Chapter 8 Clinical Laboratories Disclosures and Billing

DISCLOSURE REQUIREMENTS

Federal Law

BILLING REQUIREMENTS

Federal Law

SPECIFIC REQUIREMENTS RELATED TO CYTOLOGIC SERVICES

Billing Prohibitions
Ethical Opinions

LICENSURE AND REGISTRATION OF CLINICAL LABORATORIES

Registration Requirements
Certificates
Standards and Inspections
Sanctions
Fees
Waived Tests
Tests of Moderate and High Complexity
Provider (Physician)-Performed Microscopy Procedure

LABORATORY PERSONNEL

Laboratory Director
Persons Who May Perform Testing
SELF-REFERRAL AND FEE SPLITTING PROHIBITIONS

Self-Referral Prohibitions
Fee-Splitting Prohibitions

INTERACTION OF STARK AND CLIA

DISCLOSURE REQUIREMENTS
Federal Law
Federal law imposes three requirements of disclosure to the Department of Health and Human Services in conjunction with clinical laboratory service payable by the Medicare program:

1) Disclosure of Clinical Lab Ownership

Entities providing clinical laboratory services for which payment may be made by the Medicare program must provide the Secretary of the Department of Health and Human Services with information concerning the entitys ownership, investment interests, and compensation arrangement. Each entitys fiscal intermediary or carrier is given at least 30 days to provide the entity with a survey form. The required information includes:

1. a) The covered items and services provided by the entity;
2. b) The names and unique physician identification numbers of all physicians with an ownership or investment interest in the entity or whose immediate relatives have such an ownership or investment interest;

Information on the type and the financial relationships between the entity and physician or members of the physicians immediate family. 42 U.S.C. 1395nn(f); 42 C.F.R. 411.361.

Under this rule, these reporting requirements do not apply to entities who provide 20 or fewer Part A and Part B items and services during a calendar year.

The rules further require entities providing clinical laboratory services to report changes in their financial relationships within 60 days from the effective date of change and to retain documentation sufficient to verify information provided on the forms. Upon request by the Health Care Financing Administration (HCFA) or the Office of the Inspector General (OIG), these documents must be made available.

Failure to comply with the reporting requirements may result in:

1. a) Denial of Medicare payment;
2. b) Refund of up to twice the amount collected;
3. c) Exclusion from the Medicare and Medicaid programs; and
4. d) A civil monetary penalty of not more than $10,000 for each day for which reporting is required to have been made. 42 U.S.C. 1395 nn(g)(5).

2) Disclosure of Name and Investor Status of Referring Physician

There are certain disclosure requirements that must be met when an entity, such as a physician, makes a request for payment which can be paid by Medicare. When an entity knows or has reason to believe that there has been a referring physician, the entity must include the name and provider number for the referring physician and indicate whether or not the referring physician is an interested investor in the entity. 42 U.S.C. 1395l(q)(1).

3) Disclosure of Results to Patients

A licensed laboratory may release the results of tests performed at the laboratory regarding a patient of a hospital only to: (a) the patient; (b) the physician who ordered the tests; and (c) a provider of health care who is currently treating or providing assistance in the treatment of the patient. NRS 652.193. A report by the laboratory to the source requesting the report must include, without limitations, the following: a) name and address of the reporting agency; b) date and time the specimen was received by the laboratory; c) condition of a specimen if considered unsatisfactory on receipt; d) type of test or specific test performed; e) result of the test; f) date of the test and; g) if the specimen is sent to a reference laboratory for testing, the identify of the reference laboratory.

Additionally, a report on tissue must be written using acceptable and standardized terminology. Duplicate copies or a suitable record of all reports by a laboratory must be maintained by the laboratory in accordance with 42 C.F.R. Part 493 and in a manner which allows ready identification and accessibility. NAC 652.340.

BILLING REQUIREMENTS

Federal Law

Mandatory Medicare Assignment

With the exclusion of rural clinics, payment for clinical diagnostic laboratory tests for which Medicare payment may be made, must be billed on an assignment basis. 42 U.S.C. 1395l(h)(5)(c). This also applies to laboratories in physicians offices. Those who knowingly, willfully, and repeatedly bill Medicare enrollees directly for clinical diagnostic laboratory tests may be fined or excluded from the Medicare program by the Secretary of the Department of Health and Human Services.

