Proposed Rule Would Limit Physician Office Diagnostic Testing


On July 7, 2008, the Centers for Medicare and Medicaid Services ("CMS") published its 2009 Proposed Medicare Physician Fee Schedule. Along with a planned 5.4% decrease in Medicare payment, the Proposed Fee Schedule includes a controversial proposal to require physician offices that provide diagnostic testing to enroll in the Medicare program as an Independent Diagnostic Testing Facility ("IDTF"). Current IDTF standards would prohibit physician practices from sharing imaging equipment. Further, several of the IDTF requirements may be difficult for a physician practice to satisfy. If the new rule is adopted, physician practices that are unable to meet the IDTF requirements would be prohibited from providing diagnostic tests to their Medicare patients.

All free-standing diagnostic centers operating apart from a physician practice or hospital must be enrolled as an IDTF to bill the Medicare program. As a result, the centers must satisfy certain performance standards, including those related to physician supervision of diagnostic testing, qualifications of non-physician personnel and facility and equipment requirements. Under the current rules, however, a physician practice can perform and bill for diagnostic tests without IDTF enrollment and compliance with the performance standards if it generally has the following characteristics:

  1. A physician practice that is owned, directly or indirectly, by one or more physicians or by a hospital

  2. A practice that primarily bills for physician services and not for diagnostic tests

  3. A practice that furnishes diagnostic tests primarily to patients whose medical conditions are being treated on an ongoing basis by one or more physicians in the practice, and

  4. The diagnostic tests are performed and interpreted at the same location where the practice physicians treat patients for their medical conditions.

According to the Proposed Fee Schedule, CMS is concerned that this "double standard" between testing in a physician office versus a free-standing diagnostic center is detrimental to Medicare beneficiaries. Therefore, CMS has proposed that all physician practices that provide diagnostic tests to their patients (except for mammography services) enroll as an IDTF. Failure to enroll would result in claims denial and, if a claim is submitted, potential liability under the federal False Claims Act.

While the Proposed Fee Schedule would exempt physician practices from a few of the current IDTF performance standards (e.g., insurance coverage, maintaining a formal clinical complaint process, posting IDTF standards and business hours), there are several IDTF standards that could prove extremely problematic for physician practices offering diagnostic tests to their patients, including the following:

Physician Supervision

Currently, physicians practicing in a non-IDTF setting can supervise their own diagnostic tests, regardless of the physician's specialty. As an IDTF, however, the rules state that the supervising physician must have proficiency in the performance and interpretation of each type of diagnostic procedure performed. Cahaba Government Benefit Administrators, LLC, the Medicare Part B Carrier for Alabama ("Cahaba"), has interpreted this standard to require, for a majority of diagnostic tests, supervision by a board certified radiologist, or in more limited circumstances, supervision by a board certified cardiologist, orthopaedic surgeon or other physician specialist. The required specialty of the supervising physician is related to the type of test performed and is identified by Cahaba based on CPT code. Further, under the IDTF standards required a physician can provide general supervision (e.g., the procedure is furnished under the physician's overall direction, but the physician's presence is not required during the performance of the procedure) to no more than three IDTF sites at one time. Given these limitations, it may be impossible for a non-radiology physician practice to satisfy the IDTF physician supervision requirements.

Technician Qualifications

In a similar manner, there is also an IDTF requirement that each non-physician, often referred to as a technician, who performs a diagnostic test be state licensed or, in the absence of a state licensing board, certified by a recognized national credentialing body. Similar to the physician qualifications for supervision, Cahaba has published the technician credentialing qualifications for each test based on CPT code. While the qualifications vary depending on the test, certification by the American Registry of Radiologic Technologists, the American Association of Electrodiagnostic Technologists, the American Board of EEG and Evoked Potential Technologists, the American Registry of Radiologic Technologists, and the American Registry of Diagnostic Medical Sonographers are frequently cited by Cahaba. If a physician practice utilizes the service of a technician that does not meet the applicable license and/or credentialing requirements, the practice cannot enroll as an IDTF.

No Sharing of Space and Equipment

With the exception of hospital-based and mobile IDTFs, a fixed-based IDTF must not: (1) share its practice location with another Medicare-enrolled individual or organization, (2) lease or sublease its operations or its practice location to another Medicare-enrolled individual or organization, or (3) share diagnostic testing equipment used in the initial diagnostic test with another Medicare-enrolled individual or organization. If this standard is applied to physician practices offering diagnostic testing, the clear effect is that two or more physician groups can no longer share diagnostic imaging space and equipment in the same building, even though such sharing arrangement is permitted by the Stark Law.

CMS has asked for comments on whether certain types of diagnostic testing, in addition to mammography, should be exempted from the IDTF registration requirements. In particular, CMS has asked for comments as to whether the new registration should only apply to physician practices offering "advanced diagnostic testing", such as MRI, CT and nuclear medicine.

If adopted, the new rules would become effective September 30, 2009 for physician entities already enrolled in Medicare. Newly enrolling practices would be subject to the rule effective January 1, 2009.

Howard E. Bogard is Chair of the Health Care Practice Group at Burr & Forman LLP and exclusively represents healthcare providers in regulatory and corporate matters.