2007 reimbursement guide: What you need to know

December 28, 2006

'Tis the season for congressional wrangling over Medicare reimbursement to physicians. Before the 109th Congress adjourned, it did not eliminate reimbursement reductions to the technical side of imaging, which come from two reimbursement reductions included in the Deficient Reduction Act of 2005. Private payers also will be very quick to take advantage of these cuts, if they haven't already.

'Tis the season for congressional wrangling over Medicare reimbursement to physicians. Before the 109th Congress adjourned, it did not eliminate reimbursement reductions to the technical side of imaging, which come from two reimbursement reductions included in the Deficient Reduction Act of 2005. Private payers also will be very quick to take advantage of these cuts, if they haven't already.

Another factor affecting radiology is the lack of consistent national reimbursement for CT angiography. This, combined with new rules for Independent Diagnostic Testing Facilities (IDTF), either add more work without reimbursement or increase costs to remain in compliance with Medicare regulations without increased compensation.

Medicare physician fee schedule

The good news is that on December 8, the Senate passed legislation necessary to prevent a 5.1% reduction in the physician fee schedule. This follows the House vote that approved the legislation.

Instead of being reduced, the Medicare conversion factor for 2007 will be the same as that for 2006. The bill now goes to the White House for the president's signature, which is expected. Included in the bill is the opportunity for some physicians to receive a "bonus" payment in 2007 for participating in a voluntary physician reporting initiative.

The Medicare conversion factor for 2007 was scheduled to drop from 37.8975 to 35.9848, which would have equated to a 5.04% drop in the Medicare physician fee schedule for services provided after Jan. 1. The cuts each year are due to a provision of the regulations referred to as the sustainable growth rate formula (SGR).

The Medicare Payment Advisory Commission is working on a report that would suggest or propose long-term resolution to known deficiencies in the SGR that prompt Congress to act each year if they wish to override physician reimbursement cuts. This MedPAC report is required by the Deficit Reduction Act.

Deficit Reduction Act

The Deficit Reduction Act of 2005 passed the House on Feb. 1, 2006. The cuts disproportionately affect radiology. Many in the industry feel that the Congressional Budget Office greatly underestimated the policy's financial impact on radiologists.

The cuts, viewed as an offset for the $7.3 billion necessary to allow the 2006 physician payment freeze, reduce reimbursement for imaging services by $2.8 billion over five years. Congress ignored MedPAC recommendations that lawmakers address the unnecessary use of medical imaging by nonradiologists as part of an effort to address imaging expenditures. These cuts will have little, if any, effect on the overuse of imaging procedures by nonradiologists. Based on Congressional Budget Office estimates, the specialty of radiology will essentially absorb more than 38% of the offset for the costs for the 2006 physician payment freeze ($7.3 billion) included in the DRA legislation.

There are two major provisions of the DRA legislation that have a negative impact on radiologists. The first involves imaging services performed in nonhospital outpatient settings. The legislation, effective Jan. 1, reduces the technical component reimbursement for nonhospital outpatient imaging to the lesser of the Hospital Outpatient Payment System (HOPPS) or the Medicare fee schedule payment. (This provision does not affect the professional component.) The new payment system will now base a large segment of imaging reimbursement on a payment methodology entirely different from the current resource-based methodology.

The imaging services affected include x-ray, ultrasound, PET and nuclear medicine, MRI, CT, and fluoroscopy. Diagnostic and screening mammography are excluded from this provision. The estimated reductions are shown in the chart, "Reimbursement reductions by modality."

The second area of the legislation, effective Jan. 1, continues the multiple procedure payment reduction for the technical component of certain diagnostic imaging procedures. There is full payment for the first procedure, but a 25% reduction in the technical component payment for additional imaging procedures furnished on contiguous body parts during the same session. This is a smaller reduction than the 50% that had previously been proposed for 2007.

