Laboratories Billing for Referred Tests (Rev. 85, 02-06-04)

by  Jared Staheli
July 9th, 2015

Section 1833(h)(5)(A) of the Act provides that a referring laboratory may bill for clinical laboratory diagnostic tests on the clinical laboratory fee schedule for Medicare beneficiaries performed by a reference laboratory only if the referring laboratory meets certain conditions. Payment may be made to the referring laboratory but only if one of the following conditions is met:

• the referring laboratory is located in, or is part of, a rural hospital;

• the referring laboratory is wholly owned by the entity performing such test, the referring laboratory wholly owns the entity performing such test, or both the referring laboratory and the entity performing such test are wholly-owned by a third entity; or

• the referring laboratory does not refer more than 30 percent of the clinical laboratory tests for which it receives requests for testing during the year (not counting referrals made under the wholly-owned condition described above).

In the case of a clinical laboratory test provided under an arrangement (as defined in §1861(w)(1)) made by a hospital, CAH or SNF, payment is made to the hospital or SNF.

Examples of 30 Percent Exception:

(1) - A laboratory receives requests for 200 tests, performs 139 tests, and refers 61 tests to a non-related laboratory. All tests referred to a non-related laboratory are counted. Thus, 30.5 percent (61/200) of the tests are considered tests referred to a non-related laboratory and, since this exceeds the 30 percent standard, the referring laboratory may not bill for any Medicare beneficiary laboratory tests referred to a non-related laboratory.

(2) - A laboratory receives requests for 200 tests, performs 139 tests and refers 15 to a related laboratory and 46 to a non-related laboratory. Only 23 percent of the tests were referred to non-related laboratories. Since this is less than 30 percent, the referring laboratory may bill for all tests.

If it is later found that a referring laboratory does not, in fact, meet an exception criterion, the carrier should recoup payment for the referred tests improperly billed. The RO shall take whatever action is necessary to correct the problem.

NOTE: This provision of §6111(b) of OBRA of 1989 has no effect on hospitals that are paid under §1833(h)(5)(A)(iii).

NOTE: Laboratory services provided to a SNF inpatient under Part A are billed by the SNF, not the laboratory, due to consolidated billing for SNFs.

Only one laboratory may bill for a referred laboratory service. It is the responsibility of the referring laboratory to ensure that the reference laboratory does not bill Medicare for the referred service when the referring laboratory does so (or intends to do so). In the event the reference laboratory bills or intends to bill Medicare, the referring laboratory may not do so.


Laboratories Billing for Referred Tests (Rev. 85, 02-06-04). (2015, July 9). Find-A-Code Articles. Retrieved from

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