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The rules say that plans must pay for a medical service or item if regular Medicare would pay for it in this case. 
You can find this rule at 42 Code of Federal Regulations (CFR) Section 422.101. 
 
The rules say that payment for Professional Component (PC) Services Payment may be made under the 
physician fee schedule for the professional component of physician laboratory or physician pathology services 
furnished to hospital inpatients or outpatients by hospital physicians or by independent laboratories, if they 
qualify as the re-assignee for the physician service. B. Payment for Technical Component (TC) Services 1. 
General Rule Payment is not made under the physician fee schedule for TC services furnished in institutional 
settings where the TC service is bundled into the facility payment, e.g., hospital inpatient and outpatient 
settings. Payment is made under the physician fee schedule for TC services furnished in institutional settings 
where the TC service is not bundled into the facility payment, e.g., an ambulatory surgery center (ASC). 
Payment may be made under the physician fee schedule for the TC of physician pathology services furnished 
by an independent laboratory, or a hospital if it is acting as an independent laboratory, to non-hospital patients. 
The physician fee schedule identifies physician laboratory or physician pathology services that have a TC 
service. You can find this information in the Medicare Claims Processing Manual Chapter 12 - 
Physicians/Nonphysician Practitioners, 60  Payment for Pathology Services. 
 
The rules say that effective on or after July 1, 2012, only the hospital may bill for the TC of a physician 
pathology service provided to an inpatient or outpatient. Neither example 1 nor example 2 above will apply for 
claims with dates of service on or after July 1, 2012. You can find this information in the Medicare Claims 
Processing Manual Chapter 16 - Laboratory Services, 80.2.1 - Technical Component (TC) of Physician 
Pathology Services to Hospital Patients. 
 
The rules say that many of the diagnostic services, including radiology services, provided by 
physicians/practitioners contain both a technical component (TC) and a professional component (PC). Often, 
the PC and TC of diagnostic services are furnished in different settings. As a general policy, the Place of 
Service (POS) code assigned by the physician/practitioner for the PC of a diagnostic service shall be the setting 
in which the beneficiary received the TC service. Interpretation Provided Under Arrangement - To A Hospital 
Separate TC and PC- If a diagnostic test which has a separate TC and PC is provided under arrangement to a 
hospital, the physician who reads the test can bill and be paid for the professional component. Both the technical and professional components of the test are also subject to the physician self-referral prohibition. 
The appropriate POS code for the interpretation (or PC) is the setting where the beneficiary received the TC 
service. If the interpretation is performed in the physicians office and the patient received the TC service in the 
provider-based outpatient hospital setting, the physician assigns POS code 22, for On Campus-Outpatient 
Hospital, or POS 19, for Off Campus-Outpatient Hospital, on the claim for the interpretation or PC. 
 
Determination of Payment Locality - Under the Medicare physician fee schedule (MPFS), payment amounts 
are based on the relative resources required to provide services and vary among payment localities as resource 
costs vary geographically as measured by the geographic practice cost indices (GPCIs). The payment locality is 
determined based on the location where a specific service code was furnished. For purposes of determining the 
appropriate payment locality, CMS requires that the address, including the ZIP code for each service code be 
included on the claim form in order to determine the appropriate payment locality. The location in which the 
service code was furnished is entered on the ASC X12 837 professional claim format or in Item 32 on the paper 
claim Form CMS 1500. Separate Billing of Professional Interpretation - If the same physician or other supplier 
entity does not furnish both the TC and PC of the diagnostic service, or if the same physician or other supplier 
entity furnishes both the TC and PC but the professional interpretation was furnished in a different payment 
locality from where the TC was furnished, the professional interpretation of a diagnostic test must be separately 
billed with modifier -26 by the interpreting physician. You can find this information in the Medicare Claims 
Processing Manual Chapter 13 - Radiology Services and Other Diagnostic Procedures, Section 150  Place of 
Service (POS) Instructions for the Professional Component (PC or Interpretation) and the Technical 
Component (TC) of Diagnostic Tests. 
 
The rules say that 1 = Diagnostic tests or radiology services: This indicator identifies codes that describe 
diagnostic tests, e.g., pulmonary function tests, or therapeutic radiology procedures, e.g., radiation therapy. 
These codes generally have both a professional and technical component. Modifiers 26 and TC can be used 
with these codes. The total RVUs for codes reported with a 26 modifier include values for physician work, 
practice expense, and malpractice expense. The total RVUs for codes reported with a TC modifier include 
values for practice expense and malpractice expense only. The total RVUs for codes reported without a 
modifier equals the sum of RVUs for both the professional and technical component. You can find this 
information in the Medicare Claims Processing Manual, Chapter 23  Fee Schedule Administration and Coding 
Requirements, Section 50.6  Physician Fee Schedule Payment Policy Indicator File Record Layout. 
 
The rules say that a portion of a hospitals main campus which provides diagnostic, therapeutic (both surgical 
and nonsurgical), and rehabilitation services to sick or injured persons who do not require hospitalization or 
institutionalization. You can find this information in the Medicare Claims Processing Manual Chapter 26 - 
Completing and Processing Form CMS-1500 Data Set, 10.5 - Place of Service Codes (POS) and Definitions: 
22- Outpatient. 
 
If you want to read these Medicare rules, you can go to this website www.medicareappeal.com.