HCFA postpones proposal to cut Medicare outpatient reimbursement

November 25, 1998

Agency shelves steep technical component pay cutsIn the face of intense industry pressure, the Health Care Financing Administration this month decided to maintain current Medicare payment levels for the technical component of outpatient imaging

Agency shelves steep technical component pay cuts

In the face of intense industry pressure, the Health Care Financing Administration this month decided to maintain current Medicare payment levels for the technical component of outpatient imaging studies at nonhospital facilities. The decision, published in the Nov. 2 Federal Register, comes after months of lobbying by organizations such as the National Coalition for Quality Diagnostic Imaging Services (NCQDIS) and the American College of Radiology (ACR), as well as independent imaging firms (SCAN 10/28/98).

The proposed technical component cuts would have affected outpatient studies at freestanding imaging centers, cutting payments by as much as 24% over a four-year period. HCFA proposed the cuts in June as part of its effort to implement changes required by the 1994 Balanced Budget Amendment, which calls for shifting reimbursement funds from specialists to family practitioners.

HCFA based its new payment levels on results of a survey it conducted on the costs of running an outpatient imaging facility. But HCFA surveyed private radiology practices, rather than imaging centers, and groups such as NCQDIS and the ACR argued that the data were incomplete. Using the same survey company and the same methodology HCFA employed, NCQDIS independently surveyed 122 diagnostic imaging centers, producing data that showed that the technical costs of operating an imaging center are nearly seven times HCFA's proposed levels. In September, NCQDIS met with the agency to discuss its findings and ultimately proved successful in persuading HCFA to modify its proposal.

Despite this key victory, imaging industry lobbyists are aware that the battle isn't over. The portions of the June 5 rule that pertain to professional fees will still go into effect in January, with cuts of 8% to 12% taking place over the next four years, according to the ACR. As for the technical side, HCFA left the door open for future evaluation, and NCQDIS expects to continue to lobby for a change in the way HCFA determines outpatient billing rates.

"We've got to stay in touch and watch what's happening with this," said Cherrill Farnsworth, executive director of NCQDIS. "Our work is just beginning in many ways, because now we will be asking HCFA to look at outpatient imaging as if it were a new category-not a hospital, not a radiology practice. What led them astray is that they analyzed (the data) as if they were from radiology practices, so we'll be arguing for an entirely new category."

Even if the Nov. 2 rule gives freestanding facilities a reprieve, the imaging community still faces an uphill trudge as it responds to another proposed rule, published in September, that recommends a new fee schedule for hospital-based outpatient services. Although the September rule's comment period has been extended through January, the proposal is to be implemented in April 2000.

With the 24% cut averted, independent centers may find their business increasing. But Farnsworth and other industry watchers caution against complacency.

"The reason I'm recommending that (NCQDIS) address the outpatient hospital imaging side is that when radiology cuts happen, no matter whether they're hospital or outpatient, they affect everybody," Farnsworth said.

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