CMS Issues New Rules for Date of Service and Place of Service Requirements for Laboratory and Pathology Services

The Centers for Medicare and Medicaid Services (CMS) issued an update to the Medicare Claims Processing Manual, Chapter 26, regarding the appropriate use of Place of Service (POS) codes and Date of Service (DOS) requirements for the professional and technical components of diagnostic tests. The updates were issued through the Oct. 2 release of CMS Transmittal 1823 with an initial implementation date of Jan. 4, 2010. However, CMS extended the effective date for DOS until July 1, 2010 while the POS effective date of Jan 1, 2010 remains in effect.

CMS general rule for clinical laboratory services and the technical component of anatomic pathology services requires that the DOS of the test/service must be the date the specimen was collected. Since the professional component of an anatomic pathology service is usually on the same specimen as the technical component, the professional component DOS would be the same as the technical component, that is, the date the specimen was collected. If a specimen is collected over a period that spans two calendar days, then the DOS must be the date the collection ended.

Two exceptions to the above rule apply to clinical laboratory or the technical component of physician pathology services.

1. For Tests/Services Performed on Stored Specimens:
1. In the case of a test/service performed on a stored specimen, if a specimen was stored for less than or equal to 30 calendar days from the date it was collected, the DOS is the collection date of the sample.
2. However, if any of the following apply, the DOS will be the date the test/service was performed:

i. The test/service is ordered by the patient’s physician at least 14 days following the date of the patient’s discharge from the hospital;

ii. The specimen was collected while the patient was undergoing a hospital surgical procedure;

iii. It would be medically inappropriate to have collected the sample other than during the hospital procedure for which the patient was admitted;

iv. The results of the test/service do not guide treatment provided during the hospital stay; and

v. The test/service was reasonable and medically necessary for treatment of an illness.

2. If the specimen was stored for more than 30 calendar days before testing, the specimen is considered to have been archived and the DOS of the test/service must be the date the specimen was obtained from storage.

Place of Service Requirements

CMS requires that the POS be the location where the service actually took place. In the new guidelines, the TC and the PC of the diagnostic test may be reported with different POS codes if they took place in different locations. The Medicare Physician Fee Schedule has two payment rates for a number of procedures. The rate is based on whether the service was performed in a facility or in a non-facility place of service. Most pathology procedures with a CPT code in the 8XXXX series do not have a pay differential based on the POS code. Nevertheless, reporting the correct POS on claims will be important.

Examples were included in the transmittal to help provide guidelines for implementation. For clinical laboratory services, if the physician bills for lab services performed in his/her office, the code for "Office" is shown. If the physician bills for a lab test furnished by another physician who maintains a lab in his/her office, the code for "Other" is shown. If the physician bills for a lab service furnished by an independent lab, the code for "Independent Laboratory" is used. If an independent lab bills, the place where the sample was taken is shown. An independent laboratory taking a sample in its laboratory shows "81" as place of service. If an independent laboratory bills for a test on a sample drawn on a hospital inpatient, it uses the code for "Hospital Inpatient".

For physician anatomic pathology services, if the pathologist performs the service(s) in the hospital outpatient department or in the hospital laboratory, then the POS is outpatient (22). However, if the pathology group meets the definition of an “office” in that hospital outpatient/laboratory department, then the “office” POS is used.

CMS defines an office as a “location, other than a hospital, skilled nursing facility (SNF), military treatment facility, community health center, State or local public health clinic, or intermediate care facility (ICF), where the health professional routinely provides health examinations, diagnosis, and treatment of illness or injury on an ambulatory basis.” (Medicare Claims Processing Manual Chapter 26.10.5). In addition, the physician must incur practice expense in order to qualify for “office” designation.

For interpretations provided to patients in a skilled nursing facility, the POS again should be identified as where the interpretation took place. Generally speaking, only the professional component is billed to CMS for such patients. If services are provided to hospitals under arrangement and the PC and TC can be billed separately, the PC should reflect where the read actually took place. However, if they cannot be billed separately, there would not be a separate POS code for the PC. Both components should be billed global as POS 22.

There are still unanswered questions regarding CMS Transmittal 1823. The transmittal itself directs that anyone with questions submit them in writing to the local Medicare contractor.

Source: CMS Manual System. Department of Health & Human Services. Pub 100-04 Medicare Claims Processing. Transmittal 1823. Oct. 2, 2009. Change Request 6375. http://www.cms.hhs.gov/transmittals/downloads/R1823CP.pdf

Rick Oliver, CHCO, CPC, MT(ASCP)

Director of Compliance - Pathology

McKesson Revenue Management Solutions