CMS eliminates separate hospital payments for ‘clinically unrelated’ lab tests; L1 modifier

As part of the Hospital Outpatient Prospective Payment Changes for 2017, CMS has announced the discontinuation of the ‘L1’ Modifier. In CY 2014, CMS implemented modifier L1 to allow for separate payment of laboratory tests for use when (1) laboratory tests were the only services on the claim, or (2) when the laboratory test or tests were “unrelated” to the other services on the claim, meaning that the laboratory test was ordered by a different physician for a different diagnosis than the other services on the claim. In CY 2016, CMS implemented status indicator Q4, which allows for automatic separate payment for laboratory tests when these are the only services on the claim without the use of the L1 modifier. For CY 2017, CMS is finalizing its proposal to discontinue separate payment for “unrelated” laboratory tests, and, therefore, discontinue the L1 modifier. In addition, CMS is expanding the laboratory packaging exclusion that currently applies to Molecular Pathology tests to all laboratory tests designated as advanced diagnostic laboratory tests (ADLTs) that meet the criteria of section 1834A(d)(5)(A) of the Act.

Source: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-11-01-3.html