Proposed 2009 MPFS: Once Again, Imaging Takes a Disproportionate Impact

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In what seems to be becoming as much a harbinger of summer as fireworks or cookouts, on July 7, 2008, CMS published its proposed Medicare Physician Fee Schedule (MPFS) payment update for the next fiscal year. Once again, it includes a number of provisions intended to address CMS concerns about the appropriateness of the provision of imaging services.1 This year, CMS continues to struggle with some of its past concerns, such as the appropriate breadth of Medicare’s Purchased Diagnostics Rule (PDR), while taking an initial foray into the setting of standards for the provision of diagnostic services furnished in a physician’s practice setting. These proposals, if adopted in the MPFS update final rule, will significantly affect the provision of diagnostic services, including imaging services—and, for some physicians and imaging centers, the financial viability of continuing to furnish such services. Unfortunately, many of these proposals raise more questions than they answer. At this point, we are again left with considerable uncertainty at a time when many imaging centers must make critical operational and business decisions in response to increasing costs and decreasing revenues. During the past couple of years, CMS has been criticized for adopting a number of additional supplier standards for IDTFs when IDTFs were already the suppliers subject to the most quality-of-care standards. This disparity was especially telling when compared with the Medicare standards for the delivery of diagnostic services in a physician’s office. In fact, in response to the growing number of IDTF supplier standards, some IDTFs considered alternative Medicare enrollment options, such as physician group practice or physician-directed medical clinic, in order to alleviate the effects of the new IDTF supplier standards. In the MPFS update, CMS attempts to close this loophole by requiring all physician and nonphysician practitioner organizations2 performing diagnostic testing services (with the exception of diagnostic mammography services) for Medicare beneficiaries and enrolled in the Medicare program as clinics, group practices, or physician offices to enroll as IDTFs.3 CMS proposes defining a physician or nonphysician practitioner organization as any physician or nonphysician practitioner entity that enrolls in the Medicare program as a sole proprietorship or organizational entity, such as a clinic or group practice. Because of expected enrollment delays, existing suppliers would have until September 30, 2009, to comply with this new rule. New suppliers, however, would have to comply as of January 1, 2009. CMS would not impose all of the IDTF supplier standards on physician and nonphysician practitioner organizations. Specifically, CMS has indicated that the following IDTF supplier standards would not apply to physician and nonphysician practitioner organizations enrolling as IDTFs:
  • maintaining additional comprehensive liability insurance for each practice location,
  • maintaining a formal clinical compliance process,
  • posting IDTF standards,
  • maintaining a visible sign posting business hours, and
  • separately enrolling each practice location.
CMS, however, is seeking specific comment as to whether the physician or nonphysician practitioner organizations should be exempt from any other standards. Clearly, some additional carveouts will be required. For instance, as the proposal is currently drafted, physician and nonphysician organizations enrolling as IDTFs would be prohibited from sharing space with any other Medicare-enrolled person or entity. That is, when the regulation was taken to its logical extreme, such IDTFs could not share equipment or space with the underlying physician or nonphysician organization. Presumably, CMS did not intend such a limitation. CMS is also seeking comment on two other issues. The first is whether the proposed enrollment requirement should be limited to physician and nonphysician organizations furnishing advanced diagnostic testing procedures (such as MRI, CT, and nuclear medicine). The second is whether physician and nonphysician organizations currently use nonphysician personnel capable of complying with the IDTF nonphysician personnel standards. Mandated Mobile Entity Billing CMS is also proposing a new IDTF supplier standard that would require entities furnishing mobile diagnostic services to enroll in Medicare and bill directly for the mobile diagnostic services that they furnish, regardless of where the services are performed.4 This new standard is intended to ensure that mobile entities use qualified physicians and nonphysician personnel for the services that they render. If adopted in the final rule, this proposal would go into effect on January 1, 2009. Here again, the proposed standard creates a number of uncertainties. First, mobile diagnostic suppliers would presumably still be allowed simply to furnish equipment to other providers of diagnostic services or to sell the technical component of such services, so long as the arrangement complied with Medicare’s PDR. Second, the new IDTF standard presumably would not apply to portable radiography suppliers, since CMS still recognizes them as having a separate enrollment status from IDTFs. CMS, one hopes, will address some of these uncertainties prior to implementing the proposed IDTF supplier standard. CMS has made it quite clear that the punishment for an IDTF that fails to comply with the IDTF performance standard is revocation of billing privileges.5 Currently, CMS allows an IDTF to submit claims for services furnished prior to the date of revocation for up to an additional 27 months after the date of revocation (under Medicare’s timely claim submission rules). CMS believes that this period is too long and proposes requiring such claims to be submitted within 30 calendar days of the effective date of revocation. CMS has also proposed a similar reduction of the time for submission of postrevocation claims for physician and nonphysician practitioners. Let’s Try This Again CMS adopted final regulations last year that would have significantly expanded the scope of the PDR to cover both the technical component and the professional component of diagnostic services billed by a physician or another supplier, including