When President George W. Bush signed the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) on December 8, 2003, all the hype focused on one thing: the changes that would be occurring in reimbursements for senior citizens’ prescription drugs.

Most people didn’t hear much about the changes in the MMA that would benefit physicians-including radiologists-regarding their Medicare reimbursements. Since then, changes also have been to the Medicare Physician Fee Schedule (MPFS) and a variety of other factors that impact how those in radiology will have to do business now and in the immediate future if their Medicare reimbursements are to be profitable.

The Most Immediate Change

“In the past five years, probably the part of Medicare reimbursement that’s had the biggest impact on radiology [and all specialties] is the conversion factor,” says Pam Kassing, senior director of economics and health policy for the American College of Radiology (ACR of Reston, Va).

According to the Centers for Medicare & Medicaid Services (CMS of Baltimore), physicians’ fees comprise three elements: the value of their practice work, their practice expenses, and their malpractice rates. The value assigned from the total of all three gives the government the relative value units (RVUs) for each service.

Kenneth Ames, VP and corporate compliance officer for American Radiology Services Inc (ARS of Baltimore), explains, “Every procedure-from a chest X-ray to an MRI to a CT-is assigned a relative value. So a chest X-ray might have a value of only 1 when compared to something like an MRI, which might rate a 17 or 18.” The difference in RVUs is because the government has estimated that performing each MRI will “cost” the radiologist 17 or 18 times what it would cost to perform the chest X-ray.

Next, to determine the payment for the service, the government assigns a dollar amount (called a “conversion factor”), which will be multiplied by the RVU. So if the conversion factor was $38 and RVUs for an MRI came to a 17, the doctor would be reimbursed $38 x 17, for a total of $646. (With actual CMS numbers, the MRI’s reimbursement is a tad lower: $622.04.)

Of course, being a government formula, it gets more complicated. The above is a national, unadjusted rate. Reimbursements are then adjusted based on physician locale, with 92 geographic regions recognized by the CMS. The “National Fee Schedule,” published annually by the CMS, notes payments allowed for various services, with each service being assigned a current procedural terminology (CPT) code-or sometimes a five-character alphanumeric code from the Health Care Financing Administration common procedure coding system (HCPSC). Local contractors who process physician claims publish the localized fee schedules on their Web sites.

Kassing says that through the MMA, “Congress passed legislation that increased the conversion factor by 1.5%” in both 2004 and 2005. For 2005, that increase raises the conversion factor from $37.33 to $37.90.

An increase sounds like great news for radiologists, especially when Cherrill Farnsworth, CEO and chair of HealthHelp Inc (Houston), notes that initially, a 3.4% reimbursement cut had been expected. Farnsworth emphasizes, however, that these cuts are now expected to hit doctors in 2006.

Indeed, in a letter delivered at the beginning of January 2004 to Dennis Smith, acting administrator of CMS, the ACR noted its concern that “… beginning in 2006, physicians will face 4 years of steep cuts to recoup the costs of the 2004 and 2005 increases unless changes are made to the physician reimbursement formula.”

The Mammography Change

“Mammography is very important to women on Medicare,” Kassing notes. “They’re at an age when they should be screened.” And so one of the areas in which the ACR (and others) have been most actively involved in gaining increased fees and allowances relates to mammography.

One success: The MMA contains provision section 614, which provides an increase for hospitals in payments for outpatient department (OPD) diagnostic mammography as of January 1, 2005.1 Medicare reimbursements in this area continue to increase, with total payments for “standard breast imaging” rising from about $303 million in 2002 to more than $323 million in 2003.2

However, Ames says of mammogram reimbursements, “It’s only the first step. If they’re going to have providers nationwide offering and growing the service as the need grows, [Medicare] is going to have to make sure that it keeps pace with increases” in the cost of providing this service. CMS notes that as of the 2004 fee schedule, the current national reimbursement rate for a simple screening mammography of both breasts is $84.76; for a diagnostic mammography, it’s $96.33. Unfortunately for most providers, that’s still too much of a gap; a simple screening, for example, costs at least $100.3

Ames feels the loss that radiologists are experiencing on mammography isn’t solely Medicare’s fault. “None of the HMOs have exactly jumped on the bandwagon to raise their fees,” he says. Still, recalling the days when physicians wouldn’t touch Medicare because it was “the low payor,” Farnsworth acknowledges that today, Medicare’s fee schedule is “the gold standard” for everything, including mammograms.

That being the case, even continued improvements in allowances seem to indicate that, at least for the immediate future, mammograms will continue to barely break even and likely be a money-losing procedure for radiologists. The Institute of Medicine (IOM of Washington) notes, “Between 2000 and 2003, the number of mammography facilities operating in the United States … dropped from 9,400 to 8,600-an 8.5% decrease.”4 The IOM adds that because of this situation, women in some areas are waiting up to 5 months for their mammograms.4

David Levin, MD, former chair of the department of radiology at Thomas Jefferson University (Philadelphia) and now national medical director for HealthHelp, offers a somewhat radical viewpoint. “Radiologists should be willing to do mammography as a loss leader [because they’re] very well compensated across the board,” he says. That’s the way ARS looks at mammograms, but Ames admits that if ARS didn’t perform many other profit-generating procedures, the company might not be able to take this attitude.

Spurring Coding Changes

If those in radiology want to continue to see higher reimbursements for certain procedures-or even have some procedures reimbursed in the first place-they must become more actively involved in informing their representatives in Congress and professional associations.

The ACR relies on various committees and feedback from members. “We have a huge volunteer base,” Kassing says. “Our members call in when they have a concern.” ACR members (along with other specialty groups) sit on the CPT Editorial Panel and the RVS Update Committee (RUC), both part of the American Medical Association (AMA of Chicago), and provide feedback to CMS on fees, new codes, and values needed to make Medicare reimbursements to physicians viable. In a 2003 report, the Society of Interventional Radiologists (SIR of Fairfax, Va) noted, “CMS accepted 95% of the [RUC’s] recommended values.”5

Kassing notes that if the ACR “feels something is not valued correctly, we use Medicare’s 5-year review process” to bring it forward. For example, in the last 5-year Medicare review, she says, “We had calls from members who had concerns about a new code for infant osseous survey,” X-rays used to look for bone damage in infants, including suspected abuse victims. “So we looked into it and determined that the fee was probably too low,” Kassing says, adding that they made a recommendation to CMS and a new code with a new value was developed.

A more recent example is offered by E. Michael Lewiecki, MD, FACP, president of the International Society for Clinical Densitometry (ISCD of West Hartford, Conn). “Only one third of vertebral fractures [VF] are clinically apparent, causing little or no pain,” Lewiecki notes. However, a new type of dual-energy X-ray absorptiometry (DXA) bone densitometer provides imaging that assesses VF. According to Lewiecki, the ICSD-along with other professional associations, including the ACR-worked to get a special CPT code for vertebral fracture assessment (VFA). Next, he says, the ISCD and the ACR asked their members to participate in a survey that helped them develop an RVU to present to CMS. This step allowed CMS to develop a new Medicare reimbursement for this screening.

The ACR and other organizations urge their members to volunteer for committees to provide feedback on reimbursement issues and help with RUC surveys. Even the “average” radiologist, members are reminded, can participate in surveys and give their organizations feedback on where their primary concerns lie: the need for new reimbursement codes, gaps in reimbursement versus costs, and the like.

Winning … and Losing

Radiologists face a problem every time they garner a reimbursement victory from Medicare. “Medicare only has a limited amount of money,” Kassing explains. “New coding and value for procedures do not necessarily appear with matched funding. In this budget-neutral environment, more must then be funded with a fixed Medicare budget.”

Levin says that liability issues are one of the gravest concerns facing radiologists. A January 2004 report to RSNA supports him, noting that from 1985 to 1995, average malpractice indemnification for radiologists nearly tripled, from $46,000 to $133,000.6

Unfortunately, although the ACR admits (in the January 2004 letter to CMS’ Smith) that CMS was perfectly willing to increase malpractice RVUs to “reflect the higher costs of physician liability,” it did so at the expense of money allocated to “the physician work and practice expense.” This presented a special hardship for independent practitioners versus those practicing in large facilities, like hospitals.

Another worry on the horizon for radiologists: What happens to the field as imaging becomes ever more profitable, even with the liability issues? Everyone agrees that medical imaging-especially with constantly advancing technology like multi-slice CT, PET, and MRA-is an extremely cost-effective diagnostic tool. Levin notes, “There used to be a time when the operating room schedule was filled with exploratory laparotomies.” Today, thanks to imaging, this abdominal procedure is rarely used for diagnosis.

Levin says it’s not surprising that of four major Medicare services, imaging was the one that grew the most between 1999 and 2002, rising 9%.7 In 2001, he notes, the Medicare part B database showed that payments to physicians for noninvasive diagnostic imaging (NDI) were approximately $6.699 billion.7

Unfortunately, say the experts, this kind of “Medicare moolah” is causing all sorts of “nonexperts” to jump on the imaging bandwagon. In his recent report,8 Levin noted that the utilization rate of NDI among radiologists went up 11.6% from 1999 to 2002, but for nonradiologists, it was double: 23.5%. And more than $2 billion of the aforementioned $6.7 billion went to these nonradiologists through self-referrals.

