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MIR-2006-7AB, July 2006
MLN Matters. . .Information for Medicare Providers
(Issued by the Centers for Medicare & Medicaid Services)
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This article was originally published in 2005-12. It is being reprinted as a reminder of this information.
Redefined Type of Bill (TOB), 14X, for Nonpatient Laboratory Specimens
Provider Types Affected
All hospitals billing for nonpatient lab specimens, but particularly Maryland Hospitals billing Medicare fiscal intermediaries (FIs) for laboratory services for their outpatients and for nonpatients and critical access hospitals (CAHs) billing FIs for laboratory services for their outpatients and for nonpatients.
Provider Action Needed
Impact to You
Affected providers must stop using Type of Bill (TOB) 14X when billing for referred diagnostic tests and reserve the use of TOB 14X for nonpatient laboratory specimens.
What You Need to Know
Be aware of the redefinition of TOB 14X for use in billing tests for nonpatient laboratory specimens, which Medicare pays for based on the Clinical Diagnostic Laboratory Fee Schedule. When the lab tests are provided in Maryland, services to a hospital’s own outpatients are paid under the state cost containment system. When tests are performed on nonpatient specimens, they are categorized as “nonpatient specimen only lab tests.” The same distinction applies to CAHs. When the lab tests are performed for the CAH’s own outpatients they are paid based on cost. When they are performed on nonpatient specimens the tests are paid based on the lab fee schedule.
What You Need to Do
Use the redefined TOB 14X for nonpatient laboratory specimens as discussed in this article.
Background
While 85X TOB is still used for lab tests, it is only valid if the patient is an outpatient of the CAH and physically present at the time the specimen is collected. A CAH cannot seek reasonable cost reimbursement for tests provided to individuals in locations such as a rural health clinic, a provider-based home health agency, the individual’s home, or a physician’s office. Individuals in these locations are nonpatients of the CAH, and their lab tests are categorized as “nonpatient specimen only lab tests.” For these nonpatients, use TOB 14X and Medicare’s payment will be made under the lab fee schedule.
In the early 1990s, the definition of 14X was changed to be “all referred diagnostic services” and, subsequently, there was no adequate method to distinguish the nonpatient specimens. The changed definition of TOB 14X was confusing to both providers and FIs.
Due to this lack of clarity, and the need to pay both Maryland hospitals and CAHs on the lab fee schedule when only the specimen is received and the need to distinguish for certain pathology tests, the Centers for Medicare & Medicaid Services (CMS) is introducing a revised definition of TOB 14X for nonpatient specimens. These specimens will be paid on the clinical diagnostic lab fee schedule, as opposed to on the basis of reasonable cost or percent of charges.
Implementation
The implementation date for this instruction is April 3, 2006.
Additional Information
The official instruction issued to your FI regarding this change may be found by going to http://www.cms.hhs.gov/transmittals/downloads/R734CP.pdf  on the CMS Web site.
For additional information relating to this issue, please refer to your FI. To find their toll-free phone number, go to http://www.cms.hhs.gov/MLNProducts/downloads/CallCenter TollNumDirectory.pdf on the CMS Web site.
Disclaimer
Medlearn Matters articles are prepared as a service to the public and are not intended to grant rights or impose obligations. Medlearn Matters articles may contain references or links to statutes, regulations, or other policy materials. The information provided is only intended to be a general summary. It is not intended to take the place of either the written law or regulations. We encourage readers to review the specific statutes, regulations, and other interpretive materials for a full and accurate statement of their contents.
For more information, visit the Medlearn Matters Web page at: http://www.cms.hhs.gov/medlearn/matters/ . 
Pub. 100-4, Transmittal # 734, CR # 3835
Medlearn Matters Number: MM3835
Related CR Release Date: October 28, 2005
Effective Date: October 1, 2004
Implementation Date: April 3, 2006
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