February 2004 Newsletter

Medicare Modernization

By: Catherine Sicker, Compliance Officer, Partner

Medicare Reform — Bane or Blessing for Clinical Laboratories

The Medicare Prescription Drug, Improvement & Modernization Act of 2003, alias DIMA alias The Medicare Reform Law, was signed into law by President Bush on December 8, 2003. The legislation contains a myriad of changes ranging from a prescription drug benefit for Medicare beneficiaries to a 1.5% increase in the 2004 and 2005 physician fee schedule. (Physicians: See this month's A/R Services column for more details.)

Clinical laboratories received mixed news:

• No 20% co-payment for clinical laboratory testing.
• The freeze on inflation updates to the Clinical Laboratory Fee Schedule was reduced from 7 to 5 years-2004 to 2008.
• A two-year extension to a policy allowing independent laboratories to bill Medicare directly for pathology services provided to hospitals.
• Establishes important guidance dictating how Medicare will review and establish payment for new technology, including new laboratory tests.
• Coverage for screening tests for early detection of cardiovascular disease and for patients at high risk for diabetes.
• Coverage for initial physical exams, including pap tests, for Medicare beneficiaries beginning in 2005.
• Implementation of a demonstration project for competitive bidding for clinical laboratory services.
• Notice that hospital laboratories do not have to comply with the Medicare Secondary Payer (MSP) collection requirements in cases where independent laboratories are not required to do so.