Proposed MPFS Changes Take Aim at Self-Referral, IDTFs
MGMA Releases New Policy on Pricing Transparency
The Bill Box

Proposed MPFS Changes Take Aim at Self-Referral, IDTFs

The recently proposed 2007 Medicare Physician Fee Schedule (MPFS), issued by the Centers for Medicare and Medicaid Services (CMS) in mid-August, contains a number of provisions that directly impact or have the potential to impact providers of imaging services.

First, the proposal includes a 5.1% reduction in payment to physicians, as the agency had reported in previous weeks. The cut, once expected to be 4.8%, is calculated using a set of spending targets that CMS is required by law to meet. As expected, the proposal also includes the cap to MPFS technical component for imaging codes at the level of the equivalent code under the Hospital Outpatient Prospective Payment System.

A major revelation contained in the proposal is that CMS is considering significant changes to the reassignment rule. Devised partly in response to perceived abuses associated with “pod” laboratories, the proposed changes in the reassignment rule also appear to take steps toward tightening self-referral loopholes. At the same time, if extended to radiology, aspects of the new reassignment rule could wreak havoc on the outsourcing of night reads to nighthawks, a practice that is well entrenched throughout the nation. CMS specifically calls for comments on whether the rule should apply to radiology. The new reassignment rule would:

  • invoke the anti-markup provision, which states that if the test is not performed by the billing physician, then the cost to Medicare is the lower of the costs charged by performing supplier to billing physicians; violators would be subject to monetary penalties and exclusion from Medicare for up to 5 years; and
  • require that any physician who orders, performs, and bills for the technical component (TC) of an imaging examination, for example, also would have to read and bill for the professional component (PC) in order to bill globally, or allow an independent contractor (eg, a radiologist) to read and bill for the PC.

CMS also is considering applying the following conditions, but specifically asked for comments on whether radiology should be exempt:

  • that the test be ordered by a physician that is financially independent of the person or entity performing the test and also of the physician performing the interpretation;
  • that the physician performing the interpretation does not see the patient; and/or
  • that the physician or medical group billing for the interpretation must have performed the TC of the test.

“CMS is trying its best to eliminate financial incentives for physicians to order tests from themselves,” explains Ken Davis, a partner with Katten Muchin Rosenman LLP, Chicago. “It was a fairly common model out there for radiologists to accept less than what Medicare would pay when they reassigned their professional component over, and that’s just not going to happen anymore. For radiologists who’ve contracted with self-referring physicians, they’re going to have to split-bill for the professional component.”

Davis also notes the potential impact on nighthawk radiology services. “If implemented, that contractual arrangement reassignment exception is going to have the components of the purchased interpretation—one of which is the physician or medical group billing for the interpretation must have performed the technical component of the test. So, bottom line there is, you wouldn’t be able to have a nighthawk radiologist reassign their reimbursement over to a radiology group for purposes of an official interpretation. It wouldn’t surprise me to see them create some limitations for this.”

IDTF Limits

The proposed rule also takes aim at independent diagnostic testing facilities (IDTFs) by proposing to limit physician supervision of IDTFs to a maximum of three sites, citing a recent Office of Inspector General study that revealed a potential $71 million in erroneous payments to IDTFs “made as the result of poor or missing documentation or the lack of medical necessity.” The new rule would hold IDTFs to 13 other supplier standards similar to those adopted for suppliers of durable medical equipment, prosthetics, orthotics, and supplies in 2000—such as a policy of not soliciting patients and maintenance of a minimum of $300,000 in liability coverage. “While we understand that these proposed additional standards could lead certain IDTFs to withdraw from the Medicare program rather than comply with the new standards,” the proposal states, “we believe that legitimate businesses would not oppose these changes.”

