(Medicare Claims Processing Manual)

For Clinical Diagnostic Laboratory services denied due to frequency edits, the contractor shall use the following remittance advice messages and associated codes when rejecting/denying claims under this policy.   This CARC/RARC combination is compliant with CAQH CORE Business Scenario Three.   Group Code: CO or PR  CARC: 151  RARC: N/A  MSN: N/A  20 - Calculation of Payment Rates - Clinical Laboratory Test Fee Schedules  (Rev. 4479; Issued: 12- 20-19 Effective: 01 -23-20, Implementation: 01- 23-20)  Section 216 of Public Law 113- 93, the Protecting Access to Medicare Act of 2014, added section 1834A to the Social Security Act (the Act). This provision requires extensive revisions to the payment and coverage methodologies for clinical laboratory tests  paid under the clinical laboratory fee schedule (CLFS). The Centers for Medicare & Medicaid Services (CMS) published CMS -1621- F Medicare Clinical Diagnostic Laboratory Tests Payment System, on June 23, 2016, which implemented the provisions of the new legislation.   The final rule set forth new policies for how CMS sets rates for tests on the CLFS and is effective for dates of service on and after January 1, 2018. Beginning on January 1, 2017, applicable laboratories will be required to submit data to CMS which describes negotiated payment rates with private payers for and corresponding volumes of tests on the CLFS. In general, with certain designated exceptions, the payment amount for a t est on the CLFS furnished on or after January 1, 2018, will be equal to the weighted median of private payer rates determined for the test, based on data collected from laboratories during a specified data collection period. In addition, a subset of tests on the CLFS, advanced diagnostic laboratory tests (ADLTs), will have different data, reporting, and payment policies associated with them. In particular, the final rule discusses CMS proposals regarding:    Definition of applicable laboratory (who must report data under section 1834A of the  Act)   Definition of applicable information (what data will be  reported)    Data collection  period   Schedule for reporting data to CMS    Definition of  ADLT   Data Integrity    Confidentiality and public release of limited  data   Coding for new tests on the  CLFS    Phased in payment reduction  Prior to January 1, 2018  Under Part B, for services rendered on or after July 1, 1984, clinical laboratory tests performed in a physicians office, by an independent laboratory, or by a hospital laboratory for its outpatients are reimbursed on the basis of fee schedules. Current exceptions to this rule are CAH laboratory services as described in 10, and services provided by hospitals in the State of Maryland.  Medicare pays the lesser of:     Actual charges;    The fee schedule amount for the State or a local geographic area; or    A national limitation amount (NLA) for the HCPCS code as provided by 1834(h) of the Act.   Annually, CMS furnishes to A/B MACs (A) and (B) the proper amount to pay for each HCPCS code for each local geographic area.  This includes a calculation of whether a national limitation amount or the local fee schedule amount is to be used. This information is available to the public on the CMS Web site in public use files.  20.1 - Initial Development of Laboratory Fee Schedules  (Rev. 4479; Issued: 12- 20-19 Effective: 01 -23-20, Implementation: 01- 23-20)   Initially, each A/B MAC (B) established the fee schedules on an A/B MAC (B) -wide basis (not to exceed a statewide basis). If an A/B MAC (B)s area includes more than one State, the A/B MAC (B) established a separate fee schedule for each State. The A/B MAC (B) determined the fee schedule amount based on  prevailing charges for laboratory billings by physicians and independent laboratories billing the A/B MAC (B). A/B MACs (B) set the fees at 60 percent of prevailing charges. A/B MACs (A) used the same fee schedules to pay outpatient hospital laboratory se rvices. They set the fee at 62 percent of A/B MAC (B) prevailing charges. Subsequently, except for sole community hospitals, which continue to be paid at the 62 percent rate, A/B MACs (A) changed payments to hospital laboratories to the 60 percent fee sch edule.    In 1994, CMS took over the annual update and distribution of clinical laboratory fee schedules. The CMS updates the fee schedule amounts annually to reflect changes in the Consumer Price Index (CPI) for all Urban Consumers (U.S. city average), or as otherw ise specified by legislation.   Effective for hospital outpatient tests furnished by a hospital on or after April 1, 1988, to receive the 62 percent fee the hospital must be a sole community hospital. Otherwise, the fee is the 60 percent fee schedule. If a hospital is uncertain whether  it meets the qualifications of a sole community hospital it can seek assistance from the A/B MAC (A) or the RO.   For tests to hospital non- patients, the fee is 60 percent of the A/B MAC (B) prevailing charge. If a hospital laboratory acts as an independent laboratory, i.e., performs tests for persons who are nonhospital patients; or if the hospital laboratory is not a qualified hospital laboratory, the services are reimbursed using the 60 percent fee schedule or the adjusted fee schedule, as appropriate.  See 10.1 for the definition of a hospital outpatient.  See 20.3 for CLFS effective January 1, 2018.   20.2 - Annual Fee Schedule Updates  (Rev. 4479; Issued: 12- 20-19 Effective: 01 -23-20, Implementation: 01- 23-20)   The CMS adjusts the fee schedule amounts annually to reflect changes in the Consumer Price Index for all urban consumers (CPI -U) (U.S. city average) and the 10- year moving average of changes in annual economy-wide private nonfarm business multi -factor prod uctivity, unless alternative updates are specified by legislation. The CMS communicates this information via an annual recurring update notification (RUN). The CMS also determines, publishes for A/B MAC (A) or (B) use, and places on its web site, coding and pricing changes. This information is updated on an annual basis. See 20.3 for CLFS effective January 1, 2018.   20.3  Clinical Laboratory Fee Schedule Based on Protecting Access to Medicare Act (PAMA) of 2014  (Rev. 4479; Issued: 12- 20-19 Effective: 01 -23-20, Implementation: 01-23-20)   Effective January 1, 2018, CLFS rates were based on weighted median private payer rates as required by the Protecting Access to Medicare Act (PAMA) of 2014.   