The imaging grove is in for some serious pruning
By now, you have become accustomed to the acronym “DRA.” You know that it stands for the Deficit Reduction Act of 2005, that it is due to be implemented January 1, 2007, and that the method of Medicare reimbursement for imaging centers changes from the Medicare Physician Fee Schedule to the Hospital Outpatient Prospective Payment System (HOPPS). But have you done the accounting work to know how the DRA will affect your practice, or have you let your aversion to a bad dream stand in your way?
Certainly by this time, you should know—with a fair degree of precision—what the financial impact on your practice will be. To have been thorough, you must have itemized each procedure, by CPT code, that you provide for Medicare recipients. This does not include just patients covered by Medicare, but also Senior Plans and other contracts where you agreed to be compensated at Medicare rates. Knowing procedure by procedure details for some period—perhaps 2005—helped you compare what you did receive to what you would receive under HOPPS. Six months from the effective change date, I hope you are one of the proactive who revised the 2007 budget to reflect the significant decreases in revenue and that you have presented the information to your board of directors. The fact that you are reading this indicates that the Board did not kill the messenger! Being the bearer of bad news is difficult, but it is not nearly as difficult as showing up with huge gaps in revenue compared to the previous year and having to say, “Yes, we knew it was coming, but we did nothing to prepare for it.”
DRA was bad legislation. Ask any member of Congress, and he or she will admit it—except generally, you cannot talk to any congressperson. You are lucky if you are able to talk to the legislative assistants (LAs) who handle health care issues. Most of the LAs will admit that for the size of the bite, there was too little done in terms of due diligence, too little in terms of notice, and too little in terms of understanding the impact—plus, the vote came way too fast. But Congress saved its money, and apparently, that is all that matters. There is some hope that the implementation of the DRA imaging cuts will be postponed and that Congress will accept input from our professional societies and from vendor groups; however, there is very little hope that our industry will escape the inevitable cuts.
Health care expenditures in 2006 will likely top 20% of the gross domestic product, predictions indicate that the CMS Health Insurance Trust cash flow will go negative in the near future, and the national percentage growth for imaging costs exceeds any measure of sustainability. If you can step out of your role in the imaging forest for 1 minute, it is fairly easy to understand that our grove is in for some serious pruning. With the DRA, Congress took a blunt axe to our forest; perhaps with some input and planning, we can help Congress be a bit more judicious in what is cut. But the cuts will come, and we must be prepared.
Have you shopped recently for imaging equipment? Have you noticed a 20% decrease in the price of MRI and CT scanners? Probably not. As an industry, we need to insist that our vendors participate in these potential cuts. At today’s prices and tomorrow’s compensation, we will have to amortize equipment over much longer useful lives. In rapidly evolving technology, equipment longevity works against the best patient care. Pressure must be exerted on vendors to share the impact of the DRA imaging cuts.
What can you do? If you have not contacted your Senators and Representatives, do so at once. Although you probably will not reach a personal audience, they are very receptive to e-mails and faxes. They need to know that you will hold them accountable for any new DRA developments—or for none at all. Insist that your professional society take up this issue—many have already, and there are well-paved paths to walk down just for the investigation. Have meetings with your major vendors to ask what they are doing in response to the DRA, and focus on the cost of the equipment. Finally, prepare your budget and your practice—these are industry-shaking cuts ahead. Some imaging practices will not live to tell the tale, the well-prepared practices will endure, and the best practices will prevail.
Shannon J. Doyle is CEO of Colorado Springs Radiologists PC, and the president of the Radiology Business Management Association, Irvine, Calif.