Medicare outpatient payment proposal singles out imaging services for bundled payments

July 18, 2007

Radiology and nuclear medicine are the focal points of proposed Medicare reforms that would bundle reimbursement in 2008 for seven categories of ancillary services covered by the Hospital Outpatient Prospective Payment System.

Radiology and nuclear medicine are the focal points of proposed Medicare reforms that would bundle reimbursement in 2008 for seven categories of ancillary services covered by the Hospital Outpatient Prospective Payment System.

The proposed bundled payments aimed at strengthening the links between payment updates and quality measurement were highlighted in proposed HOPPS rules for 2008 announced July 16 by the Centers for Medicare and Medicaid Services.

If adopted, the new HOPPS rules would package payments for imaging supervision and interpretation services, contrast agents, diagnostic pharmaceutical, image processing, and guidance services. Guidance services, intraoperative services, and observation services were also singled out for bundled reimbursement.

Reversing a seven-year trend toward service-specific payments, CMS proposed broadening the payment bundles for hospital-based outpatient Medicare services to encourage better resource use, according to the report. Larger payment bundles are expected to provide incentives for efficiency and promote the stability of payment for services over time, while reducing incentives to increase service complexity. Medpac, the independent Medicare advisory group, has endorsed the new approach.

Specific payment rates were not covered in an overview posted on the CMS website.

The SNM is concerned that Medicare will not budget enough money in the new bundle reimbursement rates to cover the cost of radiopharmaceutical, said Dr. Gary Dillehay, chair of the SNM coding and reimbursement committee.

"The whole tends to be less than the sum of the parts when you bundle. Sophisticated nuclear studies won't be prescribed if providers can't recover the costs of the radiopharmaceutical agent," he said.

American College of Radiology officials were not immediately available for comment.

CMS estimates HOPPS spending will grow 10.5% to about $35 billion next year. The increase accounts for about one-third of the increase in the 2007 Medicare premium, though the program itself accounts for only about 13% of Medicare Part B spending, according to the report.

CMS also proposed providing payments for separately payable therapeutic radiopharmaceutical agents based on mean costs derived from hospital claims data and continuing to pay separately from brachytherapy sources.

Quality measurement was the second major initiative included in the 2008 HOPPS plan. It features provisions for the reporting of quality measures that CMS says would improve efficiency by giving hospitals more flexibility on how the money is spent.

Congress instructed CMS in 2006 to develop measures that assess the quality of care (including medication errors) from hospital-sponsored outpatient services. The resulting regulations require hospitals that receive Medicare payments through its inpatient prospective payment system to report its success in meeting outpatient quality measures to qualify for the full HOPPS update in 2009.

Hospitals that fail to report will see a 2 percent point reduction in their annual HOPPS payment update factor in 2007. A similar quality reporting program for inpatient hospital services was implemented in fiscal 2006. More than 96% complied with the quality measure reporting requirements.

None of the 10 quality measures proposed by CMS for 2008 pertain directly to radiology. They include such actions as administering aspirin to suspected heart attack patients upon arrival in the emergency room, tracking the median time to fibrinolysis, electrocardiography, and transfer for primary percutaneous coronary intervention after ER arrival for suspected heart attack patients, and the timing of antibiotic prophylaxis during perioperative care.

Looking beyond 2008, the proposed rule seeks comments on quality measures that may be required in 2009 and subsequent years. The proposal covers a broad range of outpatient services. It focuses specifically on outpatient treatment of cancer, diabetes, pneumonia, chest pain, syncope, and depression.

For more information from the Diagnostic Imaging archives:

CMS proposes 10% rate cut and self-referral restrictions in 2008 Medicare physician payment schedule

CMS gets an earful on reimbursement for coronary CTA

CMS may take aim at interpretation services

Senate bill seeks to delay, kill DRA payment cuts