Impact of TC Grandfather Clause Expiration

Please be advised that the TC Grandfather Clause expired on June 30, 2012.  This Clause affects “grandfathered” hospitals where the hospital outsources the technical component of certain pathology services to a third party laboratory; the third party then bills Medicare directly for the services rendered.  With the expiration of the Clause, the hospitals would have to bill Medicare directly, meaning the laboratories would have to bill the hospitals for the services rendered to the hospitals' patients. 

As a direct result of the TC Grandfather Clause expiration, laboratories may no longer bill Medicare for TC services for patients with dates of service July, 2012 and beyond. 

Laboratories are encouraged to approach their hospital clients to advise them of this upcoming expiration date and begin negotiations for billing the laboratory for the TC (client bill).  You should work with your hospital clients to negotiate the appropriate reimbursement rates, as they will be responsible for paying you for the technical services you are providing.  It may be helpful to advise your hospital that they need to add the appropriate CPT/HCPCS codes, revenue codes, and descriptions for the technical component of the pathology services to their chargemaster (CDM).

In situations where the laboratories client bill (direct bill/account bill) the hospitals, there will not be any change necessary.

Please contact PIMS to find out how this affects you and what actions you should take to preserve your business.  We can assist with review of your current arrangements, as well as with hospital negotiations. 

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