(Medicare Claims Processing Manual)

The Medicare Claims Processing Manual, Chapter 16, Laboratory Services From Independent Labs, Physicians, and Providers, provides background and additional information for payment of laboratory services.   Clinical diagnostic laboratory tests -  whether performed in a physicians office, by an independent laboratory, or by a hospital laboratory for its outpatients -  are paid based on fee schedules.  This section sets out rules for use of these schedules.   The fee schedule amounts are adjusted annually to reflect changes in the Consumer Price Index (CPI) for all Urban Consumers (U.S. city average), or as otherwise specified by legislation.  Adjustments are applied and amounts are determined by CMS and publis hed for A/B MAC (A), (B), and (HHH) use and also on CMS Web site.  A/B MACs (A), (B), and (HHH) are notified when and where updates are published.   For a cervical or vaginal smear test (pap smear), payment is the lesser of the local fee or the national limitation amount, but not less than the national minimum payment amount.  However, in no case may payment for these tests exceed actual charges.  The Part B deductible and coinsurance do not apply.   Regardless of whether a diagnostic laboratory test is performed in a physicians office, by an independent laboratory, or by a hospital laboratory for its outpatients or nonpatients, it is considered a laboratory service.  When a hospital laboratory perfor ms diagnostic laboratory tests for nonhospital patients, the laboratory is functioning as an independent laboratory.   National minimum limitation amounts are established each year for cervical or vaginal smear clinical laboratory tests.  These payment amounts are published each year in a Recurring Update Notification issued by CMS.  The affected CPT laboratory test codes for the national minimum payment amount are also identified in the annual Recurring Update Notification.  National maximum limitation amounts may also be established for certain services and are also published each year this Recurring Update Notification.  A/B MACs (A), (B), and (HHH) pay the lowest of the applicable current fee schedule, the actual charge, or the NLA.  This applies to all clinical diagnostic laboratory tests except:    Laboratory tests furnished to a hospital inpatient whose stay is covered under Part A;   Laboratory tests performed by a Skilled Nursing Facility (SNF) for its own SNF inpatients and reimbursed under Part A or Part B and any laboratory tests furnished under arrangements to an SNF inpatient with Part A coverage.  (The only covered source for laboratory services furnished under Part A is the SNF itself or a hospital with w hich the facility has a transfer agreement in effect.)    Laboratory tests furnished by hospital -based or independent ESRD dialysis facilities that are included under the ESRD composite rate payment;    Laboratory tests furnished by hospitals in States or areas which have been granted demonstration waivers of Medicare reimbursement principles for outpatient services.  The State of Maryland has been granted such demonstration waivers;    Laboratory tests furnished to inpatients of a hospital with a waiver under 602(k) of the 1983 Amendments to the Act.  This section of the Act provides that an outside supplier may bill under Part B for laboratory and other nonphysician services furnished to inpatients that are otherwise paid only though the hospital;    Laboratory tests furnished to patients of rural health clinics (RHCs) under an all inclusive rate;    Laboratory tests provided by a participating health maintenance organization (HMO) or health care prepayment plan (HCPP) to an enrolled member of the plan; and   Laboratory tests furnished by a hospice.   40.1 - Access to Clinical Diagnostic Lab Fee Schedule Files  (Rev. 2643, Issued: 01- 31-13, Effective: 07 -01-13, Implementation: 07- 01-13)  The annual laboratory fee schedule data file should be retrieved electronically through CMS mainframe telecommunications system.   For each test code, if the MACs system retains only the pricing amount, they should load the data from the field named 60% Pricing Amt.  For each test code, if the MACs system has been developed to retain the local fee and the NLA, they may load the da ta from the fields named 60% Local Fee Amt and 60% Natl Limit Amt to use to determine payment.  For clinical laboratory test codes for cervical or vaginal smear tests (listed in Chapter 16, Laboratory Services from Independent Labs, Physicians, and Providers, 80.3) load the data from the field named 60% Pricing Amt to reflect the lower of the local fee or the NLA, but not less than the national minimum payment amount.  The fields named 62% Local Fee Amt, 62% Natl Limit Amt, and 62% Pricing Amt  should be used by A/B MACs (A) for payment of clinical laboratory tests performed by a sole community hospitals qualified laboratory.   The annual laboratory fee schedule data is available via the CMS website.  It is available in multiple formats: Excel, text, and comma delimited.   40.2 - A/B MAC (B) Record Layout for Clinical Laboratory Fee Schedule  (Rev. 1, 10- 01-03) PM AB -01-162, AB -02-163  The instructions for each annual update contain the actual data set name for that year.  The Data Set Name is included with each annual update instructions.  Data Element Name  Picture  Location  Comment  HCPCS Code  X(05)  1-5  A/B MAC (B) Number  X(05)  6-10  Locality  X(02)  11-12 00 = Denotes Single A/B MAC (B) State  01 = North Dakota  02 = South Dakota  20 = Puerto Rico 40 = New Hampshire  50 = Vermont  60% Local Fee  9(05)V99  13 - 19  62% Local Fee  9(05)V99  20 - 26  60% Natl Limit Amt 9(05)V99  27 - 33  62% Natl Limit Amt 9(05)V99  34 - 40  60% Pricing Amt  9(05)V99  41 - 47  62% Pricing Amt  9(05)V99  48 - 54  Gap -  Fill Indicator  X(01)  55 - 55 0 = No Gap -fill Required  1 = A/B MAC (B) Gap -fill 2 = Special Instructions Apply Modifier  X(02)  56 - 57 Where modifier is shown, QW denotes a CLIA waive test.  