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).

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.