Medi-Cal Sets New Physician
Lab Licensing and Billing Rules
[Posted 06/03/04]

Despite CMA objections, the California Department of Health Services (DHS) has gone ahead with its plan to increase state oversight of physician-operated laboratories that accept Medi-Cal.

Under new rules, physician office laboratories established after 1995 will now be licensed by DHS, subjecting them to fees and regulations beyond those currently imposed under the federal Clinical Laboratory Improvement Amendments (CLIA) program.

Previously, physician-operated laboratories (labs operated in a physician’s office that are used by five or fewer physicians) that perform moderate- and high-complexity tests did not require state licensure. Physician labs that were in existence prior to January 1, 1996—when the original lab licensing law took effect—will continue to be exempt from state licensure requirements.

In another change, physician office labs performing moderate- and high-complexity tests must now use a laboratory-specific provider number when billing Medi-Cal. Under this rule, physicians who bill Medi-Cal for laboratory tests must submit two claims, one for the physician visit and one for the laboratory test. Pre-1996 labs are not exempt from this requirement and will need to obtain a Medi-Cal provider number to continue billing the program.

Laboratories that perform only “waived” tests (classified by FDA or CDC to be so simple that there is little risk of error) and labs that perform only “provider performed microscopy” tests will continue to be exempt from both the state licensure and Medi-Cal provider number requirements.

CMA will continue to fight these requirements, which are a new interpretation of old regulations. It remains CMA’s belief that dual fees, dual regulations, duel claim submissions, and the administrative hassles that would come with them, are not viable options.

Contact: Robin Flagg, 415/882-5110 or rflagg@cmanet.org.