The Anti-Markup Rule (AMR), effective January 1, 2009, is designed to limit the amount physicians may bill the Centers for Medicare and Medicaid Services (CMS) for the technical and professional components of diagnostic tests. CMS proposed the AMR to limit reimbursement rates to physicians who do not exhibit “sufficient control and a proper nexus to the individuals conducting and supervising the [diagnostic] test.”

The practical ramifications of the AMR for physicians and medical practices is that if you perform diagnostic tests a review will be required of your billing practices and professional arrangements by a healthcare attorney to ensure that you comply with the AMR. Notably, compliance with the Stark law does not automatically mean that you are in compliance with the AMR.

Under the AMR, if the physicians performing and ordering diagnostic tests meet either of the following the AMR limitation will NOT apply.

1. Under the “group practice” test the AMR will not apply where the physician who performs (supervises the technical component or performs the professional component, or both) the diagnostic test “share[s] the practice” with the billing physician. A physician “share[s] the practice” when the physician performs “substantially all” (at least 75%) of his/her professional services for the billing physician.

2. Under the “site of service” test the AMR will not apply to:

   1. the technical component of the diagnostic test when the test is conducted AND supervised in the office of the billing physician, and the physician supervising the test is an owner, employee or independent contractor of the billing physician; and

   2. the professional component of the diagnostic test when the professional component is performed in the office of the billing physician and the physician performing the professional service is an employee or independent contractor of the billing physician.

“Office of the billing physician” shall include diagnostic testing performed in the “same building” in which the office of the billing physician is located.

When the AMR applies, a billing physician may only bill Medicare the lowest of:

1. the performing physician’s net charge to the billing physician;

2. the billing physician’s actual charge for the test; or

3. the Medicare fee schedule amount listed for the diagnostic test.

As with many rules promulgated by CMS, the AMR is confusing. In fact, attorneys are scratching their heads as to the AMR’s application as some examples provided for our interpretation of the AMR by CMS do not create clear guidelines as to how to apply the AMR on a going-forward basis. We are hopeful that CMS will provide additional guidance on the AMR prior to the effective date. Below are a few examples of the AMR application for your consideration.

1. “Group Practice” Test

   1. Fact Pattern: A Urology Group Practice (Practice) has several locations where physicians see patients and a centralized location where pathology testing is the only medical service performed. The Practice contracts with pathologists on a full-time basis to supervise technicians to interpret the diagnostic tests.

   2. AMR application: The AMR does not apply to the technical or professional component of the diagnostic testing because the supervising physician (pathologist) works for more than 75% of his professional time for the Practice.

   3. Variation: If the pathologist worked on a part-time basis (less than 75% of his professional work time) for the Practice, the AMR would apply to both the technical and professional component of the diagnostic testing.

2. “Site of Service” Test

   1. Fact Pattern: A multi-specialty group (with 1 office) owns an MRI and physicians in the group order MRI studies for certain patients. A radiologist engaged by the group supervises the technical component and the radiologist also renders the professional component of the diagnostic test. The MRI is located in the group office and the radiologist is on sight in the group office for both supervising the technical component and performing the professional component, but works on a part-time (less than 75%) basis as an independent contractor for the group.

   2. Result: The AMR does not apply to either the technical or professional components of the MRI because the technical component is conducted and supervised in the same building where the ordering physician performs the full range of his services.

   3. Variation: If the group practice had multiple locations the AMR would not apply to the technical or professional components of an MRI that is ordered by a physician who performs his full range of services in the same building where the MRI is located. However, the AMR would apply to the technical component if supervised by the part-time radiologist, but not if the MRI is supervised by another physician that works for the group more than 75% of their professional time. The AMR would apply to the professional component of the MRI since the professional component is performed by a part-time radiologist. Moreover, the AMR would also apply to the professional component if the ordering physician generally provides his full range of services in a different building.

3. Combining the Two

   1. Fact Pattern: Radiologist provides x-ray interpretation services for 3 group practices. Radiologist spends 75% of his time providing services for Practice 1 and divides his remaining time between Practices 2 and 3, each of which has only 1 office. Radiologist performs the professional component for each of the 3 group practices in the office of the respective practice where the group provides its full range of medical services. The technician who performs the x-ray for each practice is supervised by a physician in the Practice’s office.

   2. Result: AMR does not apply to the technical or professional component of x-rays performed by Practice 1 as the Radiologist who supervises the technician and performs the professional component works for Practice 1 at least 75% of his time. The AMR would not apply to Practices 2 and 3 with respect to the technical and professional component of x-rays performed by Practices 2 and 3 since the x-rays are conducted, supervised and interpreted within the office where the ordering physician provides his full range of medical services.

Should you have any questions or comments about the AMR, please do not hesitate to contact Ms. Kirschenbaum at (516) 747-6700 or at Jennifer@kirschenbaumesq.com.