Limitations on Who May Receive Payment

Payment for clinical laboratory services, for which Medicare payment may be made, may only be made to the person or entity that performed or supervised the performance of the test. The following exceptions apply to permit payment to:

• 1)         a physician who shares a practice with the physician who performed or supervised the test.
• 2) the referring laboratory for a test performed at another laboratory, but only where:
• 3)       the referring laboratory is located in or is a part of a rural hospital,
• 4)        the referring lab is a wholly-owned subsidiary of the entity performing the test, the referring lab wholly owns the entity performing the test, or both the referring lab and the entity performing the test are wholly owned by a third entity, or
• 5)        not more than 30% of the clinical diagnostic laboratory tests for which the referring laboratory submits bills or requests for payment in any year are performed by another laboratory.
• 6) the hospital for a test provided under an arrangement made by a hospital, and

7)         the beneficiary under the extremely limited circumstances.

The requirements of the Clinical Laboratory Improvement Amendments of 1998 (CLIA) are being applied to physician office laboratories (POLs). POLs must reflect their CLIA number on each form HCFA-1500 claim for lab services or the claim will be denied. HCFA Program Memorandum, HCFA-Pub 60B, NO. B-97-3.

SPECIFIC REQUIREMENTS RELATED TO CYTOLOGIC SERVICES

Billing Prohibitions

Under NRS 652.195, cytologic examination of gynecologic specimens require direct billing. A laboratory that performs a cytologic examination of gynecologic specimens for a patient residing in Nevada shall submit any bill for those services to:

• 3) The patient directly;

5)         The responsible insurer or other third-party payor; or

• 5) The hospital, public health clinic or non-profit health clinic.

A lab shall not submit the bill for those services to the physician who directed the examination. Additionally it is unlawful for a physician to charge, bill or otherwise solicit payment from a person for cytologic services relating to the examination of gynecologic specimens. However, these rules do not apply if the cytologic services were either rendered by the physician himself, or in a lab solely in connection with the diagnosis or treatment of his own patients, or provided to an enrollee pursuant to a health care plan authorized pursuant to chapter 695C of the Nevada Revised Statutes.

Ethical Opinions

The AMA Code of Medical Ethics, Opinion No. 8.095, provides:

To alleviate patients anxiety, physicians should report clinical test results to patients within a reasonable time frame. Physicians should use their best professional judgment when determining what length of time is reasonable for the particular situation at hand. Anticipated delays should be explained at time of testing.

Physicians should adopt a consistent reporting policy that accommodates the demands of their practice while at the same time being considerate to patients anxieties. Reporting policies should be disclosed to patients. Reporting policies should consider under what circumstances and by whom the tests are appropriately reported to the patient. Any inconsistencies should be disclosed as soon as they are discovered.

Physicians should provide test results in language understandable to the patient and in the manner deemed most appropriate by the physician. Any information that would be necessary for patients to make intelligent decisions and give informed consent on future medical treatments must be disclosed to them.

Physicians should take all appropriate precautions to ensure the confidentiality of test results. Physicians should not leave test results on an answering machine, on voice mail, or with a third party unless previously given permission to do so by the patient. Additionally physicians should refrain from sending test results via electronic mail and regular mail in any form other than a sealed envelope.

LICENSURE AND REGISTRATION OF CLINICAL LABORATORIES

The following provides information on federal and state laws, including the Clinical Laboratory Improvement Act (CLIA), which governs the registration and licensing of clinical laboratories.

Registration Requirements

Nevada law has long regulated clinical laboratories. NRS 652.080, NAC 652.170 have required that clinical laboratories obtain a clinical laboratory license, pay a licensure fee, be subjected to inspection by DHS, maintain records, maintain equipment and facilities appropriately, and demonstrate satisfactory performance in a proficiency testing program.

