Medicare Provides Guidance on Laboratory Services Consolidated Billing

When laboratory services are billed by providers other than the end-stage renal disease (ESRD) facility and the laboratory service furnished is designated as a service that is included in the ESRD Prospective Payment System (PPS), Medicare will reject or deny the claim.

This is according to recent issue of Medicare Quarterly Provider Compliance Newsletter, a newsletter from CMS developed to help providers to avoid common billing errors and other erroneous activities when dealing with the Medicare Program.

The problem, identified through a recovery audit, is described as follows: The ESRD PPS includes consolidated billing for limited Part B services included in the ESRD facility bundled payment. Certain laboratory services and limited drugs and supplies are subject to the Part B consolidated billing and are no longer separately payable by Medicare when provided for ESRD beneficiaries by providers other than the renal dialysis facility.

Medicare policy requires that all ESRD-related laboratory tests must be billed by the renal dialysis facility whether provided directly or under arrangements with an independent laboratory. When laboratory services are billed by providers other than the ESRD facility and the laboratory service furnished is designated as a service that is included in the ESRD PPS (ESRD-related), Medicare will reject or deny the claim.

In the event that an ESRD-related laboratory service was furnished to an ESRD beneficiary for reasons other than for the treatment of ESRD, the provider may submit a claim for separate payment using modifier -AY.

The recovery auditor determined the claims on the audit indicate that a laboratory service was billed for an ESRD beneficiary who received services from a dialysis center on the same date of service. As a result, the laboratory service(s) should not be separately paid. Medicare recovered the identified overpayments from the providers.

Lab Billing Resources

Medicare encourages ESRD facilities and laboratories to review the following documentation to help ensure proper lab billing for ESRD beneficiaries:

  • Medicare Claims Processing Manual," Chapter 8, Lab Services, Section 60.1, available here.

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