Final rules in 2009 Medicare Physician Fee Schedule disappoint some, elate others

The 2009 Medicare Physician Fee Schedule reflects the recent tendency of the Centers for Medicare and Medicaid Services to propose stringent reforms for in-office imaging and independent diagnostic imaging facilities in the summer and decide against their implementation when the final MPFS rules are published in the fall.

This year, CMS deferred taking action on its proposal that nonhospital providers of testing services have to enroll and meet the performance standards for independent diagnostic testing facilities (IDTFs). The decision against implementing the rule surprised some observers who had hoped CMS would subject in-office services to more stringent quality standards.

"CMS worked hard to develop an effective tool to try to curtail the increasing utilization of high-demand diagnostic imaging services, but in the end they failed miserably," said Thomas Greeson, an attorney with Reed Smith LLP in Falls Church, VA.

In the process, CMS created a loophole in revisions to the anti-markup rule intended to take the profit out of the reassignment of benefits for diagnostic tests billed by one entity but performed at a discounted rate by an outside physician or imaging service. The loophole in the anti-markup rule will allow in-office services to appoint a nonradiologist to serve as the supervising physician for their equipment, Greeson said.

Specifically, the anti-markup rule will not apply when the service is supervised by a physician in the ordering physician's group who spends at least 75% of his or her professional time providing services to that group practice.

"As long as an individual holds a medical degree and meets that qualification, he or she can supervise MR, CT, or PET without any other qualification," Greeson said.

In the July 2008 proposed rules, CMS suggested that supervising physicians had to be proficient in the performance and interpretation of the test billed to Medicare Part B, a requirement that radiologists would have welcomed. In the final rule, effective Jan. 1, 2009, physicians engaged in high-tech in-office imaging will not be required to assign supervisory responsibility to a qualified physician outside the group.

"Now, every multispecialty clinic can use one of its own to be the supervising physician," Greeson said. "Despite CMS's effort to create something that can have an impact, this is totally ineffectual."

In a written statement, the American College of Radiology expressed its position that all providers in every practice setting should be required to meet all quality and performance standards that are required of IDTFs and accredited sites.

CMS argued that if a physician is willing to provide a service for less than the rates paid in the MPFS, then Medicare should be billed the lower rate and realize the profit. After CMS reviewed the comments from this proposed rule, however, it relaxed its requirements on how it defines physicians who are part of a practice and the parameters for site of service where the procedures are performed, according to an ACR evaluation.

The anti-markup rule still applies to the professional component involving interpretative services, Greeson said. CMS prohibits IDTFs and other types of high-tech freestanding imaging services from pocketing the difference between the professional fee, billed according to the terms of the MPFS, and a discounted rated negotiated with outside physicians.

The decision to delay applying IDTF standards to in-office imaging also means that referring physicians who perform MR, CT, or PET/CT in their offices will not be required to seek facility accreditation in September 2009, as CMS had proposed this summer. That requirement will be delayed until January 2012, when an accreditation requirement enacted by Congress this summer as part of the Medicare Improvements for Patients and Providers Act of 2008 kicks in.

The Medical Imaging and Technology Alliance, a trade group that represents imaging device manufacturers, applauded that aspect of the new rules.

"CMS had decided that it doesn't have to adopt that proposal, thanks to what Congress has done," said Maureen Zilly, MITA director of government relations. "Otherwise, it would have been duplicative and burdensome for providers to have to comply with the new federal law and Medicare regulations as well."

Concerning payment rates, the conversion factor for the MPFS will be $36.066, a 5.3% decrease from the 2008 conversion factor of $38.08, according to an ACR evaluation. The new rates, effective in January, followed Congressional action earlier this year that raised the 2008 conversion by 1.1%. The ACR noted that the Medicare improvements act also ordered the removal of $5 billion of impacts from the last five-year review as a budget-neutral adjustment to the physician work values of the MPFS, instead of applying them to the 2009 conversion factor.

The ACR estimated that the budget-neutral impact of the third five-year review led to an 8% decrease in the professional component for 2007 and 2008. This 8% cut will be rolled back into the fee schedule calculations, and its impact will be felt through an adjustment in the conversion factor. For radiologists, this translates into a 2.7% increase in their professional component for 2009, though the technical component, which was not affected by the third five-year review, will be cut 5.3%.

For the Hospital Outpatient Prospective Payment System, CMS announced a 3.6% increase in the conversion factor, from $63.694 for 2008 to $66.059 in 2009, according to the ACR.

Five new composite ambulatory payment classifications for HOPPS will bundle payments for ultrasound, CT/CT angiography without contrast, CT/CTA with contrast, MR/MRA without contrast, and MR/MRA with contrast. This means that when more than one ultrasound, CT or CTA, or MR or MRA study is performed in the same session, the hospital will submit the claim for the multiple studies and Medicare will send back one bundled payment, according to the ACR.

The college expressed concern that the new payment formula could led to reimbursement cuts of as much as 75% for the third and more studies that are performed during a specific session. It warned that these severe cuts could have significant effects on payments for trauma cases.