Pathology Services Billing Restrictions

DPC physicians almost always negotiate low costs for pathology services - much lower than their standard third party fee for service colleagues.  In these arrangements the lab typically bills the practice directly for each lab orders, and the DPC physician usually turns around and passes those savings on to the patient at minimal to no markup, while other practices bundle these prices into the membership fee  (a practice Dr. Eskew does NOT recommend for many reasons).  From the pathology lab's perspective, in most DPC discount arrangements they are billing the client (the physician) rather than the patient (direct billing).  Historically some clients had marked up prices a great deal above the negotiated discount rate.  This angered insurance companies and government payors, and many argued that it was a form of unlawful fee splitting.  As a result, we now have multiple pieces of guidance available from the College of American Pathologists discussing the 19 states with "direct billing" laws designed to prohibit these DPC arrangements, 8 states with anti-markup laws designed to limit potential abuse, and 16 states with disclosure laws.  As DPC physicians we need to promote state disclosure laws designed to promote greater price transparency, and we need to highlight how the ironically titled "direct billing" laws harm patient care by resulting in higher costs for DPC patients.  The College of American Pathologists has a position statement on the issue, but clearly has overlooked the direct primary care community.   The American Society for Clinical Pathology also discussed the issue in this five page manuscript, but also failed to consider what their endorsement of direct billing requirements would mean for DPC practices.  

If you are in a state that prohibits "client billing" meaning that the lab is not permitted to charge your practice and must instead bill the patient, this will typically mean that patients face inflated laboratory costs.  Ironically these types of states are often referred to in the pathology world as "direct billing" states - meaning that the lab is required to directly bill the patient and may not bill the primary care physician.  Here is a statement from the College of American Pathologists, and here is a list of states by category (if your state is on the "direct billing" list this will likely be a hurdle for your practice).