College of American Pathologists
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HCFA responds

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July 2000

The following is the Health Care Financing Administration’s response to a College request for clarification of the independent laboratory technical component billing issue under the hospital outpatient prospective payment system. Janet Wellham, who provided this reply, is the HCFA official responsible for Medicare outpatient PPS payment policies:

"An independent laboratory will not be able to bill for the technical component of a pathology service under the outpatient PPS. The outpatient final rule requires that the hospital must provide directly or under arrangements all services furnished to hospital outpatients. Therefore, if a specimen (e.g. tissue, blood, urine) is taken from a hospital outpatient, the facility (or technical) component of [a] diagnostic test must be billed by the hospital. Only in cases where the patient leaves the hospital and obtains the service elsewhere is the hospital not required to bill for the service."