| Medicare’s Anti-Markup Rule – CMS Finalizes | | | | seeking to rely on Alternative 2 must meet the Same |
| Two Alternatives | | | | Office Requirement. This is due to CMS’s belief |
| On October 30, 2008, CMS released the 2009 | | | | that the Same Office Requirement is necessary to |
| MFPFS. In the 2009 MFPFS, with respect to the | | | | minimize the potential for overutilization and program |
| application of the anti-markup rule to the provision of | | | | abuse. |
| certain diagnostic testing services, effective January 1, | | | | Arrangements that fall within the ambit of the |
| 2009, CMS adopted two alternative tests for | | | | anti-markup provisions are subject to restrictive |
| determining the applicability of the anti-markup rule. | | | | payment limitations, such that payment to the billing |
| The Final Anti-Markup Rule | | | | entity will be limited to the lowest of the following: (1) |
| Specifically, the following principles determine the | | | | the performing physician’s or other supplier’s |
| applicability of the anti-markup rule: | | | | net charge to the billing entity; (2) the billing entity’s |
| (1) Alternative 1 – “Substantially All Test.” | | | | actual charge; or (3) the fee schedule amount for the |
| Arrangements should first be analyzed under this | | | | test that would be allowed if the performing physician |
| Alternative. If the performing physician (i.e., the | | | | or supplier billed directly. |
| physician who supervises the TC or performs the PC, | | | | Significantly, the net charge amount must be |
| or both) performs substantially all (at least 75 percent) | | | | determined without reference to any charge that is |
| of his or her professional services for the billing | | | | intended to reflect the cost of equipment or space |
| physician or other supplier, the services will not be | | | | leased to the performing supplier by or through the |
| subject the anti-markup rule payment limitations. If the | | | | billing physician or other supplier. Therefore, the |
| “substantially all” services requirement is not | | | | billing physician, or other supplier may only recover |
| satisfied, an analysis under Alternative 2 may be | | | | costs for the salary and benefits it paid to the |
| applied. | | | | performing supplier of the TC or PC. As a result, |
| (2) Alternative 2 – “Site of Service Test.” | | | | billing physicians or other suppliers who implicate the |
| TCs conducted and supervised in, and PCs | | | | anti-markup rule will likely receive reimbursement that |
| performed in, the “office of the billing physician”, | | | | fails to even cover the costs of providing the services. |
| which includes the “same building”, by an | | | | Below are two examples of the final anti-markup |
| employee or independent contractor physician avoid | | | | provisions and their application to common imaging |
| the anti-markup payment limitation. | | | | services arrangements: |
| These alternative tests measure whether or not a | | | | (1) Group Practice Independent Radiologist |
| performing or supervising physician “shares a | | | | Arrangement. A physician in a multi-specialty group |
| practice” with the billing physician or other supplier. | | | | practice orders an x-ray and the part-time technician |
| A physician is no longer required to exclusively work | | | | employee performs the x-ray in the group’s |
| for one physician practice; rather, a physician need only | | | | office. The ordering physician works exclusively for |
| “share a practice” with a physician or physician | | | | the multi-specialty group and supervises the test in the |
| organization. This change aligns certain provisions of | | | | group’s office. A radiologist, who is an |
| the Stark group practice definition with the anti-markup | | | | independent contractor with the multi-specialty group |
| provisions. | | | | practice, performs the PC of the test in the group’s |
| Additionally, the 2009 MFPFS provides that a billing | | | | office and reassigns his right to payment to the |
| physician or other supplier satisfies Alternative 1 if he | | | | group. The radiologist provides professional services |
| or she has a reasonable belief, at the time he or she | | | | to several groups and hospitals in the area. He |
| submits a claim, that either: (1) the performing | | | | performs approximately 20 percent of his professional |
| physician furnished substantially all of his or her | | | | services for the multi-specialty group practice. The |
| professional services through the billing physician or | | | | anti-markup rule does not apply to the group’s billing |
| other supplier for the period of 12 months prior to and | | | | of the TC because the supervising physician (i.e., the |
| including the month in which the service was | | | | performing physician) “shares a practice” with |
| performed; or (2) the performing physician is expected | | | | the billing group insofar as he performs at least 75 |
| to furnish substantially all of his or her professional | | | | percent of his professional services for the group. |
| services through the billing physician or other supplier | | | | With respect to the PC of the test, the independent |
| during the following 12 months (including the month the | | | | contractor (i.e., the performing physician) does not |
| service is performed). | | | | perform substantially all of his professional services to |
| With respect to Alternative 2, CMS aligns the location | | | | the group (he performs approximately 20 percent). |
| test with the Stark Law “same building” test by | | | | Thus, an analysis under Alternative 2 applies. Under |
| clarifying that a physician or other supplier may have | | | | the “site of service” test, the anti-markup rule |
| more than one “office of the billing physician or | | | | does not apply because the performing radiologist |
| other supplier”. Such space is one in which the | | | | provided the interpretation on-site in the group’s |
| ordering physician or ordering supplier regularly | | | | office. |
| furnishes patient care (and with respect to physician | | | | (2) IDTF Arrangement. A physician orders a |
| organizations or group practices, the space in which | | | | diagnostic test from an IDTF. The IDTF bills globally |
| the ordering physician performs substantially the full | | | | for the test (TC and PC). The anti-markup rule does |
| range of patient care services that the ordering | | | | not apply because the IDTF did not order the test; |
| physician provides generally). Additionally, CMS requires | | | | rather, it was ordered by an outside physician. |
| the physician supervising the TC to be an owner, | | | | IDTF Performance Standards for Mobile Imaging |
| employee, or independent contractor of the billing | | | | Providers |
| physician or other supplier. With respect to the PC, | | | | 1. To summarize, effective January 1, 2009, all mobile |
| the performing physician must be an employee or | | | | entities furnishing diagnostic testing services must enroll |
| independent contractor of the billing physician or | | | | in the Medicare program and bill directly for the |
| supplier. | | | | services, unless they are billing “under |
| As a practical matter, the final anti-markup provisions | | | | arrangements” with a hospital. |
| permit the use of shared space imaging arrangements | | | | Conclusion |
| between physicians that occur in the “same | | | | Through a series of regulatory actions, CMS has been |
| building”. Nevertheless, CMS notes that centralized | | | | targeting diagnostic imaging arrangements. Diagnostic |
| building locations raise concerns for over-utilization and | | | | imaging providers and suppliers should be attentive to |
| are not permitted for the provision of diagnostic | | | | developments with future rulemakings, which may |
| tests. CMS further cautions that despite its flexibility, it | | | | significantly affect the structure of many current |
| has concerns with the present use of the IOAS | | | | imaging arrangements. As a result, we advise |
| exception under Stark and may issue future changes. | | | | providers to incorporate mechanisms into their current |
| Of particular significance for those physicians providing | | | | contractual arrangements that will permit these |
| imaging services in reliance on Alternative 2, the TC | | | | arrangements to adopt a more stringent regulatory |
| must be both conducted and supervised in the | | | | framework. Finally, the regulatory changes discussed |
| “office of the billing physician or other supplier” | | | | in this article likely will not be CMS’s final word on |
| (“the Same Office Requirement”). While Stark | | | | diagnostic imaging. Providers should be mindful of this |
| Law generally applies the Medicare coverage and | | | | before entering into structures that cannot be |
| payment regulations governing supervision of tests | | | | unwound or modified. |
| (“Medicare Coverage Requirements”), providers | | | | |