Since the passage of CLIA, laboratories have been subject to regulation by both federal and state law. CLIA establishes laboratory certification standards for all laboratories providing clinical or cytological services. 42 U.S.C. 263a. It specifically affects laboratories providing biological, microbiological, serological, chemical, immune-hematological, hematological, biophysical, cytological, pathological or other examinations of materials derived from the human body for the purpose of providing information for the diagnosis, prevention, or treatment of any disease or impairment of human beings. 42 U.S.C. 263a(a).

CLIA states that no person may solicit or accept materials derived from the human body for laboratory examination or other procedure unless there is in effect for the laboratory a certificate issued by the Secretary applicable to the category of examinations or procedures which includes such examination or procedure. 42 U.S.C. 263a(b).

Certificates

Nevada law requires a certificate of registration for a laboratory operated by licensed physicians. The Bureau of Licensure and Certification of the Health Division of the Department of Human Resources shall issue a certificate of registration to each laboratory that registers with the health division pursuant to NRS 652.235. A certificate of registration issued is effective for two years after the date of issuance.

NRS 652.125; 652.130; NAC 652.180.

The bureau may issue one certificate of registration for any number of laboratories which test specimens to protect the public health if each laboratory is supervised by the health division or a health district; and performs at least one, but not more than 15 tests which are classified pursuant to 42 C.F.R. Part 493, Subpart A as moderate complexity tests or waived tests. An application for renewal of a certificate must be in the form provided by the bureau and failure to apply for a renewal within thirty days after a certificate expires will result in termination of the laboratorys authority to operate in this state. However, upon acceptance of an application for renewal, the bureau will provide the laboratory with a new certificate.

CLIA requires that clinical laboratories have certificates which comport to the level of the complexity of the testing performed by the clinical laboratory. These complexity levels are divided into: 1) waived; 2) moderate complexity; 3) provider-performed microscopy (PPM); and 4) high complexity. 42 C.F.R. 493.15-493.25. Under CLIA, all clinical laboratories must obtain a certificate of waiver (waived tests), a registration certificate (moderate or higher complexity), a certificate for PPM procedures, a certificate of compliance (high complexity or moderate complexity), or a certificate of accreditation. 42 C.F.R. 493.3.

Although, the CLIA requirements are more stringent than Nevada law, the Nevada Health Division of Department of Human Resources and State Board of Health are limited to enforcing regulations that are less stringent than 42 C.F.R. 493. However, the Board may adopt regulations which are more stringent relating to any laboratory test classified as a waived test pursuant to the provisions of 42 C.F.R. 493, and pursuant to the qualification and duties of the personnel of a medical laboratory.

Standards and Inspections

All clinical laboratories must perform all clinical laboratory tests or examinations classified as waived under CLIA in conformity with the manufacturers instructions. 42 C.F.R. 493.15. Except for laboratories performing only tests or examinations classified as waived, laboratories are required to maintain quality assurance, quality control programs, proficiency testing, and patient test management systems. Certified and licensed labs will be subject to biennial announced and unannounced inspections. 42 C.F.R. 493.1775, 493.1776.

Sanctions

A failure to comply with the provisions of CLIA can result in one or more of the following:

• 5) Limitations, suspension or revocation of a certificate, registration, or license.

6)         A directed plan of correction

7)                 A civil fine of up to $10,000 for each violation for each day of substantial noncompliance with lab standards.

8)         Payment for the cost of on-site monitoring

9)                 Criminal penalties for intentional violations, including imprisonment and fines of at least $100,000.

10)       Automatic suspension of a license or registration based on federal exclusion from the Medicare or Medicaid program or revocation of CLIA certificate.

11)               State-initiated exclusions from the Medicaid programs.

12)       Exclusions from ownership or operation for two years following license or registration revocation.

13)             Civil suit to enjoin statutory or regulatory violations.

14)             Criminal sanctions for unlawful activity.

15)             Automatic revocation of license/registration or other approval based on intentional referral of proficiency testing samples for analysis.

l6)        Suspension of Medicaid payments for failure to permit an inspection.

42 U.S.C. 493.1800 and following sections.

Fees

Based on volume and scope of testing provided, fees for issuance and renewal of certificates will vary. Additional fees are collected for inspections. CLIA provides that its costs be covered by the fees collected. 42 U.S.C. 263a(b).

