The 14-Day Rule & Billing Medicare for Tests on Stored Specimens

The Centers for Medicare and Medicaid Services (CMS) date of service (DOS) policy, commonly referred to as the 14-day rule, governs who’s allowed to seek reimbursement from Medicare for clinical laboratory diagnostic tests (CLDTs) conducted on stored specimens. While the rule has been in effect since 2018, it can still be quite confusing.

The DOS Rule

CMS generally bundles the payment for a laboratory test with the payment for a hospital service if the date of service for a laboratory test falls during an outpatient (OP) or inpatient stay. The default date of service for a laboratory test is the date the specimen was collected. The DOS rule is an exception that allows a clinical laboratory to move the date of service to when a test is actually performed on the specimen if certain criteria are satisfied. By moving the date of service of the test, the laboratory is able to bill Medicare directly for the service, rather than the hospital.

Specifically, the DOS for a test performed on a specimen stored less than or equal to 30 calendar days from the date it was collected (a non-archived specimen) is the date the test was performed (instead of the date of collection) when: 

• The test is ordered by the patient’s physician at least 14 days following the date of the patient’s discharge from the hospital;
• The specimen was collected while the patient was undergoing a hospital surgical procedure;
• It would be medically inappropriate to have collected the sample other than during the hospital procedure for which the patient was admitted;
• The results of the test do not guide treatment provided during the hospital stay; and 
• The test was reasonable and medically necessary for the treatment of an illness. 

Application to Independent Laboratories and ADLTs

CMS last changed the 14-day rule on January 1, 2018. While total clarity is still lacking and questions remain, in a nutshell, an independent laboratory (IL) or laboratory performing Advanced Diagnostic Laboratory Tests (ADLTs) or molecular pathology testing on a hospital outpatient must bill the testing rather than bill back the hospital when:

• The physician orders the test following the date of a hospital outpatient’s discharge from the hospital outpatient department;
• The specimen was collected from a hospital outpatient during an encounter (as both terms are defined in 42 CFR 410.2);
• It was medically appropriate to have collected the sample from the hospital outpatient during the hospital outpatient encounter;
• 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. 

The “DOS must be the date the test was performed only if” the above conditions are met, according to CMS.

Limitations to Rule’s Application

Still, the patient should have been discharged prior to testing. This DOS and billing change only relates to outpatient and not inpatient services. It also only relates to ADLTs and molecular pathology testing that’s not bundled into OP payment (Ambulatory Payment Classifications, or APCs). The latter appears to include Tier 1 and Tier 2 testing and ADLTs that are not bundled in the hospital setting but are listed in the Clinical Laboratory Fee Schedule (CLFS). Ironically, the exception doesn’t include ADLTs under Criterion (B) (FDA approved), Glycated Serum Protein (GSP) tests, Proprietary Laboratory Analyses (PLA) tests, or protein-based multianalyte assays with algorithmic analyses (MAAAs).

The performing laboratory must bill Medicare directly for tests that meet this exception. Documentation is required to affirm appropriateness for billing. A performing laboratory will need patient insurance and demographic information. The hospital and performing laboratory often spend time to decipher which tests fall under the exception. Actually, the list of exempted procedures is on the CMS website, and it’s updated quarterly.

CMS established the latter date to relieve independent laboratories from having to bill back the hospital and the hospital bill insurance. Both sites would be reimbursed off the CLFS; hospitals would want to negotiate a lower charge from the independent laboratory to cover administrative functions. By reporting a different DOS, the patient is no longer receiving hospital OP services.

According to a CMS FAQ on this issue, “under the previous DOS policy, if the test was not ordered at least 14 days following the date of the patient’s discharge from an outpatient hospital procedure, there is no way that the laboratory performing a molecular pathology laboratory test or ADLT (which are separately payable under the CLFS) can avoid having to seek payment from the hospital. If the test is ordered less than 14 days from the date the patient was released from the hospital outpatient department, the laboratory cannot bill Medicare directly for the test.”

“Certain laboratory stakeholders informed CMS that the laboratory DOS policy creates unintentional operational consequences for hospitals and laboratories who perform molecular pathology tests and ADLTs.” After considering the comments received, CMS added an additional exception to the laboratory DOS regulations so that the DOS for ADLTs and molecular pathology tests excluded from Outpatient Prospective Payment System packaging policy is the date the test was performed if certain conditions are met.

Other CMS FAQs on 14-Day Rule DOS Exception

This isn’t the only FAQ that CMS has published on the new DOS exception. Another FAQ regarding this issue received the following response: “In order for the new laboratory DOS exception to apply (among other criteria) the specimen must be collected from a registered hospital outpatient during a hospital outpatient encounter. If a molecular pathology test was performed on a specimen that was collected from a ‘non-patient’ (e.g., a patient that is not a registered hospital outpatient) then the new laboratory DOS exception does not apply.”

Still another FAQ regarding this issue received the following response: “If all of the conditions for the new laboratory DOS exception are met, the performing laboratory is required to bill Medicare directly for those tests, instead of seeking payment from the hospital outpatient department.”

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Diana W. Voorhees is principal in DV & Associates, Inc., Salt Lake City, UT, which makes no representation, guarantee or warranty, expressed or implied, that the information provided is free of error, and will bear no responsibility or liability for results or consequences of its use.