Since its inception on January 1, 2009, the anti-markup rule has caused confusion within physician practices regarding its applicability.  As a result, the Centers for Medicare and Medicaid Services (CMS) recently released further instructions to its contractors, effective March 15, 2010, for handling tests subject to the anti-markup rule.¹

The anti-markup rule was first instituted by CMS for the purpose of reducing overall healthcare expenditures by placing limits on how much physicians can be reimbursed for diagnostic tests they perform.² As an example, if a billing physician refers a Medicare patient to an outside physician for diagnostic tests, Medicare’s payment to either party may not exceed the lowest of the following amounts:  (1) the performing supplier’s net charge to the billing physician; (2) the billing physician’s actual charge; or, (3) the Medicare fee schedule amount for the test that would be allowed if the performing supplier billed Medicare directly.³

Diagnostic tests are made up of both a technical component (TC)—the supplies, equipment, and technicians—and a professional component (PC)—the physician’s interpretation of the TC’s results.  The goal of the anti-markup rule is to prevent physicians from profiting from either of these components by first billing Medicare and then purchasing the tests from other physicians at a lower rate.⁴

The recent update issued by CMS indicates that when billing for either the TC or PC of a diagnostic test that another physician performs, the billing physician must indicate the name, address, and National Provider Identifier (NPI) of the performing physician.⁵  Additionally, if the performing physician is enrolled with a different Medicare Administrative Contractor, both the billing physician and the performing physician must submit their own separate NPIs.⁶ Also, if the billing physician performs only the TC or the PC and wants to bill for both, the TC and PC must be reported as separate line items.⁷

The effects of the anti-markup rule have not yet been evaluated due to its relatively recent implementation, but with these clarifications, CMS hopes to observe an increased level of physician compliance with anti-markup rule and, subsequently, a reduction in healthcare expenditures related to discrepancies in physician billing practices.