PET and PET/CT imagers brace for new payment cuts

September 6, 2006

It’s bad enough that the Centers for Medicare and Medicaid Services has proposed a $300 reduction for PET reimbursement. But the agency also wants to reimburse PET/CT at the same rate. The move has alarmed the PET community, as an increasing number of providers are purchasing the combined scanner at twice the cost of a dedicated PET machine.

It's bad enough that the Centers for Medicare and Medicaid Services has proposed a $300 reduction for PET reimbursement. But the agency also wants to reimburse PET/CT at the same rate. The move has alarmed the PET community, as an increasing number of providers are purchasing the combined scanner at twice the cost of a dedicated PET machine.

The 2007 proposed rule for the Hospital Outpatient Prospective Payment System (HOPPS) calls for the technical fee of either a PET or a PET/CT scan to be paid at the same rate of $865. Current payment rates are $1150 and $1250, respectively, for PET and PET/CT. Reimbursement for FDG would remain separate at $235.

"Simply paying a note on a PET/CT scanner - with the service contract - consumes 100% of the revenue generated at the proposed rates for an average center or hospital," said John Sunderland, Ph.D., vice president of PET operations for the Biomedical Research Foundation, which owns and operates three stand-alone PET imaging centers in Shreveport, LA.

Sunderland informally calculated that a $2.1 million PET/CT scanner, coupled with an 8% interest rate over 48 months and a $180,000 annual service contract, yields an annual cost of about $800,000.

Studies have shown that the average PET center performs about 3.3 scans per day. At the proposed rate of $865 for a PET/CT scan, a center stands to bring in $775,000 a year.

Sunderland says the message is simple: Hospital claims data on which CMS based its calculation for PET/CT reimbursement cannot be accurate.

Besides operating three facilities, Biomedical Research Foundation also supplies FDG to about a dozen different centers, which makes it privy to their volumes. About 75% of these customers are below the 3.3 scans per day volume. Most are in rural locations and would close if the proposed rates prevail, Sunderland said.

Biomedical Research Foundation's three PET centers have two PET/CT scanners and one PET machine. The PET scanner is being used less and less due to physician demand for combined studies, yet Sunderland can't afford to replace the 11-year-old machine, given the projected environment.

The good news is that an Ambulatory Payment Classification Advisory Panel to CMS voted 7 to 3 on Aug. 23 to keep PET/CT in the new technology category, a move that would hold reimbursement at the current level of $1250.

How much sway does the APC Advisory Panel have?

"We're trying to figure that out, but it's a good first step coming from an official body that doesn't have anything to gain from this," Sunderland said.

For the last several years, CMS has wanted to move PET from the new technology APC to a clinically appropriate APC. CMS routinely places emerging technologies into the new technology APC until it gathers adequate hospital claims data to assign a clinically appropriate payment rate.

The PET community had expected that the move out of new technology APC would result in a payment cut but has consistently argued that hospital claims data on which CMS bases its payment rate are inaccurate.

The current $1150 payment rate for PET, which took effect in 2005, was a compromise by CMS to soften the reimbursement reduction blow before moving PET out of the new technology APC. The agency combined a 50/50 blend of PET's median cost based on 2003 claims data and the payment rate of the 2004 new technology APC.

Now with five years' worth of claims data, CMS has proposed to strip oncologic PET of its new technology banner and assign it a clinically appropriate APC (0308), whose median cost is $865.30. PET CPT codes affected are 78608, 78811, 78812, and 78813.

According to CMS's analysis, hospital claims data from 2002 through 2004 show a median cost for oncologic PET to be between $852 and $924. The number of PET scans performed on Medicare beneficiaries increased from 48,000 in 2002 to 121,000 in 2004.

An analysis of claims data from 45,000 PET scans in 2005 yielded a median cost of $867. While the 2005 data are incomplete, they do indicate a reduced volume of PET scans. CMS suggests this is due to the increased number of claims for PET/CT in 2005, when codes for that combined service were first available for billing.

Representatives from the PET community told CMS that their data indicate the reimbursement for PET should be higher.

CMS has proposed moving PET/CT out of the new technology APC as well. Its analysis of more than 64,000 claims in 2005 (three quarters of the year) indicates the median cost for PET/CT is $865, just a few dollars less than the cost for a dedicated PET scan.

CMS thus proposes to place PET/CT into the same new APC as PET (0308) with the same median cost of $865. The PET/CT CPT codes affected are 78814, 78815, and 78816.

At the Aug. 23 meeting with the APC Advisory Panel, the Academy of Molecular Imaging presented its case for keeping PET/CT in the new technology APC for 2007. Essentially, the AMI said the following:

  • PET/CT is clinically different from PET.

  • PET/CT has greater capital and operating costs than PET.

  • CMS has only three quarters of data for PET/CT from 2005.

  • Hospitals typically do not update their charge masters for new technologies for two to three years.

On Aug. 30, members of the PET community met with physicians from CMS's Division of Outpatient Care to underscore the arguments why PET/CT should remain in a new technology APC.

"It was a useful meeting with lots of questions from the physicians on clinical uses, applications, operating costs, and capital costs of PET/CT versus PET," said Thomas Grissom, a senior health policy specialist for Foley Hoag LLP who represents the AMI.

Comments to the proposed changes can be submitted to CMS until Oct. 10. The final rule will then be published on Nov. 1 and take effect Jan. 1, 2007.

For more information from the Diagnostic Imaging archives:

CMS abandons extra payment cuts for multiple imaging procedures

Trouble by the numbers: Imaging's reimbursement bubble bursts

Two payment systems differ in makeup and intent

Congress grills officials about imaging benefits, costs