Fee Schedule Through December 31, 2017                                                                                                                                                                                                                                                                                                                 Outpatient clinical laboratory services are paid based on a fee schedule in accordance with Section 1833 (h) of the Social Security Act.  Payment is lesser of the amount billed, the local fee for a geographic area, or a national limit. In accordance with the statute, the national limits are set at a percent of the median of all local fee schedule amounts for each laboratory test code. Each year, fees are updated for inflation based on the percentage change in the Consumer Price Index. However, legislation by Congress can modify the update to the fees. Co -payments and deductibles do not apply to services paid under the Medicare clinical laboratory fee schedule.     Each year, new laboratory test codes are added to the clinical laboratory fee schedule and corresponding fees are developed in response to a public comment process. Also, for a cervical or vaginal smear test (pap smear), the fee cannot be less than a natio nal minimum payment amount, initially established at $14.60 and updated each year for inflation.   Sole Community Hospitals                                                                                                                            Effective for hospital outpatient tests furnished by a hospital on or after April 1, 1988 through December 31, 2017, to receive the 62 percent fee the hospital must be a sole community hospital. Effective for hospital outpatient tests furnished by a Sole community possessive hospitals payment is based on a fee schedule in accordance with Section 1833(h) of the Social Security Act. Payment is the lesser of the amount billed, the local fee for a geographic area, or a national limit.   Critical Access Hospitals                                                                                                                                                                                                                                              Critical access hospitals are generally paid for outpatient laboratory tests on a reasonable cost basis, instead of by the fee schedule, as long as the lab service is  provided to a CAH outpatient .  30 - Special Payment Considerations  (Rev. 1, 10-01-03)  30.1 - Mandatory Assignment for Laboratory Tests  (Rev. 1, 10-01-03) B3-5114.1  Unless a laboratory, physician, or medical group accepts assignment, the A/B MAC (B) makes no Part B payment for laboratory tests paid on the laboratory fee schedule.  Laboratories, physicians, or medical groups that have entered into a participation agreement must accept assignment.  Sanctions of double the violation charges, civil money penalties (up to $2,000 per violation), and/or exclusion from the program for a period of up to five years may be imposed on physicians and laboratories, with the exception of rural health clinic laboratories, that knowingly, willfully, and repeatedly bill patients on an unassigned basis.  However, sole community physicians and physicians who are the sole source of an essential specialty in a community are not excluded from the program.  Whenever a A/B MAC (B) is notified of a sanction action for this reason, the A/B MAC (B) does not pay for any laboratory services unless the services were furnished within 15 days after the date on  the exclusion or suspension notice to the practitioner, and:   It is the first claim filed for services rendered to that beneficiary after the date on the notice of suspension or exclusion; or   It is filed with respect to services furnished within 15 days of the date on the first notice of denial of claims to the beneficiary.  (Fifteen days are allowed for the notice to reach the beneficiary.)   A/B MACs (B) refer questions on payment procedures to the Sanctions Coordinator in the RO.   A/B MACs (B) process laboratory claims inadvertently submitted as unassigned as if they were assigned.  (See 50.)  For purposes of this section, the term assignment includes assignment in the strict sense of the term as well as the procedure under which payment is made, after the death of the beneficiary, to the person or entity that furnished the service, on the basis of that persons or entitys agreement to accept the Medicare payment as the full charge or fee for the service.   30.1.1 - Rural Health Clinics  (Rev. 1, 10-01-03) PM A -99-8, Rev. 810, CR 1133, PM A-00-30  Rural Health Clinics (RHCs) must furnish the following laboratory services to be approved as an RHC.  However, these and other laboratory services that may be furnished are not included in the encounter rate and must be billed separately:   Chemical examinations of urine by stick or tablet method or both;  Hemoglobin or hematocrit;  Blood sugar;  Examination of stool specimens for occult blood;  Pregnancy tests; and   Primary culturing for transmittal to a certified laboratory (No CPT code available).   Effective January 1, 2001, freestanding RHCs/Federally Qualified Health Centers (FQHCs) bill all laboratory services to the A/B MAC (B), and provider based RHCs/FQHCS bill all laboratory tests to the A/B MAC (A) under the host providers bill type.  In eit her case payment is made under the fee schedule.  HCPCS codes are required for laboratory services.  (See 40.4 for details on RHC billing.)  30.2 - Deductible and Coinsurance Application for Laboratory Tests  (Rev. 2581, Issued: 11- 02-12, Effective: 04-01-13, Implementation: 04-01-13)   Neither the annual cash deductible nor the 20 percent coinsurance apply to:    Clinical laboratory tests performed by a physician, laboratory, or other entity paid on an assigned basis;    Specimen collection fees; or    Travel allowance related to laboratory tests (e.g., collecting specimen).   Codes on the physician fee schedule are generally subject to the Part B deductible and coinsurance, although exceptions may be noted for a given code in the MPFS or through formal Medicare instructions such as temporary instructions and requirements for specific services noted in this manual.   Any laboratory code paid at reasonable charge is subject to the Part B deductible and coinsurance, unless otherwise specified in the description of coverage and payment rules.   30.3 - Method of Payment for Clinical Laboratory Tests - Place of Service Variation  (Rev. 3685, Issued: 12- 22-16, Effective: 01 -01-17, Implementation: 01 -03-17)