Podcast

Apr 23, 2026

Roetzel HealthLaw HotSpot: Avoiding Costly Mistakes Under Medicare’s Anti-Markup Rule

Host Ericka Adler is joined by Roetzel shareholder Christina Kuta to break down the anti-markup rule and what health care providers need to know to stay compliant. They discuss how the rule applies to diagnostic testing services billed to Medicare, when billing arrangements may raise compliance concerns, and share practical examples to illustrate how it works in real-world scenarios. They also cover the potential consequences of noncompliance, including repayment obligations, penalties, and risks that may arise during audits or practice sales, and discuss what providers should be doing now to avoid costly mistakes.

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Transcript

Ericka Adler:
Hi everyone, welcome to the HealthLaw HotSpot. I'm Ericka Adler, and I'm joined by my fellow shareholder, Christina Kuta. Today, we're going to be talking about something that doesn't come up very often in more current educational lectures and podcasts, but remains a big problem for a lot of our clients, and that is the anti-markup rule. Some of you may have heard this, you may have read about it, maybe at some point your lawyer lectured you about it, but I'm willing to bet that many of you have simply forgotten about it. So, we're going to revisit this topic, and we're going to start off by having Christina explain what the anti-markup rule is.

Christina Kuta:
Sure. As Ericka indicated, this is a rule that's been around for a bit, and I find a lot of the clients we work with either didn't know about it, aren't quite sure how it works, or like Ericka indicated, have sort of forgotten at this point and are not in compliance with the anti-markup rule. The anti-markup rule is a CMS regulation related to billing for certain diagnostic testing services- things like pathology or radiology-type services, MRI, X-ray. And it essentially applies when a physician orders the professional component or the technical component of a diagnostic test, and that physician or that physician's group practice bills for the test, but the actual physician who provided supervision of the technical component, or actually provided the professional component, does not share a practice with the billing physician who billed and collected for the test. And it applies only to Medicare. So, what we're talking about today doesn't apply to other payers, it's strictly a Medicare rule.

Ericka Adler:
Okay. We'll give an example because that's so hard to envision.

Christina Kuta:
Absolutely. So, what sharing of practice means, let's kind of go over that first, then we'll give some examples and walk through them. Sharing a practice means the physician that performs the professional component or technical component provides at least 75% of their services for the billing provider, or the performing physician provided the professional component or the technical component physically in the office where the physician who ordered the test is regularly providing services. 

Let's go through some examples. I find this is super helpful with the markup rule. Let's say you have a medical practice and they engage a radiologist to read some films. The radiologist reads off-site; he or she is sitting at home, and that radiologist provides multiple services for multiple medical practices. So, he or she is not reading the films on-site, they're at home, and they're not spending 75% of all their time in a given year for any one practice; they're doing it for multiple practices. In that example, the anti-markup rule applies. And we'll talk about what that means when we go through a few of the other examples. 

Another example: the practice engages a radiologist for off-site reading, and that radiologist bills Medicare for the reads. The practice doesn't pay him or her anything. Anti-markup rule doesn't apply, because remember, the rule only applies if the performing physician is different than the billing physician. 

Let's talk about another example: the practice engages a pathologist to read some slides, and the pathologist reads slides and bills Medicare directly for the professional component. Again, because the pathologist is the one providing the service and the pathologist is one billing for the service, anti-markup rule doesn't apply. 

One more example: the practice engages a radiologist to perform reads, and the radiologist is physically located in Office A of the practice when they read the test, but the physician who orders the test only provides services in Office B for the practice and Office B is several miles away. The anti-markup rule will apply because the radiologist's services were not performed on-site where the ordering physician regularly provides services, even though they provided services in the office of the practice for which the ordering physician works. So again, it's a very fact-specific rule, but it is a rule that is enforced by Medicare, so it's something that, if you're in a situation where you are engaging a provider, a physician, to provide a service that's a diagnostic testing service, and that physician doesn't work for you full-time, or isn't providing services in your office, and Medicare patients are involved, you should always have someone review if markup would apply.

Ericka Adler:
What are the repercussions of screwing this up?

