OPPS 2018 Revisions:  Outpatient 14-Day Rule Changes to Lab DOS Policy

December 14, 2017 By: Quadax

The new CMS OPPS rule changes could impact your lab's revenue cycle process. 

Centers for Medicare and Medicaid Services (CMS) published its final rule with comment period revising the Medicare Hospital Outpatient Prospective Payment System (OPPS) for 2018. Labs that provide services to hospital outpatients may want to review the new OPPS rule changes, particularly the revisions to the laboratory date of service (DOS) policy (see CMS excerpt highlighted below).

The new carve out exceptions to the 14-day rule will allow labs to bill Medicare directly under the Clinical Laboratory Fee Schedule (CLFS) for molecular pathology tests and advanced diagnostic laboratory tests (ADLTs) that are excluded from OPPS packaging rules and ordered less than 14 days after a patient’s outpatient hospital discharge. In these instances, the DOS for the excepted tests would be the date of testing rather than the date of specimen collection. The OPPS 2018 definition of a qualifying ADLT only refers to criterion A, and does not qualify a test as an ADLT using criteria B or C. The new rule goes into effect with January 1, 2018 date of service. This new rule does not change the inpatient 14-day rule.

How the new rule will impact your revenue cycle depends on the type of testing your lab performs for Medicare hospital outpatients. The biggest change is the opportunity for labs who perform testing excluded from the OPPS packaging policy to bill Medicare directly, using the date of testing as the date of service on the claim.

How will this impact your lab’s reimbursement? Hospitals who have been administratively and financially burdened by the outpatient 14-day rule, may be incented to withdraw from institutional billing arrangements in favor of the lab billing Medicare directly. Consider the following.

  • If your lab test is covered by Medicare, is the allowed amount listed on the Medicare CLFS more or less than your current institutional billing fee schedule? How will your lab address and process Medicare pre-claim requirements such as medical necessity or local coverage determinations? Does your claims clearinghouse check for Medically Unlikely Edits (MUEs)? When exposed to MUEs, will your claims submission process perform the necessary edits to ensure your Medicare claims make it to adjudication?
  • If your test is not covered by Medicare, or Medicare’s reimbursement is not at an acceptable level, you may want to attempt to retain the current institutional billing arrangement—such an arrangement is not precluded by the new rule. Ensure your billing system can report the appropriate DOS on the institutional invoice for the ADLTs and molecular pathology tests excluded from OPPS packaging policy. As hospitals have historically absorbed the cost of these tests performed for Medicare hospital outpatients, they may be unwilling to retain institutional arrangements except for those qualifying tests that are in high-demand.

How will the outpatient 14-day rule change affect test ordering behavior? Hospitals waiting to place test orders on day fourteen, can now order tests earlier. Will earlier ordering improve test result quality and delivery? Working with viable specimens, producing better results, and providing faster turnaround times?

The OPPS 2018 laboratory DOS policy exceptions open up a whole new world of reimbursement for labs who perform testing excluded from the OPPS packaging policy. As you consider how these changes will impact your lab’s revenue cycle process and reimbursement results, learn how Quadax can help. Experienced in laboratory revenue cycle optimization, we help labs of all types maximize their revenue.

Revisions to the Laboratory Date of Service Policy 

For a clinical diagnostic laboratory test, the date of service (DOS) is typically the date the specimen was collected, unless certain conditions are met. CMS considered potential modifications to the DOS policy that would allow laboratories to bill Medicare directly for molecular pathology tests and certain ADLTs which are excluded from the OPPS packaging policy and ordered less than 14 days following the date of the patient’s discharge from the hospital.

After considering the public comments received, we [CMS] added an additional exception to the current laboratory DOS regulations, effective January 1, 2018. This new exception to the laboratory DOS policy generally permits laboratories to bill Medicare directly for ADLTs and molecular pathology tests excluded from OPPS packaging policy if the specimen was collected from a hospital outpatient during a hospital outpatient encounter and the test was performed following the patient’s discharge from the hospital outpatient department.

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