Technical Component (TC) of Physician Pathology Services to Hospital Patients (Rev. 2714, 06-25-13)

by  Jared Staheli, MPP
Jul 10th, 2015

Section 542 of the Benefits Improvement and Protection Act of 2000 (BIPA) provides that the Medicare A/B MAC/carrier can 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 applies to TC services furnished during the 2-year period beginning on January 1, 2001. Administrative extensions of this provision, and new provisions established under Section 732 of the Medicare Modernization Act (MMA); Section 104 of the Tax Relief and Health Care Act (TRHCA) of 2006; Section 104 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA); Section 136 of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA); Section 3104 of the Patient Protection and Affordable Care Act (PPACA); Section 105 of the Medicare & Medicaid Extenders Act of 2010 (MMEA); and Section 3006 of the Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA) allow the A/B MAC/carrier to continue to pay for this service through June 30, 2012.

For this provision, covered hospital means a hospital that had an arrangement with an independent laboratory or other entity that was in effect as of July 22, 1999, under which the laboratory or other entity 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 A/B MAC/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:

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

2. Is not enrolled in any of the following:

a. A Medicare + Choice plan under Part C of such title;

b. A plan offered by an eligible organization under §1876 of the Act;

c. A program of all-inclusive care for the elderly under §1894 of the Act; or

d. A social health maintenance organization demonstration project established under §4108(b) of the Omnibus Budget Reconciliation Act of 1987.

The following examples illustrate the application of the statutory provision to arrangements between hospitals and independent laboratories and/or other entities.

In implementing BIPA §542; MMA §732; TRHCA §104; MMSEA §104; MIPPA §136; and PPACA § 3104; MMEA § 105; and MCTRJCA § 3006, the A/B MAC/carriers should consider as independent laboratories any entity that it has previously recognized and paid as an independent laboratory as of July 22, 1999.

An independent laboratory that has acquired another independent laboratory that had an arrangement on 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 through June 30, 2012.

EXAMPLE 1:

Prior to July 22, 1999, independent laboratory A had an arrangement with a hospital in which this laboratory billed the carrier for the TC of physician pathology services. In July 2000, independent laboratory B acquires independent laboratory A. Independent laboratory B bills the carrier for the TC of physician pathology services for this hospital’s patients in 2001 and forward.

If a hospital is a covered hospital, any independent laboratory that furnishes the TC of physician pathology services to that hospital’s inpatients or outpatients can bill the carrier for these services furnished in 2001 and forward up to June 30, 2012 (see note below on last paragraph).

EXAMPLE 2:

As of July 22, 1999, the hospital had an arrangement with an independent laboratory, laboratory A, under which that laboratory billed the A/B MAC/carrier for the TC of physician pathology service to hospital inpatients or outpatients. In 2001, the hospital enters into an arrangement with a different independent laboratory, laboratory B, under which laboratory B wishes to bill its A/B MAC/carrier for the TC of physician pathology services to hospital inpatients or outpatients. Because the hospital is a “covered hospital,” independent laboratory B can bill its A/B MAC/carrier for the TC of physician pathology services to hospital inpatients or outpatients.

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 A/B MAC/carrier only for these limited services.

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 A/B MAC/carrier for TC of physician pathology services furnished to patients of that hospital.

An independent laboratory or other entity that has an arrangement with a covered hospital should forward a copy of this agreement or other documentation to its A/B MAC/carrier to confirm that an arrangement was in effect between the hospital and the independent laboratory as of July 22, 1999. This documentation should be furnished for each covered hospital the independent laboratory or other entity services. If the laboratory or other entity did not have an arrangement with the covered hospital as of July 22, 1999, but has subsequently entered into an arrangement, then it should obtain a copy of the arrangement between the predecessor laboratory or other entity and the covered hospital and furnish this to the A/B MAC/carrier. The A/B MAC/carrier maintains a hard copy of this documentation for postpayment reviews.

Please Note: Effective on or after July 1, 2012, only the hospital may bill for the TC of a physician pathology service provided to an inpatient or outpatient. Neither example 1 nor example 2 above will apply for claims with dates of service on or after July 1, 2012.