Imaging Takes a Hit under New Reimbursement Rules

Earlier this month, the Centers for Medicare and Medicaid Services (CMS; Baltimore) announced new reimbursement rules for outpatient services and physician payments under the provisions of the Deficit Reduction Act (DRA) of 2005. In 2007, Medicare payments to hospitals for outpatient services will increase by an average of 3%, and physician payments are expected to decrease by 5%, CMS reports.

CMS acting commissioner Leslie V. Norwalk said the new rules will enable increased patient access to some of the latest diagnostic and treatment technologies. “We are taking one more step toward rewarding hospitals for providing quality care, not just in the inpatient setting, but also in the outpatient department,” she said. Norwalk also noted the value of preventive care, stating, “CMS believes that paying more for screening services to detect and treat health problems early will improve the quality of life for Medicare beneficiaries while saving money for both the beneficiaries and taxpayers.”

Medtech industry associations generally viewed the 2007 reimbursement rules for outpatient services as a mixed bag.

Jori Frahler, director of federal affairs for the Medical Device Manufacturers Association (MDMA; Washington, DC), said, “MDMA is pleased that CMS continues to advance its efforts to base payments on correctly coded claims and use a greater number of claims in rate-setting, but is disappointed that CMS chose not to accept the ambulatory payment classification (APC) advisory panel's recommendation on new technology APCs . . . and chose not to implement a payment floor for decreases from 2006.”

Stephen J. Ubl, president and CEO of AdvaMed (Washington, DC), described the 2007 reimbursement rules as “both good news and bad news.” He said AdvaMed was pleased that CMS recognized that “advanced medical technologies are enabling more procedures to be done in outpatient and ambulatory settings . . . and is responding to this shift to outpatient services by addressing quality, transparency, and payment accuracy to modernize the payment system.” However, he added, “We remain concerned that the data being used to calculate payment rates are old and thereby undermine payment accuracy.”

Despite Norwalk's emphasis on the importance of preventive care, medical imaging—often a key component of early diagnosis and treatment—will take a significant hit under the new physician payment rule. Full payment would be provided for the first procedure, but additional imaging procedures done on adjoining body parts during the same session will be subject to a 25% reimbursement reduction.

Although hospitals, medtech manufacturers, and patient advocacy groups raised several concerns in regard to the new reimbursement rules, the imaging provision in particular set off a firestorm of protest among stakeholders. Speaking from the medtech manufacturer's standpoint, AdvaMed's Ubl said the imaging cuts are unacceptable.

Representing 39 organizations across the healthcare spectrum, the Access to Medical Imaging Coalition (AMIC; Washington, DC) is actively petitioning Congress to pass the Access to Medicare Imaging Act, which is represented in the House as HR 5704 and in the Senate as S 3795. The act would delay implementation of the cuts in imaging reimbursement for two years while the Government Accountability Office studies their potential impact.

In formulating its stance against the cuts in imaging reimbursement, AMIC commissioned the Moran Co. (Arlington, VA) to study the impact of the proposed cuts. According to the findings, 87% of the imaging procedures subject to cuts would be reimbursed at a rate below what it costs physicians to provide the exam in an in-office setting. For some procedures, CMS would reimburse providers less than 20% of the cost of providing the service, the report found.

“This report illustrates how extreme, far-reaching, and ill-advised the DRA imaging cuts are,” said Arl Van Moore, MD, chair of the board of chancellors of the American College of Radiology (ACR; Reston, VA). “Many physicians may be unable to provide imaging services to Medicare patients when, for nearly 90% of services affected, reimbursement does not even cover the cost of providing the care.”

ACR president James P. Borgstede, MD, described the new reimbursement rules as undercutting new imaging technologies. “These cuts will keep physicians from investing in equipment that would save or extend lives and deny patients the opportunity to receive the highest quality less-invasive care,” he said. “Medical imaging is serving an increasingly large role in patient care.”

According to Tim Trysla, executive director of AMIC and a former CMS policy analyst, the agency never studied the potential impact of its cuts. “There's no logic, no reason, and no evaluation . . . of the massive reductions in payment for imaging services ranging from cancer care to heart treatments,” he said.

In its protest of the imaging reimbursement cuts, AMIC has joined forces with the National Electrical Manufacturers Association (NEMA; Rosslyn, VA), a trade association representing companies with more than 90% of the global market for medical imaging systems. Andrew Whitman, vice president and head of NEMA's medical products division, described the cuts as harmful and excessive. “The shift in congressional make-up in no way lessens our resolve to have these cuts delayed until Congress can more fully examine their impact on patient care,” he said.

In previous years, Congress has stepped in to prevent such cuts.

© 2006 Canon Communications LLC

Return to MX: Issues Update.