2008 Update on Non-hospital-based Outpatient Medicare Reimbursement

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As part of GE Healthcare’s commitment to ongoing monitoring of the reimbursement situation, GE presented a Webcast on this topic on May 7, 2008. Called the 2008 Reimbursement Environment for OICs, the program was presented by Michael Becker, general manager, reimbursement, and John Schaeffler, manager, federal government relations, both of GE Healthcare.

The hour-long Webcast covered 2008’s changes in outpatient imaging reimbursement; current threats to reimbursement, along with positive developments for some imaging applications; the Economic Stimulus Act’s benefits for imaging providers; and GE’s important work in imaging advocacy among payors, lawmakers, regulatory agencies, the medical community, and the public. (These reimbursement topics will be covered in greater depth at the 3rd Annual GE Healthcare Outpatient Imaging Center Conference in Washington, DC, July 23-25. Executives can access conference information and register at www.gehealthcare.com/registration.)

The presenters noted that imaging has become a target for spending cuts because of its own success, with the highest rate of growth in Medicare services per beneficiary, which it has sustained over the past several years. Because overutilization of imaging is often cited as a driver of this growth, payors are attempting to slow growth through aggressive measures.

These may take the form of utilization controls, including broader use of preauthorization, accreditation, and credentialing requirements; radiology benefit management services, which now affect two thirds of the privately insured; and, at the state level, a greater emphasis on self-referral and certificate-of-need regulations.

Commenting on the GE Webcast and the 2008 reimbursement environment, Gordon Baltzer of MEI Development Corp, Coral Springs, Fla, says:

"The evaluation of utilization assumptions underlying the establishment of reimbursement levels needs to be watched closely and is expected to increase, requiring imaging providers to operate closer to functional capacity to remain viable over the long term."

The second means of reducing imaging’s growth is to reduce payment rates. Perhaps the most visible payment change was the Deficit Reduction Act, which also included the Multiple Procedure Discount. In addition, other potential payment changes could result in further reductions including decreases mandated by Sustainable Growth Rate (SGR) regulations and state taxes on imaging services.

Since January 1, 2007, the DRA has limited payment for the technical component of imaging services performed in IDTFs and medical offices or clinics to the lower of the Medicare Physician Fee Schedule (MPFS) rate and the Hospital Outpatient Prospective Payment System (HOPPS) rate. About a third of imaging procedure codes, have been affected by this cap, with PET, MRI, ultrasound, and CT, subject to the largest cuts.

Some services have been excluded from the DRA including procedures packaged under HOPPS, along with therapeutic procedures and mammography. Drastic as the DRA’s effects were, many centers have now learned to cope with them through enhanced efficiency, higher volumes, or both. Baltzer says, “Imaging centers can now focus on patient volumes and cost containment instead of placing hope in the reversal of the DRA cuts.”

A Better Year

Some of the news presented for 2008 was surprisingly good. Asked to comment on the Webcast, Bob Maier, president and CEO, and Brian Baker, vice president, both of Regents Health Resources Inc, Brentwood, Tenn, say, “2008 is a more favorable year for outpatient medical imaging than 2007 was. In 2007, the DRA was implemented, new rules were established, and the industry responded. We now know how to address the financial impact proactively and understand the new rules for outpatient medical imaging.”

Changes in HOPPS for 2008 are important not only to hospitals, but to outpatient imaging centers (OICs), because DRA linked the technical payments for many procedures to HOPPS rates. The overall HOPPS increase for 2008 was 3.8%, making the DRA reductions a bit less painful. In addition, a new packaging approach was applied to the hospital outpatient payment system where payment for secondary procedures, such as contrast, radiopharmaceuticals, guidance procedures, and post-processing, were packaged into the payment rate of the primary procedures they are performed with. This packaging resulted in an increase in the HOPPS payment rate for some procedures,