DRA forces self-referring docs out of medical imaging

Self-referring physicians are among the first casualties of reductions in Medicare technical payments from the new 2005 Deficit Reduction Act rules implemented in January. Some nonradiologists are shutting down their self-referred imaging businesses, according to Dr. Harvey L. Neiman, executive director of the American College of Radiology.

Neiman spoke Oct. 25 at the 2007 Economics of Diagnostic Imaging National Symposium in Arlington, VA.

"Certainly, the amount of income coming in from the technical component part of our practices if we have an (outpatient) imaging center has decreased. But perhaps there are some good things as well," Neiman said. "We are getting ever-increasing feedback that some self-referring physicians are closing their office imaging practices."

The DRA cut outpatient imaging payments by mandating that Medicare pay the lower of the technical rates covered in either the Medicare Physician Fee Schedule or the Hospital Outpatient Prospective Payment System. The DRA also cut payments for imaging contiguous body parts. The new formula pays 100% of the technical component for the first segment. It then cuts the rate 50% for adjacent segments imaged during the session.

Estimates on Medicare's cost-savings from the DRA cuts vary from $1.4 billion in first year to as much as $13 billion over a three-year period. A study commissioned by the pro-imaging Access to Medical Imaging Coalition lobbying group predicted the aggregate Medicare payment for imaging services in physician offices and imaging centers would fall 16% to 18% below aggregate payment for similar services provided in hospital outpatient departments.

Neiman cited his own experience during a recent visit to a Texas hospital as evidence that referring physicians are getting out of the imaging business. He was talking to a member of the administrative staff, when one of the facility's orthopedic surgeons called in with an offer to sell his office-based CT scanner. He decided to sell it because income from the scanner was declining, Neiman said.

A possible exit from office-based self-referral may lead to the entry of nonradiologists into hospital-based interpretation, however. Neiman has heard of instances in which self-referring physicians have asked hospitals for the privilege to interpret images.

Neiman also summed up the ACR's legislative advocacy efforts during 2007. The college successfully lobbied for the removal of Medicare-related provisions of the Children's Health and Medicare Protection Act of 2007 considered detrimental to radiology, he said.

The ACR supports action to eliminate cuts for physician payment rates that should become effective between 2008 and 2009. It opposes the Sustainable Growth Rate formula proposed to control Medicare spending by dividing physician services into six separate categories to become effective in 2010, Neiman said.