5 minutes with David C. Levin, MD: Outpatient imaging cuts and unintended consequences

In a study published in the Journal of the American College of Radiology, David C. Levin, MD, Vijay Rao, MD, and Laurence Parker, PhD, conclude that reimbursement cuts are resulting in a shift of MRI volume from office-based facilities to hospital-based outpatient settings. Radiology Business Journal spoke with Levin, professor and chairman emeritus in the department of radiology at Jefferson Medical College and Thomas Jefferson University Hospital in Philadelphia, about the results of the study.

RBJ: What are the some of the implications of your study?

Levin: What’s happening, and we’re seeing it not just in MRI, but in some other advanced imaging modalities as well, is that private imaging facilities are starting to close down. The result is that these MRI and other advanced imaging exams are beginning to shift into hospital outpatient facilities. That’s not a good thing from the perspective of the healthcare system because hospitals get reimbursed a lot more than private offices. So costs are going to go up.

Even though the Medicare people think all they have to do is cut reimbursements and that will solve the problem [of increasing costs], that’s not going to solve the problem: Even though what they are paying per procedure is going down, this other trend—the shift from private offices to hospital facilities—is going to cause their costs to go up. 

RBJ: What would be the best course of action to stop this trend?

Levin: [Medicare] could raise the fees a little bit and make the private offices a little more viable—which, of course, they’re not going to do. But I think they need to stop cuts to private office imaging—and they need to stop it now, because their margins right now are so low that you basically can’t run a business. The equipment is very expensive, and the service costs are very expensive, so it’s a very high-cost business to run.

Maybe there was some justification many years ago for cutting reimbursements, but they have cut them right to the bone now. It’s astounding how little they pay for outpatient advanced imaging if you look at the numbers.

RBJ: From the perspective of this study, what’s your take on the Medicare Payment Advisory Comission’s (MedPAC) recommendation to reduce or eliminate the differences in payment rates between outpatient departments and physician offices for selected APCs (ambulatory payment classifications)?

Levin: It will be interesting to see if they can get away with that. The hospitals are going to cry foul because hospitals face all sorts of costs and reimbursement problems themselves.  They provide all kinds of services that are not reimbursed: uninsured patients, patients coming through emergency rooms where reimbursements don’t cover costs and a lot of other services where costs aren’t covered. Hospitals rely on services like imaging to provide surpluses that help make up for their cost deficiencies in other areas of their operations.

Any attempt to lower hospital outpatient-imaging reimbursment to the current MPFS levels would receive vociferous pushback from hospitals, Levin says: "And rightly so."