The Laboratory Date-of-Service Rule

Section 414.510 is titled for specimens, not for tests, and it opens by stating that it governs the date of service for either a clinical laboratory test or the technical component of a physician pathology service. That second half is routinely forgotten, and it widens the rule's reach past the fee-schedule tests most people have in mind.

The default is short. Except as the section otherwise provides, the date of service is the date the specimen was collected. Everything else in the section is an exception that moves the date forward, and there are four of them.

Nothing in § 414.510 says a word about who submits the claim. It is worth being precise about that, because the rule is almost always taught as a billing rule and it is not one. It is a dating rule whose consequences are produced by a different pair of regulations entirely.

Those are 42 CFR 410.42(a) (opens in a new tab) and 42 CFR 411.15(m) (opens in a new tab) — what CMS calls the under arrangements provisions, an arrangement being the thing defined at 42 CFR 409.3. Between them they provide that Medicare generally will not pay an entity other than the hospital for a service furnished to a hospital patient during an encounter, unless the hospital has an arrangement with that entity to furnish it. Set the two rules side by side and the chain is mechanical.

1. 01

   The date of service lands inside the stay or encounter

   Then the test is a service furnished to a hospital patient, the under-arrangements provisions bite, and payment for it is generally bundled with the hospital's payment. The hospital bills Medicare, and it pays the laboratory that performed the test under their arrangement. The laboratory's money comes from the hospital, not from Medicare.
2. 02

   An exception moves the date past the discharge

   Then the test is no longer furnished to a hospital patient during an encounter, the under-arrangements provisions have nothing to attach to, and the performing laboratory bills Medicare directly and is paid under the Clinical Laboratory Fee Schedule. CMS describes the exception as disconnecting the test from the encounter — which is exactly what it does.

The number comes from the stored-specimen exception, § 414.510(b)(2)(i). Where a specimen was stored 30 calendar days or less from the date it was collected, the date of service is the date the test was performed — but only if five conditions are all met, and the first is that the test is ordered by the patient's physician at least 14 days following the date of the patient's discharge from the hospital.

Read that clause slowly, because three different mistakes live in it. The interval runs from discharge, not from the date of collection and not from the date of the surgery. It is measured to the order, not to the performance of the test or the receipt of the specimen. And it is a minimum — an order placed sooner does not fail some documentation test, it simply means this exception is unavailable and the general rule applies, which puts the date back inside the hospital stay.

The remaining four conditions

The specimen was collected while the patient was undergoing a hospital surgical procedure; it would have been medically inappropriate to collect the sample other than during the hospital procedure for which the patient was admitted; the results do not guide treatment provided during the hospital stay; and the test was reasonable and medically necessary for the treatment of an illness. All five are conjunctive.

The second number in the same paragraph

Storage of 30 calendar days or less is what makes the exception available at all. A specimen stored more than 30 calendar days before testing is treated as archived under (b)(2)(ii), and its date of service is the date the specimen was obtained from storage — a third date, distinct from both collection and performance.

The parallel exception for live tissue

A chemotherapy sensitivity test performed on live tissue has its own five conditions at (b)(3), and its interval attaches to something else again: the decision about which chemotherapeutic agents to test must be made at least 14 days after discharge. The category is defined at (b)(4) as a test requiring a fresh tissue sample to test the sensitivity of tumor cells to various agents, and CMS identifies which tests those are through program instructions rather than in the regulation.

Paragraph (b)(5) is the newest exception and the one that most often decides a modern laboratory claim. It was added effective 1 January 2018 by the CY 2018 hospital outpatient rule, and amended twice since. It exists precisely because the 14-day rule left a gap: a molecular test ordered sooner than fourteen days after an outpatient discharge had no route to a post-discharge date, so the laboratory had no way to avoid seeking its money from the hospital.

Its five conditions contain no interval at all. The test must have been performed following a hospital outpatient's discharge from the hospital outpatient department; the specimen must have been collected from a hospital outpatient during an encounter, both as defined in 42 CFR 410.2; it must have been medically appropriate to collect the sample during that encounter; the results must not guide treatment provided during the encounter; and the test must have been reasonable and medically necessary for the treatment of an illness.

Which tests are inside it

The introductory text names four categories, and its current wording is the product of both later amendments. A molecular pathology test qualifies only when performed by a laboratory other than a blood bank or center — that carve-out was added by the CY 2020 rule, because blood banks and centers run some of the same molecular codes as other laboratories while often not being enrolled in Medicare or set up to bill it directly. The term is defined at 42 CFR 414.502 (opens in a new tab), as an entity whose primary function is the collection, processing, testing, storage or distribution of blood or blood components intended for transfusion and transplantation.

