Payment Policy Change

Effective with services received on or after April 1, 2004, Medicare will implement a new payment policy for referred lab services by an independent lab “Specialty 69–Independent Laboratory”. These changes will result in the following operational differences:

• An independent clinical laboratory may bill only the carrier in which it is enrolled by reason of having a physical presence
• An independent clinical laboratory may not enroll with a carrier as a “reference-use-only” laboratory
• The referring laboratory must identify a referred service as such on the claim and identify the reference laboratory performing such test *, and both the referring laboratory and the reference laboratory must be enrolled in Medicare.

* Identification of referred services is done by use the CPT modifier 90 for each service. Identification of the reference laboratory is done by completing Item 32 of the 1500 claim form, or the equivalent electronic claims fields. See the referenced CMS transmittal for complete information.

Carriers will process all claims submitted by laboratories physically located in their area of jurisdiction, and will cancel all “reference use only” PINs. Medicare will base the payment amount of a referred service on:

• The fee schedule of the jurisdiction in which the test was performed, or
• If such fee schedule does not have a price for the referred service, the carrier must base the payment amount on its own fee schedule amount, or
• If none, on a price it develops.