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CMS Clarifies Rules for IDTF Medicare Billing of Diagnostic Tests

by | Mar 10, 2023 | Essential, Guidelines at a Glance-nir, National Lab Reporter

The agency recently issued new guidance exempting indirect independent diagnostic testing facilities from some requirements.

If your lab is an independent diagnostic testing facility (IDTF), you must comply with special Medicare requirements in carrying out your operations and billing for your services. The IDTF rules can be confusing, particularly with the rise in telehealth and new technology allowing for testing without patient interaction. With that in mind, the Centers for Medicare & Medicaid Services (CMS) recently issued new guidance specifically exempting what are called “indirect IDTFs”—healthcare entities that provide diagnostic tests not requiring patient interaction—from certain IDTF requirements. Here’s a briefing on the new CMS guidance and IDTF requirements in general.

The New CMS Guidance on Indirect IDTFs

The new CMS guidance, which is contained in revised Medicare Learning Bulletin IDTF fact sheet MLN909060 published on October 2022, explains how the basic requirements apply to IDTFs that perform diagnostic services via tests not involving patient interaction, such as computer modeling and analytics.1 Such tests generally have two things in common, the guidance notes:

  • They don’t involve direct patient interaction
  • They do involve off-site computer modeling and analytics

Such services, the guidance explains, are typically done by a technician who conducts a computer analysis offsite at another location where the patient isn’t present. The physician then reviews the image and decides how to diagnose or treat the patient.

The punchline: CMS has revised the rules to make indirect IDTFs that have no patient interaction, treatment, or testing whatsoever at their practice location “wholly exempt” from certain Medicare rules, including the requirement that IDTFs:

  • Have a comprehensive liability insurance policy of at least $300,000
  • Answer, document, and maintain documentation of a beneficiary’s written clinical complaint at the physical site of the IDTF
  • Openly post the standards for answering and documenting such complaints for patient and public review

Other Medicare IDTF Requirements

The CMS guidance also summarizes the other key requirements relating to IDTFs. Here’s a set of FAQs to provide a briefing on general IDTF rules.

Q1: What’s the Significance of Being an IDTF?

A: Having status as an IDTF is important because it allows the entity to bill Medicare for diagnostic testing procedures performed outside the hospital setting. However, IDTFs are also subject to special enrollment and billing rules and other limitations.

Q2: What Is an IDTF?

A: CMS invented the IDTF classification to distinguish IDTFs from what were previously known as Independent Physiological Laboratories (IPLs). A testing facility qualifies as an IDTL if it’s independent of a hospital and the office of an attending or consulting physician—although it may be owned by physicians. Under Medicare rules, the IDTF’s sole purpose must be to furnish diagnostic tests and it may not directly use test results to treat a beneficiary. IDTFs may be either fixed locations or mobile entities. Unless it’s hospital-based, a fixed-base IDTF may not share a practice location with, lease, or sublease its location or operations to or share diagnostic testing equipment used in the initial diagnostic test with another individual or organization that’s enrolled in Medicare.

Q3: How Do IDTFs Enroll in Medicare?

A: One major difference between IDTFs and hospital and physician labs are the enrollment rules. To enroll in Medicare, IDTFs must complete a special form known as the CMS-855B (aka, “Medicare Enrollment Application: Clinics/Group Practices and Other Suppliers”).2 They must then undergo a site visit inspection. Each IDTF practice location must be separately enrolled (unless the location is used solely as a warehouse or repair facility). Result: An enrolling IDTF may list only one practice location on its CMS-855B. To add a practice location to an existing enrollment, the IDTF must submit a separate application for the location and undergo a separate site visit at that location. That also applies to fixed IDTF sites that want to add a mobile unit.

Q4: When Can IDTFs Start Billing Medicare?

A: Medicare won’t pay for services that an IDTF provides unless and until it secures billing privileges. The effective date of Medicare billing privileges is whichever of the following dates is later:

  • The filing date of the Medicare Administrative Contractor (MAC)-approved Medicare enrollment application, that is, the date the MAC gets a signed application that it’s actually able to process for approval; or
  • The date the IDTF first starts providing services at its new practice location

Q5: What Are the IDTF Personnel Requirements?

A: IDTFs must ensure that their personnel meet certain requirements. There are three sets of rules:

Supervising Physicians: IDTFs must have one or more supervising physicians at each practice location who are responsible for oversight of testing quality, proper use and calibration of testing equipment, and ensuring that non-physician personnel are qualified to use the equipment. Supervising physicians may provide general supervision at no more than three IDTF sites. They must also:

  • Be licensed to practice in all states where the diagnostic tests they supervise are performed;
  • Be enrolled in Medicare, although not necessarily in the same state as the IDTF’s enrollment;
  • Meet the proficiency tests for any tests they supervise; and
  • Not be currently excluded or barred from participating in any Federal Executive Branch procurement or non-procurement program.

