Direct Billing for AP Services

Washington is the latest state to enact direct billing legislation for anatomic pathology (AP) services. The legislation, signed into law April 20, will ensure that patients are billed for AP service only by the physician who performs or supervises the service. Similar legislation is pending in Indiana, and if approved, Indiana would become the 18th state with a direct billing law. The College of American Pathologists (CAP) has long supported direct billing of pathology services and has opposed the practice of client billing, in which a treating physician realizes a profit by charging a patient full price for a laboratory service the physician received at a discount. In some cases, a physician marks up the price of the service to widen the profit margin. Client billing gives providers an incentive to choose a laboratory test based on price, rather than quality. It also creates an incentive to order more tests than necessary, as each service ordered results in an incremental increase in profit. While some states have passed anti-markup and disclosure laws, which allows the referring physician to bill the client but not mark up the service, it appears that more states are eyeing direct billing as a way to protect patients from being overcharged.