Congress Blindsides Radiology, Votes to Cap PFS Technical Reimbursement at HOPPS Rates

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WASHINGTON, DC — Taking the imaging world by complete surprise, the Senate voted with the House on Wednesday, December 21, to equalize technical component reimbursement rates paid under the Physician Fee Schedule with those paid for under the Hospital Outpatient Prospective Payment System beginning in 2007, dealing the freestanding imaging center world an estimated $8.1 billion blow over 10 years. That figure includes the previously announced cuts for MRI and CT contiguous body part imaging: 25% in 2006 and a proposed additional 25% in 2007. The bill now returns to the House for a final vote because of a procedural change in the Senate

The Senate was so evenly divided on the bill that Vice President Dick Cheney had to cast the deciding vote, 51-50, to pass the Deficit Reduction Act of 2005 devised behind closed doors over the weekend and passed by the House shortly after 6 AM Monday morning. “It ensures that payment rates for imaging services delivered in physician offices [and freestanding imaging centers] do not exceed the payment rate for identical services delivered in a hospital outpatient department,” said Ron Geigle, spokesman for the National Electrical Manufacturers Association, Rosslyn, Va. NEMA was the first to sound the alarm to the radiology community after the House passed the bill on Monday.

The development was so sudden that as of Wednesday night, legions of lawyers in the employ of organized radiology, including the American College of Radiology (ACR) and the National Coalition for Quality Diagnostic Imaging Services (NCQDIS), were still scrutinizing S.1932 to fully understand the implications of the legislation. Access, however, was an initial concern. “This one-size-fits-all approach will have a disastrous effect on patient care, particularly in rural communities that do not have large hospitals convenient to them and rely predominantly on in-office imaging care.” said James P. Borgstede, MD, chair of the ACR Board of Chancellors. “The ACR has worked closely with Congress and other governmental bodies to educate our elected officials on sensible alternatives that will help rein in costs and improve quality of care.”

“We think this will create a real patient access issue,” noted NEMA spokesman Geigle. “There will be movement if this holds. In effect, when you see reimbursement drop 50%, you can expect that a physician or IDTF will ask: ‘Is it worth it?’” Geigle posed the example of ultrasound guidance for the minimally invasive alternative to surgical breast biopsy. Reimbursement for the technical component of CPT 76942, ultrasonic guidance for needle placement, is $110.66 in the freestanding setting, but $62.25 under HOPPS.

Radiology bore the brunt of the total $28.1 billion in Medicare savings the Congressional Budget Office estimates the legislation will achieve. “The cuts to imaging represent almost a third of the sustained growth rate-related cuts,” noted NEMA spokesman David Shoultz, Arlington, Va. “It is astronomically disproportionate in a bad way.” The $8.1 billion in savings attributed to the imaging cuts incorporate the 25% discount for scans on contiguous body parts in 2006, and a proposed additional 25% cut in 2007.

The ACR and NEMA both vowed to attempt to dissuade Congress from enacting the legislation.

Dealing With the Body Part Debit

Meanwhile, for owners of imaging centers the Medicare reduction to the technical component for multiple MR and CT scans on contiguous body parts will sting. Steve Duvoisin, CEO of Duvoisin and Associates, Spokane, Wash, a firm that manages primarily radiological practices in the Northwest, is preparing for the 25% cut—scheduled to go into effect January 1 for scans billed under the Physician Fee Schedule—by taking a careful look at the expenditures for new equipment in his 2006 budgets. The 25% cut in contiguous body parts currently is set to become 50% in 2007. Because the number of scans done per year theoretically will not decrease, reducing staff is not an option for Duvoisin’s centers. So future capital expenditure is the only place to make up the $500,000 per year he figures the contiguous body part debit may cost his practices.

In the analysis of John Buckhalter, vice president of AGI Healthcare Group, San Ramon, Calif, the reduction for CT would impact an average radiology center with a 1.5-3% revenue reduction, dependent on the type of scans done, how they are being done, and what percentage are paid for by Medicare. “It is very hard