An IDTF’s supervisory physicians, whether for a fixed or mobile unit, can’t order IDTF-performed tests unless they’re the patient’s treating physician and aren’t otherwise prohibited from referring to the IDTF. The supervisory physician is deemed the treating physician if they do both of the following:

  • Provide a consultation or treat the patient for a specific medical problem; and
  • Use the test results to manage the patient’s medical problem

Interpreting Physicians: IDTFs don’t have to have interpreting physicians but if they do, those physicians must meet all of the above requirements for supervisory physicians and also be qualified to interpret the types of tests (codes) the IDTF lists in its enrollment application.

IDTF Technicians: An IDTF technician must:

  • Meet the certification and license standards of the state in which they perform tests at the time of IDTF enrollment and at the time they perform any tests; and
  • Be qualified to interpret the types of tests (codes) the IDTF lists in its enrollment application.

Q6: What Are the Requirements for IDTF Operations?

A: There are detailed rules governing how IDTFs conduct their operations, including the insurance and complaint documentation requirements from which indirect IDTFs are now exempt. Among other things to which the indirect IDTF exemptions don’t apply, IDTFs must:

  • Maintain a physical facility at an appropriate site—a post office or commercial mail box or hotel or motel location doesn’t count;
  • Ensure the physical facility and mobile units contain ample space for the necessary equipment, hand washing, patient privacy, and medical records storage;
  • Refrain from directly soliciting patients, including via telephone, computer, or in-person contact;
  • Accept only patients referred for diagnostic testing by an attending physician providing a consultation or treating a patient for a specific medical problem and who uses the results in the management of the patient’s specific medical problem; and
  • Disclose to the government any person having ownership, financial or control interest, or any other legal interest in the supplier at the time of enrollment or within 30 days of a change

Q7: What Are the Rules for IDTF Billing for an Interpretation by a Non-IDTF Physician?

A: To bill for an interpretation performed by a physician who doesn’t share a practice with the IDTF, the IDTF must meet conditions contained in Section 30.2.9 of the Medicare Claims Processing Manual.3 Specifically, payment to the billing physician or other supplier (minus deductibles and coinsurance paid) for the technical component (TC) or professional component (PC) of the test may not exceed whichever of the following amounts is lowest:

  • The performing physician/supplier’s net charge to the billing physician or other supplier (for purposes of the TC, the performing supplier is the physician who supervised the test, and for purposes of the PC, the performing supplier is the physician who performed the PC)
  • The billing physician or other supplier’s actual charge
  • The fee schedule amount for the test that would be allowed if the performing physician or other supplier billed directly

Q8: What Are the Rules for Global Billing?

A: The new CMS guidance notes that global billing is acceptable when the same entity performs both the TC and Modifier 26 and that entity provides both the TC and Modifier 26 within the same Medicare Physician Fee Schedule (MPFS) payment locality. As with all services payable under the MPFS, CMS uses the ZIP Code to decide the appropriate payment locality and corresponding fee used to price the service. Entities that bill with the global diagnostic test code must report the name, address, and National Provider Identification (NPI) of the location where they provided the TC in Items 32 and 32a (or the 837P electronic claim equivalent).

IDTF Billing Fraud: The NCL Case

The OIG has prosecuted several cases involving billing fraud by IDTFs. One notable example is the case against National Cardio Labs LLC (NCL) for falsely billing Medicare for cardiac and blood pressure diagnostic testing using data from Holter heart monitors and other medical devices. The case began when a whistleblower accused NCL of billing for tests that were not reimbursable, not listed on its CMS-855B form, or not provided. The whistleblower also claimed that NCL unbundled services to obtain duplicative reimbursement. The government accepted the case and in 2010 NCL paid $3.6 million to settle the allegations.5

Q9: What Are the Rules for Separately Billing the TC and PC?

A: When billing the TC and Modifier 26 separately (as opposed to globally), the entity must report the name, address, and NPI of the location where it performed each component. The billing provider or supplier may report its own name, address, and NPI in Items 32 and 32a (or the 837P electronic claim equivalent) if it has an enrolled practice location at the address where the service was provided. The NPI in Item 32a must correspond to the entity identified in Item 32 (regardless of whether the NPI is for the group, hospital, IDTF, or individual physician).

Q10: What Are the Requirements for IDTF Test Ordering?

A: The guidance notes that all IDTF-performed procedures must be specifically ordered in writing by the physician or practitioner treating the patient, that is, the physician supplying a consultation or treating a patient for a specific medical problem and who uses the results in the management of the patient’s specific medical problem. There are separate rules for tests ordered by non-physician practitioners.4


  1. https://www.cms.gov/outreach-and-education/medicare-learning-network-mln/mlnproducts/downloads/icn909060-idtf-fact-sheet.pdf
  2. https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/cms855b.pdf
  3. https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c01.pdf#page=63
  4. https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-410/subpart-B/section-410.32
  5. https://archives.fbi.gov/archives/losangeles/press-releases/2010/la070810.htm

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