Can you hear the thunder of running feet? Next comes a big swoosh as pneumatic doors in hospitals across America open simultaneously to let outpatient radiology departments exit and morph into freestanding models. The truth is, many rational observers on the health care scene will take the Health Care Financing Administration’s final regulation implementing the new prospective payment system for hospital outpatient services as an invitation to spin off their outpatient radiology service into a freestanding environment where the ambulatory patient classsifications (APCs) do not apply. The new system will become effective on July 1, 2000, with a 3-year transitional corridor, during which hospitals will be partially insulated from reductions exceeding certain threshold amounts.
According to Diane S. Millman, JD, health care attorney with McDermott, Will & Emory, counsel to the National Coalition for Quality in Diagnostic Imaging Services (NCQDIS), and editorial advisor for this journal, in many instances the reimbursement rate is higher in the freestanding environment than the hospital. “Even when the total allowable rates are comparable in the two settings, the portion of the rate payable by the Medicare program is significantly higher where the diagnostic imaging center is organized as a freestanding (nonhospital) facility,” she added. She explains that coinsurance amounts in the freestanding setting are limited to 20% of the allowable amount, while the coinsurance portion in the hospital setting is often in the range of 60-65% of the APC amount. Perhaps most onerously, HCFA refused to establish separate APC payment rates for MRI and CT procedures depending on whether a contrast agent is used, despite the efforts of NCQDIS and other organizations representing radiology. Millman reports that the final APCs combine MRI and MR angiography procedures into one APC and the final rate for the MRI APC is lower than the rate published in the proposed regulation last year.
The indefatigable optimist Cherrill Farnsworth, president of NCQDIS, CEO of HealthHelp, Inc, Houston, and also an editorial advisor for this journal, sees opportunity written all over this angst for hospitals that want to restructure their outpatient departments. “The facts are if you are any type of joint venture (even if owned 100% by the hospital and managed by another party) or part owned by the hospital and another party, then the department does not fall under the APCs,” she said. “If you are hospital owned but the hospital files to become an independent diagnostic testing facility (IDTF), you do not fall under the APCs. However, you can no longer put the costs through on your Medicare Cost Report. So a thorough evaluation of the economic situation needs to be done before the restructure.”
Nonetheless, the restructuring of hospital outpatient departments is likely to be undertaken in many institutions across the United States. Therein lies the opportunity for radiologists and administrators who have stood on the sidelines for so many years observing the management — and mismanagement — of radiology departments to play a greater role in the operation of the department and to reap the rewards of a job well done, an opportunity, if you will, to have some skin in the game. Last month we featured an article written by administrators at two prominent radiology departments involved in such an endeavor. This month two consultants and former hospital administrators share their model for “Spinning Off Radiology.” The authors include a list of requisite resources for attempting such an undertaking, but there is one thing that is not on their list: a passionate belief in the department and your ability to help the department meet the demands of the marketplace.
On a related front, I have been promoted to Associate Publisher of Decisions in Axis Imaging News. As associate publisher, I will become actively involved in helping advertising director Beth Hoffman and our new but veteran advertising representative Jacques Montague to communicate and promote the editorial direction and overall mission of Decisions in Axis Imaging News out in the field. I will maintain my current role as editor, but, as a passionate believer in this magazine, I will also carry that message to the marketplace. See you there.
Associate Publisher & Editor