Densitometry comeback may develop as HCFA releases new Medicare rates

November 12, 1997

New rates provide big increases for axial, peripheral scansThe Health Care Financing Administration provided bone densitometry companies with a Halloween treat on Oct. 31 by releasing new bone densitometry reimbursement rates that include sharp

New rates provide big increases for axial, peripheral scans

The Health Care Financing Administration provided bone densitometry companies with a Halloween treat on Oct. 31 by releasing new bone densitometry reimbursement rates that include sharp increases over previously published rates. With the Radiological Society of North America meeting right around the corner, the agency's timing couldn't be better for an industry that has struggled during the last several months, due in part to confusion over HCFA's previously proposed changes for Medicare reimbursement rates (

SCAN

10/29/97).

As published in the Federal Register last month, Medicare reimbursement for axial scans will increase from $120 to $131, while peripheral-scan payments will jump from $38 to $69. The new rates, effective on Jan. 1, correct figures published in the Federal Register in June, when HCFA proposed a drastic cut in reimbursement for axial scans to $40 and raised peripheral-scan reimbursement to $57. Many industry observers believe the agency posted the rates in error.

The proposed cut in axial rates had aroused concern in the industry because axial scanners are widely believed to provide the best indication of fracture risk for the hip and spine. Lobbying efforts directed at HCFA by bone densitometry vendor representatives, the National Osteoporosis Foundation, and other luminaries apparently paid off, with both axial and peripheral scans benefiting.

New reimbursement rates could clear the way for companies to benefit from what some analysts believe is pent-up demand for bone densitometry scanners caused by the postponement of scanner purchasing after the lower rates were published in June. The new rates can only help, said Mark Duerst, vice president of sales and marketing at Hologic of Waltham, MA.

"We did have some people sitting there in an environment of uncertainty waiting to make decisions, because unlike CT or (other modalities), (bone densitometry) isn't a critical component in a lot of hospital programs and is a new opportunity for them," he said. "So until all of the ducks are lined up, people were reluctant to move ahead. This gives them that opportunity now."

The return of axial reimbursement rates to the same general range as before was gratifying to most vendors. The rates will obviously have a positive effect on the market, said James Hanson, vice president of marketing for Lunar of Madison, WI.

"There has been confusion because of the HCFA mistakes regarding payment, and this will help," Hanson said.

Of course, peripheral scanners also stand to gain from the new figures, which are $9 higher than the original proposal in June. Executives at White Plains, NY-based Norland Medical Systems, which is targeting the peripheral segment, were especially enthused about the rise in peripheral reimbursement rates.

"We were pleasantly surprised to see that HCFA also agrees that peripheral is definitely the technology that physicians' offices and point-of-practice offices should consider when doing bone-density testing," said Jan Garey, marketing director at the company.

It is unclear what effect the new Medicare reimbursement rates will have on the fledgling ultrasound-based densitometry segment. As published, CPT code descriptions for the axial and peripheral procedures refer clearly to a dual-energy x-ray study. If ultrasound-based studies were reimbursed at the $69 figure, it would make those low-cost systems even more attractive to private practitioners.

All three bone densitometry firms are planning to enter the ultrasound-based densitometry market. Hologic's Sahara ultrasound system received a Food and Drug Administration advisory panel recommendation for approval two months ago (SCAN 9/17/97). The company expects approval soon. Lunar, which has developed the Achilles product, hopes to obtain a decision directly from the FDA for the device and bypass the panel review process. Norland has rights to an ultrasound densitometry scanner in an earlier product stage. Called Paris, the scanner which is being developed by Canadian vendor IMRO.