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Annual Laboratory Compliance Notice

To Health Care Providers and Professionals

This notice is being issued in accordance with guidance issued by the Office of Inspector General (OIG) in the U.S. Department of Health and Human Services (DHHS). The OIG recommends that a clinical laboratory communicate the following information to healthcare providers and professionals to inform them of the laboratory’s policies and regulations that govern laboratory services. 

Medical Necessity

Medicare does not generally pay for screening services. Only medically necessary tests should be ordered; if not all component tests of a panel are medically necessary, only order medically necessary components.  The OIG’s view is that using custom panels/profiles may result in ordering tests which may not be reasonable, necessary or paid, and the OIG takes the position that a physician or other individuals authorized to order laboratory tests, who knowingly causes a false claim to be submitted may be subject to sanctions or remedies under criminal, civil, or administrative law, such as the False Claims Act.

Further, to support a determination that a laboratory diagnostic test is reasonable and necessary, adequate documentation must be available to demonstrate a health care professional’s order and the medical necessity of the diagnostic tests.

Diagnosis Information

Section 4317 of the Balanced Budget Act of 1997 requires the physician or authorized ordering provider to submit diagnosis information on the laboratory order for submission of a Medicare insurance claim.  The diagnosis information supplied should accurately describe the patient’s condition on the date of service as documented in the patient’s medical record. 

Reflex Testing

Reflex testing occurs when an initial test results are positive or outside normal parameters and indicate that a second related test is medically appropriate for patient care.  Unless other specific instructions are provided, all screening tests ordered with non-negative results, as well as unexpected negative results for an indicated, prescribed medication will be confirmed with another test using a different, more sensitive and specific method (e.g.: LCMSMS, GCMS). Each confirmation test will result in an additional charge. 

Medicare National and Local Coverage Determinations

Coverage determination policies define the conditions for which the included tests are covered or not or reimbursed by Medicare, typically by reference to specific ICD-10 codes that are deemed to support coverage. 

Medicare Local Coverage Determination (LCD) for Urine Drug testing (L35006) can be found on  the  Centers for Medicare/Medicaid Services (CMS)  web  database  of  coverage  decisions at  the  following  link :

If a particular test ordered for a patient will likely not be covered as it does not meet Medicare NCD or LCD medical necessity guidelines, the patient should be provided with an Advance Beneficiary Notice (ABN). Providing the prescribed CMS ABN advises the patient of her/his potential financial responsibility for a diagnostic test if Medicare denies coverage and payment.

Medicare Payment Amounts

Medicare payment for covered diagnostic laboratory tests is made on the basis of an established fee schedule.

Depending upon the specific drug tests performed, the presumptive (screening) and definitive (confirmatory) tests performed by Drugscan are billed to Medicare using the codes in the table below.   Medicare payment amounts in the table are based on 2021 Medicare National Limitation Amounts (NLAs) for presumptive (screening) and definitive (confirmatory) drug testing.  


Short Description

National Limit


Presumptive drug test, chem analyzer



Definitive drug tests, 1-7 drug classes



Definitive drug tests, 8-14 drug classes



Definitive drug tests, 15-21



Definitive drug tests, 22+ classes


The comprehensive 2021 Medicare Clinical Laboratory Fee Schedule can be viewed and downloaded at:‐fee‐service‐paymentclinicallabfeeschedclinical‐laboratory‐fee‐schedule‐files/21clabq1 

Click and open 21CLABQ1 (

Note that Medicare may not pay the actual amounts listed above for testing performed, due to limited coverage policies (see Medical Necessity section above), and/or payment policies that limit the tests or number of units paid for specific CPTs or HCPCs.  Also, Medicaid fees will be equal to or less than the Medicare amounts. 

Clinical Consultant

Consistent with the requirements of the Clinical Laboratory Improvement Act (CLIA), Drugscan has a clinical consultant who is available to address ordering, coverage, and other clinical information to health care providers and professionals:

Gina Cooper, MSN RN
Director of Toxicology Services


Drugscan is committed to being fully compliant with all applicable Federal, State, and local laws and regulations. It has a comprehensive compliance program that follows the guidance set forth by the DHHS OIG. Further, it encourages the reporting of any compliance related concerns, issues, or questions.

Drugscan has a Compliance Hotline, for the confidential reporting of any compliance issues, which may be anonymous if preferred.

The Hotline Number is: 267-960-3470.

Emails may be sent to: