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Primary Care Wins, Imaging Loses, Under New CMS Proposal

 |  By HealthLeaders Media Staff  
   July 02, 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.

Farley says the notion that imaging equipment is in use 90% of the time is "insane." He says the CMS recommendation is based on a 2006 survey of imaging use at six large urban hospitals.

"At the time, when they did it, even the head of MedPAC said these numbers aren't reflective of what is going on nationwide and shouldn't be used for calculating imaging reimbursement. CMS agreed, but nonetheless here it is," he says.

Farley says a more comprehensive survey by the Radiology Business Management Association determined that the average national usage for imaging equipment is about 58%, and drops to 48% in rural areas.

The RBMA also estimates that a 90% utilization rate for CT and MRI scans alone would translate into an additional 30% reimbursement cut, on top of a 23% hit that imaging services took from the Deficit Reduction Act of 2005.

"You are talking about a cut that will literally affect whether or not a provider can keep the doors open and the lights on. You are talking about a severe impact, not an inconvenience," Farley says.

He says imaging has become the flogging post for healthcare reform. "Certainly we feel like there are a lot of eyes on radiologists these days," he says. "We feel like, particularly with the cuts that have already been enacted, the volume and dollars spent in our area of medicine are very much in line with the physicians services overall, and shouldn't be singled out to this effect."

The proposed changes would affect payments beginning calendar year 2010, and could impact more than 1 million physicians and non-physician practitioners who are paid under the MPFS, which sets payment rates for more than 7,000 procedures in physicians' offices, hospitals, and other healthcare settings.

CMS is also proposing to:

  • Remove physician-administered drugs from the definition of "physician services" in anticipation of enactment of legislation to provide fundamental reforms to Medicare physician payments. While the proposal will not change the projected update for services during 2010, CMS projects that it would reduce the number of years in which physicians are projected to experience a negative update. AMA President J. James Rohack. MD, called the proposal "a major victory for America's seniors and their physicians."
  • Implement a mandate in the Medicare Improvements for Patients and Providers Act of 2008 that suppliers of the technical component of advanced imaging services be accredited beginning Jan. 1, 2012 by designated accrediting organizations. The accreditation requirement would apply to mobile units, physicians' offices, and independent diagnostic testing facilities that create the images, but would not apply to the physician who interprets them.
  • Implement provisions to promote improvement in quality of care and patient outcomes through revisions to the Electronic Prescribing Incentive Program and the Physician Quality Reporting Initiative. Professionals or group practices that meet the requirements of each program in 2010 will be eligible for incentive payments for each program equal to 2% of their total estimated allowed charges for the reporting periods. CMS is proposing to simplify the reporting requirements and is also proposing a new process for group practices to be considered successful electronic prescribers.
  • Refine Medicare payments to physicians, which are expected to increase payment rates for primary care services. The proposals include an update to the practice expense component of physician fees. For 2010, CMS is proposing to include data about physicians' practice costs from a new survey, the Physician Practice Information Survey, designed and conducted by the AMA.
  • Stop making payments for consultation codes typically billed by specialists at a higher rate than evaluation and management services. Physicians will instead use existing E/M service codes when providing these services. The resulting savings would be redistributed to increase payments for the existing E/M services.
  • Increase the payment rates for the so-called "Welcome to Medicare" visit to be more in line with payment rates for higher-complexity services.
  • Refine how Medicare recognizes the cost of professional liability insurance in its payments. These changes would have a modest impact, but they will promote payment equity by redirecting the portion of Medicare's payment for professional liability insurance to those physicians that have the highest malpractice costs.

Taken together, CMS says refining the practice expenses, eliminating payment for the consultation codes and revising the treatment of malpractice premiums would increase payments to general practitioners, family physicians, internists, and geriatric specialists by between 6% and 8%.

"Primary care pay needs to go up and specialty care pay needs to come down," Epperly says. "When that gap narrows, the students coming out of medical school will redirect their choices for workforce much more into primary care than away from it."

CMS will accept comments on the proposed rule until Aug. 31, and will respond to all comments in a final rule to be issued by Nov. 1.

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