CMS Grants a Stay for HOPPS; Imaging Centers Take 25% Hit

The Centers for Medicare and Medicaid Services (CMS) announced that it would not implement the 50% reduction in the technical component for contiguous body imaging from the 2006 Hospital Outpatient Prospective Payment System (HOPPS) pending further study. It will, however, begin to phase in the 50% reduction with a 25% cut in the technical component for contiguous body imaging for in-office and freestanding outpatient imaging performed under the physician fee schedule. Signaling a tougher stance on self-referral, CMS also determined to incorporate diagnostic and therapeutic nuclear medicine into the definition of designated services regulated by the federal Stark self-referral laws.

In opposing the proposed 50% cuts, the American College of Radiology, Reston, Va, vigorously sought to educate CMS on its proposal for a blanket reduction in HOPPS reimbursement for CT and MRI examinations on contiguous body parts in the same session, expressing concerns regarding CMS’s methodology for determining the reduction rate.

“Basically, what CMS did was take the methodology they used for the fee schedule and crosswalked it to HOPPS,” says John A. Patti, MD, FACR, chair of the ACR Commission on Economics. “We said that was in error.”

According to Patti, each hospital is required to submit its aggregate charges and costs to CMS so a cost-to-charge ratio can be determined for each cost center. When CMS evaluates that data to determine a HOPPS payment, under the current system, contiguous body scans are already factored into that payment because it is less expensive for a hospital to do several procedures at the same time.

“We think the methodology CMS uses to determine the HOPPS payment already accounts for any efficiencies that occur when you’re doing multiple imaging procedures on contiguous body areas,” Patti says. “Those cost efficiencies are already built into the data, so it would be inappropriate to reduce them any further. They are correct in not implementing the HOPPS 50% reduction.”


CMS will begin to reduce the technical component of MR, CT, and some ultrasound reimbursement for contiguous body imaging in the physician fee schedule by 25% starting in 2006, and will phase in another 25% reduction in 2007. This reduction will not be applied to transvaginal ultrasound and breast ultrasound, pending further study.

“We don’t see, based on the information that we have, that there is a 50% cost savings,” says James Borgstede, chairman of the Board of Chancellors at the ACR. “If they want to make the reduction, it would seem like they would need to justify that there is a 50% savings, and I don’t see that they have justified that there is a 50% savings yet.”

Patti says CMS outlines several clinical labor activities defined in the practice expense methodology as not needing to be done more than once for contiguous CT examinations of the chest, abdomen, and pelvis: greeting the patient, positioning and escorting the patient, providing education and obtaining consent, retrieving prior examinations, setting up the IV, and preparing and cleaning the room.

“We agreed with CMS that some of those activities are indeed not done a second time,” he says. “However, we did not agree that all of them are not done. What we said to CMS is that we basically supported the MedPAC recommendation, which says that the percentage reductions in payment for the second and third procedures may vary by modality because different modalities produce different efficiencies when done contiguously.”

Patti says the ACR plans to continue educating CMS as to where the ACR thinks CMS’s methodology is not accurate, and take some time over the next year to work with CMS to achieve an appropriate number. “Clearly, there should be some reduction for some of the procedures,” he says. “We don’t think there should be a blanket number for all procedures, and we clearly don’t think it should be 50%.

“This is a process, and the ACR feels that it has a relationship with CMS so that they will listen to our input, and that they will and should modify this 25% reduction as they have said they hopefully will do,” Patti says.

Both men believe the physician fee schedule ruling will have an adverse effect on in-office and freestanding outpatient radiology practices. Patti says revenues will decrease, but how much depends on the patient mix. Borgstede says the bulk of in-office imaging done today is by radiologists. The problem, he believes, is that nonradiology practices, compared to radiology practices, are growing at an astronomical rate. Many of the nonradiology practices image only a single body part.

“The people who more commonly do contiguous body parts are the radiologists, and the radiologists aren’t the people that have the astronomical growth,” he says. “So you’re penalizing the people who are doing things appropriately because of the problems created by the people who are doing it inappropriately.”


CMS has ruled that diagnostic and therapeutic nuclear medicine is now considered “designated services” under the federal Stark law, which governs self-referral from physicians in a position to order diagnostic and other ancillary services, and is intended to prevent them from gaining an economic benefit from those services. The CMS ruling goes into effect January 1, 2006, but allows physicians who have financial arrangements with nuclear medicine facilities to separate themselves from those holdings by January 1, 2007.

“Certainly, it will help CMS control some of its costs, and I think it will impact the utilization of imaging,” Borgstede says. “The in-office ancillary exemptions still exist, and that’s unfortunate because people can still put this in their office. It’s just that they can’t do any of the other things: joint ventures or putting in any exclusive imaging center with no [physician] office and refer to it.”

Average No. of Imaging Center Procedures Per Week

According to the August 2005 “Diagnostic Imaging Center Market Report” released by Verispan, 5,760 freestanding diagnostic imaging centers have been identified across the nation, a 5.7% increase since the previous year. Factors fueling the increase include an aging population, rapidly advancing imaging technology, and an increased awareness, and demand for, imaging services. Since 2002, however, the average number of procedures per center per week has trended down, from a height of 291 procedures per week in 2002 to 244 procedures per week in 2005. Roughly 44% of all imaging centers are located in the top five states. They include: Florida (697); California (557); New York (537); Texas (435); and Pennsylvania (307). A copy of the full report can be purchased at


Andrea Fiumicelli

Andrea Fiumicelli has been appointed chief operating officer of Agfa HealthCare, Greenville, SC…Robert E. Schaaf, MD, president and managing partner of Wake Radiology, Raleigh, NC, has been appointed to a 4-year term on the North Carolina Medical Care Commission by Gov Mike Easley. He is a member of the NC Medical Society and the Medical Mutual Insurance Co boards of directors, as well as a member of the Decisions in Axis Imaging News Editorial Advisory Board…Richard Linden, president and CEO of Merge Technologies Inc, Milwaukee, presided over the Nasdaq stock market opening bell in October in celebration of his company’s June acquisition of Cedara Software Corporation…The Academy of Sciences, Gottingen, Germany, is awarding Kattesh V. Katti, PhD, professor of radiology and physics at the University of Missouri, Columbia, the 2005-2006 Gauss Professorship…Benjamin J. Morris, RT(R)(T)(CT), a Missouri radiation therapy program director, has been awarded the $3,000 2005 Siemens Scholar Award from the ASRT Education and Research Foundation, Albuquerque, for the continuation of his master’s degree studies at Southwest Missouri State University, Springfield.

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