2014 Survival Guide: Key Issues Facing Radiology in the New Year
The recent upheavals in the world of health care have meant the arrival of new challenges with each passing year, and owing to imaging’s contributions to escalating costs, radiology has been especially hard hit in the past. 2014 will prove to be no exception, bringing a fresh slate of reimbursement and market challenges, according to Jeff Maze, director of business intelligence for Zotec Partners. “Understanding these issues, as well as their potential impact on the business of radiology, will be mission critical,” he says. Maze explains that as part of its preparations for the coming year, his company employs its business-intelligence capabilities to create detailed projections of the impact of imminent regulatory and market changes on practices’ volumes and revenues. “The new year always brings a lot of changes,” he notes. “We project the impact using a variety of models to help our practices understand what to expect. Being prepared for these changes, especially with the declines in revenue radiology practices have experienced over the past few years, is not optional—it is necessary for survival.” New MPFS and RVUs The health-care community waited with bated breath for the 2014 Medicare Physician Fee Schedule, which was released a month late due to the October government shutdown. The proposed version had provoked the ire of the radiology community with provisions that would make CT and MRI separate cost centers (resulting in reimbursement cuts in both hospital and nonhospital settings) and that would link practice-expense RVUs to Hospital Outpatient Prospective Payment System (HOPPS) and Ambulatory Surgical Center (ASC) rates, with a cap on payments. In spite of the protestations of the ACR® and other members of the radiology community, CT and MRI cost centers were confirmed in the final rule. CMS did, however, heed public comments and hold off on the practice-expense cap, although practice-expense RVUs are now linked to HOPPS/ASC rates. In the absence of a delay or repeal of the sustainable growth rate at year’s end, the conversion-factor update for 2014 is estimated by the ACR to be a whopping negative 24%. “We’re projecting a double-digit decrease in office-based procedures, primarily due to the practice-expense RVUs getting hit as hard as they are,” Maze says. “We have a lot of hospital-based customers, and the impact they’ll see is less than 1%. We’re keeping our fingers crossed that the conversion factor might increase.” Further, as a result of the establishment of the new cost centers for high-tech imaging (as well as RVU updates), MRI reimbursement will be significantly affected. Maze and his colleagues are predicting 20% to 30% decreases in reimbursement for spine, brain, and neck procedures alone; CT reimbursement will also decline, but not nearly so precipitously. “The impact to CT is in the mid-single digits—not minimal, by any means, but not as bad as to MRI,” he says. “We ran this for all of our clients across the country, and we’re not seeing anyone getting off the hook for the MRI or practice-expense decreases.” PPACA Impact Initially, Maze and his colleagues were optimistic about seeing an uptick in patient volume—and thus, an increase in revenue—as a result of the Patient Protection and Affordable Care Act (PPACA). That optimism diminished when problems with the healthcare.gov website slowed the pace of enrollment in exchanges by the previously uninsured. “Initially, we expected a positive impact on volume, but now we expect it to remain flat,” he says. Nationwide, enrollment is only at 20% of the predicted level, Maze says, and payors are signaling a lack of faith in what is obviously a troubled system. “Now, there are questions about whether people can even keep their existing coverage,” he notes. “Anthem is backing away from marketing the exchanges—and UnitedHealth never was, in the first place. We see no reason that the PPACA should influence our (or our practices’) budgeting for 2014.” Without that anticipated increase in volume, overall, radiology practices can expect to see their revenues decline, Maze predicts. “Assuming a neutral impact from health-insurance exchanges, most practices will see a decrease in revenues,” he says. Other Changes Maze notes that imaging volume shifts between hospitals and imaging centers, depending on where the professional component of services is more costly. After experiencing volume gains in recent years, hospitals are now seeing patients move to lower-cost imaging centers. “Practices that are more heavily based in hospitals will need to take this into account,” he notes. Practices should also closely watch their referral bases for changes in the coming year, he advises. “You always need to be aware of how many Medicaid and self-pay patients your referrers are accepting,” he says. “Many practices only monitor to make sure they are getting the same level of volume from their referrers, but if the carrier or modality mix changes, the payment could be significantly different.” In spite of these obstacles, there could be some good news on the horizon, Maze suggests. “Even though enrollment in health-insurance exchanges is budget neutral (for now), it would be a mistake to assume no long-term benefit,” he says. “The patients who have enrolled, so far, are older and sicker than expected because their health-care costs are high and they had the incentive to keep trying. A healthy 25–year-old probably tried to enroll once or twice and then decided just to come back when the site is working properly. While it’s been a rocky start, it’s still too early to tell if the exchanges missed their mark, for the long term.” If patient volume increases gradually throughout the year—and practices operate with ever more business savvy—the forecast could improve. “It will be possible to be profitable and successful this year, with the right understanding of (and preparation for) these issues,” Maze says. Cat Vasko is editor of ImagingBiz.com and associate editor of Radiology Business Journal.