• A molecular pathology test performed by a laboratory other than a blood bank or center.
• A test designated by CMS as an advanced diagnostic laboratory test under paragraph (1) of the § 414.502 definition — the multiple-biomarker analysis that, combined with an empirically derived algorithm, yields a prediction and provides new clinical information obtainable from no other test. Paragraph (2) of that definition, covering tests cleared or approved by the Food and Drug Administration, is not referenced, so an approval-route designation does not bring a test inside this exception.
• A test that is a cancer-related protein-based Multianalyte Assays with Algorithmic Analyses, added by the CY 2021 rule.
• The test described by CPT code 81490, named individually in the same amendment.

This is the part that costs money, and it is the part most often described wrongly — as a permission the laboratory may exercise. It is not. CMS stated in finalizing the exception that the performing laboratory will be required to bill Medicare directly for tests that meet it, and answered the question directly when a commenter asked: the hospital would no longer be permitted to bill for these tests unless the hospital laboratory actually performed the test. If the hospital's own laboratory ran it, the hospital laboratory bills.

A commenter later proposed exactly the arrangement practices tend to assume already exists — letting a hospital and a laboratory agree between themselves which of them would bill, with the exception applying only where they had not agreed. CMS did not adopt it. So there is no negotiated route, and an agreement between a hospital and a laboratory about who submits the claim does not change the answer the regulation gives.

The wrong party billed

Two failure shapes follow, and they are not symmetrical. A hospital that bills a test the exception has moved has billed a service it is not permitted to bill. A laboratory that waits for the hospital to bill, and to pay it under an arrangement, is waiting on a payment neither party is entitled to make — while its own filing window runs.

The transition is over

The exception took effect for dates of service on or after 1 January 2018 and was implemented in July of that year, after which CMS announced enforcement discretion for six months and extended it twice, because hospitals could not readily give performing laboratories the outpatient-status and coverage information they needed to bill. That discretion ended on 2 January 2020. Nothing about the current posture is provisional.

Where it does not reach

A specimen collected from someone who is not a registered hospital outpatient is outside the exception, and does not need it: a hospital laboratory testing a specimen for someone who is not a patient of the hospital is operating as an outreach laboratory and bills separately in its own right. Referred-laboratory billing is a separate regime again, restricted to independent clinical laboratories, with its own modifier and its own requirement to report the reference laboratory's CLIA number on the claim — the certificate side of a laboratory claim is covered under billing CLIA-waived tests.

Three of the four exceptions produce a date of service of the date the test was performed. For a test that runs over several days, that raises an obvious question, and it is worth knowing that the question has been asked of CMS repeatedly and has not been answered.

Commenters asked CMS to define the performance date as the date of the laboratory's final report. CMS declined in the rule that created the exception, on the ground that there is no clear and consistent definition of a final report across all laboratories and all specimen types, and declined again on the same reasoning when the request was repeated in the following cycle. Its own guidance tells laboratories to consult their local Part B contractor about the performance date for the specific test, while confirming one point that does settle: if testing begins after the outpatient's discharge, the condition that the test was performed following discharge is met.

1. 01

   Establish the patient's status at collection first

   Inpatient, registered hospital outpatient, or neither. The whole analysis branches here, and the outpatient exception exists only for the middle case. Neither is not a gap — it is the outreach case, which never needed an exception.
2. 02

   Identify which exception is even in play

   A stored specimen, live tissue for chemotherapy sensitivity, or one of the (b)(5) categories. They have different conditions and different intervals, and applying one exception's conditions to another is the most common way a correct fact produces a wrong conclusion here.
3. 03

   Check membership against the current list, by quarter

   For the outpatient exception, whether a code is inside it is a lookup against the list CMS publishes and updates quarterly, not a reading of the words molecular pathology. Capture which version of the list was used, because the answer can change between quarters and a claim is judged on its own date of service.
4. 04

   Measure any interval from the right event

   Discharge to order for the stored-specimen exception; discharge to the agent-selection decision for the live-tissue one. Not collection, not surgery, not receipt in the laboratory. A spreadsheet that dates from the wrong event will be wrong consistently and invisibly.
5. 05

   Settle the performance date with the contractor, not internally

   For any test that spans days, get the local Part B contractor's position on what the performance date is and keep it. CMS has twice declined to define it nationally, so an internal convention is an assumption rather than a rule.
6. 06

   Reconcile the hospital and laboratory sides against each other

   Because the exception is mandatory, the two entities cannot both be right. A periodic reconciliation between what a hospital billed and what its reference laboratories billed for the same specimens is the control that finds the disagreement, and it finds it while there is still time to correct a claim.