In section E of the proposal, entitled “Deficit Reduction Act (DRA) Related Proposals,” CMS slightly offsets the hit to radiologists, mandating that “given the expected interaction between the multiple procedure imaging policy and the further imaging payment reductions mandated by section 5102(b) of the DRA …, along with the new information we have received from the ACR on the multiple imaging procedure policy as it applies to common combinations of imaging services, we believe it would be prudent to maintain the multiple imaging payment reduction at its current 25% level while we continue to examine the appropriate payment levels.”

Although the current proposed MPFS expresses concern regarding pathology laboratories only, it notes, “We are soliciting comments as to whether diagnostic tests in the designated health services category of radiology and certain other imaging services should be excepted from any of those provisions.” Other aspects of the proposal that affect imaging include:

  • removing coverage for the use of single photon absorptiometry (SPA), which uses isotope sources to measure bone mineral density (BMD), because many medical experts indicate that SPA has largely been replaced by the newer techniques of dual energy x-ray absorptiometry (DXA); CMS also proposes to revise §410.31(b) by allowing a medically necessary BMD for patients who qualify for monitoring, and calls for comments on the elimination of SPA;
  • raising reimbursement for the supply item for vertebroplasty from $660.50 to $696; and
  • introducing a new code for abdominal aortic aneurysm screening via ultrasound, reimbursing at the same level as retroperitoneal ultrasound.

The comment period for the new MPFS will end October 10; to submit a comment, visit

Cat Vasko is associate editor of  Axis Imaging News.

MGMA Releases New Policy on Pricing Transparency

On June 28, the Medical Group Management Association (MGMA), Englewood, Colo, released a position paper outlining the organization’s support of pricing transparency and recommendations for achieving it, including:

  • require health plans to release fee schedules showing total allowed charges and methods used to calculate fees to physicians and hospitals as part of the contracting process;
  • require that health plan contracts with physicians and hospitals clearly specify that disclosure of insurer fee-schedule information to patients, for services that are to be provided to the patient by the physician or hospital and charged to that insurer, is permissible; and
  • require that providers use the billing terms established by the Patient Friendly Billing Project [published by the Healthcare Financial Management Association] in its glossary of terms.

The MGMA paper also notes, “While increases in providers’ cost to deliver health care services are a factor in increasing expenses for payors and consumers, they are not the sole contributing factor. The administrative complexity of multiple health plan policies and procedures also has serious financial ramifications for the entire system.” The position paper provides guidelines for streamlining the administrative process as well.

On August 22, an executive order was signed by President Bush, requiring the Office of Personnel Management and the Departments of Defense, Veterans Affairs, and Health and Human Services to compile data on health care cost and quality, and to share their information with other agencies and their enrollees. Use of an interoperable electronic medical record also is required.

To view MGMA’s position paper, visit

—C. Vasko

The Bill Box

Senate Version of Access to Medicare Imaging Act Filed

On August 3, Senators Gordon Smith (R-Ore) and Jay Rockefeller (D-WVa) filed the Senate version of the Access to Medicare Imaging Act, which would declare a 2-year moratorium on the Deficit Reduction Act of 2005 (DRA) imaging cuts and require a Government Accountability Office (GAO) study to assess their validity and viability.

The Senate bill, S 3795, was introduced with eight cosponsors, a number the Access to Medical Imaging Coalition (AMIC), Washington, DC, hopes to expand to 25 this month. Particularly of interest to AMIC are members of the Senate Finance Committee. The equivalent House bill, HR 5704, now has 68 cosponsors, with AMIC hoping for 100 by the end of this month.

AMIC members wish to alert Congress to the fact that imaging cuts comprise about one third of the Medicare savings in the DRA, even though imaging constitutes only one tenth of Medicare spending. Of additional concern is the fact that the imaging cuts were included in the DRA without the usual hearings.

The National Coalition for Quality Diagnostic Imaging Services (NCQDIS) also supports the legislation. “The DRA includes broad-based cuts in radiology services that will devastate the industry and hurt patient care,” says NCQDIS Executive Director Cherrill Farnsworth. “Because the DRA fails to take into account quality and access-to-care issues, the proposed cuts could have serious impact on access to needed diagnostic services for Medicare beneficiaries, especially patients living in rural areas. This Senate bill protects that access while offering time to study the effects on our nation’s most vulnerable patients: senior citizens.”

