CHAMP, Sustainable Growth Rate Reform, and Other Potential Payment-reduction Vehicles

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Today’s imaging market is substantially different from that of earlier years; payment is less secure, coverage for new technology is more difficult to obtain, and government and private oversight are increasing. After years of uninhibited growth and development, the imaging sector now faces unprecedented scrutiny that will probably change the way that imaging technologies are covered, paid for, and regulated. While policymakers on both sides of the aisle have committed to health-reform goals, including quality improvement, sustainable growth, and empowering consumers, the federal and state budgetary forecasts have prompted focused efforts on managing cost and utilization for all health services, including—if not especially—imaging. With other health care sectors, such as physician services, facing significant Medicare payment cuts, there’s yet another reason for the deepening scrutiny of imaging: as a source of savings to fund other provider sectors’ demands for higher payment. Identifying offsets or cost savings is essential as legislators wrestle with an impending physician Medicare payment cliff, budgetary reconciliation processes, and rising entitlement spending. The federal budgetary environment increasingly requires every dollar of new spending to be offset by a reduction elsewhere. Many key congressional and Medicare policy officials have already zeroed in on imaging services, arguing that the industry’s dramatic growth suggests overuse of services and the potential for trimming payments. The Deficit Reduction Act of 2005 levied $13 billion in cuts to medical imaging over three years, causing changes that are just beginning to reverberate throughout the industry. Policymakers continue to pursue savings through imaging reform, including provider certification, more aggressive oversight by government bodies, stricter technology assessments, and efficiency measurement. A Case Study: Possible Reform Legislation Until the fall of 2007, changes to imaging payment policies tended to proceed in piecemeal fashion. Last July, the House of Representatives introduced the Children’s Health and Medicare Protection Act of 2007 (CHAMP), the first of several efforts to expand the State Children’s Health Insurance Program (SCHIP). To help fund the SCHIP expansion, among other initiatives, the House bill sought radically to alter the way in which all physicians were held accountable for Medicare spending, and introduced accreditation and certification requirements. All told, the changes outlined in CHAMP could have cost the imaging industry an additional $400 million in cuts over five years, according to the AMA.1 Most notably, the House proposed reforming physician payments by replacing the sustainable growth rate targets—a mainstay of Medicare physician-payment policy—with newly defined specialty-specific expenditure targets. The proposed legislation would have capped Medicare outlays for each family of physician specialties, including radiology. Beginning in 2010, each of these families of specialties would have faced payment cuts if spending exceeded its specific target. Outlined in a March 2007 Medicare Payment Advisory Commission (MedPAC) report, this sector-specific payment methodology raised several potential problems for the imaging sector. First, MedPAC predicted that imaging services could face up to a 6.5% negative payment adjustment, in the absence of restrictions on the size of such adjustments. Clearly, the prospect of formulaic reductions would pose a challenge to innovators and clinicians alike. MedPAC also noted a salient design flaw in the payment scheme exclusive to imaging services. Although the proposed sector-specific expenditure targets aimed to link future payment increases to past spending totals, the imaging sector is unique in that the scheme would not have aligned incentives with behavior. While clinicians who provide imaging services contribute to the sector’s growth, the dominant drivers of imaging utilization are the practice patterns of referring physicians. Using expenditure targets for imaging to influence the behavior of referrers fails to link behavior to consequence. In addition to proposing a fundamental change in the reimbursement landscape for physician services—with a deep structural misalignment for the imaging sector—CHAMP would have imposed new accreditation requirements on the industry. As suggested by MedPAC, long an advocate of imaging accreditation, the House bill would have directed the Secretary of Health and Human Services to select private entities to administer provider standards. These standards would encompass imaging equipment, qualifications for technologists and supervising physicians, image quality, patient-safety requirements, and training and educational requirements for interpreting physicians. The private sector already embraces these accreditation initiatives. Amid ongoing efforts by private radiology benefit management companies, UnitedHealthcare announced in 2007 that only members demonstrating certification by the ACR or the Intersocietal Accreditation Commission (IAC) would be eligible for reimbursement. Originally slated to take effect on March 1, 2008, the accreditation requirement will now begin in the third quarter of this year and will apply to CT, CT angiography, MRI, MR angiography, nuclear medicine, nuclear cardiology, PET, and echocardiography services.2 It is not yet clear how UnitedHealthcare will respond to entities that fail to meet the ACR and IAC standards, or how new potential entrants will assess an accredited market. Although imaging centers with high-quality equipment and personnel should not have difficulty obtaining certification, applying for accreditation could require a substantial investment of time and administrative resources. Ultimately, the CHAMP imaging provisions did not survive past the House vote on the bill. The legislation that emerged from conference closely resembled the Senate version, which contained none of the imaging provisions outlined in CHAMP. After two presidential vetoes, legislators passed, and the president signed, the Medicare, Medicaid, and SCHIP Extension Act of 2007, a slimmer package whose chief goal was to preserve the popular children’s program. The View From Washington: 2008 and Beyond Although a fierce discussion about SCHIP funding ultimately eclipsed CHAMP’s consequential imaging provisions, reimbursement for imaging services will remain a hotly debated issue in 2008 and 2009. Amid bleak predictions about Medicare’s financial health, Congress must now address a looming 10.6% reduction in physician payment. Given the volatile political climate, we are not likely to see expansions in program spending without identified offsets, and the imaging sector may again find itself the target of considerable cuts. Should Congress delay addressing physician payment and other spending issues with another temporary adjustment, a new administration will face immediate pressures to address the long-term sustainability of Medicare, notably its payments to physicians. Members of the imaging community would be well served by engaging decision makers in discussions of the value of imaging services and the potential cost savings from highly targeted and timely treatment, and by investing in the cost-benefit analysis needed to evaluate emerging technologies. By developing internal metrics, the industry can work with policymakers to achieve optimal utilization of services and to ensure that patients have access to high-quality care.