Reimbursement Under the ACA: Hefty Cuts On The Horizon

July 31, 2013

Radiology is facing more reimbursement cuts under the Affordable Care Act. Here’s what to expect and what to do about it. (Part 4 of 4)

Radiology is no stranger to pay cuts. In recent years, providers have scrambled to absorb repeated reimbursement reductions - and they’re likely to take another hit in 2014.

Since 2006, CMS has sliced radiology payments 12 times. And, in line with the cost containment and reduction missions of the Affordable Care Act (ACA), the agency released its proposed rule in earlier this month, detailing additional, significant drops in reimbursement.

The result, said Pam Kassing, senior economic advisor to the American College of Radiology, could be a substantial shift in services offered by both private practices and hospitals.

“We’re hearing from those that have their own imaging centers and provide services in-office that they’re barely hanging on,” she said. “A lot of sites have been sold to hospitals, and many just don’t exist anymore. Of those in business, they’re not making much of a profit margin. They’re providing a diverse mix of services to the community, but if they’re on the verge, I don’t see them sustaining for the next year.”

The Coming Cuts

To date, CMS has focused predominantly on identifying codes that are good candidates for bundling - those performed together at least 75 percent of the time. Some of the newest bundled codes pertain to abscess drainage, breast biopsy, and intravascular stints.

[[{"type":"media","view_mode":"media_crop","fid":"15908","attributes":{"alt":"Pam Kassing","class":"media-image media-image-right","id":"media_crop_7508966528015","media_crop_h":"0","media_crop_image_style":"-1","media_crop_instance":"859","media_crop_rotate":"0","media_crop_scale_h":"0","media_crop_scale_w":"0","media_crop_w":"0","media_crop_x":"0","media_crop_y":"0","style":"float: right; margin: 5px; height: 150px; width: 100px;","title":"Pam Kassing","typeof":"foaf:Image"}}]]The agency now has expanded its efforts to pinpointing misplaced values - codes that are either reimbursed at too high or too low a level. One of the guiding principles in making these adjustments, Kassing said, is that no clinical site can receive more reimbursement than a hospital does for any service.

Based on this decision and beginning next year, radiologists will see a 10 percent to 45 percent drop in reimbursement for 47 codes they routinely use. Most of the codes will affect CT and MRI procedures. Some codes, however, will see substantial increases. For example, an upper extremity ultrasound will see a 41-percent payment increase.

In theory, evening out reimbursement rates shouldn’t cause much concern, she said. But, establishing uniform prices ignores the fact that some tests are more complex and useful.

“This is a problem when you look at CT and MRI cost centers,” she said. “It’s being proposed that Medicare will pay $85 for a CT and $84 for an X-ray, but these tests use different resources, and the actual cost difference is 10-fold.”

Making the reimbursement levels virtually equivalent also ignores that, in most cases, the CT is intrinsically more valuable to the patient than the X-ray based on the amount of diagnostic information it can provide.

Another significant problem with this strategy, she said, is that it ignores all the inactive time associated with conducting a scan.

“Medicare is redefining what kind of time it wants to recognize,” she said. “They’re using the equipment time for the time the patient sits on the actual piece of equipment, and they’re not considering that you have to gown them, bring them to the room, explain the procedure, and the position the patient.”

Given that it often takes more time to image a Medicare payment than a younger patient, providers will likely lose a significant amount of reimbursement through this policy change, she said.

“These are significant cuts, significant dollars that are being budget-neutrally shifted elsewhere,” she said. “The problem we have is that, first of all, we don’t think any impact should be that huge in any one year when physicians are trying to run offices and set up business plans. They need to know what their income will be for the coming year.”

Controlling Imaging Studies

It’s unlikely these reimbursement cuts looming in the not-too-distant future will be the last ones the industry sees, said Lawrence Muroff, MD, a radiology professor at the University of Florida and the University of South Florida Colleges of Medicine. And, practices and providers must be prepared to face the challenge head-on, he said.

“I think we can logically assume that these reductions will continue, and I think we’ll see some groups thrive and do well, but that may be at the expense of others that aren’t as proactive or who haven’t done sufficient homework,” said Muroff, who is also the CEO and president of Imaging Consultants Inc. “There needs to be strategic and scenario planning - things that would be important to their survival and their ability to thrive.”

Reimbursement cuts, he said, will likely give rise to many changes in the industry, including new practice models. But it also opens the door wider for radiologists to assume a larger imaging management role, said Saurabh Jha, MD, a radiologist at the Hospital of the University of Pennsylvania.

[[{"type":"media","view_mode":"media_crop","fid":"12328","attributes":{"alt":"Saurabh Jha, MD","class":"media-image media-image-right","id":"media_crop_1629834694721","media_crop_h":"0","media_crop_image_style":"-1","media_crop_instance":"463","media_crop_rotate":"0","media_crop_scale_h":"0","media_crop_scale_w":"0","media_crop_w":"0","media_crop_x":"0","media_crop_y":"0","style":"float: right; margin: 5px; height: 155px; width: 115px;","title":"Saurabh Jha, MD","typeof":"foaf:Image"}}]]In a recent New England Journal of Medicineeditorial, Jha refers to this responsibility as being a gatekeeper - the provider charged with determining whether an ordered study is appropriate. It’s a role that can also be used to limit the over-utilization of many studies that face the deepest reimbursement cuts, particularly in emergency departments where over-utilization is relatively common, he said. 

“I think radiologists are approaching this role in a good way. We’re not saying we’re going to deny studies, just that we’re going to talk it over with referring physicians and patients,” he said. “It’s an effective way for radiologists to take some control over imaging, particularly inpatient imaging. If there’s a clear financial stake involved, I think we’re going to see administrators and payers lean even more on radiologists to control utilization.”

Although image gatekeeping isn’t a silver bullet, providing this type of guidance to referring physicians and patients can also be seen as a value-added service, he said, given the industry’s focus on the Image Wisely and Image Gently campaigns. Initially, efforts to control utilizations could lead to more significant drops in reimbursement as providers recommend against conducting various studies.

The trick to success will be strengthening relationships with referring physicians and educating them about the most appropriate uses of diagnostic scans. Over time, Jha said, radiologists will be asked to spend less time teaching colleagues about imaging studies and more time concentrating on conducting appropriately-ordered tests.

ACR Activity

According to Kassing, ACR officials have met repeatedly with representatives from CMS and the Office of Management and Budget throughout the ACA implementation process. These efforts will continue, she said, to ensure both agencies are aware of the ACR’s concerns over inpatient and outpatient reimbursement.

Ultimately, she said, the ACR would like to see CMS stagger the payment cuts over time to minimize the impact that implementing them all at once would have on providers. In fact, the ACR will likely recommend CMS implement reimbursement cuts that total no more than 10 percent drops per year, she said.

In the meantime, practices can proactively work to weather these payment reductions by maintaining a diversified portfolio of services.

“Being sure you offer a wide array of services will help you by letting the gains in one area offset the losses in another,” Kassing said. 

In addition, the ACR is rolling out the Imaging 3.0 campaign, an initiative designed to help the industry and its providers safely navigate new payment models. As part of the campaign, practitioners will receive tools, techniques, and strategies to guide them through ACA implementation.

“There’s a lot of uncertainty over where we go from here,” she said. “The ACR is trying to help our members determine where they’ll fit in within the new payment system. We’re trying to lead them in a new direction, knowing that fee-for-service is temporary and that the practice landscape is changing.”