HI 00401.330 Negotiated Rates for Laboratory Services

The Secretary is authorized to enter into agreements with laboratories under which Medicare payments for diagnostic laboratory tests will be on the basis of negotiated rates which will be the full charges. Since the laboratories will not bill Medicare beneficiaries for deductible and coinsurance amounts, cost savings for both the laboratories and the program will result.

This provision applies only to diagnostic laboratory tests for which payment is to be made to a laboratory on the basis of assignment. Further, the negotiated rates may not exceed the payments that would have been made in the absence of such rates.

Payments made to a laboratory under an agreed-upon rate will have been calculated to assure that program liability will be no more than had payment been based on the reasonable charge subject to the deductible and coinsurance amounts. Under the agreement, when reimbursement is based on a negotiated rate, the laboratory accepts the amount as payment in full.

A. Eligibility of laboratory

A laboratory is eligible to receive Medicare payments for covered services in accord with agreed-upon rates only if the laboratory agrees to submit claims to the carrier in a manner which is efficient, economical and under conditions that assure that only covered services are billed for; and it agrees not to bill beneficiaries for any deductible and coinsurance amounts (and to refund any such amount collected in error).

B. Minimum agreement provisions

Agreements entered into with laboratories remain in effect for 1 year. Each agreement specifies the kinds of laboratory services it covers and the agreed upon payment for these services. It provides for termination or nonrenewal of the agreement at the end of the year, and for a mutually acceptable method for renewal and/or renegotiation of the reimbursement rate.

The carrier reviews any proposal received, determines the laboratory’s eligibility, and works out with the laboratory any modifications deemed advisable or necessary. It submits the proposal to the Medicare RO with its evaluation, recommendations, and information on the current allowable charges for the laboratory’s services. The Medicare RO reviews all the information, requests additional information as needed, and forwards the proposal to Central Office with its analysis and recommendations. CMS determines whether the proposal is acceptable and/or what changes may be necessary. When a mutually acceptable proposal has been worked out, the laboratory and carrier involved are notified by the Medicare RO of the formal and final procedures necessary to effectuate the agreement.


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HI 00401.330 - Negotiated Rates for Laboratory Services - 04/06/2015
Batch run: 04/06/2015
Rev:04/06/2015