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Medicare Payment Provisions Expire

January 26, 2010:

Medicare providers should take note of a special edition article alerting providers that certain Medicare payment provisions expired on December 31, 2009. In the article, the Centers for Medicare and Medicaid Services (CMS) also notes that potential new legislation that affects the Medicare program may extend these provisions.

The expired provisions include a moratorium that allowed independent laboratories to bill for the technical component (TC) of physician pathology services furnished to hospital patients and the outpatient therapy cap exceptions process. The exceptions process to the therapy caps enables Medicare patients to receive additional, medically necessary outpatient physical, speech, and occupational therapy services after reaching the payment cap.

Under the therapy cap exceptions process, all exceptions must be medically necessary, appropriately provided, and documented even when the patient has a condition or certain conditions or complex situation that qualifies for an automatic exception to the caps. Modifier KX is appended to the CPT procedure code to indicate that an exception to the cap has been approved or that an automatic exception applies. The therapy cap exceptions process originally expired on June 30, 2008; however, a key provision of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) legislation extended the effective date of the exceptions process to the therapy caps to December 31, 2009. CMS's first guidance on this provision can be found at: http://www.cms.hhs.gov/TherapyServices/.
In the context of Medicare, the technical component of any procedure code represents the services provided by the hospital or facility, including the nursing or technical staff, supplies, equipment, room, and drugs. CMS stated in the final physician fee schedule regulation published on November 2, 1999, that it would implement a policy to pay only the hospital for the technical component (TC) of physician pathology services furnished to hospital patients. Prior to this proposal, independent laboratories could bill for the TC of physician pathology services for hospital patients. Under the outpatient rebundling provisions of the outpatient prospective payment system (OPPS), independent laboratories cannot bill for the technical component of a pathology service. Instead, hospitals must provide, directly or under arrangements, all services furnished to hospital outpatients. Therefore, if a specimen such as tissue, blood, or urine is taken from a hospital outpatient, the facility or technical component of the diagnostic test must be billed by the hospital.

The implementation of this rule was delayed in order to allow independent laboratories and hospitals time to negotiate arrangements. Subsequent legislation formalized a moratorium on the implementation of the rule for claims with dates of service on or after July 1, 2008, and prior to January 1, 2010.

Claims for services affected by these provisions furnished on or before December 31, 2009, will be processed under normal conditions, but claims with dates of service on or after January 1, 2010, will not be paid in keeping with the expired provisions. For services provided on or after January 1, 2010, providers may want to hold on to Medicare claims for these services until it is determined whether new legislation will be enacted to extend these provisions. If the new legislation is enacted, payment for affected services may resume.

This special edition article, MLN Matters® number: SE0931, can be found at http://www.cms.hhs.gov/MLNMattersArticles/downloads/SE0931.pdf.

Sarah A. Serling, CPC, CPC-H, CPC-I, CCS-P, CCS
Clinical/Technical Editor


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