Lawmakers' backroom barter leads to bad deal for imaging services

March 1, 2006

The U.S. Congress has not exactly swathed itself in glory in recent months. Lobbying scandals have exposed the unhealthy link between money, legislation, and pork barrel projects. The indictment of one representative and the conviction of another on corruption charges, with more indictments likely to follow, have shed a bright, ugly spotlight on the way our national legislators conduct their business.

The U.S. Congress has not exactly swathed itself in glory in recent months. Lobbying scandals have exposed the unhealthy link between money, legislation, and pork barrel projects. The indictment of one representative and the conviction of another on corruption charges, with more indictments likely to follow, have shed a bright, ugly spotlight on the way our national legislators conduct their business.

With these events serving as a backdrop, it should come as no surprise that a backroom deal cut in the wee hours will result in huge reductions in spending for imaging services.

Just before Christmas, House and Senate negotiators scrambled to cut $11 billion from the Medicare and Medicaid budget. In doing so, they scrapped proposals to cut managed care payouts. They also managed to avoid a 4.4% reduction in physician fees.

But that money had to come from somewhere, and imaging services became the target. Representatives imposed caps on the technical component of fees for imaging services performed in nonhospital settings such as independent imaging centers. It is significant that these cuts were not part of the original Senate or House budget proposals and were apparently drawn up at the last minute by conferees grasping for a solution upon which all could agree.

The estimated five-year cost of eliminating the 4.4% physician fee reduction is $7.3 billion. The caps on imaging make up $2.8 billion of that amount, according to the American College of Radiology. It's possible that Congress drastically underestimated the five-year impact of the fee cap, which the ACR says could hit $6 billion.

This is bad enough, but worse is the fact that Congress made this decision without considering a host of viable alternatives. Last year, the Medicare Payment Advisory Commission carefully reviewed imaging payment issues and endorsed the adoption of federal quality and safety standards. The ACR estimates these could have reduced imaging costs by $4.8 billion over 10 years. The MedPAC recommendations were ignored by Congress.

The budget decision also ignores more than a decade of validated, data-driven decision making that helped set fees under the Resource Based Relative Value System.

Instead, House and Senate negotiators, presumably with the backing of the Bush administration, delivered a politically driven budget.

The consequences for medical imaging could be enormous. In-office imaging payments for Medicare services could fall an average of 20% to 30%. In some regional pockets, technical component payments could be cut by 80%. Rural providers may be hit especially hard. The impact could range from declining availability of imaging services to lackluster equipment sales and a stall in new technology developments.

Congress is not solely to blame. As noted by legal columnist Thomas Greeson in this issue ("Utilization rules should target self-referral," page 19), a series of bad decisions by the Centers for Medicare and Medicaid Services has allowed nonradiologists to take advantage of loopholes in limits on self-referred imaging. CMS has the rulemaking power to correct this and should. Estimates of the resulting savings should become part of budget discussions.

The only good news here is that these cuts will not take effect until Jan. 1, 2007. There is still time for Congress to reconsider its ill-advised decision and adopt more reasonable measures. Imaging will need to chip in and help control Medicare and Medicaid costs, but not the disproportionate share envisioned now.

All members of Congress need to hear from radiologists on this issue. Backroom budget deals are no substitute for an open process with full hearings and careful consideration. Our representatives can do better. Radiologists should demand that they do.