On November 19, 2009, the Center for Medicare and Medicaid Services (CMS) will announce significant changes to the Anti-Markup Rule. CMS previously, on July 12, 2007, proposed that the Anti-Markup Rule should apply whenever a physician or other supplier bills Medicare for either the technical or professional component of a diagnostic test (except clinical diagnostic laboratory tests) that was ordered by a physician or supplier, and such test was either: (a) purchased from an outside supplier; or (b) performed or supervised by a physician who does not share a practice with the billing physician or supplier.

CMS has eliminated application of the Anti-Markup Rule to diagnostic tests that are purchased and will apply the Rule solely to those situations in which a physician or supplier bills Medicare for the technical or professional component of diagnostic tests performed or supervised by a physician who does not share a practice with the billing physician or supplier. This significant change to the Anti-Markup Rule goes into effect on January 1, 2009.

The “shares a practice” test may be met in one of two situations. First, if the performing physician provides 75% or more of his or her professional services for the physician or physician's group that orders and bills for the test, he or she will have been deemed to have met the 75% or “substantially all” test. The performing or supervising physician would be allowed to provide up to 25% of his or her professional services for other physician groups or other entities and still be deemed to be sharing a practice under the Anti-Markup Rule. In such event, the diagnostic services of the performing physician are not subject to the Rule. If the performing physician or the supervising physician cannot meet the 75% test, the “shares a practice” provision may still be met if either the technical or professional component is performed by an owner, employer or independent contractor physician located in the same building where the ordering physician provides substantially the full range of patient care services that he or she normally provides.

If the billing physician or the supplier meets neither test, the Anti-Markup Rule would apply to covered diagnostic tests. In such an event, the billing physician or supplier would receive in reimbursement the amount of the supervising physician’s cost of performing the test or the physician fee schedule amount for test, which amount is lower.

For further information, please contact Roy M. Bossen, Kurt A. Leifheit or your regular Hinshaw attorney.

This alert has been prepared by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship.