Provider Types Affected
Clinical laboratories

Provider Action Needed
This article and related CR 4144 contain important information regarding:

• The 2006 annual updates to the clinical laboratory fee schedule;
• Mapping for new codes for clinical laboratory tests; and
• Laboratory costs related to services subject to reasonable charge payments.

It is important that affected laboratories understand these changes to ensure correct and accurate payments from Medicare.

Background
Update to Clinical Laboratory Fees
In accordance with §1833(h)(2)(A)(i) of the Social Security Act (the Act), as amended by Section 628 of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003, the annual update to the local clinical laboratory fees for 2006 is zero (0) percent.

Section 1833(a)(1)(D) of the Act provides that payment for a clinical laboratory test is the lesser of the actual charge billed for the test, the local fee, or the National Limitation Amount (NLA).

National Minimum Payment Amounts
For a cervical or vaginal smear test (Pap smear), §1833(h)(7) of the Act requires payment to be the lesser of the local fee or the NLA, but not less than a national minimum payment amount. Also, payment may not exceed the actual charge.

The 2006 national minimum payment amount is $14.76 ($14.76 plus zero percent update for 2006). The affected codes for the national minimum payment amount include the following Current Procedure Terminology (CPT)/HCPCS codes:

National Limitation Amounts (Maximum)
For tests for which NLAs were established before January 1, 2001, the NLA is 74 percent of the median of the local fees. For tests for which NLAs are first established on or after January 1, 2001, the NLA is 100 percent of the median of the local fees in accordance with §1833(h)(4)(B)(viii) of the Act.

Access to 2006 Clinical Laboratory Fee Schedule
Internet access to the 2006 clinical laboratory fee schedule data file should be available after November 18, 2005, at http://www.cms.hhs.gov/suppliers/clinlab on the CMS Web site.

Interested providers should use the Internet to retrieve the 2006 clinical laboratory fee schedule. It will be available in multiple formats: Excel™, text, and comma-delimited.

Public Comments
On July 18, 2005, the Centers for Medicare & Medicaid Services (CMS) hosted a public meeting to solicit input regarding the payment relationship between 2005 codes and new 2006 CPT/HCPCS codes. The meeting announcement was published in the Federal Register on May 27, 2005, and on the CMS Web site on June 20, 2005.

Recommendations were received from many attendees, including individuals representing laboratories, manufacturers, and medical societies. CMS posted a summary of the meeting and the tentative payment determinations at http://www.cms.hhs.gov/suppliers/clinlab on the CMS Web site. Additional written comments from the public were accepted until September 23, 2005.

Comments after the release of the 2006 laboratory fee schedule can be submitted to the address listed below so that CMS may consider them for the development of the 2007 laboratory fee schedule. Comments should be in written format and include clinical, coding, and costing information. To make it possible for CMS and its contractors to meet a January 3, 2007 implementation date, comments must be submitted before August 1, 2006 to:

Centers for Medicare & Medicaid Services (CMS)
Center for Medicare Management
Division of Ambulatory Services
Mail stop: C4-07-07
7500 Security Boulevard
Baltimore , Maryland 21244-1850

Additional Pricing Information
The 2006 laboratory fee schedule includes separately payable fees for certain specimen collection methods (codes 36415, P9612, and P9615).

For dates of service on or after September 1, 2005, the fee for clinical laboratory travel code P9603 is $0.935 per mile and for code P9604 is $9.35 per flat rate trip basis. The clinical laboratory travel codes are billable only for traveling to perform a specimen collection for either a nursing home or homebound patient.

The standard mileage rate for transportation costs was increased by the federal government’s Treasury Department to 48.5 cents a mile effective September 1, 2005, and this increase is incorporated into the fees for travel codes P9603 and P9604. If the federal government revises the standard mileage rate for calendar year 2006 or a portion of 2006, CMS will issue a separate notice regarding the change.

The 2006 laboratory fee schedule also includes codes that have a “QW” modifier to both identify codes and determine payment for tests performed by a laboratory registered with only a certificate of waiver under the Clinical Laboratory Improvement Amendments of 1988 (CLIA).

Organ or Disease Oriented Panel Codes
Similar to prior years, the 2006 pricing amounts for certain organ or disease panel codes and evocative/ suppression test codes were determined by Medicare by summing the lower of the fee schedule amount or the NLA for each individual test code included in the panel code.

Mapping Information for New and Revised Codes
This information is shown in the following table:

Laboratory Costs Subject to Reasonable Charge Payment in 2006
For outpatients, the following codes are paid under a reasonable charge basis. In accordance with §42 CFR 405.502 – 405.508, the reasonable charge may not exceed the lowest of the actual charge or the customary or prevailing charge for the previous 12-month period ending June 30, updated by the inflation-indexed update.

The inflation-indexed update for year 2006 is 2.5 percent.
Manual instructions for determining the reasonable charge payment can be found in the Medicare Claims Processing Manual, Pub. 100-04, Chapter 23, Section 80- 80.8. (The Web address for this manual is provided in the Additional Information section below.)

If there is insufficient charge data for a code, the instructions permit considering charges for other similar services and price lists.

When these services are performed for independent dialysis facility patients, Medicare Claims Processing Manual, Pub. 100-04, Chapter 8, Section 60.3 instructs that payment is made on a reasonable charge basis. However, when these services are performed for hospital-based renal dialysis facility patients, payment is made on a reasonable cost basis.

Also, when these services are performed for hospital outpatients, payment is made under the hospital outpatient prospective payment system (OPPS).

Transmittal 496, Billing for Blood and Blood Products (Change Request (CR) 3681), issued March 4, 2005, provided instructions and established a new HCPCS modifier BL (Special Acquisition of Blood and Blood Products) to better specify the blood product charge in the hospital outpatient setting.

Because blood product services can also be performed in physician offices, independent laboratories, renal dialysis facilities, and other outpatient settings, contractors and shared system maintainers must update their files to accept the modifier BL as a valid modifier for Medicare Part B claims. Providers should submit a separate blood product charge for application of the blood deductible (BL modifier) from a blood product charge to which the blood deductible should not apply.

Transmittal 496 and the Medicare Claims Processing Manual, Pub. 100-04, Chapter 17, Section 231, provide further instructions on billing for blood products using the BL modifier. (See the Additional Information section below for CMS Web site access to Medlearn Matters article MM 3681, which discusses CR 3681.)

Those codes paid on a reasonable charge basis (as qualified by the above text) are:

Blood Products

Also, the following codes should be applied to the blood deductible, as instructed in the Medicare General Information, Eligibility and Entitlement Manual, Pub. 100-01, Chapter 3, Section 20.5-20.54:

Transfusion Medicine

Reproductive Medicine Procedures

Implementation
The implementation date for the instruction is January 3, 2006.

Additional Information
Instructions for calculating reasonable charges are located in the Medicare Claims Processing Manual (Pub. 100-04) Chapter 23, Sections 80-80.8 at http://www.cms.hhs.gov/Manuals/IOM/list.asp#TopOfPage on the CMS Web site.

Information on the blood deductible is available in the Medicare General Information, Eligibility, and Entitlement Manual, Pub. 100-01, Chapter 3, Section 20.5-20.54. That manual is available at http://www.cms.hhs.gov/manuals/101_general/ge101index.asp on the CMS Web site.

The official instructions issued to the carrier/intermediary regarding this change can be found at: http://www.cms.hhs.gov/Transmittals/ on the CMS Web site. On the above page, scroll down while referring to the CR NUM column on the right to find the links for CR 4144. Click on the links to open and view the files for those CRs.

To review a Medlearn Matters article about CR 3681, go to http://www.cms.hhs.gov/MedlearnMattersArticles/downloads/MM3681.pdf on the CMS Web site.

If you have questions, please contact your carrier/intermediary at their toll-free number, which may be found at http://www.cms.hhs.gov/MedlearnProducts/downloads/CallCenterTollNumDirectory.pdf on the CMS Web site.

Disclaimer
This article was prepared as a service to the public and is not intended to grant rights or impose obligations. This article 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/MedlearnMattersArticles/.

Pub. 100-4, Transmittal# 750, CR# 4144
Medlearn Matters Number: MM4144
Related CR Release Date: November 10, 2005
Effective Date: January 1, 2006
Implementation Date: January 3, 2006

Posted: 11/29/2005

CPT codes, descriptions, and other data only are copyright 2005 American Medical Association (or such other date of publication of CPT). All Rights Reserved. Applicable FARS/DFARS Apply.