With respect to Nevada law, The following non-refundable fees will be charged pursuant to NAC 652.488:

• 1)     License of laboratory;
• 2) Licensure of director;
• 3)    Registration of laboratory operated pursuant to NRS 652.235 which is nonexempt pursuant to NAC 652.155;
• 4) Registration of laboratory operated pursuant to NRS 652.235 which is exempt pursuant to NAC 652.155;
• 5)      Certification of personnel;
• 6) Placement of license or certificate in inactive status;
• 7)             Issuance of original duplicate license or certificate;
• 8) Permit to operate a laboratory at temporary location;
• 9)          Change of location of laboratory;
• 10) Change of director of laboratory;
• 11)     Inspection for additional specialties and subspecialties in which tests will be performed at laboratory.

Waived Tests

These tests are simple laboratory examinations and procedures which are cleared by the FDA for home use and employ methodologies that are so simple and accurate as to render the likelihood of erroneous results negligible. 42 C.F.R. 493.15. However, the question of what tests are classified as waived under CLIA is difficult to answer, since the list changes often. The Department of Health and Human Services takes the position that once a manufacturer of a test is notified that the test is classified as waived, that notice serves as official confirmation that the test can be placed in the waived category. Thus, physicians receive letters and press releases from manufacturers advertising that a test has been placed in the waive category even though the CLIA regulations do not yet reflect the waived status.

CLIA regulations currently identify the following tests in the waived category:

Dip Stick or tablet reagent urinalysis (non-automated) for the following:

Bilirubin

Glucose

Hemoglobin

Ketone

Leukocytes

Nitrite

pH

Protein

Specific gravity

Urobilinogen

Fecal occult blood

Ovulation tests-visual color comparison tests for human luteinizing hormones

Urine pregnancy tests-visual color comparison tests

Erythrocyte sedimentation ratenon-automated

Hemoglobin-copper sulfatenon-automated

Blood glucose by glucose monitoring devices cleared by the FDA specifically for home use

Spun microhematocrit

Hemoglobin by single analyte instruments with self-contained or component features to perform specimen/reagent interaction, providing direct measurement and readout.   42 C.F.R. 493.15.

Since the list is constantly expanding, a copy of a complete waived categorization test list, can be found on the Internet at:             ftp://ftp.cdc.gov/pub/laboratory_info/CLIA/waived.txt.

Tests of Moderate and High Complexity

DHHS uses seven criteria to determine whether a test is classified as moderate or high complexity. 42 C.F.R. 493.17. These criteria include, the knowledge, training and experience necessary to perform the test and the operational steps in the testing process. Thus, the more complex the test, the higher the classification.

Provider (Physician)-Performed Microscopy (PPM) Procedure

Provider-performed microscopy is not subject to routine inspection. 42. C.F.R. 493.19. They must meet the following specifications:

1. a)the examination must be personally performed by a physician, mid-level practitioner under the supervision of a physician, or dentist during the patients visit on a specimen obtained from his/her own patient or from a patient of the group clinic or practice of which the professional is a member or employee;
2. b)the procedure must be categorized as moderately complex;

• 11) the primary instrument for performing the test is the microscope;

1. d) the specimen is labile or delay in performing the test could compromise the accuracy of the test results;

• 12) control materials are not available to monitor the entire testing process;

1. f) limited specimen handling or processing is required.

The following procedures meet the requirements:

• 13) all direct wet mount preparations for the presence or absence of bacteria, fungi, parasites, and human cellular elements;

1. b) all potassium hydroxide (KOH) preparations;

• 14) pinworm examinations;

1. d) fern tests;

• 15) post-coital direct qualitative examinations of vaginal or cervical mucous;

1. f) urine sediment examinations;

• 16) nasal smears;

1. h) fecal leukocyte examinations; and
2. i) qualitative semen analysis (limited to the presence or absence of sperm and detection of mobility). 42 C.F.R. 493.19.

