Healthcare Laws Authorize Practices That Were Criticized by State Auditor in Recent Hospital Report

Friday, August 11, 2017 Hospital News
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UNIONVILLE, Mo., Aug. 10, 2017 /PRNewswire/ -- Hospital Partners Inc. issued the following statements and information regarding

the MO State Auditor's recent report.

As a rural hospital / critical access hospital Putnam County Memorial Hospital is authorized by law to assign and bill for clinical laboratory testing provided at a reference lab. The "non-patient" clinical

lab testing is an essential part of providing local revenue for the hospital to offset financial losses rural/critical access hospitals typically incur. These are not new laws but instead have been in place for decades.

The gross mischaracterization of this standard practice by the State Auditor's office has led to inaccurate conclusions and potential limitations of access for the local patients being served by the hospital.

"The assignment of non-patient lab specimens has been standard practice for rural and critical access hospitals for many years. The purpose of the rural/critical access exceptions is to give rural healthcare facilities a fighting chance to survive and serve their local communities. Reference labs operate by means of a similar clinical protocol - the patient does not present to the hospital for the testing, the patient specimen is sent instead. These provisions simply allow rural/critical access hospitals to compete," said Mark Thomas, an attorney who specializes in healthcare compliance.

Since Hospital Partners Inc., have taken over the day-to-day operations of Putnam County Memorial Hospital more than six million dollars has been paid to alleviate much of the outstanding debt and allow the hospital to fund critical programs.

"We appreciate the Auditor's concerns and take them seriously. We will be reviewing and addressing the procedural findings within the report; however, had the Auditor's office referred to the applicable healthcare laws that govern this commonly-accepted practice before issuing the report, we genuinely believe the findings would have been substantially different. We have also reached out to the Attorney General's office to request a meeting to clarify this issue," said Thomas.

The following are the relevant provisions:

  • The use of clinical laboratory work "assignment" from a hospital to a reference lab is authorized by 42 USC s. 1395l(h)(5)(A)(iii) and the Medicare Claims Processing Manual, Chapter 16, Section 40.1.
  • Assignment from a hospital to a lab is limited to 30% of all the annual testing total (not just Medicare testing) under 42 USC s. 1395l(h)(5)(A)(ii)(III) and the Medicare Claims Processing Manual, Chapter 16, Section 40.1, unless the hospital is a rural hospital.
  • Critical Access Hospitals are expressly authorized to bill "non-patient" clinical lab testing as "TOB 14X" ("Type of Bill") claims under the Medicare Claims Processing Manual, Chapter 16, Section 40.3.1.
  • The Medicare Claims Processing Manual at Chapter 2, Section 90.4, details how and when a 14X is to billed:  "To properly bill, hospitals other than CAHs assign type of bill (TOB) 13X to all bills for outpatient hospital services and TOB 14X for non-patient (referred) laboratory specimens. A non-patient is defined as a beneficiary that is neither an inpatient or an outpatient of a hospital, but that has a specimen that is submitted for analysis to a hospital and the beneficiary is not physically present at the hospital."

"We look forward to working with all involved to bring clarity and closure to this issue," stated Thomas.

Contact: Mark Thomas 352-372-9990 or David Byrns 954-336-4640 

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SOURCE Putnam County Memorial Hospital

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