Jump in Equipment Utilization Rate in Fiscal Cliff Deal Will Take $800 Million from Imaging

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For the past three years, industry advocates managed to hold the equipment utilization rate at 75%. Late night negotiations during the fiscal cliff crisis changed all that.

“The 90% equipment utilization rate for the technical component of diagnostic imaging got thrown in at the last minute because they had savings attached to it of about $800 million over a 10-year period,” explains Cynthia Moran, assistant executive director, American College of Radiology (ACR). “They were so desperate to get dollars to pay for the 1-year sustainable growth rate (SGR) patch, that they took the savings and ran with it.”

The White House had long pushed to get the equipment utilization rate to as much as 95%, and this time there was no holding it back, Moran says. “The people in the room making the deal in this last go around included staff from CMS,” she laments. “For less than a billion dollars they decided to pick at our bones one more time. That was more than disappointing to say the least.”

Despite the setback, ACR officials will not quietly concede the new rate, which is scheduled to go into effect in 2014.
The fight over the debt limit increase in just two months time provides yet another opportunity, though no one expects it to be easy.

Debt limit talks, budget discussions, and automatic sequestration cuts will dominate on Capitol Hill in the coming months, and the ACR will keep pushing, Moran promises. “We will be doing everything we can to mitigate this increase,” she says. “The job is quantum leaps more difficult, because if we convince enough lawmakers to remove us from that package and go back to the 75% number, we will have an $800 million hole in the budget that we will be asked to fill. We will be looking at other policies that we think can garner savings as a replacement for the utilization cut.”

One such “replacement” could be utilization management (UM) strategy that would mandate the use of decision support and appropriateness criteria in the ordering of advanced imaging studies. Moran calls UM the ACR’s “major policy direction,” and hopes to convince lawmakers that it can garner major savings.

MPPR and Excise Tax

Despite a whopping 280 House cosponsors for a bill designed to kill the multiple procedure payment reduction (MPPR), the industry received no satisfaction on that front. “Because it was a budget neutral policy, there was no interest in bringing that up when the deal was put together,” Moran says. “We were highly disappointed, because it had such broad bipartisan support, and we will see if there is interest again in the next couple of months. We will be pushing it in the context of these larger reforms that will be part of the discussion in March.”

For Moran, the lack of support for MPPR reform in the latest legislation demonstrates a “totally fractured” legislative process on Capitol Hill. “In the previous world order, 280 cosponsors would almost guarantee that a bill would be debated, and probably be part of a larger health care bill,” she says. “In this environment, those processes have totally changed. Unless you can prove you can save the federal government hundreds of millions, or billions, that is the only time people will give you an audience.”

The 2.3% excise tax on equipment manufacturers also remained, a development that Moran called “a concern to everybody, and of course to our friends in industry. We are supportive of their work on that effort [to repeal], and we expect that to be brought up again during the next battle in March.”

To read the ACR's statement on the fiscal cliff deal, click here.