How to succeed against the industry’s top five reimbursement threats

It’s no secret that radiology reimbursements have steadily declined over the past few years, but with the right strategies, you can still find ways for your facility to thrive. Axis Imaging News spoke to Christopher Robertson, senior vice president of radiology operations for McKesson’s Revenue Management Solutions business unit, about the top five threats to imaging reimbursement and what you can do to meet these challenges head on.

CMS. The Deficit Reduction Act (DRA), which cut Medicare reimbursements for the technical component of radiology up to 40% last year, may be old news, but the industry continues to feel its impact. In the wake of these cuts, the freestanding imaging center market consolidated dramatically in 2007, and further consolidation in the marketplace is likely. “The carryover from what happened in 2007 is still being felt in 2008,” Robertson said.

While no further cuts of the DRA’s scale are expected from CMS this year, changes to the physician fee schedule across all health care segments could negatively affect radiology. CMS originally planned a 10.1% cut to the conversion factor in 2008, but postponed a final decision until this summer. Conversion factor cuts have long been a point of contention between CMS and physician groups, which point to a flawed sample growth rate. The hope is that the agency can come to an acceptable compromise, but the 10.1% cut may still be in the cards this year.

CMS’s budget neutrality mandate also plays a role in shifting reimbursement rates. In this equation, increased reimbursements for one physician segment result in decreases for all others. Radiology has lately been on the losing end of this equation, and it could happen again in 2008 when anesthesiologists are expected to receive a reimbursement boost. “The end result is that if one provider feels a reimbursement bump up, then everybody else has to feel a corresponding reimbursement bump down,” Robertson said.

What you can do:

  • Focus on quality. Freestanding imaging centers once touted their accessibility, but the consolidated market has tempered this advantage. “You’re going to see people differentiating on quality,” Robertson said. While it is tempting to cut costs, don’t scrimp on equipment. Instead, track the profitability of each service you offer and cut back on services such as mammography that may not be doing as well in your market. Then focus on providing high-quality interpretations for the segments that do well in your area.
  • Improve efficiency. Look for ways to streamline your processes and increase throughput, such as implementing practice management software. The idea is to accommodate more patients per day on each piece of equipment—for example, moving from 10 ultrasound appointments to 12. “Those additional patients flowing through the site can allow you to buffer the economic cuts,” Robertson said.

Private payors. Independent carriers have implemented a variety of cuts to mirror the technical component reductions from the DRA. Some companies slash this fee schedule up to 30% across the board. Others simply won’t allow new facilities into the market, or they put up barriers to entry, such as requiring new imaging centers to obtain Medicare numbers prior to joining their networks. The Catch-22 is that only opened facilities are eligible for Medicare numbers. “You could be going 60 to 180 days and not be enrolled with the given payor, which means you have a serious cash-flow issue,” Robertson said.

Many payors are also moving toward implementing standards of quality for credentialing or network status. The criteria for these quality assessments are still evolving, though it is unlikely that the standards will be universal across all payors. Once the criteria are set, facilities that don’t meet the standards could be blocked from network affiliation, which increases the pressure on facilities to provide quality services.

What you can do:

  • Know what’s in your contract. Some private-payor contracts are tied to CMS reimbursement rates. Find out if your contract corresponds to current rates or to those of a past year. “Obviously, there’s been a downward trend, and so you don’t want to be attached to the current year’s Medicare reimbursement, if you can avoid it,” Robertson said.
  • Secure your fair share. When it comes to the professional component, make sure you are on the same page with the facilities that contract your services. For example, the imaging center you contract with may try to offset cuts to the technical component by paying you less for the professional component. “The radiologist may end up taking an unfair share of the cut in their overall reimbursement,” Robertson said.
  • Collect the full amount. With a high-volume business such as imaging, it’s important to make sure that payors reimburse you for the full amount for each transaction. “If you do 1,000 chest x-rays, and they’re underpaying you by $2 here or there, you’re leaving money on the table,” Robertson said. Monitor your reimbursements regularly, stay on top of fee schedule changes, and make sure your billing system has a built-in feature to track reimbursements as well.

Other specialists. As imaging technology evolves, diagnostic options such as cardiac computed tomography angiography (CTA) are rivaling traditional invasive measures. While this spells good news for patients and hospitals, incorporating these technologies is often trying for radiologists and specialists such as cardiologists, who both want to handle these case loads. “There’s that immediate turf battle over who’s got the right to perform, bill, and collect for that service,” Robertson said.

