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Primary Care Wins, Imaging Loses, Under New CMS Proposal

John Commins, for HealthLeaders Media, July 2, 2009

Primary care physicians are cheering—and radiologists are jeering—a new CMS proposed change to the Medicare Physician Fee Schedule that will cut reimbursements for imaging services by as much as 30% and use the savings to raise reimbursements for primary care by as much as 8%.

"I am surprised. We all kind of knew this sort of thing was coming, but until you see it in writing you don't believe it," says Ted Epperly, MD, president of the American Academy of Family Physicians. "We've been there before and never saw it. Putting it out now in the heat of the debate is a big deal. It sends a strong message."

"I'm impressed that CMS is actually doing stuff to reformulate the system toward primary care. Of course, the devil is in the details and we will see what the final product looks like, and it's not a total fix, but it's a step in the right direction," he says.

However, the cheers among primary care physicians may be short-lived if CMS actually goes through with the long-delayed reimbursement cuts–projected to be reduced by 21.5% in 2010–that are part of the sustainable growth rate formula in the Balanced Budget Act of 1997. This formula has called for reimbursement reductions beginning in 2002. However, after physicians howled, CMS took administrative steps to avert a reduction in 2003, and Congress has found ways to avoid the reductions over the past five years.

It's not clear if Congress will finally allow these very deep cuts to occur in 2010, an election year. "I will predict confidently that you will have tens of thousands of physicians who will either drop out of Medicare or stop taking Medicare patients, just when the Baby Boomers start to hit Medicare," says Douglas S. Arnold, executive director of the Middlesex (CT) Professional Services, Inc., a network of more than 300 physicians.

"You are going to have millions of Medicare patients who won't have access to physicians. They are going to be [angry] and they vote and they are going to take it out on the incumbents," he says.

This year may be different, however, because the move toward healthcare reform may actually force CMS and Congress to impose the deep reimbursement cuts. "The big difference this year is all the health reform legislation and all the big price tags. This becomes one little component in the greater scheme of things," Arnold says.

"All the projections that have come out of CBO are taking into account this 21.5% rate cut. If they pay Medicare rates at 21.5% lower than they do now, I don't think anybody has thought out what that is going to mean. You are going to have doctors who say take this job and shove it. Who can take a 21.5% fee cut for the majority of their business?" he adds.

CMS says the change is needed to address concerns from the Medicare Payment Advisory Commission and the Government Accountability Office about the rapid growth and high cost of imaging services.

“Those things have been overvalued and overpriced,” Epperly says. “We are the only part of the economic sector where new technology doesn’t lower cost. It actually raises cost. What is missing from the system that needs more attention is the basic coordinated integrated care not this fragmented specialty care that we get now.”

The GAO says spending on imaging, such as CTs, MRIs, and PETs, is growing almost twice as fast as spending on other types of imaging services, and is a significant contributor to the rapid growth in healthcare spending in recent years.

Shawn Farley, public relations director for the American College of Radiology, disputes that assertion. He says MedPAC figures show that imaging growth per beneficiary in 2006 and 2007 was 2%. “They’re talking about imaging growth has skyrocketed, but the numbers don't bear that out for the past two years,” he says. “That is very much in line with other physician services out there.”

To address imaging costs, CMS proposes adjusting the payment rates, which now assume that imaging equipment will use it about 50% of the time during regular office hours. CMS survey data suggest imaging equipment is being used as much as 90% of the time. “As the use of this type of equipment increases, the per-treatment costs for purchasing, maintaining and operating the expensive equipment declines, making a reduction in payment appropriate,” CMS says.

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