CMS Delays Revised Anti-markup Provisions with Respect to Certain Services Performed in Certain Locations

In response to advocacy by the AUA, AMA, the Medical Group Management Association and others, including a letter signed by 47 national physician organizations, the Centers for Medicare & Medicaid Services (CMS) has issued a delay in the application of the expanded anti-markup rule that it published in the 2008 final physician fee schedule. A CMS notice published in the January 3 Federal Register postpones implementation of the rule until Jan. 1, 2009, instead of the scheduled effective date of Jan. 1, 2008.

The rule would have expanded the Medicare payment rule referred to as the anti-markup rule. In its current form, the anti-markup rule limits the payment a physician can receive for the technical component (TC) of services the physician purchases from an outside supplier. In its expanded form, CMS's new rule would have applied the same payment limitation to the professional component (PC) of purchased diagnostic tests, as well as to the TC and PC of services performed by employees of physicians or group practices if the services are performed outside of the office of the physician or group practice. The new provision defines the office of a group practice as space where the group provides substantially the full range of patient care services that it provides generally.

The delay is not that straightforward. It postpones application of this new rule except in the case of anatomic pathology diagnostic testing services furnished in space used by a physician group practice as a "centralized building," which essentially means that this postponement only applies to diagnostic pathology services when the group provides other patient care services at the site as well. This is intended to close a perceived loophole in the self-referral regulations that had allowed the operation of off-site "pod labs." CMS has stated its intention to use the one-year delay to clarify the application of the rule, issue an additional proposed rule, or both.

Although we are grateful for the delay, the AUA maintains the position that the entire rule should be rewritten to avoid unintended negative consequences for patient access to diagnostic tests that have been created. To read the AUA's comments on the final rule, click here. Thanks also to the urology practices who submitted comments on the final rule in response to the AUA's December 21 alert.