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The ABCs of Medicare Billing for Radiology

By Jagger Esch

Medicare covers diagnostic and radiology services, but these services must be completed or supervised by a certified radiology physician. The servicebills must be sent by physicians with certifications through organizations such as The Joint Commission, the ACR, or the Intersocietal Accreditation Commission.

Both radiology and other diagnostic health services go under a patient’s Medicare Part B coverage. Hospital outpatient visits for radiology and diagnostic health services are Part B services. Radiology services are typically under a fee schedule. This means the payment is either the lower billing charge or the Medicare Physician Fee Schedule dollar amount. Both coinsurance and deductibles apply; a patient’s coinsurance determines their amount.

Diagnostic tests have coverage under Medicare Part B once a beneficiary contributes 20%, after the Medicare Part B deductible; these amounts will be sent to patients in bill form through the mail. A patient receiving a diagnostic test in an outpatient facility may be responsible for a copayment. Health care services or tests are dependent on physician fees, types of health care facilities, other forms of health insurance, and whether a physician accepts assignment of health services. Medicare will pay under the Medicare Physician Fee Schedule for radiology services when beneficiaries obtain services through a health care facility that isn’t a hospital.

Components and Limitations
Professional components of a service are the doctor’s diagnostic tests and associated costs. It is the doctor’s explanation of the radiology test. Anything that is a physician’s health service is sent separately to a local Medicare contractor. In conjunction with the billing code, modifier 26 indicates a professional component bill.

The technical component is the cost of the equipment and staff related to the radiology services, which also includes malpractice and practice costs. A modifier technical component in conjunction with the billing code denotes a technical component.

Components don’t apply to health care services that don’t distinctly split professional and technical components. When physician health care services can’t be split into both technical and professional components, modifiers can’t pair with billing codes because these billing codes don’t allow modifiers.

Specific diagnostic test rules require a physician to perform the test in a health care practice that is not part of the ordering physician’s practice. This payment rule applies to the technical component of the test and is effective as of January 1, 1994. A payment limit is also applied to the professional component of the test, as of January 1, 2003. Test examples are EKGs, ultrasound services, X-rays, and electroencephalograms.

Billing and Payment
Most radiology services receive payment under a fee schedule. Inpatient radiology services are billed under Medicare Part A to fiscal intermediaries as well as A/B Medicare administrative coordinators. The payment for the doctor’s services is paid by either the A/B Medicare administrative coordinator or the fiscal intermediaries and is paid to the hospital. This includes the technical component of the radiology services. The professional component of the radiology services will be sent separately by the doctor and paid for by the insurance carrier.

When patients receive outpatient radiology services, these services are paid under the Outpatient Prospective Payment System. The professional component of health services must be from a doctor with separate billing and payment.

Radiology services to outpatients within a skilled nursing facility (SNF) setting receive services through Medicare Part A. Billing for these services is by the health care provider who completes the tests. These payments include the SNF Prospective Payment System. Doctors complete the professional component of diagnostic health services for both SNF inpatients and outpatients. These services have separate billing and payment.

Medicare Claims Processing
Medicare covers diagnostic health services that are medically necessary. The anti–markup payment limitation applies toward the technical component and the professional component of radiology services. This doesn't include mammography screenings.

Radiology and diagnostic services in the hospital will fall under Part A bills. Carriers can’t pay for technical component services for hospital patients. The professional component services inpatients receive from physicians in hospitals may have the bill separately paid by the carrier or Medicare administrative contractor.

Per the ICD Coding Guidelines for Outpatient Services, doctors must record all diagnoses on the patient’s diagnostic test results. When tests are complete, the doctor will bill under the physician fee rules. When a doctor bills out for diagnostic tests that are contingent on the anti–markup limitation, the fee amount for the health services is equivalent to the lower amount of billing. For example, Medicare pays the lower amount of the performing doctor’s net charge to the billing doctor or medical supplier, the billing doctor or medical supplier’s charge, or the fee amount that is granted for where the health services are performed.

When hospital outpatients receive diagnostic or radiology services, the hospital receives payment under the Outpatient Prospective Payment System. When a patient receives radiology or diagnostic services in an outpatient SNF, billing for these services comes from the health care supplier or the SNF, if previous arrangements are made.

— Jagger Esch is the president and CEO of Elite Insurance Partners, a Medicare broker and resource center.