Farnsworth warns radiologists that she won’t be surprised to see still other healthcare amateurs getting into the field. Especially now that a Medicare Administrative Contractor (MAC) no longer has to be a licensed insurer, why shouldn’t a company like Citigroup or American Express move into this area? “They’re used to transactions,” Farnsworth says. “Patients could make their co-pays and deductibles on a credit card that is also their insurance card and their smart card medical record.” She points out that these institutions are electronically equipped-in ways that most radiologists still aren’t-to take advantage of HIPAA’s new standardized codes. “These big financial institutions would be very efficient,” Farnsworth says. “They’d be the lowest bidder and still make money.”

Girding for Battle

Experts agree that radiologists must be more careful in their paperwork if they’re to take advantage of the new codes, especially since Medicare is growing fussier about accepting any “generic” codes for billing. Farnsworth says that as with other specialties, “the billing paperwork is a real inefficiency in radiology.”

A variety of changes in software and HIPAA standards look as though they’ll be helping to make billing more standardized in the near future. In other words, Farnsworth believes, “We should be able to see [more] efficiencies.” However, this theory will hold true only if smaller practitioners are far more diligent in implementing and using these system upgrades than they were in preparing for Y2K, for instance.

Levin suggests encouraging Medicare to require accreditation before it reimburses for imaging. He notes that right now, Maryland is the only state with “a law saying that if you’re not a radiologist, you cannot be paid for doing CTs, MRIs, etc, in your office. Physicians in other states must be more active in trying to pass similar laws.”

Finally, experts issue this warning: It’s time for radiologists to start working as a team. “Radiology is still a cottage industry,” Farnsworth notes. “We are not organized in a way that a group could successfully bid to provide radiology to a multistate region. [Consequently,] the large radiology providers will have to take a leadership role in putting together a ?bidding network’ of large and small providers and facilities to cover their region if they want to control their destiny”-and their reimbursements. Ames concurs, adding, “It wouldn’t be too tough to put together a multistate network if we had to.”

But will the industry do so? Farnsworth isn’t sure. “Under competitive bidding, not all physicians will be Medicare providers-only those who win the bids,” she notes. And ultimately, she concludes, that process of low bidding “could cause grave cuts to reimbursement.”

Wendy Meyeroff is a contributing writer for Medical Imaging.

References

  1. Centers for Medicare & Medicaid Services. Medicare program; revisions to payment policies under the physician fee schedule for calendar year 2005. Available at: http://www.cms.hhs.gov/regulations/pfs/2005/1429p.asp.
    Accessed December 14, 2004.
  2. Centers for Medicare & Medicaid Services. Berenson-Eggers Type of Service (BETOS) Codes. Available at: http://www.cms.hhs.gov/data/betos/default.asp.
    Accessed December 14, 2004.
  3. Mendenhall D. Costs, availability of mammogram still problematic. Pittsburgh Post-Gazette . April 9, 2002.
    Available at: http://www.post-gazette.com/healthscience/
    20020409hsidebar2.asp
    . Accessed December 14, 2004.
  4. National Academy of Sciences’ News. Increased access to high-quality mammography needed to reduce cancer deaths; shortage of screening specialists should be addressed to deal with capacity crisis. June 10, 2004. Available at: http://www4.nationalacademies.org/news.nsf/isbn/
    0309092132?OpenDocument
    . Accessed December 14, 2004.
  5. Society of Interventional Radiology. Washington interventionalist report December 2003. Available at: http://www.sirweb.org/congAff/capitolHillUpdateDec03.shtml.
    Accessed December 14, 2004.
  6. Radiological Society of North America News?January 2004. Support builds for medical malpractice reform. Available at: http://www.rsna.org/publications/rsnanews/jan04/malpract-1.html. Accessed December 14, 2004.
  7. Levin DC, Rao VM. Turf wars in radiology: the overutilization of imaging resulting from self-referral. J Am Coll Radiol . 2004;1(3):169?172. Available at: http://www.jacr.org/article/PIIS1546144003000796/abstract.
    Accessed December 15, 2004.
  8. RSNA 2004. Growth in utilization rates of noninvasive diagnostic imaging (NDI) among radiologists and nonradiologist physicians between 1999 and 2002. Available at: http://rsna2004.rsna.org/rsna2004/V2004/conference/event_
    display.cfm?id=66601&em_id=4407122
    . Accessed December 20, 2004.