The general consensus is that many practices are not aware of and may not be in compliance with the Anti-Markup Rule (“AMR”) promulgated by the Centers for Medicare & Medicaid Services (“CMS”) in late 2008. The AMR, which became effective on January 1, 2009, limits the amount a physician (the “Billing Physician”) may bill for the technical and professional components of diagnostic tests performed or supervised by another physician (the “Performing Physician”) if the two physicians do not “share a practice.” These diagnostic tests do not include clinical diagnostic laboratory tests but do include all other diagnostic tests such as diagnostic radiology, nuclear medicine, ultrasound, transcatheter procedures, transluminal atherectomy, cardiography, echocardiography, diagnostic cardiac catheterization, vascular studies, pulmonary tests, allergy tests, sleep lab tests, and audiologic function tests. The AMR limits the ability of physicians or their practices to profit from the technical and professional components of diagnostic tests they bill to Medicare but purchase from other physicians or suppliers who do not have a sufficient nexus with the Billing Physician. In order to make sure that your practice or client complies with the AMR, you must first familiarize yourself with the rule’s scope and directives.
Scope of the AMR
To determine whether or not the Performing Physician “shares a practice” with the Billing Physician, the CMS has provided two alternative tests: the “substantially all” professional services test and the “site-of-service” test.
Under the “substantially all” professional services test, a Performing Physician is deemed to “share a practice” with the Billing Physician (and thereby elude the limitations of the Anti-Markup Rule) when the Performing Physician performs at least 75% of her professional services for the Billing Physician “even if the physician works for one or more billing physician groups or other health care entities.”
If unable to satisfy the “substantially all” test, physicians will be found to “share a practice” only if they are able to satisfy the “site-of-service” test. To satisfy this test, the technical and professional components of a diagnostic test must be performed by an employee or independent contractor physician in an office where the Billing Physician regularly furnishes patient care, regardless of the number of locations.
Limitations under the AMR
If the AMR applies, the payment to the Billing Physician for the technical or professional component of the diagnostic test may not exceed the lowest of (i) the Performing Physician’s “net charge” to the Billing Physician, (ii) the Billing Physician’s actual charge, or (iii) the fee schedule amount. CMS has clarified that “net charge” does not include the Billing Physician’s overhead or “any charge that is intended to reflect the cost of equipment or space leased to the performing supplier by or through the billing physician or other supplier.” CMS justifies its decision to prevent practices from recouping their direct practice or overhead costs by arguing that practices would overutilize such a provision and use overhead recovery to make a profit.
Penalties
A Billing Physician who fails to comply with the AMR may be subject to civil monetary penalties, exclusion from the Medicare program, or even criminal charges under the False Claims Act.
The Upshot and an Illustration
Health care providers which bill for diagnostic services that are performed outside the building where the Billing Physician is located, must restructure or meet the 75% threshold of the “substantially all” professional services test to avoid falling subject to the AMR’s payment limitation.
Imagine, if you will, a group practice with three physicians, each of whom works at one of the practice’s three locations (e.g. Locations 1, 2, & 3). Furthermore, assume the group’s diagnostic services are all performed at Location 1 by an independent contracting specialist on a part-time basis. The Billing Physician at Location 1 satisfies the “site-of-service” test because she regularly furnishes patient care at Location 1 and therefore falls beyond the scope of the AMR. However, if the independently contracting specialist does not meet the “substantially all” services test by providing at least 75% of her professional services to the group, the Billing Physicians at Locations 2 and 3 that order the diagnostic tests actually performed at Location 1 will be subject to the AMR’s payment limitations. Avoiding AMR limitations in such a case might be achieved by contracting with the specialist to ensure that at least 75% of her professional services are furnished through the group’s practice or, alternatively, by rearranging schedules so that all physicians regularly furnish services at Location 1.
We strongly advise you to review your arrangements to ensure compliance.
Colin Luke is a partner with Bradley Arant Boult Cummings. He practices in the healthcare group.
