Purchased Diagnostic Tests
Physicians may not, under the law, charge Medicare patients more for a diagnostic test than what they themselves were
charged by an outside entity to have them performed. Physicians who knowingly
and willfully violate this provision are subject to civil and criminal penalties and/or exclusion from the Medicare and Medicaid
Physicians may legally bill without payment
constraints for tests that they perform or that their employees perform under their supervision. Physicians should be careful, however, not to engage in arrangements that may appear legal but which are
actually intended to circumvent the law.
Attempts may be made by the medical diagnostic
community to adjust or establish arrangements that allow physicians to profit from others’ work or to create the appearance
that the physician has performed or supervised his or her employees’ performance of the service. Medicare has identified some of these arrangements as involving cardiac scanning services and mobile ultrasound
companies leasing their equipment to physicians for the day the equipment is used and hiring out their staff to the physicians
to meet the supervision requirement. CMS views these arrangements as transparent
attempts to circumvent the prohibition against the mark-up on purchased diagnostic tests.
The mere issuance of a W-2 form by the physician does not automatically make the leasing company’s technician
the physician’s employee for the purposes of meeting Medicare’s employer-employee criteria.
The valid employee-employer relationship is based upon factors such as:
Who has the right to hire and fire?
Who provides employee training?
Who is paying health and retirement benefits?
Who approves sick and vacation leave?
Who schedules the employee’s time?
Another arrangement to circumvent the purchased
diagnostic service provision is for the ordering physician to reassign his or her payment for the interpretation of the test
to the supplier. The supplier, in turn, bills for both the test and the interpretation
and pays the ordering physician a fee for the interpretation. This arrangement
violates section 1842(b)(6) of the Social Security Act, which prohibits Medicare from paying benefits due the person that
furnished the service to any other person. This arrangement also could constitute
a violation of section 1128B(b) of the Act, which prohibits remuneration (compensation) for referrals (i.e., kickbacks).
Violations of section 1128B(b) of the Social
Security Act may subject the physician or supplier to criminal penalties and/or exclusion from the Medicare and Medicaid programs. Illegal remuneration for referrals can be found even when the ordering physician performs
some service for the remuneration.