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The Health Care Financing Administration (HCFA) defines an independent physiological laboratory (IPL) as an entity operating independent of a hospital, physician's office or rural health clinic. Testing modalities performed by IPLs include, but are not limited to, neurological and neuromuscular tests, echocardiograms, ultrasounds, x-rays, pulmonary function tests, cardiac monitoring and nuclear medicine testing. Initially, Medicare only covered diagnostic tests that were performed by a physician, hospital or other entity certified by the program to perform the test. Beginning January 1979, HCFA decided that diagnostic services performed by these entities qualified for Medicare reimbursement and began assigning provider numbers to IPLs. To date, Medicare has issued approximately 5,000 unique IPL provider numbers. Nearly $129 million was paid to IPL providers in 1996. Vulnerabilities associated with this industry have been widely recognized by HCFA and its carriers. Both have taken steps to address these vulnerabilities.