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Legal Update
from Krieg DeVault LLP
Legally Speaking

In the Nov. 19, 2008, Federal Register, the Centers for Medicare & Medicaid Services (CMS) posted the final Anti-Markup Rule, effective Jan. 1, 2009.

Under this final rule, claims submitted for technical component (TC) or professional component (PC) for diagnostic testing are subject to the Anti-Markup Rule if:

  1. The physician billing for the TC or PC was the one who ordered the diagnostic test.
  2. The diagnostic test was performed by a physician who does not “share a practice” with the billing physician.

CMS defines “performing” physician as the physician who supervises the TC, performs the PC or both.

CMS further clarifies a performing physician will be deemed to “share a practice” with the billing physician, and thus not be subject to the Anti-Markup Rule, if the performing physician meets one of the following tests.

Alternative one
The performing physician will be deemed to “share a practice” with the billing physician if the performing physician provides substantially all professional services (greater than or equal to 75 percent) through the billing physician.

If the performing physician does not meet the “substantially all” services requirement of this alternative, an analysis under alternative two may be applied on a test-by-test basis.

Alternative two
If the performing physician is an owner, employee or independent contractor of the billing physician, and the services are performed in the office of the billing physician, a performing physician will be deemed to “share a practice” with the billing physician.

The “office” of the billing physician means any medical office space, regardless of the number of locations, in which the ordering physician regularly furnishes patient care. This includes space where the billing physician furnishes diagnostic testing, if the space is located in the same building where the ordering physician regularly furnishes patient care.

“Same building” is defined using the same definition used in the Stark Law’s In-Office Ancillary Services Exception, meaning a building with a single street address assigned by the U.S. Postal Service.

If the Anti-Markup Rule applies to the TC or PC of a test ordered by the billing physician, payment to the billing physician may not exceed the lowest of the following:

  • The performing physician’s net charge to the billing physician
  • The billing physician’s actual charge or
  • The Medicare fee schedule amount for the test that would be allowed if the performing physician billed directly

This legal column is provided by the Indianapolis law firm Krieg DeVault LLP, which provides business and legal counseling to physicians and their practices. Contact the firm at (317) 636-4341.


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