CODING Q&A: Get Ready for More Scrutiny on Diagnostic Tests

Changes are coming to the way tests must be ordered.


Within the Medicare program, ophthalmologists are paid for a diagnostic test with about 90% of all eye exams. An important aspect of testing is the order for the service. As Medicare and other payers increase scrutiny, a clearer understanding of both longstanding and new regulations on this subject is helpful.

Q. What is an order for a diagnostic test?

A. The medical rationale for diagnostic testing starts with the examining physician’s need for more information than is attainable from the patient’s history and exam. The Centers for Medicare & Medicaid Services (CMS) defines an order as “communication from the treating physician/practitioner requesting that a diagnostic test be performed for a beneficiary” and goes on to describe ways an order may be communicated to a testing facility. Since most of the tests you order will be performed by your staff, an order in your medical record suffices.

The Code of Federal Regulations further states, “All … diagnostic tests must be ordered by the physician who is treating the beneficiary, that is, the physician who furnishes a consultation or treats a beneficiary for a specific medical problem and who uses the results in the management of the beneficiary’s specific medical problem. Tests not ordered by the physician who is treating the beneficiary are not reasonable and necessary.”1

A test personally performed by the physician does not need an order. For example, extended ophthalmoscopy cannot be delegated to auxiliary personnel, so an order isn’t necessary — the ophthalmologist does it.

Suzanne L. Corcoran, COE, is executive vice president and founder of Corcoran Consulting Group (CCG), San Bernardino, California, which specializes in coding and reimbursement issues for ophthalmic practices.

Q. Who may order a test?

A. A provider “orders” nonphysician services for the Medicare beneficiary, such as clinical laboratory or imaging services. The national provider identifier (NPI) for the individual physician identifies the ordering physician. Since 2016, the NPI on a claim for “incident to” services and supplies, including diagnostic tests, is more strictly regulated. §1862(s)(2)(A) of the Social Security Act specifies that services and supplies furnished as incident to a physician’s professional service (“incident to” services) are “of kinds which are commonly furnished in physicians’ offices and are commonly either rendered without charge or included in physicians’ bills.”

The CY 2016 Physician Fee Schedule Final Rule2 amended the “incident to” regulations to state explicitly that only the physician or other practitioner who directly supervises the auxiliary personnel who provide the “incident to” services may bill Medicare for the “incident to” services.

CMS is not requiring the supervising practitioner be the same individual who orders or refers the beneficiary for the services, or who initiates treatment. Rather, CMS is requiring that under circumstances where the supervising practitioner is not the same as the referring, ordering, or treating practitioner, only the supervising practitioner may bill Medicare for the “incident to” service. Additionally, “As a condition of Medicare payment, auxiliary personnel who, under the direct supervision of a physician or other practitioner, provide incident to services to Medicare beneficiaries must comply with all applicable federal and state laws. This includes not having been excluded from Medicare, Medicaid and all other federally funded health care programs.”2

In most cases, the physician’s examination of the patient leads to an order for one or more diagnostic tests, which may be performed on the same day or later. Rarely, the ophthalmologist’s order for a test precedes the exam, such as when it is based on information about the patient received prior to a face-to-face encounter. For example:

  • You receive a copy of the chart notes from a referring doctor who asks for a consultation and, after reviewing the chart, order a diagnostic test to be administered upon the patient’s arrival.
  • Your technician takes a history from a new patient and finds something concerning. The technician brings the information to you, the physician scheduled to see this patient soon, and you order an immediate diagnostic test based on it.
  • A patient calls and speaks directly to the physician, who orders a diagnostic test based on the phone call.

The initial decision to order a test is motivated by a suspicion of a disease or illness due to patient symptoms, clinical signs, and/or prior medical history suggestive of a disease process. Testing without suspicion of a disease or illness is considered screening and is not usually covered. An order, based on individual information about the patient, must designate a valid clinical reason for the diagnostic study. The results of the testing combined with other data can help the physician plan appropriate therapeutic intervention. Palmetto GBA states, “While a physician order is not required to be signed, the physician must clearly document, in the medical record, his or her intent that the test be performed and the medical record must be authenticated by signature of the treating physician.”3

Avoid the use of standing orders. Retina specialists see patients for specific conditions. Establishing a protocol based solely on being a retina specialist does not support an order. Diagnostic test orders must be specific to a patient and generated on a case-by-case basis.

Repeat testing is necessitated by disease progression, the occurrence of a new disease, or planning for additional surgical treatment. Repeated tests of the same, unchanged condition are usually unwarranted. Too-frequent testing can garner unwanted attention from Medicare and other payers. RP


  1. CMS. 42 CFR 410.32. Diagnostic x-ray tests, diagnostic laboratory tests, and other diagnostic tests: conditions. .
  2. CMS. Medicare program; revisions to payment policies under the physician fee schedule and other revisions to Part B for CY 2016. Federal Register 80 FR 70885. Published November 16, 2015. .
  3. Palmetto GBA, JM Part B. Orders for diagnostic tests. Last updated February 12, 2018. .