The unsavory practice by equipment-owning specialties of skimming the professional component plainly is indefensible.

Those words in the headline came to mind on Sunday morning when scrolling through the 700-plus page proposed 2007 Medicare Professional Fee Schedule (MPFS). In rethinking the reassignment rule, the Centers for Medicare and Medicaid Services (CMS) is taking square aim at a widely deployed but unsavory practice associated with self-referral. While clearly intended to address some flagrant abuses associated with “condo” and “pod” laboratories, the proposed changes also will resonate within a scenario that is all too familiar to radiologists in markets where other specialties are forklifting imaging equipment into their offices. It works like this: The other specialist bills globally for the examination and pays the radiologist a fee that is less than what he or she would have received if the professional component (PC) was billed separately.

In the latest MPFS, CMS proposes to invoke the anti-markup provision for clinical diagnostic laboratory tests—which clearly states that no matter who bills for a reassigned interpretation, if it is performed at less than the PC, Medicare will pay the lower of the two fees (see story in our PAYOR WATCH section, “Proposed MPFS Changes Take Aim at Self-Referral, IDTFs“). The anti-markup provision is based on existing requirements for purchased tests and purchased test interpretations (other than clinical diagnostic laboratory tests).

CMS clearly states its concern with overutilization of diagnostic procedures in Section I of the proposed rule, and implies a concern with self-referral: “We are concerned that allowing physician group practices or other suppliers to purchase or otherwise contract for the provision of diagnostic tests and then to realize a profit when billing Medicare may lead to patient and program abuse in the form of overutilization of services and result in higher costs to the Medicare program.”

And no wonder. The financial crisis that is building in health care received another jolt with the recent release of US Census data that showed a bump in the number of Americans without health insurance. A record 46.6 million Americans were uninsured in 2005, nearly 1 in 6 Americans, or 15.9% of the country, compared with 45.3 million or 15.6%, in 2004. And while those numbers in isolation are chilling enough, the number of uninsured has been shown to have an upward effect on the cost of care to all payors, both public and private. This is no time to be playing fast and loose with Medicare dollars.

Traditionally, the MPFS is a mixed bag for every specialty, and, even beyond the reimbursement cuts, this year is no exception. In addition to invoking the anti-markup provision, CMS proposes several other conditions to the reassignment of diagnostic interpretations, including one that requires the physician or medical group billing for the interpretation to also have performed the technical component of the test. The problem this creates is leaving no room for the practice of nighthawk radiology, which is so widely entrenched and vigorously defended (see letters) that a carve-out for radiology services most assuredly will be recommended urgently. CMS specifically called for comments from radiology, and they are due by October 10.

But the victories, however small, must be savored. Chances for the anti-markup provision to be applied to diagnostic imaging are good, and this is good news for radiology. Anyone who tried to defend the practice would appear no better than a thief.

Cheryl Proval
Editorial Director