PPM tests authorized include:

• 17) urinalysis; microscopic only;
• 18) urinalysis, by dipstick or tablet reagent for bilirubin, glucose, hemoglobin, ketones, leukocytes, nitirite, pH, protein, specific gravity, urobilnogen, any number of these constituents; non-automated, with microscopy;

1. c) urinalysis, by dipstick or tablet reagent for bilirubin, glucose, hemoglobin, ketones, leukocytes, nitrite, pH, protein, specific gravity, urobilnogen, any number of these constituents; automated, with microscopy; (may only be used when the lab is using an automated dipstick urinalysis instrument approved as waived.);

• 19) urinalysis; two or three glass test.

A lab may apply directly for a certificate for provider-performed microscopy procedures without applying for a registration certificate or license. However, a lab with only a certificate for provider-performed microscopy must request and receive a registration certificate and license for any other procedures from DHHS.

LABORATORY PERSONNEL

Laboratory Director

Both CLIA and Nevada law have required that a laboratory director be responsible for the oversight of the clinical lab. The director shall ensure that policies and procedures are established and enforced to ensure the health, welfare, and safety of the personnel of the lab and visitors. The director must make sure the physical premises and environmental conditions of the lab are appropriate for the testing performed and provide a safe environment in which employees are protected form biological, chemical, and physical hazards. The lab must be adequately ventilated, with temperatures controlled within the requirements of the tests performed. NAC 652.280.

The director is responsible for the overall operation and administration of the clinical laboratory, including administering the technical and scientific operation of the clinical lab, the selection and supervision of procedures, reporting of results, and active participation in its operations, to the extent necessary to comply with state and federal statutes and regulations. NAC 652.282. The director must document the adequacy of the qualifications of the personnel directing and supervising the lab and performing the lab tests and procedures. 42 C.F.R. 493.35. The director must ensure that all personnel, prior to testing, have appropriate education and experience, receive the appropriate training for the type of the services offered, and have demonstrated they can perform all testing operations reliably to provide accurate results. 42 C.F.R. 493.1403; 493.1441; NAC 652.286.

Persons Who May Perform Testing

A clinical laboratory technologist may perform tests that require the exercise of independent judgment, under minimum supervision or review by the director or general supervisor, in those specialties for which he has adequate education, training, and experience and in which he has demonstrated proficiency. NAC 652.452.

A medical technician may perform a test only if the test is classified pursuant to 42 C.F.R. 493(a) as a waived test, a moderate complexity test, or a high complexity test, the results of the test are read directly from an instrument, and the test requires no interpretation and no intervention by the operator of the test during its analytic phase. NAC 652.440.

A laboratory assistant may perform only those procedures requiring the degree of skill commensurate with his education, training, and technical abilities. He may not independently perform laboratory procedures, but may assist manually under direct supervision. NAC 652.450.

A technologist may perform a test in a specialty only if he is certified in that specialty. NAC 652.478. Similarly a technician may perform a test in a specialty only if he is certified in that specialty and the test is classified by 42 C.F.R.493(a) as a waived test, a moderate complexity test, or a high complexity test. The test being performed must also be read directly from an instrument and the test must require no interpretation and no intervention by the operator of the test during its analytic phase. NAC 652.485.

SELF-REFERRAL AND FEE SPLITTING PROHIBITIONS

Self-Referral Prohibitions

Stark Bill

Referrals by physicians of Medicare patients to clinical labs, among other entities, with which the referring physician or the referring physicians immediate family has a financial relationship are generally prohibited. There are some limited exceptions that apply to allow physicians to continue to operate in-office labs and to allow group practices to continue to operate clinical labs.

Fee-Splitting Prohibitions

Federal Medicaid and Medicare Anti-Kickback Law

The offering or acceptance of consideration for the referral of patients is prohibited. 42 U.S.C. 1320a-7b(b). The OIG lists three specific practices occurring nationwide which it finds suspicious.

