Medicare rule comments reveal fears, fixes of radiologists

November 10, 2006

After a 60-day comment period on proposed changes to the Medicare physician fee schedule, the Centers for Medicare and Medicaid Services released its final rule this month, a document that deviates little from the changes announced earlier in the year. Comments sent in by interested stakeholders, however, reveal concerted efforts to amend provisions that reduce payment.

After a 60-day comment period on proposed changes to the Medicare physician fee schedule, the Centers for Medicare and Medicaid Services released its final rule this month, a document that deviates little from the changes announced earlier in the year. Comments sent in by interested stakeholders, however, reveal concerted efforts to amend provisions that reduce payment.

The final rule implements three provisions affecting payment for imaging services under the fee schedule:

  • A 25% reduction in reimbursement for the second and subsequent images of contiguous body parts when taken in a single session for certain imaging services. In its proposed rule, CMS had nixed the idea of implementing an additional 25% reduction (totaling 50% in cuts) in 2007.

  • A cap on the technical component payment of the lesser amount of either the physician fee schedule or the Hospital Outpatient Prospective Payment System (HOPPS). This provision is mandated by the Deficit Reduction Act of 2005. However, for imaging services subject to both the contiguous body parts reduction policy and the HOPPS cap, CMS said it will first apply the multiple imaging adjustment and then apply the cap. This approach results in a higher payment than would exist if the cap were applied first.

  • A new methodology for determining practice expense payments for all services, including imaging. The proposed payment amounts, based on data provided by physician groups and reviewed by the relative value update committee, will be phased in over four years to allow continuing review and revisions. CMS states that this methodology is more transparent than the existing process, as it allows specialties and other stakeholders to predict the effects of proposals to improve the accuracy of practice expense payments.

Also of note, physician payments will be reduced 5% for 2007 instead of the proposed 5.1%. Medicare law includes a statutory formula that requires CMS to implement this reduction. Since 2002, in response to rising spending, the statutory update formula has been in place to impose payment cuts. Physician payments were reduced in 2002, but for 2003 through 2006, Congress temporarily suspended the reduction in favor of specific payment increases.

The changes take effect Jan. 1.

In comments to CMS made prior to the final rule, physicians noted that increases in practice costs are outpacing most inflationary measures. They predicted that costs to provide care will soon exceed reimbursement. Many physicians will be unable to absorb the sustained losses, which could result in reduced access to care if physicians refuse or limit Medicare patients, according to the comments. A survey conducted by the American Medical Association and cited by commenters found that 45% of physicians will either stop accepting or decrease the number of new Medicare patients they accept if payments are cut for 2007.

Suggestions to CMS included replacing the statutory formula with a more appropriate metric that better reflects the actual costs of medical practice. Such suggestions are in vain, however, as the reduction formula and the physician update are dictated by statute. CMS is required to follow this methodology when calculating payment rates under the physician fee schedule.

CMS noted that it is working closely with medical professionals and Congress to ensure that the most effective Medicare payment methodologies are used to compensate physicians.

Regarding the contiguous body parts payment reduction, comments submitted to CMS indicated that a 25% reduction is greater than what is justified by any efficiencies achieved in performing multiple procedures. They also suggested that the multiple procedure payment reduction is duplicative, inappropriate, and excessive in light of the technical component cap, and requested its elimination.

In the final rule, CMS responded that its data prior to the passage of the DRA in February 2006 supported a 50% payment reduction. CMS said it will therefore maintain the 25% reduction while it continues to examine the issue.

Many comments to the agency criticized the technical component cap, maintaining that HOPPS was never intended to reflect the cost of providing individual physicians' services and that its use undermines the resource-based physician fee schedule. Other comments indicated that the cap will have a devastating impact and threatens the future viability of nonhospital outpatient imaging.

A few commenters requested a delay in implementing the cap and asked CMS to consider cosponsoring HR 5704, a bill that calls for a two-year moratorium on the imaging cuts. CMS responded that because the cap is mandated by Congress, the agency is obligated to implement the measure.

Several comments suggested excluding certain imaging codes from the cap, including various noninvasive vascular diagnostic study codes; imaging guidance procedures that are integral to the performance of interventional treatment; imaging associated with radiation therapy; and PET, PET/ CT, and CT/CTA, as well as category III codes used to report emerging technologies, because these are carrier-priced codes and, therefore, not paid under the physician fee schedule.

The commenters also suggested changing the definition of medical imaging procedures to suit these potential exclusions. CMS responded that it cannot modify the statutory definition of imaging services and, therefore, cannot exclude certain noninvasive diagnostic study procedures.

Physicians and other commenters also expressed concern to CMS that women's health would suffer because of reductions in reimbursement for bone mass measurement and screening, and computer-assisted detection as an add-on service for mammograms. CMS noted that the reductions primarily occur as a result of the practice expense payment refinements and do not specifically target women's health issues.

"Even after accounting for the payment decreases for DXA and CAD, there would be hundreds of millions of dollars in additional spending directed to physicians to manage women's health care, due to the increases for evaluation and management services," the agency noted in its final rule.

CMS said it will ask the relative value update committee to further review the data used to establish the practice expense payments for DXA and CAD during the next four years during the transition to the new payments.

For more information from the Diangostic Imaging archives:

Reimbursement cuts could make exams money losers

Hasty budget action spurs petition for delay

CMS abandons extra payment cuts for multiple imaging procedures

Trouble by the numbers: Imaging's reimbursement bubble bursts

Congress grills officials about imaging benefits, costs