General Explanation of Payment

10.2 - General Explanation of Payment (Rev. 3510, Issued: 04-29-16, Effective: 10-01-16, Implementation; 10-03-16) Outpatient laboratory services can be paid in different ways: • Physician Fee Schedule; • 101 percent of reasonable cost (critical access hospitals (CAH) only); NOTE: When the CAH bills a 14X bill type for a non-patient laboratory specimen, the CAH is paid under the fee schedule. • Laboratory Fee Schedule; • Outpatient Prospective Payment System, (OPPS) except for most hospitals in the State of Maryland that are subject to a waiver; or • Reasonable Charge Annually, CMS distributes a list of codes and indicates the payment method. Carriers, FIs, and A/B MACs pay as directed by this list. Neither deductible nor coinsurance applies to HCPCS codes paid under the laboratory fee schedule. The majority of outpatient laboratory services are paid under the laboratory fee schedule or the OPPS. Carriers, FIs and A/B MACs are responsible for applying the correct fee schedule for payment of clinical laboratory tests. FIs/AB MACs must determine which hospitals meet the criteria for payment at the 62 percent fee schedule. Only sole community hospitals with qualified hospital laboratories are eligible for payment under the 62 percent fee schedule. Generally, payment for diagnostic laboratory tests that are not subject to the clinical laboratory fee schedule is made in accordance with the reasonable charge or physician fee schedule methodologies (or at 101 percent of reasonable cost for CAHs). For Clinical Diagnostic Laboratory services denied due to frequency edits, the contractor shall use the following remittance advice messages and associated codes when rejecting/denying claims under this policy. This CARC/RARC combination is compliant with CAQH CORE Business Scenario Three. Group Code: CO or PR CARC: 151 RARC: N/A MSN: N/A