CMS eyes ‘high’ PET reimbursement

October 15, 2004

Medicare reimbursement for an FDG-PET scan could be reduced by nearly $500 if proposed changes to the hospital outpatient prospective payment system are enacted in 2005.

Medicare reimbursement for an FDG-PET scan could be reduced by nearly $500 if proposed changes to the hospital outpatient prospective payment system are enacted in 2005.

The Centers for Medicare and Medicaid Services is considering maintaining PET in a new technology ambulatory payment classification (APC) at a rate of $1450. But CMS has tried for years to take PET out of the new technology category, and this year is no different.

In the Aug. 16 Federal Register, CMS listed two payment options for PET if taken out of the new technology category. One is a claims-based payment rate of $898.64, and the other is a blended rate of $1150. Additionally, proposed changes to reimbursement for FDG could reduce its rate from $324.48 per dose to $220.50.

The Academy of Molecular Imaging sent a letter to the CMS administrator saying that if CMS implements either of the reduced payment options in the final rule, Medicare beneficiary access to PET imaging would be severely compromised across the country.

The AMI also indicated that such a drastic reduction in reimbusement for FDG would result in payments that "are in most cases well below what hospitals must pay for the radiopharmaceutical, particularly in smaller and more rural hospitals, potentially resulting in beneficiary access issues."

PET proponents walk a fine line when communicating with CMS. Since 2001, the government has continued to expand coverage for FDG-PET, and many new requests for coverage are being considered.

But the AMI pointed out that for the expanded coverage to be meaningful, payment rates must cover the cost of performing PET.

"Adequate payment is particularly critical at this time, when PET is being incorporated into the practice of medicine and the number of studies per site is typically low," said the letter signed by AMI president Dr. R. Edward Coleman.

A study commissioned by the AMI concluded that hospitals need to perform three or more scans per day in order to break even at the current payment rate of $1450 per scan. Needless to say, hospitals performing fewer than five scans per day would suffer losses under the proposed claims-based payment option of $898.64. Study sites performing fewer than four scans per day would lose money under the proposed blended rate of $1150.

According to data collected by the AMI, the average number of scans per day across the country ranges from 1.88 to 3.29. This means that, even at the current rate of $1450 per scan, most PET centers are not breaking even, Coleman noted in the letter.

CMS bases its new numbers on cost data collected by hospitals across the country. PET proponents have argued for years that the agency's cost data are flawed. They say that when CMS began collecting PET cost data, a number of academic centers had their own cyclotrons and fully depreciated scanners. Community-based hospitals that installed PET within the last several years have dramatically different expenses that may not be sufficiently represented in the CMS formula.

Furthermore, they contend that early hospital cost reports contained many errors because the technology was so new. In its letter to CMS, the AMI cites a recently published Government Accounting Office report mandated by Congress that identified a number of problems with CMS's use of hospital outpatient claims data as a basis for setting payment rates.

Many PET practitioners say it is inevitable - and desirable - to assign APC codes to FDG-PET procedures. The challenge is to ensure that Medicare payment levels accurately reflect the actual cost of performing these studies, including the cost of FDG.

The comment period ended earlier this month. CMS is expected to announce the final rules by year's end.

For more information from the Diagnostic Imaging archives:

Rx for PET referral shortage

Reclassification of radiopharmaceuticals stirs debate

PET reimbursement awaits pivotal year in Washington

Medicare announces higher outpatient payment rate for clinical PET