1. Phlebotomy Services for Physicians: Laboratories that send their employed phlebotomists to physicians offices to collect specimens from patients for testing are warned to not undertake additional tests that are normally the responsibility of the physicians office staff. Taking vital stats or performing other nursing functions as well as providing clerical services would implicate the anti-kickback statute.
2. Discounted Lab Pricing: A laboratory that offers to perform tests encompassed within the composite rate for below the fair market value in return for the facilitys agreement to refer all or most of its tests falling outside the composite rate to the lab implicate the anti-kickback statute.   The statute is implicated because the laboratory would be offering something in value in return for ordering of additional tests, constituting illegal remuneration under the statute. This type of practice will not be protected by the discount safe harbor.
3. Laboratory Waiver of Charges to Managed Care Patients: Where non-contracting labs offer to provide lab services free of charge for a providers managed care enrollees in order to induce physicians to continue to use the lab for non-managed care patients might raise anti-kickback concerns. This would depend on the status of a physicians agreement with the managed care plan. For example, if the contract provides a bonus or penalty depending upon the utilization of ancillary services, in the event a lab agrees to write-off charges for a physicians managed care work, the physician could realize a financial benefit created by the appearance that utilization of tests has been reduced. In such cases, the anti-kickback statute would be implicated.
4. Additional Inducements Suspected by the OIG: Free pickup and disposal of bio-hazardous waste products, such as sharps, unrelated to the collection of specimens for the outside laboratory; provision of computers or fax machines, unless such equipment is integral to and exclusively used for, the performance of the office labs work; provision of laboratory testing for health care providers, their families, and their employees.

These type of practices could induce the referral of Medicare and Medicaid reimbursed laboratory testing.

INTERACTION OF STARK AND CLIA

The following are examples of clinical lab situations that require an understanding of both Stark and CLIA.

• 12) An individual physician who practices alone wishes to provide in-office laboratory services to all of his or her patients, including those covered by Medicare.
• 20) CLIA: Depending on which test is being performed, the physician must obtain either a registration certificate, a certificate of compliance, certificate of accreditation, certificate for provider-performed microscopy, or waiver certificate.
• 21) Stark: Physicians can perform laboratory testing on their own Medicare and Medicaid patients based on the in-office ancillary service exception.
• 13) Three physicians, each in solo practice, share office space and an in-office laboratory. They wish to provide laboratory services to all their patients, including those covered by Medicare.
• 22) CLIA: The same as the previous example. Physicians who perform lab testing in their office in addition to performing tests in a shared lab must have a separate certificate for the office laboratory.

411. b) Stark: There is no shared in-office laboratory exception for physicians not in a group practice. Thus, the referral of Medicare patients to the laboratory, by the physicians who share it, is prohibited unless the arrangement meets the in-office ancillary exception. In order to meet the in-office ancillary exception, the term direct supervision has been defined as supervision by a physician and surgeon who is present in the office suite and immediately available to provide assistance and direction throughout the time services are being performed. 42 C.F.R. 411.351.

• 14) A three-physician medical group (structured as a medical partnership or professional corporation) wishes to refer all their patients to their in-office laboratory.
• 23) CLIA: The laboratory must obtain a registration certificate, a certificate for provider-performed microscopy procedures, or waiver certificate depending on which specific tests the lab performs.
• 24) Stark: Group practices, which perform laboratory services within their offices generally, meet the in-office ancillary service exception.
• 15) A group of five physicians has an in-office laboratory to which they refer all of their patients. In addition, the group wishes to provide laboratory services to other physicians whose practices are not associated with the group and are located elsewhere.
• 25) CLIA: The laboratory must obtain a registration certificate, certificate of compliance, certificate of accreditation, or waiver certificate based on the specific tests the laboratory performs. A certificate for provider-performed microscopy is not available.

1. b) Stark: The law does not prohibit a laboratory from accepting referrals from a physician who does not have a financial relationship with the lab. However, the laboratory must have a billing number from the Medicare carrier and directly bill for the services that are performed on referral.

• 16) The same five-person medical group wishes to establish a clinical laboratory which is independent of the medical practice and to which they wish to refer all of their patients. In addition, the group wishes to accept patients of other physicians who are not part of the group practice.
• 26) CLIA: Same as above. Neither the location of the laboratory, its ownership, or the individual it serves changes the requirement of certificates. A certificate for provider-performed microscopy is not available.

Stark: Generally, Stark prohibits the referral of Medicare patients to a clinical laboratory in which the referring physician has a financial interest. The in-house ancillary service exception would not apply.

STATUTES AND REGULATIONS