Christina Kuta:
Okay, so if markup rule applies, the billing provider is limited to what they can pay the performing physician, or what they can charge Medicare. Essentially, anti-markup reads, no markup. Medicare does not want the billing practice to make any money off the test if the test being done violates the anti-markup rule. If in one of the examples I gave, let's say the example where the radiologist reads from home, and the radiologist does not provide 75% of their services for the billing practice, then that test, the read that that radiologist does, is subject to the markup rule. So, what that means is, the practice cannot bill Medicare more than what they're paying the radiologist to perform that service. So, let's say Medicare pays $25 for that read. They can't pay that performing radiologist $20 and pocket $5, Because the anti-markup rule applies, they either have to take the $25 from Medicare and pay the $25 to the radiologist, or they have to be paying the radiologist more than the amount they're actually getting paid for Medicare. So, anti-markup means essentially no profit off those tests. If you violate the anti-markup rule, the service subject to the anti-markup rule are not payable by Medicare, and the practice that billed could be subject to fines and penalties for violating the markup rule. Also, it's possible, and if you find yourself in this position, you should discuss with, knowledgeable legal counsel, it's possible you may be in a position where you have to make a self-disclosure about violations of the anti-markup rule and the related claims through one of the protocols, or make a voluntary repayment to the MAC, of the claims that violated the markup rule. And if it's a voluntary disclosure, pursuant to a self-disclosure protocol, typically that's a 6-year look-back period.

Ericka Adler:
Now, this is a rule that is violated likely every day by thousands and thousands of practices across the country. The fact is that people, either they didn't know or they've forgotten about this rule. It's very common for practice to hire somebody to interpret all kinds of diagnostic tests. And, you know, usually they're just negotiating and paying the doctor something, and then billing what they bill. Usually very little discussion about how those two even fit together, right? The safest thing really is to have the interpreting physician just do the billing separately. Then you don’t ever need to wonder if you're in compliance or not. And of course, before everybody freaks out after hearing this, as Christina said early on, it's Medicare-specific, right? So, if you're not doing Medicare, you don't need to worry about reaching out to your lawyer and being worried that you're in violation of the law. It's very specific to Medicare. But this is one of those things that, at some point when it first came out, everybody was talking about it, everyone was having their contracts reviewed, and lawyers knew to set things up properly, but I actually do believe there's a lot of younger lawyers - kind of aging us here, Christina - that, because this law is not really talked about all that much, they may not be as familiar with it, may not be looking for it, whether they're the one writing the contract or reviewing the contract. So, bringing this to your attention, because recently, we have run into some issues where clients have been getting in trouble for this, so it seems to be making some type of resurgence. I hope most people will catch it before anyone gets in trouble, but that's the reason why we're doing this topic.

Christina Kuta:
And I can tell you that part of the reason I think that it sort of lost favor in the hearts and minds of some health care attorneys and clients is because of COVID. Because during COVID, the regulators loosened some of the Stark and kickback requirements in order to sort of meet the pandemic. But they did not waive, or any way minimize the impact of the anti-markup rule. And during that time period, I spoke to folks that I consider to be sophisticated health care lawyers who said, oh no, it won't be enforced during the pandemic, you know, they're they're limiting enforcement of certain Stark and kickback, rules, so I don't think the anti-markup rule's going to be an issue during this period. But I had occasion to actually reach out to someone at CMS, who has some authority there about this, and they confirmed in writing that the anti-markup rules were in full force during COVID. They were not reduced or limited in any way. So, I think during that time period, people just sort of thought it wasn't going to be an issue even though it still was an issue, and it sort of, you know, kind of slipped out of people's minds, and like you indicated, Ericka. We've had some clients have issues with this. Particularly, this comes up when a client wants to sell their business, or they're maybe going through a process where someone's doing some due diligence and vetting their business for a potential purchase, and they have discovered issues with the markup rule, and we've had clients that have had to make significant repayments to Medicare in order to be able to sell the practice, because the buyer said we're not going to take on this risk. Because you have several years of blatantly violating the markup rule.

Ericka Adler:
Well, hopefully this is a helpful topic for someone out there who's listening. If you have any questions, we hope that you'll reach out, either to myself or Christina. We're happy to answer any questions, and feel free, anytime, if you have related questions, to contact us. Anything else you want to add?

Christina Kuta:
Yes, I want to add one more thing. There are state markup laws that don't just apply to Medicare in certain states. Illinois, for example, prohibits the markup of anatomic pathology services. It applies to all payers, and it's way more restrictive than the Medicare anti-markup rule. So, if you're looking into this issue from a Medicare perspective, depending on what state you're located in, you should also look at your state laws to see how they may apply as well, and how it may expand the payers where markup is prohibited.

Ericka Adler:
Okay, great. Thanks for bringing that up. Alright, I think that's it for this topic. If anyone has any questions, reach out. This is the HealthLaw HotSpot, and we'll see you next time.