The Pro's and Con's of Billing Approaches

Current Billing Approach +   Medicare and state laws generally require direct-bill to payor by performing laboratory. +   Medicare exceptions for hospital outpatients (see next row) +   Labs enroll with payor.   +   Medicare has additional complex rules for the hospital outpatient setting.  +   States have flexibility to set regional requirements.  Few lab tests fall under state mandates. +   Set pathway of bill submission reduces double payments to two entities (e.g. physician office and performing lab.)   +   Although complex, such rules implement the statute, through regulations and evolving agency interpretation of prior statutory language.  +     Multi-state insurers must vary lab test benefit plans by states.     +   Processes change after years with no statutory update. +   Hospitals newly become responsible for costs and medical necessity of lab tests ordered by distant, unaffiliated physicians and performed by distant, unaffiliated labs. +   Complex rules generate additional gray zones. +   Basic facts such as the “date of service” of a lab test vary depending on what payor the provider is submitting to, and the coverage category of the test.
Billing Proposal 1: +    Private plans: No change suggested.  
Billing Proposal 2: +    Medicare: Revisit recent billing rules for outpatient-origin specimens. Replace existing complex rules with simple rule, e.g. add modifier “HS” to indicate a hospital specimen but allow performing lab to bill.  +    Along with allowing performing laboratory to bill, responsibility for repayment on audit returns to the performing laboratory +    One contractor audits and controls most of laboratory’s payments. +    Revenue-neutral.  +    Regulatory change required.