Legislative Update: Calculating the True Cost of the DRA

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As the medical imaging industry is well aware, the Deficit Reduction Act of 2005 (DRA), effective January 1, 2007, directed severe reductions in payments for many imaging services in the physician office and independent facility setting. Under the DRA, the payment for the technical component (e.g., equipment, non-physician personnel, supplies, and overhead) of an imaging service was set at the Hospital Outpatient Prospective Payment System (HOPPS) payment rate, if the PFS payment rate is higher. This led to severe cuts in certain imaging procedures that are essential for diagnosing and treating disease. The Congressional Budget Office (CBO) predicted that these cuts would create Medicare savings of $8 billion, but calculations performed by the Medical Imaging & Technology Alliance (MITA) have estimated that the cuts will reduce Medicare expenditures for medical imaging by $13 billion.

Examples of these cuts include:

Reimbursement for PET/CT exams used to diagnose cancerous tumors and determine the effectiveness of cancer treatment has been reduced by more than 50%.

Reimbursement for bone densitometry studies necessary for the diagnosis of women at risk for osteoporosis (a recently enacted Medicare screening benefit) would be reduced by more than 40%. Reimbursement for bone densitometry will drop from $139.00 in 2006 to $37.90 by 2010.

Reimbursement for MR angiography of the head used to detect the location of aneurysms has been reduced by 42%; and

Reimbursement for ultrasound guidance procedures, performed as part of a minimally invasive biopsy for the diagnosis of breast cancer (a biopsy method that saved the Medicare program $88 million from 2001 to 2003), has been reduced by 35%.

In recent legislative activity, the U.S. House of Representatives, on August 1st, passed the Children’s Health and Medicare Protection (CHAMP) bill, which reauthorizes the State Children’s Health Insurance Program as well as expands program eligibility to include an additional 5 million children. The Medicare provisions of the House bill also contain significant provisions related to medical imaging services that would further negatively impact reimbursement for medical imaging services – on top of those payment cuts that were enacted as part of the DRA.

While the final Children’s Health Insurance Program bill passed by both the House and the Senate that was sent to the President did not include those Medicare provisions related to medical imaging, the Medicare provisions serve as the basis for the House’s position on Medicare related to any Medicare bill that will be passed before the end of the year. The Senate is still working on a Medicare bill that will be conferenced with the House provisions to address the scheduled 9.9 percent physician payment cut in 2008.

The industry has been severely impacted by the DRA, and this will ultimately filter down to patients. Further reductions to medical imaging reimbursement could potentially limit millions of Americans with already limited access to vital medical imaging services such as MRI, CT, PET, ultrasound and mammograms. The human toll could be very great, as many would miss the opportunity to be tested for cancers, heart disease, osteoporosis, and a host of other debilitating and potentially fatal illnesses. From a research perspective, the long-term consequences are equally negative, as future innovations will be stifled, and with them, the hope and help that such breakthrough technologies offer.