FAQs: Anti-Markup Provision of 2009 Medicare Physician Fee Schedule Final Rule

1. What is the anti-markup rule?

The anti-markup rule prohibits a physician or supplier who orders and bills for diagnostic tests from marking up its charge to Medicare for those tests if they were performed or supervised by a physician who does not share a practice with the ordering/billing physician. Instead, Medicare can only be billed the physician or supplier’s “net charge.” The definition of “shares a practice” is thus critical to application of this policy. In the final rule, CMS adopts two tests for determining whether a physician “shares a practice” with the ordering/billing physician or supplier. The first is the 75% test (Q 4); the second is the “same building” test (Q 5). You only need to meet one to be exempt from application of the anti-markup rule.

2. When does the anti-markup rule take effect?

January 1, 2009

3. Will there be another delay like there was last year?

This is unlikely. The medical community does not appear to be organizing around this issue. This is probably because CMS made such significant modifications that most physician organizations are deciding they can probably live with it.

4. How does the anti-markup rule affect physiatrists who provide EMGs as part of their own practice?

It will not affect you if you provide 75% of your professional services through the practice that is billing for the EMGs. If you do not meet this test, then see response to question 4.

5. How does it affect a physiatrist who provides EMGs part-time to other physician practices and does not meet the 75% test?

It depends on who orders the EMGs. If they are ordered by a physician in the billing practice where you furnish the part-time services, then you must provide the service (the technical and professional component) in the same building where the ordering physician “provides substantially the full range of patient care services that he/she provides generally.” So it is really a question of whether the ordering physician meets the criteria. You will want to confirm with the billing practice that the anti-markup rule does not apply.

If you are the ordering physician then the question is whether you provide “substantially the full range of patient care services” at that location. If you are only providing EMGs, for example, you would probably not meet this test and the anti-markup rule would apply. If you provide most of the other services you usually provide such as consults, procedures, and the like, then you may meet this criterion.

6. How does the anti-markup rule apply to diagnostic services provided at freestanding or independent testing facilities such as IDTFs?

The anti-markup rule would probably not apply to services you furnish at an IDTF. The anti-markup rule only applies where the billing and the ordering entity are the same or have common ownership. An IDTF does not usually order the tests it bills for. Usually they are ordered by an independent physician. However, issues could arise if the IDTF is owned by a physician practice that refers to it.

7. Does the anti-markup rule apply to procedures such as nerve blocks or other injections?

No. The anti-markup rule only applies to diagnostic services. It does not apply to therapeutic procedures such as nerve blocks.

8. What if I fail both tests? Is there a way to restructure an arrangement to come into compliance?

One way to restructure is for the physician who is performing the diagnostic tests (e.g. EMGs) to bill for the service him or herself, rather than reassign to the ordering physician or group. However, this would also require that physician to pay the group fair market value for overhead it incurs (e.g. use of space, equipment, staff).

9. What is the penalty for not complying with the anti-markup rule?

If the anti-markup rule applies and a physician or supplier bills more than its “net charge” to Medicare, the billing physician or supplier can be sanctioned under the civil monetary penalties law and can be excluded from the Medicare program. It is also possible that the claim could be considered a “false claim” which could result in liability under the civil False Claims Act or even criminal liability under the Criminal False Claims Act.

|back to top|