IDTFs. Further, the PDR would have applied not only to purchases of professional and technical components, but whenever such components were furnished by an outside supplier at a site other than the office of the billing physician or entity. The anti-markup provision of the PDR would have generally limited payment to the outside supplier’s net charges, without regard to any charge intended to reflect the cost of equipment or space leased to the outside supplier by or through the billing physician or entity.6 Although these regulations were supposed to go into effect on January 1, 2008, CMS published a notice two days later that (except for certain kinds of anatomic pathology diagnostic testing) it was delaying the effective date of the final regulations until January 1, 2009.7 The need for the delayed effective date was largely attributable to widespread confusion as to how the final rule was to be implemented and to the fact that the changes would have required the restructuring of many seemingly legitimate arrangements. In the proposed MPFS update, CMS presents two alternative approaches to revising the PDR. Under the first approach, the PDR would apply in all cases where the professional or technical component of a diagnostic testing service is either purchased from an outside supplier or performed or supervised by a physician who does not share a practice with the billing physician or physician organization.8 An employed or independent-contractor physician would be deemed to share a practice with the billing physician or physician organization if he or she is employed by, or contracts with, a single physician or physician organization. With respect to this approach, CMS is seeking comment as to whether CMS should allow (and if so, how to allow) a physician or physician organization occasionally to provide services outside his or her practice (as in locum tenens arrangements) without implications for the PDR. Under the second approach, much of the existing final PDR regulations would remain intact, but the office of the billing physician or entity would be defined to include space where the diagnostic test is performed within the same building (as defined by the Stark law) in which the billing physician or supplier regularly furnishes patient care. CMS, however, would provide a number of clarifications: The anti-markup provision applies to the technical component if the technical component is either conducted or supervised outside the office of the billing physician or entity; the technical component is not purchased from an outside supplier if the technical component is supervised by a physician located in the office of the billing physician or entity; and for PDR purposes, the performing supplier of the technical component is the physician who supervises the technical component, while the performing supplier of the professional component is the physician who performs the professional component. For the most part, these clarifications are welcome and indicate a more complete understanding of the issues under the PDR than previously indicated. CMS also proposes an exception to the anti-markup provision of the PDR for tests ordered by a physician in a physician organization (as defined by Stark law for purposes of the stand-in-the-shoes concept) if the physician organization does not have any owners who have the right to receive profit distributions. CMS has also made a number of specific requests for comments on topics that include calculating the net charge for the professional component when the PDR anti-markup provision applies; whether, and how, CMS should provide specific regulatory guidance on calculating the net charge for purposes of the anti-markup provision; whether CMS should allow some overhead costs associated with an outside supplier’s leasing of space or equipment from the billing physician or entity; whether, in addition to or in lieu of the PDR, CMS should prohibit reassignment in certain situations and require direct billing; whether the final PDR regulations, currently scheduled to go into effect on January 1, 2009, should be delayed; whether the proposals set forth in the MPFS update should go into effect on January 1, 2009; and whether some or all of the proposals should be delayed past January 1, 2009. CMS has also proposed updating the qualification requirements for radiography personnel in the conditions of coverage for portable radiography suppliers. Specifically, CMS would revise the requirements for radiography personnel to reflect the current requirements of the Joint Review Committee on Education in Radiologic Technology. One such change would be to eliminate the current requirement that radiography personnel receive formal training of not less than 24 months, except for personnel obtaining training prior to July 1, 1966. Standing alone, these changes are long overdue and reflect the current training criterion for radiography personnel. Portable radiography suppliers, however, have to wonder if this is the first step in adopting widespread performance standards similar to those that CMS has imposed on IDTFs. Payment Issues Most of the payment issues affecting suppliers of imaging services derive from general Medicare fee-schedule issues, such as the proposed 5.4% negative update in 2009 for physician services payable under the MPFS. These changes, however, have been temporarily avoided because Congress has overridden President Bush’s veto of the Medicare Improvement for Patients and Providers Act of 2008, which implements an 18-month stay of future Medicare payment cuts and gives physicians a 1.1% payment update. The hope is that the 18-month stay will give Congress a chance to address the sustainable growth-rate issue permanently. On the imaging front, CMS again holds the multiple imaging procedure payment discount at 25%. CMS does, however, propose adding 10 new codes to, and deleting one existing code from, the list of codes subject to the multiple imaging procedure payment discount. Comments on the proposed MPFS update and on any of the specific requests for more information made by CMS should be submitted to CMS by August 29, 2008. Thomas E. Bartrum, JD is a shareholder in the Nashville, Tenn, office of Baker Donelson Bearman Caldwell & Berkowitz, PC, where he focuses his practice exclusively on federal health care regulatory issues affecting health care providers; tbartrum@bakerdonelson.com.