If you are like many other laboratories we’ve been speaking to, you may find yourself wondering what the revision to the CMS 14-day rule really means.

Previous Rule

The previous rule allowed a reference lab to bill Medicare directly for testing performed on a specimen collected during an outpatient hospital event only after 14 days passed. If the timeline was 0-14 days, the lab billed the hospital who then bundled the testing into the outpatient event for billing. The date of service requirement differed based upon:

  • Any specimen stored more than 30 days (hospital or non-hospital) had to be the date the specimen was recovered from storage.
  • Hospital outpatient specimens stored for 14-30 days, post-discharge, must be the date the test was performed.

This resulted in some hospitals delaying test requests for certain reference lab tests until after 14 days had passed, thus delaying potential patient treatment. Regardless of the direction the hospital took, there is always the administrative burden the hospitals or the referral labs dealt with.

Revised Rule

The revised rule, which went into effect January 1, 2018, added exclusions under the Hospital Outpatient Prospective Payment System (OPPS) for tier 1 and tier 2 molecular pathology tests and advanced diagnostic laboratory tests (ADLTs). The laboratory can now bill Medicare for these tests.

  • For hospital outpatient specimens stored for 1-13 days after the date of discharge, the date of service must be the date the test was performed.

For tier 1, tier 2 molecular pathology tests and ADLTs, this change allows laboratories to apply the same rules they were already applying for hospital outpatient specimens stored for 14-30 days to hospital outpatient specimens stored for 1-13 days. This change should result in the laboratory adding these tests to their existing process in place for managing this type of testing.

Market Confusion & Challenges

This new regulation has created confusion and administrative challenges. Communication with Medicare Administrative Contractors (MACs) or other regional CMS representatives have left labs with a lack of guidance regarding implementation and timeline.

Labs continue to struggle with timely (or no) receipt of patient billing information from their hospital customers. There is some hope for an upside in utilization; however, only time will tell if the decrease of hospital administrative burden will drive increased ordering patterns. Labs remain concerned about ongoing reimbursement reduction due to PAMA and their annual ADLT pricing review by CMS.

TELCOR customers continue to evaluate the rule. With the uncertainty, many are choosing to hold off on process change until there is clarification from CMS or the MACs.

TELCOR Solution

The TELCOR RCM solution already provides customers with functionality to ensure charges for these tests can be held for review and modification prior to claim generation. Other revenue cycle and billing solutions in the marketplace do not have the flexibility required to process charges based on parameters such as patient stay, procedure, CPT, department, payer or financial class. Those systems force billing teams to work claims denials or recoupments which delay time to payment.

Regardless of the end result, TELCOR remains at the forefront of deploying solutions to help laboratories drive efficiency, improve collections and obtain the analytics necessary to know their profitability.


Kurt Matthes, vice president, RCM reengineering and service, has more than 25 years of experience in laboratory systems. Since joining TELCOR in 2007, he has performed various responsibilities including implementation, service and sales support working with TELCOR customers to help ensure success.