Reimbursement Outlook for 2011: Trouble on the Way

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Pamela KassingOn November 30, the Physician Payment and Therapy Relief Act of 2010 was signed into law, delaying the 23% Medicare physician-payment cut mandated by the sustainable growth rate formula. The legislation replaced the cut with a 2.2% update through December 31, with the intention of giving Congress time to find a more permanent solution. On December 8, that solution appeared to have been reached, with the passage, by Congress, of legislation that would extend current reimbursement rates through 2011.

The legislation, if passed, could represent a small bright spot in what is otherwise a difficult reimbursement environment for imaging. The bill would subsidize its 2011 payment update—the cost of which is estimated at $14.9 billion over 10 years—through a modification to the PPACA health reform legislation involving the provision of tax credits to those with incomes between 100 and 400% of the federal poverty level; the change, which marks the first substantial modification to health care reform passed by Congress, would require tax credit recipients who misstate their income or experience a change in income over the course of the year to repay part of the subsidy.

In a statement on its website, the ACR® noted that it “worked hard to make sure Congress did not consider further cuts to imaging or cuts to radiation therapy services to offset the legislation.”

2011 MPFS

The 2011 Medicare Physician Fee Schedule (MPFS), by contrast, doesn’t contain much good news for imaging. Perhaps most contentiously, the MPFS includes a provision that the technical component of imaging reimbursement be cut by 50% for any study performed after another in the same modality on the same patient—irrespective of whether the studies in question are performed on contiguous body parts. “What Medicare has done is expanded the payment reduction to noncontiguous body areas and applied the policy across modalities—to CT, MRI, and ultrasound,” says Pamela Kassing, senior economic advisor for the ACR. “We do not think there’s a justification for the reduction of 50%. We don’t see that there are that many economies.”

She adds, “In ultrasound, for instance, a lot of steps in a second study have to be done all over again—you reposition the patient, you use a different probe. Any way you calculate it, whether it’s two contiguous parts or not, it never comes out to 50%.”

Kassing explains that CMS needed to find $3 billion in savings, and did so mostly through upping the equipment-utilization rate for radiology and through the multiple-procedure reduction. “That is money Medicare is going to redistribute in the fee schedule,” she says. “We’ve been going back and forth on this for many years—since 2006. There are no solid data to back up that a 50% reduction is warranted, but they were looking for money that needed to come out of the Medicare budget. Basically, radiology paid for it.”

Another issue associated with the 2011 MPFS is the concept of misvalued codes. Previously, the DHHS had reviewed codes every five years; now, the HHS secretary has the authority to evaluate codes with the fastest growth, those applying to new technologies or services, those with low RVUs, those not reviewed since the early 1990s, and any other codes that the secretary determines appropriate.

This, Kassing says, is a particularly ominous development. “The first step is to go after radiology and, I think, therapy,” she says. “They have the authority to look at these according to any method they want; they pretty much have a call out for proposals for different ways of looking at misvalued codes. We’re very concerned that if Medicare comes out with new methods, all of our codes will start falling out of relativity. This is going to be a big issue for us in the coming year—it’s hitting us hard.”

Fighting Back

Kassing says that the ACR will continue to work with the DHHS, CMS, and Congress to address these issues. “We participate in the RVS Update Committee (RUC) process,” she says. “We have advisors to the RUC and staff, so we’ll keep working that process, and we’ll also be watching for other groups Medicare is working with to look at different payment models.”

The new Independent Payment Advisory Board (IPAB) is one such entity—not least because it, too, will be examining misvalued codes. The IPAB, Kassing explains, will not have authority over the Medicare Payment Advisory Commission (MedPAC); however, outside MedPAC, it “can evaluate separately and make recommendations,