MPFS Deep Dive: Radiology’s Reimbursement Outlook for 2011

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Randy RoatRandy Roat says, “The news for radiology could be worse.” Roat, vice president of radiology services for Medical Management Professionals, Inc. (MMP), Atlanta, Georgia, refers to the reimbursement changes contained in the 2011 Medicare Physician Fee Schedule (MPFS). “Counterintuitively, almost every single one of the imaging RVUs was raised,” he notes. “Had we not experienced this year’s Medicare economic adjustment, we would have seen some degree of revenue growth.” In fact, the Medicare Economic Index Budget Neutrality Adjustment resulted in a 7.9% decrease of the conversion factor; this, Roat says, “is where we are seeing the money lost.” The change, of course, was applied across the entire Medicare system, not specifically to radiology. In fact, according to an analysis conducted by Roat and his team at MMP, without the Medicare Economic Index Budget Neutrality Adjustment, some radiology practices would have experienced a significantly less severe 0.25% decrease in reimbursement across all procedures—and that decrease is largely accounted for by changes to a small number of codes. With the rebasing factored in, however, Roat’s analysis shows that radiology practices can expect an average Medicare reimbursement decline of 4% to 9% in 2011. “The 2011 MPFS dataset created by MMP reveals several points worth teasing out, as radiology practices adjust their strategic plans in an attempt to minimize the impact of the cuts,” Roat says. “My recommendation would be that national statistics are not going to be very helpful. This is all about the individual practice. For it to be able to make the right decisions, it has to understand the triggers causing payment variations.” Key Changes The biggest radiology payment changes included in the 2011 MPFS relate to the codes for angiography and for CT of the abdomen and pelvis. The reimbursement decreases for these procedures are so steep, Roat says, that they actually drag down the average reimbursement change from an increase of 6.2% to a decrease of 0.25%. “If we look specifically at these codes, they singlehandedly wipe out the 6.2% increase for the entire rest of the practice,” Roat notes. “A very small set of less than 20 codes affects the whole average.” Another area with deleterious implications for reimbursement is interventional radiology. “We examined a few interventional practices and had our coders recode 90 to 180 days of work, for each one, according to the new bundled extremity angiography codes. We found an average 30.56% reduction for interventional procedures,” Roat says. “If a fairly robust interventional practice is doing a full scope of work, it is probably looking at a 30% reduction in pay. This is the type of analytical thought process you need to rely on, as a practice, to determine which direction you should take strategically.” As an example, Roat observes, a radiology group without an angiography service line might see a lessened overall impact, while another that offers the service might have to evaluate that decision more closely. “A lot of important strategic decisions will fall down from this type of analysis,” he says. The technical component also is likely to be subject to large reimbursement cuts, Roat says, because of the changes to the multiple-procedure reduction. Previously, the reduction mandated a 25% downward adjustment to reimbursement for a second, contiguous body part imaged during the same procedure as the first. In July 2010, that reduction was increased to 50% and applied across modalities. Roat adds, however, that the technical component also benefited from the Medicare Economic Index reallocations, so any potential impact will be very practice specific. Finally, changes to the geographic practice-cost indices used by Medicare to calculate appropriate reimbursement based on location stand to have an impact on some practices, Roat says. He notes that according to MMP’s analysis, the Detroit, Michigan, metropolitan area will be among the most negatively affected. Silver Lining The news, however, might not be all bad. Roat notes that based on the 2011 MPFS, the radiology industry’s notion that imaging is being targeted by CMS is somewhat overstated. “It is very easy to conclude that radiology is under attack when looking at the changes to some of these codes,” he says, “but those who are saying ‘Woe is me’ right now are not looking at all these wins they are about to get on 300 procedures. You cannot just look at the losers; you have to balance it off your winners, too.” Further evidence that imaging is not specifically being targeted can be found in the cuts experienced by other specialty areas, such as cardiology and therapy. “This 5% to 8% cut in reimbursement is not good, but radiology is certainly not the only specialty experiencing cuts,” Roat observes. “The revenue shortfalls we are seeing are coming more from the Medicare Economic Index conversion-factor adjustment than anything else, and that extends across all specialties—everyone felt the pain.” He adds that reimbursement cuts for higher-value procedures (such as CT of the abdomen and pelvis), while difficult to adapt to in the short term, might positively affect the radiology industry in the long term. “This changes the incentive to perform imaging, while increasing the burdens that come with it,” Roat says. “This is just conjecture, but I think this may actually cause a lot of those in-office, self-referred imaging operations to cease, and might result in an uptick in volume for radiologists.” That being said, Roat concludes on a note of warning, observing that radiology practices will have to look closely at their operations in the coming year to stay afloat in the midst of what are still—when all factors are accounted for—deep cuts. “My recommendation is to take a look at your practice and conduct strategic planning, understanding that as revenue tightens, the practice needs to become more focused in where it places its efforts,” he says. “Where does my revenue come from, how will it be affected, and at the end of the day, is this a service that I have to offer? We will see practices reevaluating all the components of their business to see whether their expenses will continue to be covered by their revenue.” Cat Vasko is editor of and associate editor of Radiology Business Journal