Health care providers welcomed the changes last year to the Medicare reassignment requirements that allow independent contractor physicians to reassign payment for Medicare-covered services regardless of the site of service to another entity such as a physician group. Prior to these changes, the Medicare reassignment regulations specifically required independent contractor physicians to provide services on a group’s premises if the group wanted Medicare to pay the group directly for that physician’s services.

Pursuant to the changes to the reassignment requirements in the Medicare Modernization Act for independent contractor physicians, many physician group practices considered contracting with radiologists to perform the professional component of certain diagnostic services. In this arrangement, the radiologist could perform the professional interpretation of a diagnostic service at a location other than the physician group’s office (e.g., via teleradiography), the group would pay a flat fee to the radiologist for the interpretation and report, and the group would bill Medicare for the diagnostic test and interpretation under a global billing code.

In the preamble to the 2005 Medicare physician fee schedule, CMS commented that the changes to the reassignment requirements did not change the requirements under other Medicare billing rules or regulations that affect billing and claims submission such as the Stark Law. CMS further commented that physician practices “should be mindful” that compliance with the physician services and in-office ancillary services exceptions to the Stark Law require a physician who is engaged by a group practice as an independent contractor may provide services subject to the Stark Law (e.g., radiology services) to the group practice’s patients only in the group’s facilities.

These comments by CMS were a direct reminder that the services of an independent contractor physician, such as professional services of a radiologist, must be furnished on the premises of a physician group if a physician group would like the services to meet the in-office ancillary services exception to the Stark Law. For example, if an orthopedic physician would like to refer his patient to his group for an MRI and the group would like to bill Medicare for both the MRI and as interpretation of the MRI by an independent contractor radiologist, the interpretation by the radiologist must be performed on the premises of the orthopedic group.