Effective January 1, 2009, under California law, physicians may no longer bill patients or insurers for the technical component of diagnostic imaging services (CT, PET, or MRI) that were not rendered by the physician or someone under his or her supervision. This means that radiologic facilities or imaging centers must now directly bill the patient or the responsible third-party payor.California Business & Profession Code Section 655.8. The new law is Section 655.8 of the California Business and Professions Code. Section 655.8 prohibits a physician, chiropractor, podiatrist or dentist (“licensee”) from billing or otherwise charging the patient or other responsible payer for the technical component of CT, PET and MRI diagnostic tests that were not actually performed or supervised by such licensee. Section 655.8 further requires that a diagnostic imaging facility that performs the technical component of these tests to bill the patient or other responsible payer directly, and prohibits these facilities from billing the licensee who ordered the test. A violation of Section 655.8 constitutes a misdemeanor and is punishable by imprisonment, fines, or both.
Section 655.8’s apparent intention is to preclude several types of common global billing arrangements. and especially the ones driven more by marketing. First, it seeks to preclude lease arrangements between diagnostic facilities and licensees, where the diagnostic facility bills a licensee at a low cost for diagnostic space, equipment and staff, and the licensee orders tests which are performed at the facility, adds a mark-up to the technical component of the test and bills the patient and/or the responsible third party payer for the test. Any part-time and block time-sharing leases, space sharing arrangements, and similar arrangements need to be reviewed to see if they comply with Section 655.8.
Second, Section 655.8 seeks to preclude brokering arrangements where a broker arranges for diagnostic services at negotiated rates with multiple diagnostic facilities, then bills third party payers for services rendered by those facilities at marked-up rates. Under Section 655.8 these arrangements are prohibited because the diagnostic facilities is billing the broker for services rather than third party payers and patients.
Scope of Section 655.8 and Meaning Of "Performed" and "General Supervision." Section 655.8 is not perfectly clear and there are numerous issues regarding its scope. First, the term "performed"is not defined so it is not clear what relationship the licensee must have with the diagnostic facilities, the technicians and other employees and the equipment in order to be deemed to have "performed" the test.
Second, the “supervision” requirement is met if the licensee provides the applicable level of supervision set forth in Medicare regulations, 42 C.F.R. Section 410.32. This is only vague to the extent that it is unknown how the State will interpret "general supervision." We have seen general supervision arrangements that are unpaid and there is little interaction with the technicians or involvement with the facility. Such arrangements will likely not meet the critieria.
42 C.F.R. Section 410.32 includes 3 different levels of supervision depending upon the test performed. "General supervision" is required for the most commonly performed diagnostic tests and it requires that the test be furnished under the licensee’s overall direction and control, but the licensee’s physical presence is not required during the performance of the test. General supervision also requires that the licensee be responsible for the training the technicians who perform the test, the maintenance of the equipment and other supplies needed for the test.
The best practice is to treat "general supervision" as a serious responsibility. Ideally, the general supervising physician should visit the facility regularly, be involved in ongoing oversight of the technicians and at have input into their performance evaluations, review equipment calibration reports, and routinely engage with employees on quality control.
Each arrangement will need to be analyzed under Section 655.8 to determine whether a licensee can bill patients or payers for the technical component of a test requiring general supervision which is rendered pursuant to a lease arrangement with a diagnostic center. The structure and day-to-day operations will need to be reviewed to determine whether (1) the test was performed under the “overall direction and control” of the licensee (even when he or she is not present at the leased premises when the test is performed) and (2) the general supervision requirements are met.
Exceptions to Section 655.8. Section 655.8 does have exceptions for: (a) diagnostic tests performed within a physician and surgeon’s office or the office of a group practice; (b) licensees and diagnostic facilities that contract directly with a licensed health care service plan; (c) for health care programs operated by public entities (including colleges and universities); and (d) health care programs that are operated by private educational institutions that serve their students' health care needs
There is also an exception that allows radiologists to bill for the technical and professional components, even though the radiologist did not perform or supervise the test. For this exception to be applicable the radiologist and any member of his group practice (1) could not have ordered the diagnostic test and (2) has to provide the interpretation. In other words, radiologists who provide the interpretation may purchase the technical component of diagnostic imaging services assuming that neither the radiologist nor a person in their medical group ordered the diagnostic study.
Importantly, Section 655.8 does not apply to X-Ray, ultrasound, mammography, or other imaging services. It only applies to CT, PET and MRI. Physicians are also reminded that it is a violation of law to allow physician assistants or other staff to perform x-rays without proper certification. After Section 655.8 was enacted, the California Department of Public Health publicly announced that it intends to strictly enforce this x-ray provision and physicians found to be in violation will be cited and may be subject to additional enforcement action.
Conclusion. Section 655.8 must be taken into consideration in planning or structuring billing arrangements related to diagnostic imaging services. In addition, for providers who submit claims to Medicare, they will also need to comply with the anti-markup regulations applicable to the technical component and professional component of diagnostic imaging services that were issued by CMS in the 2009 Medicare Physician Fee Schedule ("MPFS").
It is expected that the State will rely on Section 655.8 in its audits for Medi-Cal to preclude physicians from global billing where they use mobile services and are not radiologists. We also expect that Medicare will use it along with its anti-markup regulations to limit billing by IDTFs. Private insurers will also become more aggressive as they seek to control costs for CT, MRI and PET diagnostic studies.
Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates. The firm focuses its practice on the representation of licensed professionals and businesses in civil, business, administrative and criminal proceedings, with a specialty in health care providers.
You can reach Tracy Green at 213-233-2260.
