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Healthcare Alert: Technical component grandfather provision

The grandfather provision for technical component of anatomic pathology services provided to Medicare inpatients and outpatients of “covered” hospitals is scheduled to sunset on December 31, 2011.  This grandfather provision permits an independent laboratory to bill the Medicare Part B carrier for technical component of anatomic pathology services provided to Medicare inpatients and outpatients of a hospital that outsourced its technical component of anatomic pathology services as of July 22, 1999 to an independent laboratory under an arrangement pursuant to which the independent laboratory billed the Medicare Part B carrier directly for such outsourced services.
Without Congressional intervention, this grandfather provision will end at the end of this year, and independent laboratories will no longer be able to bill their Medicare Part B carriers for the technical component of anatomic pathology services provided to the Medicare inpatients and outpatients of these covered hospitals.  Rather, the laboratories will be required to bill the hospitals.  The hospitals will not receive any additional payments for such services for Medicare inpatients, although the hospitals will be able to bill for the outpatient technical component services under the Medicare outpatient prospective payment system.

The grandfather exception is of vital importance to many of these covered hospitals and the laboratories that provide the technical component services to their Medicare inpatients and outpatients.  A permanent “fix” would be preferable to another extension of the grandfather exception, although an extension is better than the expiration of the exception.  Pathology laboratories and covered hospitals may wish to consider contacting their Senators and Congressional Representatives to urge their support for a permanent fix or extension of the grandfather exception to avoid financial hardship to these healthcare providers.

For more information, please contact:

Jane Pine Wood

or any of our Healthcare Practice attorneys by clicking on the link below:

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© 2011 McDonald Hopkins LLC All Rights Reserved. This Alert is designed to provide current information for our clients, friends and their advisors regarding important legal developments. The foregoing discussion is general information rather than specific legal advice. Because it is necessary to apply legal principles to specific facts, always consult your legal advisor before using this discussion as a basis for a specific action.