Review of CMS Actions related to Billing for Molecular Pathology Testing

By Margaret A. Keller, PhD, Senior Director, National Molecular Laboratory, American Red Cross Biomedical Services

The Centers for Medicare & Medicaid Services (CMS) Laboratory Date of Service (DOS) exception Policy at 42 CFR 414.510(b)(5) requires laboratories performing Advanced Diagnostic Laboratory Testing (ADLT) and molecular pathology testing on outpatients covered by Medicare discharged within the prior 14 days to bill CMS directly instead of seeking payment from hospital.  The DOS is a required field in Medicare claims submission. In many cases, the DOS for a laboratory test is the date the specimen was collected. However, with this DOS policy, CMS stipulates that for molecular pathology test or an ADLT that meets the criteria of section 1834A(d)(5)(A) of the Act, the DOS must be the date the test was performed if:

  • The test is performed following the date of a hospital outpatient’s discharge from the hospital outpatient department; and
  • The specimen was collected from a hospital outpatient during an encounter (as both are defined 42 CFR 410.2); and
  • It was medically appropriate to have collected the sample from the hospital outpatient during the hospital outpatient encounter; and
  • The results of the test do not guide treatment provided during the hospital outpatient encounter; and
  • The test was reasonable and medically necessary for the treatment of an illness.

For blood centers that have molecular immunohematology laboratories and/or histocompatibility laboratories that perform DNA-based testing, this policy would have had a significant impact on their operations. Specifically, many blood centers are not HIPAA covered entities and do not have the systems in place to bill Medicare directly. Instead, most blood center laboratories offering testing services to hospital clients bill those hospitals for testing performed, and the hospitals then submit the testing for reimbursement with the third-party payers, including Medicare.  If compliance with this policy were required, it could have had significant impact on the ability of blood centers to continue offering these services to hospital customers. Specifically, it would have required significant financial investment and placed considerable administrative burden on most blood centers to become HIPAA covered entities and establish revenue cycle management systems in their centers such that they could bill payers directly. It also was predicted to cause confusion and possibly billing irregularities since blood centers typically would not have the patient information necessary to determine if specific patient testing would fall under the policy or not.

This policy was published in the CY 2018 Hospital Outpatient Prospective Payment System (OPPS)/Ambulatory Surgical Center (ASC) final rule on December 14, 2017, with implementation July 2018. On July 3rd, 2018, CMS announced enforcement discretion would be exercised until January 2, 2019 and then on December 26, 2018, CMS announced a 6-month extension to enforcement discretion period, until July 1, 2019.  Finally, on June 25, 2019, CMS extended that period a third time until January 2, 2020. 

AABB, Americas Blood Centers (ABC) and American Red Cross (RC) worked together to assess the potential impact of this policy as well as request that CMS consider a revision to the policy. On July 29, 2019, CMS released a proposed revision to the DOS policy. Specifically, CMS offered three alternatives and requested public comment.  The three alternatives were

  • Exclusion of blood centers and blood banks from the Laboratory DOS policy
  • Exclusion of molecular pathology tests from the policy, limiting it to ADLTs
  • Limiting inclusion to testing that is deemed by the ordering physician to that not intended to guide treatment during the hospital outpatient encounter

In late July 2019, CMS released a request for comment on potential revisions to the policy that may exempt Red Cross testing. In late September 2019, responses were submitted by Red Cross as well as joint response from Red Cross/ABC and AABB. Both responses supported an exemption for laboratories located in “blood centers”.

On September 26, 2019, the three organizations (AABB, ABC, RC) submitted a letter to CMS urging them to finalize the exclusion of all molecular pathology testing of red blood cells, white blood cells and platelets performed by blood banks and blood centers from the laboratory DOS policy. The reasoning was that these centers perform this testing primarily to identify the most compatible blood products for patients. This strong advocacy was effective.

On November 12, 2019, CMS published revision to the laboratory DOS policy within its OPPS final rule. It excluded blood banks and blood centers from the policy. Therefore, though enforcement discretion ended January 2, 2020, there is no change to the process by which laboratories performing molecular pathology testing on patient samples are billed. Specifically, hospitals continue top bill Medicare “under arrangement” for the testing performed by the blood center-based laboratory.  After nearly 2 years of uncertainty, blood bank labs performing molecular pathology testing and the hospitals they serve have clarity and certainty about the billing process for this important and growing area of transfusion medicine.

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NOTE: The views expressed do not necessarily represent the view of the American Red Cross.

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