The New Year Rings-In Change to CMS’ “14 Day Rule” for Its Laboratory Date of Service Policy

January 16, 2018

Prior to 2018, CMS’ 14 Day Rule prevented reference and independent laboratories from billing Medicare directly for molecular pathology tests ordered less than 14 days following an outpatient’s discharge from the hospital.  Instead, the laboratory would seek reimbursement from the hospital and the hospital would bill Medicare.

Although molecular tests were not bundled into hospital payment packages by the Hospital Outpatient Prospective Payment System (OPPS) fee schedule, CMS treated them as such when they were ordered within 14 days of a patient’s discharge.

A main factor in the issue is CMS’ Date of Service (DOS) policy, which generally requires that the DOS for clinical diagnostic laboratory services is the date the specimen is collected.  Medicare has been clear that the DOS may affect payment for a test, especially when the specimen was collected while the patient was being treated in the hospital and is later used for testing after the patient has been discharged.

Besides the obvious administrative challenges this represents for both labs and hospitals, there has been growing clinical concern voiced over potential delays in patient testing, access to test results, and implementation of treatment plans as the 14 day timeframe is accommodated.

In response, the 2018 CMS OPPS Final Rule created an exception to the 14 Day Rule and modified its DOS Policy specifically for hospital outpatients receiving MolDX Tier 1 and Tier 2 molecular tests and advanced diagnostic laboratory tests (ADLT).

Effective January 1, 2018, in the case of the above tests, the DOS must be the date the test was performed instead of the date the specimen was obtained, as long as the following conditions are met. 
• 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 outpatient encounter
• It would be medically inappropriate to have collected the sample from the hospital outpatient other than during the hospital outpatient encounter
• The results of the test do not guide treatment provided during the hospital outpatient encounter
• The test was reasonable and medically necessary for the treatment of an illness

This revision now enables labs performing specific molecular pathology tests to bill Medicare directly instead of seeking reimbursement from the hospital.

It is important to note the following exceptions to this laboratory DOS change:
1. The exception only applies when the specimen has been obtained from a hospital outpatient, not inpatient
2. The exception does not apply to Gene Sequencing procedures (GSPs), Proprietary Laboratory Analysis tests (PLAs), or Protein-based Molecular Multi-Analyte Assays with Algorithmic Analysis (MAAAs); hospitals will continue billing Medicare for these tests when ordered less than 14 days following a hospital outpatient’s discharge.

The below PDF includes a comprehensive list of all molecular tests that are exempt from the 14 day DOS rule.