Despite established payment rate, PET reimbursement slow in coming

March 3, 1999

Carriers struggle to implement coverage documentPET imaging advocates rejoiced last year when the Health Care Financing Administration agreed to reimburse Medicare providers for lung cancer indications. The announcement sparked renewed interest in

Carriers struggle to implement coverage document

PET imaging advocates rejoiced last year when the Health Care Financing Administration agreed to reimburse Medicare providers for lung cancer indications. The announcement sparked renewed interest in the modality among patients, physicians, and manufacturers, which translated into higher PET and gamma camera sales in the U.S. in 1998.

But despite the increased attention to PET imaging, many PET centers have found their reimbursement requests mired in red tape as HCFA’s third-party carriers struggle to implement the new policy. The problem, some believe, has to do with the complexity of the reimbursement policy and the difficulty that some Medicare carriers face in implementing it.

In June 1998, HCFA announced that it would reimburse technical fees for FDG procedures used in certain lung cancer applications at a rate of $1980 (SCAN 6/10/98). The decision came after years of pressure from PET advocates, most prominently Sen. Ted Stevens (R-AK), chairman of the Senate Appropriations Committee. Working with Secretary of Health and Human Services Donna Shalala, Stevens negotiated with HCFA for the lung cancer payment and asked the agency to consider other applications (SCAN 1/14/98).

Experts estimate that there are approximately 175 active PET centers across the U.S., with 80 dedicated PET systems and 200 gamma cameras capable of conducting FDG imaging with coincidence detection upgrades (some facilities have both PET units and gamma cameras). However, many PET centers have yet to receive payment for lung cancer scans performed since reimbursement was approved. Industry advocates such as the Institute for Clinical PET of Foothill Ranch, CA, attribute the slow payment to a phalanx of causes, ranging from the complexity of HCFA’s coverage policy to the tedious process carriers must go through to add new codes to their databases.

“The coverage policy went into effect in January of last year,” said Jennifer Keppler, executive director of ICP. “It’s taking a while for the policy and the procedures to filter down to each Medicare carrier. So (reimbursement) is spotty across the country. From what I understand, this is typical of complex national coverage policies: When a national policy comes out, it can take up to a year to implement.”

Industry watchers suggest that HCFA’s coverage document for lung cancer PET has caused confusion for carriers, slowing the reimbursement process. Carriers have misunderstood the policy and the modifiers that describe eligible patients, and have struggled to incorporate the new policy coding into their databases. Because of this complexity, some providers are receiving letters from their carriers seeking proof that the scanners and radiopharmaceuticals used in procedures are approved by the Food and Drug Administration. In addition, some centers have been refused payment because they are freestanding facilities.

“Our intermediary requested proof that our scanner was approved by the FDA, and it took some time to get proper documentation proving that,” said Pam Ewing, program manager at the University of Southern California PET Imaging Science Center in Los Angeles.

“They also said they wouldn’t pay an outpatient center. We’re across the street from the university hospital, but we’re not in the hospital. So that’s taken about six months for us (to work out). Now they’ve said they will pay for PET scans in the outpatient setting.”

Another reason for the slow reimbursement is the overwhelming number of Medicare claims that carriers process. HCFA third-party payors deal with more than a billion claims per year, and receive a processing fee of only about $1 a claim. With the deluge of bills and HCFA’s mandate that carriers absorb the reimbursements within their existing budgets, carriers could be tempted to drag their heels when it comes to cutting checks.

How are providers coping? They’re including more information in the bills they send to their carriers, such as FDA clearance letters for their equipment, as well as copies of the FDA Modernization Act document that addresses the agency’s role in approving the legal availability and use of FDG. They’re improving their relationships with local carriers. And they’re getting by with payments from private payors.

The Northern California PET Imaging Center in Sacramento has been able to support itself through private-payor reimbursement, according to Ruth Tesar, president of ICP and executive director of the center.

“We have a huge amount of money in receivables sitting out there waiting for the check from Medicare, but for the past five years we’ve been able to make it on private-payor reimbursement,” Tesar said. “But it would be nice to have that money. We might be able to do more than scrape the barrel.”

PET advocates are a dedicated group and are not likely to drop the issue of reimbursement lightly, or soon, according to Tesar.

“People who have been involved with PET are very hardy, very dedicated,” she said. “Once they do a PET scan they believe in the modality. So they don’t quit.”

As providers and carriers continue to work out reimbursement issues, PET advocates are turning their efforts towards expanding reimbursement applications. Advocates met with HCFA staff in Baltimore in January to discuss broadening the range of PET applications to be reimbursed by Medicare (SCAN 2/17/99). Potential new indications include colorectal cancer, melanoma, brain tumors, lymphoma, and head and neck cancer.

HCFA initially proposed setting high standards of clinical validation before expanding PET reimbursement. PET advocates, however, believe that their arguments were successful in persuading the agency to expand coverage without requiring clinical support such as double-blind clinical trials. A decision on new indications is expected in the next several months.

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