ACR Economic Update: What to Expect From CMS in 2010

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While health reform is still a legislative preoccupation, where regulatory agencies are concerned, the train has left the station, according to Maurine Spillman-Dennis, MPH, MBA. Spillman-Dennis is a senior director in the economics and health policy division of the ACR®, and she presented an economic update from the college at the RBMA Fall Educational Conference on October 12, 2009, in Phoenix, Arizona. Her predictions, largely confirmed by the final ruleissued by CMS on October 30, are a reliable guide to what imaging providers can expect from the Medicare program in 2010.

The regulatory changes made to the Medicare Physician Fee Schedule (MPFS) will not include any adjustments to physician work RVUs, Spillman-Dennis says. An overall reduction in physician payments of 21.2%, however, will go into effect on January 1, 2010, unless Congress overrides this cut based on the sustainable growth rate (SGR); legislative action has been used to prevent the annual SGR-mandated MPFS decreases in past years.

Utilization Rate

Instead of focusing on work RVUs, CMS is concentrating on practice-expense RVUs for this year’s MPFS changes, Spillman-Dennis says. The equipment-utilization rate used to calculate practice expenses was previously 50%, but the CMS proposal raised that to 90% for equipment costing more than $1 million. Of course, radiology will be among the specialties hit hardest by this change because it relies heavily on advanced technology.

The new utilization rate will lead, Spillman-Dennis says, to a 44% reduction in the input for practice-expense calculations. The 90% rate was based on a survey of only six facilities, all of them urban. An RBMA survey that has since been provided to CMS found, in contrast, equipment-utilization rates of 48% for rural facilities and 56% for urban ones. The Office of Management and Budget is also discussing the RBMA survey data, and it is possible that an ongoing survey will eventually be designed.

The final rule of October 30 maintains the proposed 90% utilization rate, but phases it in over a four-year period (with the 2010 rate not yet set). Equipment costing more than $1 million but used to provide treatment has also been exempted from the utilization-rate change, perhaps in response to the efforts of the American Society for Radiation Oncology (ASTRO) to persuade CMS to reconsider the reliability of the utilization data.

Hourly Practice Expense

What Spillman-Davis characterizes as devastating hits to radiology payments for 2010 take the form of reductions in practice expense per hour based on the Physician Practice Information Survey (PPIS) administered by the AMA. The ACR objects to this year’s use of data from radiologists in hospital-based practices (and from very few radiologists at all), since the information does not reflect the much higher actual practice expenses for the specialty as a whole.

For example, the PPIS found that the malpractice-insurance expense for radiology was zero (since it surveyed hospital-based radiologists who did not pay for coverage), but the survey ignored the significant cost of liability-insurance policies (such as those covering errors and omissions) of imaging centers. For the professional component, practice-expense RVUs would be reduced 19% for 2010 based on the PPIS; for the technical component, 33%.

Primary care physicians will gain some of what radiologists lose, and Spillman-Dennis reports that a primary care coalition has pushed CMS to ensure a January 1 full implementation of the PPIS-based practice-expense changes. She hopes for change in this area, however, because the RBMA has provided CMS with comprehensive insurance-cost data that might provoke reconsideration of radiology’s hourly practice expense. On October 30, CMS announced that it would phase in the PPIS-based changes over four years, and that practice expenses for medical oncology would not be included in these changes.

Coverage and MedPAC Plans

According to Spillman-Dennis, the coverage position now taken by CMS is that it will no longer pay for new technology, no matter what its merits might be. Screening CT colonography (CTC) has been sacrificed to this principle, despite the existence of outcomes data (which are usually difficult to acquire for screening procedures). CMS rejected the outcomes data because they were not stratified by patient age, and it augmented its national coverage determination that CTC would not be covered by issuing opinions in