Laboratory Question for the Week of April 2, 2018

Laboratory Compliance Question of the Week


My question relates to the Medicare 70/30 rule for referral testing. In the definitions and examples provided by the Centers for Medicare & Medicaid Services (CMS), the terms “related” and “non-related” laboratories are used. Is a joint venture partner’s laboratory a related or non-related laboratory?


Most of what we have read indicates that the CMS guidance around the 70/30 rule is open to interpretation. It suggests that the laboratory should maintain documentation of how they determine what tests are included in the total test count and the referred test count, as well as documentation of the calculation itself.

A joint venture laboratory probably would be considered a related laboratory, but you may want to seek a legal opinion. Transmittal 85 (published in 2004) includes the following statement that suggests that a laboratory with concern about the right to bill for testing should seek advice on this topic:

If it is later found that a referring laboratory does not, in fact, meet an exception criterion, the carrier should recoup payment for the referred tests improperly billed. The RO [regional office] shall take whatever action is necessary to correct the problem.

For transmittal 85, go to

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