According to Arl Van Moore, MD, FACR, chair of the American College of Radiology (ACR) Board of Chancellors, “The GAO study called for by S 3795 is vital in light of recent Centers for Medicare and Medicaid Services and Medicare Payment Advisory Commission admissions that neither body recommended the DRA cuts to Congress nor conducted any study as to their effect on patient access prior to passage of the DRA. To have such deep cuts go into effect without a thorough review would create an unfair burden for patients. The detrimental effects on the American health care system caused by these unsubstantiated cuts will be felt for many years to come.”

Burgess Bill Calls for Expansion of QIO Roles

A new physician payment bill introduced July 24 by Representative Michael Burgess (R-Tex) would replace the sustainable growth rate with the Medicare Economic Index beginning in 2007, create a quality measures program, eliminate the Medicare Advantage stabilization fund for regional preferred provider organizations (PPOs), and make adjustments to the Quality Improvement Organization (QIO) program. It also would delay the Deficit Reduction Act of 2005 (DRA) imaging cuts by 1 year.

While the Access to Medical Imaging Coalition (AMIC) focuses on the Access to Medicare Imaging Act (HR 5704), QIOs are rallying support for the Burgess bill. The proposed expansion of the role of QIOs reflects the recommendations of a recent Institute of Medicine study, which noted that providers often are limited in their quality improvement efforts due to insufficient QIO funding.

An investigation by the Senate Finance Committee (SFC), however, has brought to the forefront financial improprieties on the part of QIOs, and leaders of the SFC are urging Medicare not to expand QIOs’ roles until the issue has been resolved.

In a statement on his Web site (, Burgess outlines how the tenets of the current physician payment plan are designed to provide economic incentives for physicians to decrease health care spending. “Unfortunately, this system doesn’t work,” he noted. “Health care spending continues to grow yearly, and physicians exceed their target expenditure every year. Subsequently, Medicare reimburses them less and less.”

The Burgess bill also calls for a combined Department of Health and Human Resources and Institute of Medicine study on utilization and appropriateness of imaging services, focusing on the role of defensive medicine and analyzing whether imaging saves health care dollars in the long run; a 1-year delay to DRA imaging cuts is called for while the study takes place.

“Every portion of this bill is to improve Medicare for patients and providers,” Burgess’ statement said.

New Ohio Law Holds Hospitals Accountable for Performance and Pricing

An Ohio bill, signed into law by Governor Bob Taft on August 10, requires hospitals to report performance data by April 2007 to a state Web site, and to report average pricing for their top 60 outpatient procedures by May 2007. The law follows previous legislation requiring hospitals to report charges and volumes for their top 100 inpatient procedures, and replaces an earlier law requiring hospitals to report data on 136 performance measures in 9 areas of service. The mandate mirrors those being passed in state legislatures across the country.

Under the new law, the state health director will decide on a new method of tracking performance based on recommendations by the Agency for Healthcare Research and Quality, the Centers for Medicare and Medicaid Services, the Joint Commission on Accreditation of Healthcare Organizations, and the National Quality Forum.

Hospitals also will be required to post the prices they charge for room, board, and other ancillary services.

House Representative Jim Raussen (R-Springdale) said to the Cincinnati Enquirer, “It’s ironic that it’s easier to find more information today on what type of refrigerator to buy than on which hospital provides the best cardiac care. I hope this law will encourage health providers to focus on patient outcomes and to be as cost-efficient as possible. No hospital wants to be listed as having the most expensive medical procedure and the lowest level of quality outcome.”1

State officials anticipate that the Web site, which will cost about $5 million to launch and $2 million annually to maintain, will go live in mid-2007.

—C. Vasko


  1. Kemme S. Ohio will put hospitals rankings on Web. August 9, 2006. Cincinnati Enquirer. Available at: Accessed August 28, 2006.