Complicating matters, older contracts between radiologists and hospitals don’t always address today’s emerging technology issues. “There are some situations where a radiologist’s contract may not specify that they have exclusivity to do all CT services, and yet they might have accountability for oversight over all CT services,” Robertson said. This is the least desirable position for radiologists, who would then be held responsible for tests they neither billed for nor performed.

Aside from siphoning business away from radiologists in some cases, “turf wars” can severely damage relationships between radiologists and their referring physicians. In some cases, this could result in a hospital seeking imaging services elsewhere.

What you can do:

  • Go back to your contract. Know exactly what your contract specifies regarding new technology. Often, the clue to your authority over a certain procedure is present in the original contract wording and can work in your favor when addressing these issues with the hospital. “A lot of it comes down to who is clinically qualified to perform the test and provide the service, and who is contractually provided the right and obligation to do it,” Robertson said.
  • Know when to let go. Be sure that providing services such as CTA is vital to your bottom line before making a stand. Renegotiating your contract to accommodate new technology may seem tempting, but it also leaves you open to other changes you may not be willing to make. “You have to look at your contract and say, ‘Is this particular battle worth fighting?'” Robertson said. “Once you open up that contract, it’s usually hard not to open up the rest of it.”

Other radiologists. Software systems such as PACS, RIS, and teleradiology packages have done wonders to improve the efficiency, throughput, and accessibility of radiology services. These systems allow you to interpret images from anywhere in the country, which opens up expansion opportunities. The flip side is that an imaging center based two states away may suddenly be gunning for your contracts. “Radiologists are much more open to competition than previously,” Robertson said.

Being the only game in town is no longer enough to give your imaging center leverage with local hospital administrators, who might be tempted by the lower rates offered from a facility in another state. Radiology groups will also find themselves competing with nighthawk services for the same business. As a result, rates across radiology will begin to decrease as facilities compete for contracts. “The more accessible a business becomes, the more people are willing to cut their rates to keep the business,” Robertson said.

What you can do:

  • Invest in technology. To stay competitive, have the technology infrastructure in place to go after more business. By improving your efficiency and maintaining high quality, you can significantly increase your case load and your reach. “Maybe you’re able to generate 20% more work with the same number of radiologists than you could 10 years before,” Robertson said.
  • Offer stand-out service. Ensure loyalty from local hospitals and referring physicians by focusing on service. Provide all of your referral sources with the quality interpretations and expert knowledge they can’t find anywhere else, and check in with them regularly to address any concerns. “You need to have consistent communication with the person who holds that contract and know where you stand,” Robertson said. “Are you fulfilling your obligations under that contract?” Make sure they don’t have a reason to take their business elsewhere.

In-house oversights. When dealing with complicated billing procedures, it’s no wonder that mistakes and oversights can arise in your accounts receivable. But uncorrected, these errors can significantly hurt your bottom line. Two trouble spots for many facilities are denials management and charge capture.

Denials are common for many reasons. A patient may not be covered by the payor in question, or the billing department may have incorrectly coded the claim. Denials often center on medical necessity—a payor may not buy a referring physician’s argument for ordering the test. Some tests even require preauthorization from the payor. Unfortunately, radiologists are usually unaware of these issues until long after they’ve interpreted the contested films. “Then your billing company said you didn’t get paid for John Doe because there was no precertification,” Robertson said.

On the charge-capture side, many facilities miss reimbursement opportunities by not meticulously tracking their billing opportunities. For example, when filing a claim for a CT, they may forget to bill for the contrast agent used. These small oversights add up quickly and cut into an already hurting bottom line. “You really have to sweat the small stuff,” Robertson said. “Every dollar counts.”

What you can do:

  • Proactively manage denials. Track all denials and look for patterns, then work proactively to eliminate recurring issues. For example, if you notice a number of medical necessity challenges, educate your referring physicians about why payors may not reimburse for a certain test. Talk with hospital administrators about patient registration information that could help reduce denied claims. These efforts will help you avoid missed reimbursement opportunities. “You really need to be monitoring and managing what you can control,” Robertson said.
  • Bill for all services and supplies. Institute a formal tracking system to ensure that you are not missing any reimbursement opportunities. Doing this manually can be daunting and imprecise, so research technology that can autogenerate claims for each test and supply. Also, be sure to conduct regular audits to detect any oversights. “Otherwise, you’re going to leave money on the table,” Robertson said.

Ann H. Carlson is a contributing writer for Axis Imaging News. For more information, contact .