In last year’s Medicare Physician Fee Schedule (MPFS) proposed rule, CMS described its concerns for the potential for fraud, waste and abuse of the Medicare program that may be caused by the growth of so-called “pod” or “condo” laboratories. “Pod” laboratories are laboratories that are located off-site from a physician’s office (sometimes even in another state) and operated entirely by an independent contractor physician pursuant to a reassignment arrangement for the purpose of performing pathology studies that will be billed globally by the ordering physician’s office. Typically the physician’s office pays the pod laboratory a fixed fee for a diagnostic test that is less than the global fee the physician is able to collect from the Medicare program when he/she bills for the test. Last year, CMS had proposed to amend its reassignment rules to include a new provision to attempt to take the profit from the arrangements. CMS decided to not act on last year’s proposals, but in this year’s MPFS rules, CMS has acted—and decisively so. The agency’s new rules affect pod labs, but also will have a significant impact on many imaging arrangements involving referring physicians.

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