Healthcare law will mean big changes in practice

November 4, 2004

The 2004 Medicare Modernization Act, signed into law late last year, will bring sweeping changes to medicine. What impact the legislation will have on radiology is up for debate.

Cherrill Farnsworth, president of the National Coalition for Quality in Diagnostic Imaging Services, contends that the act is the most important development affecting radiology in recent history. It will cause changes to provider payments and will produce a greater reliance on new private-sector managed care, Farnsworth said at the American Healthcare Radiology Administrators meeting in August. Radiology groups may have to enter a competitive bidding process to provide Medicare services or, in a worst-case scenario, they could be completely locked out of providing services.

Dr. John A. Patti, chair of the ACR commission on economics, does not envision such a dire future, however. Part of the disagreement rests with the new entities called Medicare administrative contractors (MACs), which will take over administrative functions from both Part A fiscal intermediaries and Part B carriers. How the MACs will interact with radiology groups and networks is not certain. Farnsworth says that radiologists may have to enter a bidding process for Medicare contracts, but Patti disagrees.

"MACs are going to be processing claims in traditional fee-for-service Medicare. Radiologists won't be involved in a competitive bidding process as far as MACs are concerned. The only competition will be among those entities that want to be considered MACs," he said.

Thomas Greeson, a healthcare lawyer with ReedSmith in Reston, VA, said that both Farnsworth and Patti may be correct, but one needs to clarify what may change as a result of the Medicare Modernization Act and what will not. The issue, he said, is not the replacement of carriers and fiscal intermediaries by the MACs. Instead, the question is the potential impact of the new Medicare Advantage (Part C) program created by the act.

The Centers for Medicare and Medicaid Services will unquestionably take steps to encourage Medicare beneficiaries to move from the "traditional" Part B fee-for-service program into Part C Medicare coverage. Beneficiaries who choose Part C coverage will be covered by private managed-care plans, and those plans that participate will be expected to have selectively contracted with hospitals and physicians.

"It will be a managed-care model for Medicare-quite a change. And when the new private regional and local plans are in place, existing Medicare coverage and local and national coverage policies of the traditional program may well be replaced with totally new payment and reimbursement policies. Ultimately, the long-term consequences of MMA may be dramatic," Greeson said.

Radiologists in these Medicare Advantage plans will continue to voluntarily contract with the plans as they always have, according to Patti.

"There will be the same competitive forces in these instances as there were when radiologists had to deal with PPOs, and it's possible that competitive bidding might intensify, but I don't think radiologists will be left out," he said.

The bill will break up the country into anywhere from 10 to 50 regions by the end of the calendar year. Health plans will have to cover an entire region, or they may need to align with other plans to provide coverage, Farnsworth said. The larger plans, with their economies of scale, will have an advantage because CMS has stated that a successful bid will be based not only on the lowest price per enrollee but also on access and efficiency.

If the more sizable plans choose to use ancillary radiology providers in addition to their own network providers, they would be wise to have those radiology groups submit bids so they can ensure the best price and pass on the pain, Farnsworth said. In that situation, the larger radiology groups or those aligned with other groups will have a better chance at being awarded the contract, which would have a substantial impact on how radiologists practice.

Another scenario would have entire hospitals forced to submit bids to health plans, essentially lumping all ancillary providers, including radiology groups, into their offer. Radiologists aligned with hospitals that lose a bid could potentially be prevented from providing Medicare services at those hospitals, Farnsworth said.

The debate, however, may become a moot point, depending on politics in Washington. Even with this uncertainty, Farnsworth contends that radiology groups should be aware of the act's potential impact, particularly when they develop their strategic plans for 2005 through 2010.