Physician groups may opt for a fee-for-service system. This system charges patients a specific amount for each service received. Included are laboratory tests. The advantage of this is that revenue for laboratory tests is based on the volume of services. Most insurance providers, including Medicare and Medicaid, cap the amount they will pay for these services based on a coding system. They will not pay for services that do not match a diagnostic code. Patients must be informed if the tests ordered are not under the diagnostic code for their condition. The patient then has the option to refuse the testing or sign an advanced beneficiary notice. In this case, the patient is responsible for the cost of testing should the healthcare organization decide not to pay for the test. When physician groups opt to take an assignment of the amount of payment from organizations such as Medicare-Medicaid, their pricing is capped for those groups. Assignment means that the health care provider accepts the Medicare-approved amount as 80% of the payment for covered services. The patients receiving the benefit are responsible for the other 20%, and the health care provider cannot charge more than the Medicare assigned payment amount for the test. A physician who doesn't accept assignment can charge up to 15 percent above the Medicare-approved amount for a service (i.e., laboratory test). The patient is responsible for the additional charge, on top of the regular 20 percent share of the cost. A majority of physician groups opt for assignment.
