Urologists eye CT scanners as reimbursement drops

November 4, 2004

Faced with a potentially large decrease in revenue for outpatient treatment of prostate cancer, some urologists have turned to CT scanning as a means to counter the shortfall. The move has caught the radiology community's attention.

Faced with a potentially large decrease in revenue for outpatient treatment of prostate cancer, some urologists have turned to CT scanning as a means to counter the shortfall. The move has caught the radiology community's attention.

The Centers for Medicare and Medicaid Services has changed the reimbursement formula for outpatient administration of hormonal therapy for advanced prostate cancer. As a consequence, a hypothetical practice with 48 patients receiving treatment will see revenue decline from an estimated $132,000 in 2004 to as little as $41,000 in 2005, said Richard Rutherford, director of practice management for the American Urological Association.

"The elimination of most of the profit from the administration of prostate cancer drugs in urologists' offices is something that the AUA has been warning members about for years," Rutherford said at the annual meeting of the Western Section of the AUA.

Whereas reimbursement once was set at 20% above average wholesale drug prices, the new formula calls for reimbursement at 6% above the average selling price in 2005. Additional changes in the reimbursement formula could drive the profit margin for urologists even lower in 2006.

"The new formula is going to bite us, and our task is to figure out how to suck out some of the poison," Rutherford said.

In some instances, getting rid of the economic poison has meant turning to in-house urologic CT scanning. With as few as three studies a day, CT scanning can surpass the break-even point, although not for solo or small practices, he said.

Using the hypothetical example of a pelvic scan without contrast, three studies a day would generate more than $163,000 over five years, assuming acquisition of a used scanner, 5% annual growth in scanning volume, and no outside reading or interpretation services. The estimated total positive cash flow would exceed $360,000 (see table).

"Keep in mind that you generally get more than one scan," Rutherford said. "You might get a CT scan of the pelvis with and without contrast and a CT scan of the abdomen with and without contrast. That would be four individual studies on the same patient."

Money is not the sole reason that urologists have begun doing their own CT scans; lack of priority for urology studies at radiology centers is another. Rutherford said he has heard of urologists and their patients having to wait five weeks for CT studies for stone protocols.

A move into the CT scanning business requires diplomacy with radiologists, insurers, and other payers, he said. Radiologists are not happy about losing a urology component of their business, and some third-party payers are taking steps to limit the growth of imaging studies. A Pennsylvania insurer recently decreed it would not pay for CT scans unless they were performed at a facility that provides imaging services 40 hours a week and has an in-house radiologist, Rutherford said.

Radiologists have not taken urologists' venture into CT scanning lightly. Several urologists in Rutherford's audience alluded to local, regional, and national lobbying efforts that amount to "plunking down a lot of money to control the market."

But such characterizations misrepresent organized radiology's efforts and concerns, according to Dr. James Borgstede, chair of the board of the American College of Radiology.

"We think the imaging that is done needs to be appropriate with respect to the need for the examination to begin with and with respect to the quality of the techniques used," Borgstede said. "If entities such as the ACR appropriateness criteria or accreditation programs are used, those are ways to assure the appropriateness and the quality of an examination."

Recognizing that multiple solutions exist for the appropriateness issue, the ACR has chosen to be proactive in an effort to find the best solution, Borgstede said. Absent that effort, insurance carriers will implement solutions that will not be advantageous to patients or to the medical community.

Despite the talk about the need for diplomacy with radiologists, urologists' greatest concern should be how reimbursement will be affected, said Stephen Carrales, a consultant with UroRad Health Care and Urology Associates of South Texas. Carrales has helped several urology practices set up their own in-house CT facilities.

"Urologists have the patients and the power, and all we're trying to do is keep the patients within the umbrella of urologists and enhance continuity of care," he said. "At the same time, we're keeping the revenue that would go to outside folks within the urology community. In light of decreasing reimbursement across the board, it is important for urologists to capture every dollar that is rightfully available to them."

Radiologists can still obtain their share of the CT revenue from reading the scans, Carrales said. In most instances, urology practices perform and bill for the technical component of the study and then send the scans to radiologists for full reading and interpretation.