Data Element Name  Picture  Location  Comment  Filler  X(03)  58 - 60   40.3 - Institutional Claim Record Layout for Clinical Laboratory Fee Schedule  (Rev. 2643, Issued: 01- 31-13, Effective: 07 -01-13, Implementation: 07- 01-13)  The CMS will provide the specific file names when the prices are released.  The file name will contain the label CLAB.   Record Length =  60 Record Format =  FB Block Size =  6000 Character Code =  EBCDIC  Sort Sequence =  A/B MAC (B), Locality, HCPCS Code  Header Record  Data Element Name  Picture  Location  Comment  1-Label  X(03)  1 - 3 Value = Lab  2-Filler  X(07)  4 - 10  3-Filler  X(08)  11 - 15  4-Filler  X(04)  16 - 22  5-Date Fee Update  X(08)  23 - 30 YYYYMMDD  6-Filler  X(22)  31 - 52  7-Date File Created  X(08)  53 - 60 YYYYMMDD  Data Record  Data Element Name  Picture  Location  Comment  1-HCPCS  X(05)  1 - 5  2-Filler  X(04)  6 - 9  3-60% Fee  9(05)V99  10 - 16  Data Element Name  Picture  Location  Comment  4-62% Fee  9(05)V99  17 - 23  5-Filler  X(07)  24 - 30  6- A/B MAC (B) Number  X(05)  31 - 35  7- A/B MAC (B) Locality  X(02)  36 - 37 00 = Single State A/B MAC (B)  01 = North Dakota  02 = South Dakota  20 = Puerto Rico  8-State Locality  X(02)  38 - 39 Separate instructions will be used for the use of this field at a later date.   9-Filler  X(02)  40 - 41  10-Effective Date  X(08)  42 - 49 Update effective date (YYYYMMDD)  11-Filler  X(11)  50 - 60   40.4 - Gap-Filled Fees Submitted to CMS by A/B MACs (B)  (Rev. 1, 10- 01-03) AB-01-162, AB -02-163   In accordance with 531(b) of the Benefits Improvement and Protection Act of 2000 (BIPA), CMS solicits public comments on determining payment amounts for new laboratory tests.  The CMS hosts an annual public meeting to allow parties the opportunity to provide input to the payment determination process.  The CMS employs one of two approaches to establishing payment amounts for new laboratory test codes, crosswalking and gap- filling.  After considering public input regarding the new test codes, CMS determines  which approach is most appropriate for each new test code.   If the new test is comparable to an existing test, the new test is crosswalked to the existing test, and it is assigned the local fee for the existing test and the corresponding NLA.  The new test code and payment amounts are included in the updated laboratory fee schedule annually.  If CMS determines that the laboratory fee schedule includes no sufficiently comparable test to permit crosswalking, CMS instructs A/B MACs (B)  to gap -fill the payment amount for the new test code.  Gap -filling is an empirical process of determining a payment amount in a locality using available information sources.  Usually the period during which gap-filled payment amounts are instructed is the year following the introduction of a new code.  During this period, A/B MACs (B)  establish and use these payment amounts; they may be revised in the course of the year.  Also during this period, A/B MACs (B)  must report the gap-fill amounts to their ROs which are then forwarded to CMS C O.  The CMS considers the gap -fill amounts and uses them to establish the fees for the new test code in the next update of the laboratory fee schedule.   In determining gap- fill amounts, the sources of information A/B MACs (B)  should examine, if available, include: charges for the test and routine discounts to charges; resources required to perform the test; payment amounts determined by other payers; and charges, payment amounts, and resources required for other tests that may be comparable or otherwise relevant.  A/B MACs (B)  may consider other sources of information as appropriate, including clinical studies and information provided by clinicians practicing in the area, manufacturers, or other interested parties.  To assist each A/B MAC (B)  in establishing a gap- fill amount, A/B MACs (B)  Medical Directors may meet and share information regarding the new test, though without reaching a formal consensus.  Establishing payment amounts for new laboratory tests is inherently difficult, precisely because these tests are new and as a result the types and extent of information available about them may be limited.  Because the circumstances of different tests may vary significantly, specifying in detail a method of using the various information sources outlined above does not appear appropriate at this time.  However, CMS designates a new test code for gap -filling in instances where no test code seems sufficiently similar to make a crosswalk approach appropriate.  Accordingly, A/B MACs (B)  should not determine a gap-fill amount by crosswalking to the payment amount for another test code.   After determining a gap -fill amount, an A/B MAC (B)  may consider if a least costly alternative to a new test exists.  If an A/B MAC (B)  determines a least costly alternative test exists, the A/B MAC (B)  may adopt the payment amount of the least costly alternative test as the gap -fill amount for the new test code.  The least costly alternative amount will be considered the local fee, and CMS will use this payment amount in establishing the NLA.  However i n this case, the A/B MAC (B)  must report two payment a mounts, the gap- fill amount prior to determination of a least costly alternative and the payment amount that the A/B MAC (B)  has determined to be the least costly alternative.