Physician fee freeze may temper cuts for rads

April 21, 1993

Congress may impose a temporary fee freeze on Medicare paymentsto physicians instead of the RAPs-DRG plan currently in the 1994budget. A freeze is viewed as the lesser of two evils by U.S.radiologists, who are faced with growing pressure to reduce

Congress may impose a temporary fee freeze on Medicare paymentsto physicians instead of the RAPs-DRG plan currently in the 1994budget. A freeze is viewed as the lesser of two evils by U.S.radiologists, who are faced with growing pressure to reduce paymentsto their speciality and the use--some say overuse--of medicalimaging.

Radiologists counter the overutilization charge with the claimthat much of the procedural growth comes from increased imagingby other physicians in their offices and in outpatient imagingcenters. They won't have to struggle hard for the ear of Rep.Pete Stark (D-CA), who is escalating his attack on self-referralin Congress.

The American College of Radiology considers a temporary freezeon Medicare payments preferable to a bundled payment plan forservices performed by radiologists, anesthesiologists and pathologists(RAPs).

The RAPs-DRG plan first surfaced in February as part of PresidentClinton's 1994 budget proposal. Similar plans have been proposedthree times in the past and never made it through Congress.

In 1987, the last year RAPs-DRGs were proposed, Congress bannedfuture implementation of a RAPs bundling proposal without legislativemandate.

Clinton's plan was not expected to survive preliminary budgetediting by the Department of Health and Human Services. But inearly April, two Congressional health subcommittees held hearingson the Medicare budget proposal, which still includes RAPs-DRGs.

The plan would bundle payment for RAPs services provided tohospital inpatients into a fixed payment per discharge. Paymentwould be made to the hospital or its medical staff for distributionto RAPs physicians. Beneficiary co-insurance would assume 20%of the payment. The plan would save $390 million over a four-yearperiod.

The ACR, which testified at the April hearings, sees numerousproblems with the plan.

"DRGs encourage hospitals not to do studies and that'snot always appropriate," said Dr. Karl K. Wallace, chairmanof the ACR board of chancellors.

Distribution of payments by hospitals and medical staff toRAPs physicians would also set a poor precedent, he said.

"That aspect of the plan has the potential to be verydivisive and may result in some of the RAPs physicians movingout of their specialties," he said.

It is also premature to consider implementing a new paymentplan before the existing resource-based relative value scale (RBRVS)has been fully phased-in, he added. The RBRVS still has threeyears of physician payment restructuring ahead.

Part of the rationale behind the RAPs-DRG plan is to curb overutilizationof imaging, which the Clinton administration has attributed toradiologists. But data collected by the Health Care FinancingAdministration show volume increases in radiology in hospitalsis due to nonradiologists performing imaging procedures, Wallacesaid. Even larger utilization increases have been seen in outpatientand private office settings.

REP. STARK HAS ALREADY TAKEN STEPS to target imaging self-referral.The most recent is the Health Care Anti-Fraud and Abuse Act of1993, introduced in March. The bill was prompted by a GeneralAccounting Office report that found that 10% of the nation's health-careexpenditures can be traced to fraudulent practices.

The anti-fraud bill joins Stark's other offering introducedin January. The proposal prohibits physicians from referring patientsto facilities in which they have a financial interest, regardlessof whether the payer is public or private.

Targeting joint-ventured self-referral is not enough, however,Wallace said.

"That's only part of the solution," he said. "Thegrowth in self-referral by nonradiologists has been substantial.Placing limits on this type of overutilization could result inbudget savings of $200 million annually."

While the verdict is yet to be delivered on RAPs, Congressappears to favor instead a freeze on Medicare fee updates forphysicians in 1994, Wallace said.

The move would free Congress to devote itself to the Clintonadministration's health-care reform package expected to be unveiledin May. The freeze would keep the conversion factor for Medicareservices paid under the RBRVS at 1993 levels, he said.

By freezing hospital Medicare rates as well, the move couldsave as much as $30 billion in 1994, according to a CongressionalBudget Office report released in March.

"Congress seems bent on getting something passed simplyand quickly that will bring in the money the Clinton administrationwants," Wallace said. "Whether it's a fee freeze acrossthe board or one that only affects specialty physicians remainsto be seen."