payment limitation will not apply if the performing/supervising physician “shares a practice” with the billing physician or other supplier.
• If the performing physician (the physician who supervises or conducts the TC, performs the PC, or both) furnishes substantially all (at least 75 percent) of his or her professional services through the billing physician or other supplier, the anti-markup payment limitation will not apply.
• If the TC or PC is supervised/performed in the “office of the billing physician or other supplier” or in the “same building” by a physician owner, employee, or independent contractor of the billing physician or other supplier, the anti-markup payment limitation will not apply.
• The billing physician or other supplier must keep on file the name, the National Provider Identifier, and address of the performing physician. The physician or other supplier furnishing the TC or PC of the diagnostic test must be enrolled in the Medicare program. No formal reassignment is necessary.
• NOTE: When billing for the TC or PC of a diagnostic test (other than a clinical diagnostic laboratory test) that is performed by another physician, the billing entity must indicate the name, address and NPI of the performing physician in Item 32 of the CMS-1500 claim form. However, if the performing physician is enrolled with a different B/MAC, the NPI of the performing physician is not reported on the CMS-1500 claim form. In this instance, the billing entity must submit its own NPI with the name, address, and ZIP code of the performing physician in Item 32 of the CMS-1500, or electronic equivalent, claim form. The billing supplier should maintain a record of the performing physician’s NPI in the clinical record for auditing purposes.
• If the billing physician or other supplier performs only the TC or the PC and wants to bill for both components of the diagnostic test, the TC and PC must be reported as separate line items if billing electronically (ANSI X12 837) or on separate claims if billing on paper (CMS-1500). Global billing is not allowed unless the billing physician or other supplier performs both components.  

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