Both provisions apply to technical component services and the technical component of global services. The professional component is paid in full for all procedures. For imaging services subject to both the multiple imaging reduction policy and the outpatient hospital cap, CMS is applying the multiple imaging adjustment first and the outpatient HOPPS cap second.

Independent Diagnostic Testing Facilities

IDTFs will have to meet additional standards or could be excluded from the Medicare program. The new standards stem from a 2004 HHS OIG audit that found $71 million in erroneous payments to IDTF. Some of the new standards include liability insurance limits, unannounced on-site inspections by CMS and limits on how many IDTFs a physician can supervise.

AAA screening

Abdominal aortic aneurysm screening has been approved for reimbursement and will go into effect on Jan. 1. DRA allows for reimbursement of one ultrasound screening per patient for AAA for services furnished on or after that date. The screening ultrasound is subject to eligibility and other limitations but is not subject to the annual Part B deductible.

CTA reimbursement

There has been a lot of anticipation regarding the issuance of CPT codes for CTA, but this year will not see them. In fact, we may need to wait as long as 2009. Issuance of a CPT code for a procedure is typically the last step in a long approval process that results in universal reimbursement. Even though we will not have CPT codes for CTA in 2007, the reimbursement coverage for these exams is improving.

Last year the American College of Radiology, the American College of Cardiology, and the Blue Cross and Blue Shield Association worked together to develop eight new Category III codes. These will be used to report cardiac CT and CTA for evaluating coronary artery calcification, cardiac structure and morphology, and cardiac function and coronary vasculature. Various permutations of studies currently being performed are described by these codes, which is expected to lead to more accurate reporting of the work involved. Data collected by tracking these codes will help determine what will be included in the eventual development of CPT codes for reporting cardiac CT and CTA.

2007 CPT code changes

Every year, the AMA advisory panel on coding revises the CPT book. There are many changes to the CPT for 2007 that will affect radiology. See the chart, "CPT changes for 2007". The changes can be broken down into additions of new codes representing newly described procedures and assignment of new CPT code numbers to existing procedures. Some of the changes in the latter category also contain revised descriptions.

Functional MRI codes 70554 and 70555 were established to report MRI performed in association with neurofunctional testing and is accomplished by imaging patients while they are performing specific tasks. Two new ultrasound codes were added to report nuchal translucency measurement, a procedure performed for the detection of chromosomal abnormalities. The procedure can be performed using either the transabdominal or transvaginal approach.

Interventional radiology also received some new codes this year. Code 19105 was added to describe cryosurgical ablation of a fibroadenoma using ultrasound guidance. Each fibroadenoma that is ablated is reported separately. Codes 22526 and 22527 were added to report intradiscal electrothermal annuloplasty. Code 22526 is reported one time when the procedure is performed bilaterally. Code 32998 was added to report percutaneous radiofrequency pulmonary tumor ablation. Codes 77013, 77022, and 76940 can be reported in addition for performance of CT, MRI, and ultrasound imaging when imaging guidance and monitoring of visceral tissue ablation are performed.

Code 37210 was added to report embolization of uterine fibroids. Prior to CPT 2007, this same procedure was coded with 37204 and 75894. The new code, 37210 has been valued to include embolization, selective catheterization, and radiological supervision and interpretation. Codes 49435 and 49436 were added to report insertion of subcutaneous catheter extensions for remote chest exit sites and the delayed exteriorization of subcutaneously embedded intraperitoneal catheters.

The chart, "New code assignments for 2007" summarizes the assignment of new CPT code numbers to existing codes. It lists the new code on the left and the old code on the right. The code numbers were changed to allow for more appropriate placement in the various new subsections of the CPT book. There were no changes to the code descriptions.

Mr. Reinitz is president of Comprehensive Medical Data Management in Powell, OH. He can be reached at kirk_reinitz@cmpminc.com. Contact him at that address for a copy of the analysis comparing the HOPPS fee schedule to the Medicare physician fee schedule.