Payment guide for pathology professional and technical component

A. Payment for Professional Component (PC) Services

Payment may be made under the physician fee schedule for the professional component of physician laboratory or physician pathology services furnished to hospital inpatients or outpatients by hospital physicians or by independent laboratories, if they qualify as the re-assignee for the physician service.



B. Payment for Technical Component (TC) Services

1. General Rule

Payment is not made under the physician fee schedule for TC services furnished in institutional settings where the TC service is bundled into the facility payment, e.g., hospital inpatient and outpatient settings. Payment is made under the physician fee schedule for TC services furnished in institutional settings where the TC service is not bundled into the facility payment, e.g., an ambulatory surgery center (ASC). Payment may be made under the physician fee schedule for the TC of physician pathology services furnished by an independent laboratory, or a hospital if it is acting as an independent laboratory, to non-hospital patients. The physician fee schedule identifies physician laboratory or physician pathology services that have a TC service.



2. TC Services Furnished by Independent Laboratories to Hospital Inpatients and Outpatients

• For services furnished on or after July 1, 2012, an independent laboratory may not bill the Medicare contractor (and the Medicare contractor may not pay) for the TC of a physician pathology service furnished to a hospital inpatient or outpatient.

• For services furnished prior to July 1, 2012, payment may be made under the fee schedule, as noted below, for the (TC) of pathology services furnished by an independent laboratory to hospital inpatients or outpatients.

CMS published a final regulation in 1999 that would no longer allow independent laboratories to bill under the physician fee schedule for the TC of physician pathology services. The implementation of this regulation was delayed by Section 542 of the Benefits and Improvement and Protection Act of 2000 (BIPA). Section 542 allows the Medicare carrier to continue to pay for the TC of physician pathology services when an independent laboratory furnishes this service to an inpatient or outpatient of a covered hospital. This provision is applicable to TC services furnished January 1, 2001 through June 30, 2012.

For this provision, a covered hospital is a hospital that had an arrangement with an independent laboratory that was in effect as of July 22, 1999, under which a laboratory furnished the TC of physician pathology services to fee-for-service Medicare beneficiaries who were hospital inpatients or outpatients, and submitted claims for payment for the TC to a carrier. The TC could have been submitted separately or combined with the professional component and reported as a combined service.
The term, fee-for-service Medicare beneficiary, means an individual who:

• Is entitled to benefits under Part A or enrolled under Part B of title XVIII or both; and

• Is not enrolled in any of the following: A Medicare + Choice plan under Part C of such title; a plan offered by an eligible organization under §1876 of the Social Security
 Act; a program of all-inclusive care for the elderly under §1894; or a social health maintenance organization demonstration project established under Section 4108 of the Omnibus Budget Reconciliation Act of 1987.

In implementing Section 542, the contractors should consider as independent laboratories those entities that it has previously recognized as independent laboratories.
An independent laboratory that has acquired another independent laboratory that had an arrangement of July 22, 1999, with a covered hospital, can bill the TC of physician pathology services for that hospital’s inpatients and outpatients under the physician fee schedule.


An independent laboratory that furnishes the TC of physician pathology services to inpatients or outpatients of a hospital that is not a covered hospital may not bill the carrier for the TC of physician pathology services during the time §542 is in effect.

If the arrangement between the independent laboratory and the covered hospital limited the provision of TC physician pathology services to certain situations or at particular times, then the independent laboratory can bill the carrier only for these limited services.

The contractor shall require independent laboratories that had an arrangement, on or prior to July 22, 1999 with a covered hospital, to bill for the technical component of physician pathology services to provide a copy of this agreement, or other documentation substantiating that an arrangement was in effect between the hospital and the independent laboratory as of this date. The independent laboratory must submit this documentation for each covered hospital that the independent laboratory services.

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