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A U.S. District Court judge has dismissed a case against CMS which had blocked the enforcement of a provision in the Anti-Markup Rule intended to limit the ability of non-pathology physician groups to profit from pathology services performed in so-called “pod” laboratories for lab work.

The ruling by Judge Rosemary Collyer comes less than a month after she had ordered a temporary injunction blocking the provision while she further weighed its implications.

The Anti-Markup Rule is intended to discourage clinicians from using such pod labs, which are sites for lab work located miles from the physicians’ offices in which the physician groups furnish their normal range of services, to markup the cost of anatomic pathology services.

The plaintiffs in the case -- Uropath, which manages various pathology laboratories, and its affiliated laboratories and physician groups -- had filed the lawsuit against Michael Leavitt, secretary of the Department of Health and Human Services, claiming that they would lose a substantial portion of their business and would be forced to close their laboratories if the provision was enforced.

Collyer concluded that the Court lacked the jurisdiction to hear the claims and ruled “Plaintiffs Uropath and [Rebecca Page, Uropath’s director of clinical operations], do not participate in Medicare and have no standing to challenge the Anti-Markup Rule,” Collyer wrote in her decision.

CMS has argued that such markup practices allow physician groups to “realize excessive profit when billing Medicare for services…may lead to patient and program abuse in the form of overutilization of services and may result in higher costs to the Medicare program” and “can distort medical decision-making, cause overutilization, increase costs and result in unfair competition,” according to reports on the pathology anti-markup lawsuit.