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Illinois Legislature Passes Anti-Markup Law Applicable to Pathology Services

Written by: Karen Lovitch and Stephanie Willis

Yesterday both chambers of the Illinois legislature voted to override the Governor's amendatory veto and passed Public Act 098-1127, which prohibits a physician from charging a markup on anatomic pathology services if the physician orders but does not supervise or perform the service. The law does, however, permit the physician to add on a “specimen acquisition or processing charge” if it is limited to actual costs incurred for collection and transportation and separately coded as a service distinct from the performance of the anatomic pathology service. If the physician decides to bill for the service despite the inability to charge a price that is higher than what the performing laboratory was paid, disclosure requirements apply. Although the law does not specify an effective date, it will take effect on January 1, 2015, according to a representative from the legislative information office.

Illinois joins a number of other states that already have enacted a markup prohibition.  Virginia, for example, passed similar legislation earlier this year.  Other states have chosen to limit a physician's ability to profit from laboratory services that he or she orders by requiring direct billing or disclosure when submitting claims.  Before entering into arrangements involving purchased anatomic pathology or other laboratory services, physicians and laboratories should be aware that applicable state laws can vary widely and should be analyzed carefully to ensure compliance.  The College of American Pathologists' website provides additional information regarding the state laws that apply to anatomic pathology billing as well as the history of the Illinois legislation.

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Karen S. Lovitch

Chair, Health Law Practice & Co-Chair, Health Care Enforcement Defense Practice

Karen advises industry clients on regulatory, transactional, operational, and enforcement matters. She has deep experience handling FCA investigations and qui tam litigation for laboratories and diagnostics companies.