Budget bill targets diagnostic imaging services

February 2, 2006

The U.S. House of Representatives narrowly passed a $39 billion budget-cutting bill yesterday with provisions that significantly reduce Medicare reimbursement for imaging services.

The U.S. House of Representatives narrowly passed a $39 billion budget-cutting bill yesterday with provisions that significantly reduce Medicare reimbursement for imaging services.

The Congressional Budget Office estimates that the imaging provisions will save $2.8 billion over five years. The overall Medicare and Medicaid changes are expected to save $11 billion in the same time. Thus, imaging is taking at least a quarter of the overall hit.

The American College of Radiology, however, says the CBO has greatly underestimated the policy's financial impact on radiologists. The ACR's preliminary analysis reveals that the cuts actually amount to nearly $1.2 billion annually, or $6 billion over five years.

The ACR's impact analysis has been vetted by two separate outside companies, according to Dr. James P. Borgstede, chair of the ACR board of chancellors.

"We were quite surprised by the low figures of the CBO," Borgstede said.

The savings would be realized, in part, from capping the technical component reimbursement for physician office imaging to the lesser of the Hospital Outpatient Prospective Payment System or the Medicare Fee Schedule.

These cuts are in addition to those imposed by the Centers for Medicare and Medicaid Services (and adopted by Congress), which reduce reimbursement for imaging exams on contiguous body parts in the same session by 25% in 2006, with an additional 25% reduction to take effect in 2007.

Neither the financial impact analysis of the CBO nor the ACR take into account the contiguous body parts reduction, Borgstede said, which is a difficult figure to calculate.

"The overall impact will be much more than what either of us has estimated," he said.

Some good news in the legislation is a provision to eliminate a 4.4% reduction in the Medicare conversion factor that took effect Jan. 1, 2006. Payment will be reinstated at the 2005 level.

The Budget Reconciliation Act first passed the House in December by a vote of 212 to 206, with nine Republicans joining 196 Democrats and one independent in opposition. The Senate then narrowly passed its version of the bill (51-50) in late December and sent it back for a second House vote.

In the intervening month, opponents of the cuts could not sway enough Republican moderates to vote against the bill. The final tally was 216 to 214, with 13 Republicans voting against the measure. President Bush is expected to sign the legislation.

The ACR spent much money and energy in 2005 educating leaders on Capitol Hill about the "real" cause of the rising cost of imaging: self-referral. What went so drastically wrong that Congress produced legislation that disproportionately affects radiologists?

"There was an insulated group of congressional leaders who decided at the last minute that imaging would be one of the targets," said Josh Cooper, director of government relations for the ACR. "Unfortunately, there was no consultation with stakeholders. This came down to a political rather than a policy decision."

Cooper pointed to three jurisdictional committee chairs for the arbitrary cuts: Charles Grassley (R-IA), finance committee; Bill Thomas (R- CA), ways and means committee; and Joe Barton (R-TX), energy and commerce committee.

The imaging budget cuts do not take effect until Jan. 1, 2007. A few leaders on Capitol Hill have indicated they would like to develop a better policy, Cooper said. The ACR already has received a pledge from Nancy Johnson (R-CT), chair of the House health subcommittee, and Thomas to work toward that end.

Legislators' decision to slash imaging dollars was influenced in part by the fact that payment for imaging services varies from site to site, Borgstede said. He told them the problem is not that physicians are paid too much, but rather that hospitals are compensated too little.

The ambulatory payment classifications used by hospitals are notoriously inaccurate at representing their actual costs, he said. It is a charge-based system that is subsidized by inpatients.

"We think that our system, the resource-based relative value scale, represents the real costs to provide services," Borgstede said.

Essentially, Congress scrapped the RBRVS, which has been in effect for more than 15 years, for technical component radiology.

All of medicine should be concerned, Borgstede said. If Congress can gut imaging reimbursement at the last minute, they can cut from anywhere just as easily.

The legislation also contains a provision to pay for an annual abdominal aortic aneurysm screening and coverage for colorectal cancer screening.

For more information from the Diagnostic Imaging archives:

Congressional budget cuts hit radiologists

CMS proposes imaging payment cuts, extends self-referral law to nuc med