Diagnostic Tests: Purchased or Personally Performed

If a test is personally performed by a physician or is supervised by a physician, the physician may submit claims under the normal physician fee schedule rules. This includes situations in which the test is performed or supervised by another physician with whom the billing physician shares a practice.  

Supervision Requirements
The CMS Medicare Benefit Policy Manual ((Pub. 100-02), Chapter 15, Section 80) defines the various levels of physician supervision required for diagnostic tests.

• The supervision requirement for physician billing is not met when the test is administered by supplier personnel, regardless of whether the test is performed at the physician's office or at another location

Anti-Markup Payment Limitation: "Purchased Diagnostic Tests"

• The anti-markup payment limitation applies to diagnostic tests that were formerly referred to as "purchased diagnostic tests"
• The anti-markup provision applies when a physician or other supplier orders a diagnostic test (payable under the MPFS and excluding clinical diagnostic laboratory tests) and bills for the technical component (TC) or professional component (PC) of the test that is performed or supervised by a physician or other supplier who does not 'share a practice' with the billing physician or other supplier that ordered the test

• The performing supplier’s net charge to the billing physician or other supplier
• The billing physician or other supplier’s actual charge
• The fee schedule amount for the test that would be allowed if the performing supplier billed directly (42 CFR 414.50(a)(1))
• The net charge must be determined without regard to any charge that reflects the cost of equipment or space leased to the performing supplier by the billing physician or other supplier (42 CFR 414.50(a)(2)(i))

• To independent laboratories
• If the performing physician 'shares a practice' with the ordering/billing physician or other supplier. As set forth in 42 CFR 414.50(a)(2), there are two alternatives for determining whether a performing/supervising physician shares a practice with the ordering/billing physician or other supplier. The two alternatives are:
  • Alternative one; substantially all services requirement:
    • Under the first alternative, if the performing physician (that is, the physician who supervises the TC or 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 performing physician does not meet the "substantially all services" requirement, a "site of service" analysis may be applied on a test-by-test basis to determine whether the anti-markup payment limitation applies.
  • Alternative two; site of service test:
    • The second alternative is the "site of service" test. Only TCs conducted and supervised and PCs 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 will avoid application of the anti-markup payment limitation. 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, if the space is located in the 'same building' (as defined in 42 CFR 411.351) in which the ordering physician regularly furnishes patient care.
    • If the billing physician or other supplier is a physician organization (as defined in 42 CFR 411.351), 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 generally provides. With respect to the TC, the performing supplier is the physician that supervised the TC and, with respect to the PC, the performing supplier is the physician that performed the PC. Thus, if the "site of service" requirements are met, the anti-markup payment limitation will not apply.

• Electronic claims: More than one test subject to the anti-markup payment limitation may be submitted on a single electronic claim. Submit the total anti-markup service amount for each service (line level).
  • Paper claims: submit the professional and technical components of the test on separate claims. When Item 20 is marked yes, enter a charge amount. In item 32, submit the name, address, city, state, and ZIP for the physician/supplier from whom the diagnostic test was acquired. Palmetto GBA will assume that the one address in Item 32 applies to both services. Paper claims submitted with more than one purchased test will be returned as unprocessable. If more than one supplier is used, separate claim forms are required.
• The NPI of the ordering physician is required on all claims for diagnostic tests

• Global procedures
• Professional component only
• Technical component only
• Purchased professional component and
• Purchased technical component

• Includes situations when you perform the test and interpret the results
• When you bill globally you must have: (1) personally performed both the professional and technical components; or (2) personally performed the professional component and supervised your own employees who performed the technical component

• Includes situations when you interpret the test but do not perform the test
• Submit the appropriate procedure code to Palmetto GBA using CPT modifier 26 (professional component). Note, when CPT or HCPCS coding provides a specific code for the professional component, do not use modifier 26   

• Includes situations when you perform the test but do not interpret the results
• Submit the appropriate procedure code to Medicare using HCPCS modifier TC (technical component). Note, when CPT or HCPCS coding provides a specific code for the technical component, do not use modifier TC.  

• The tests are initiated by a physician or medical group which is independent of the person or entity providing the tests and of the physician or medical group providing the interpretations
• The physician or medical group providing the interpretations does not see the patient and
• The purchaser (or employee, partner, or owner of the purchaser) performs the technical component of the test. The interpreting physician must be enrolled in the Medicare program. No formal reassignment is necessary.

• A physician or medical group may submit the claim and if assignment is accepted, receive the Part B payment for the technical component of diagnostic tests which the physician or group purchases from an independent physician, medical group, or other supplier
• This payment procedure is not extended to clinical diagnostic laboratory tests
• In order to purchase a diagnostic test, the purchaser must perform the interpretation
• The physician or other supplier that furnished the technical component must be enrolled in the Medicare program
• No formal reassignment is necessary

• CMS Medicare Benefit Policy Manual (PDF) Pub. 100-02, chapter 15, section 80 (physician supervision requirements)
• CMS Medicare Claims Processing Manual (PDF) Pub. 100-04, chapter 13, section 20.3-20.32D (guidance on purchased services)