Congress report predicts blitz of reimbursement cuts

January 21, 2009

The American College of Radiology plans to fight proposals in the Congressional Budget Office’s latest report on possible cost-cutting policies affecting medical imaging. College policy experts fear the report may represent the starting point for future payment cuts.

The American College of Radiology plans to fight proposals in the Congressional Budget Office's latest report on possible cost-cutting policies affecting medical imaging. College policy experts fear the report may represent the starting point for future payment cuts.

The CBO report, Budget Options Volume I: HealthCare, was issued in December 2008. It contains more than 100 policy options for the Obama administration and the 111th Congress, some of which were aimed directly at advanced medical imaging services, according to ACR officials.

The proposals include several options:
• requesting prior authorization for advanced imaging services paid for by the Centers for Medicare and Medicaid Services
• implementing service-specific spending targets
• raising equipment utilization rates for the assessment of practice expenses

The CBO estimates that prior authorization can save Medicare from $200 million to more than $1 billion in five to 10 years. The Government Accountability Office has also endorsed prior authorization and other private sector tools to contain spending.

Medical imaging proponents oppose preauthorization and propose instead the use of appropriateness criteria and professional accreditation. Last year, the ACR led efforts that ended with the passing of the Medicare Improvements for Patients and Providers Act of 2008 (HR 6331). Provisions in the new law call for a pilot test of appropriateness criteria in 2010 and mandatory accreditation by 2012.

The Children's Health and Medicare Protection Act of 2007, a bill introduced in the House of Representatives, contained a provision that divided the congressionally mandated sustainable growth rate formula that governs Medicare physician payment among six different categories using one conversion factor. The CBO option, however, would make imaging a separate medical service category with its own conversion factor based on growth rate. Imaging would face a 5% annual payment reduction using this system.

CMS currently calculates the equipment utilization rate factor at 50%. In other words, CMS assumes that all medical equipment is used half the time a physician office is open for business. The CBO advised changing the rate to either 75% or 95%. A 75% rate would save Medicare an estimated $1 billion over five years and $1.9 billion in a decade in reimbursement for the technical component of medical services.

The former policy option is just the writing in the wall for what is to come, according to ACR Director of Congressional Affairs Orrin Marcella in an interview with Diagnostic Imaging. Topping the list of ACR's nightmares is the upcoming report by the Medicare Payment Advisory Commission. The commission report will likely contain a recommendation to raise the equipment utilization rate. And it does not look pretty, according to Marcella.

"We are expecting MedPAC to recommend a 90% rate," he said.

Since 2005, reports singling out diagnostic imaging as a major contributor to rising federal healthcare costs have influenced policy discussions in Washington. All imaging services providers should thus expect continued scrutiny, Marcella said.

As Congress and the Obama administration examine federal healthcare for cost-cutting opportunities, some programs that have so far escaped relatively unscathed -- such as Medicare Advantage -- during the Bush administration will not be able to do so any more. If the latest policy proposals are any indication, however, medical imaging will once again be an easy target, Marcella said.

"When we and others who are delivering cutting-edge technological services for patients are sort of getting the finger pointed at us, that's not a good indication," he said.

For more information from the Diagnostic Imaging archives:

Medicare imaging soars from in-office servicesProponents hail passage of Medicare bill as triumph for physicians, patientsIRs look for silver lining as government pushes quality