DRA II: CMS Proposes Slashing the Technical Component Again
A proposed 90% equipment-utilization formula and brand-new lowball practice-expense data courtesy of the AMA will deal radiology a new round of cuts comparable to those contained in the DRA. The specialty faces dramatic cuts to the technical component in the proposed 2010 Medicare Physician Fee Schedule (MPFS), and these have triggered a vociferous response from organizations representing a broad spectrum of radiology stakeholders.
The RBMA has provided CMS with a detailed response in a letter dated August 27, 2009, expressing dismay and concern about the general downward trend in Medicare payments for imaging services and the failure of CMS to propose policies to curb the inappropriate utilization of imaging services caused by self-referral. Some members estimate the impact of the proposed MPFS to be in excess of 25% for global services, excluding the potential 21.5% reduction in the conversion factor.
A survey of RBMA members with a usable sample of 117 responses indicates that 73.5% would be forced to reduce staff, 73.5% would reduce overhead, 21.4% would limit the access of Medicare patients, and 62.4% would have to pay radiologists less. Particularly troubling for the vendor community is the fact that 85.5% say that they would forgo technology upgrades. Almost a third (29.9%) say that they would consolidate sites of service, and 21.4% would be forced to close a center.
Especially troublesome are the new data collected by the Physician Practice Information Survey (PPIS), which CMS will use to calculate practice-expense RVUs. First, the data are based on a low number of respondents (56). Second, as the RBMA points out, radiology’s practice expense per hour does not distinguish between hospital-based and office-based physicians; the RBMA believes that the practice expense could be significantly higher in OICs than in the hospital setting. The fact that nearly two-thirds of the surveys were completed by hospital-based radiologists would necessarily skew the data toward the lower hospital-based practice expenses.
Third, the large difference between the PPIS data collected by the AMA and the supplemental practice-expense data (based on 171 responses) collected by the ACR with input from practice managers suggests that the physician-only responses may not accurately reflect true practice expenses. Fourth, CMS has not made the PPIS data available for review.
“In an environment where there is acknowledgement that only half of direct costs are being covered by CMS, it is imperative that the methodology for recognizing and paying for indirect costs be robust and fair across all medical specialties,” the RBMA’s letter states.
The RBMA urges CMS to delay implementation of the data collected by the PPIS, allowing time to accrue additional survey respondents beyond the 56 physicians who reportedly responded to the AMA-sponsored survey. If CMS elects to proceed, the RBMA suggests that the PPIS be blended with the supplemental data collected by the ACR at the behest of CMS.
The ACR is highly critical of the quality of the PPIS data used to determine practice-expense RVUs in its August 27 comments to CMS, zeroing in on the fact that two-thirds of the 56 respondents were hospital-based radiologists who bill for professional services only and have no indirect or direct practice expenses. The college asks CMS to delay implementation of the data for one year while data quality is assessed. 
Table. Liability Policiies: Types, Coverage, and Premiums “The ACR is concerned that only 33% nonfacility billing is not representative of the true practice of radiology and that the survey is inappropriately biased to hospital-based physicians,” thus causing the practice expense per hour to decrease, the ACR’s comment letter states. Pamela Kassing, MS, ACR senior director of economics and health policy, lays the odds at 50–50 that CMS will delay implementing the new practice expense data for another year. “There are some groups that are severely hurt, and there are others that benefit,” she notes. “It’s a budget-neutral redistribution. For those of us who have asked for a delay, the data are very weak.” Kassing says that the survey was so flawed that the AMA could use only a third of responses, and then, for radiology, only one-third of the respondents included office-cost data. “They want to revise reimbursement for 33,000 radiologists based on the data from 18 surveys,” she emphasizes. Equipment-utilization Rate Both the RBMA and the ACR strongly oppose the proposal for a 90% equipment-utilization rate. The RBMA cites CMS comments published last year, in the 2009 MPFS, that highlight the about-face: “We do not believe that we have sufficient empirical evidence to justify an alternative proposal” to the 50% utilization-rate assumption. The RBMA letter reminds CMS of the Balanced Budget Act of 1997, which requires the secretary of HHS to use generally accepted cost-accounting principles when developing new resource-based RVUs. The association’s own data, based on a member survey, are closer to Medicare’s current 50% utilization rate. Three policy considerations raised by the CMS proposal have been identified: first, any change in Medicare’s utilization-rate assumption should apply to all medical services, not just imaging; second, any change in a rate assumption beyond 60% is excessive and should be phased in gradually, at no more than 10% per year; and third, any change in the utilization-rate assumption should not apply to new and emerging modalities until they are widely performed and well integrated. The RBMA recommends that CMS conduct the necessary studies to obtain accurate utilization rates and to gauge the impact of change on providers, particularly those in rural settings. In its response to the proposal, the ACR has offered to work with CMS to gather accurate data on equipment-utilization rates for the wide variety of equipment used in the field. Malpractice RVUs Also woefully inadequate are the malpractice RVUs that CMS has determined for the technical component of radiology services. Citing a lack of actual liability-premium data, CMS instead uses medical physicists’ malpractice-premium information as a proxy in calculating malpractice RVUs for radiology services, the letter notes. The outcome is that most malpractice RVUs for the technical component of radiology procedures are set to zero. The RBMA explains that imaging centers face malpractice exposure and can be sued for the actions or inactions of technologists. Radiology groups, likewise, can be sued for the alleged liability of radiologist shareholders, as well as nonshareholder employees. Insurance typically carried by imaging centers includes umbrella liability policies that cover the center and nonphysician clinical personnel, separate from physicians’ personal malpractice coverage; errors-and-omissions policies; general liability policies; and property, fire, extended coverage, flood, hurricane, worker’s compensation, commercial auto, fidelity/crime, employee health/dental, pollution, directors and officers, employee practices, and kidnap/ransom liability insurance policies. The letter notes that these costs are significant and cannot be spread across the full line of health care services, as in a hospital. In response, the RBMA conducted a survey (see table), with 39 imaging centers responding, that put the cost of annual liability policies at $14,297 in the low quartile and $47,812 in the upper quartile, for a mean of $31,526. The survey’s results were submitted to CMS, along with a list of insurance brokers with freestanding imaging center clients and the recommendation that CMS incorporate this information in its malpractice-RVU calculations for radiology technical-component providers. Woe Is Us In a member teleconference called by the Association for Quality Imaging, Christopher Hogan, PhD, associate with Dyckman & Associates (a Washington, DC-based health care consulting company), and Alyse Schuman, vice president of NEMA and managing director of the Medical Imaging & Technology Alliance, shared data prepared for members that paint a grim outlook for imaging-technology owners if the proposal is not scaled back by CMS. Noting that the new practice-expense survey resulted in reducing practice expense per hour from more than $200 to between $120 and $130, Hogan says, “Once you start off on that cash basis, it is very hard to see anything but reductions in your rates. Three specialties were hit pretty hard, but everyone else is pretty happy.” Radiation oncology, clinical oncology, and cardiology are among the hardest-hit specialties. Schuman explains, “The percentage change for CT, for example, for the combined effect of utilization-rate change as well as the practice expense, will be a 30.7% cut; for MRI, a 26.5% cut. MRI of the lumbar spine without contrast would go from $348 to $231; MRI of a joint (lower extremity) without contrast, from $348 to $261.” Schuman recited a list of the most extreme cuts. Hogan says, “Regardless of what happens, we are looking at getting hit by CMS, in a regulatory sense, as well as legislatively, with respect to the utilization-rate change. We are in a position where we need, very loudly and clearly, to communicate that the cuts, on top of what already has happened with DRA, are going to be devastating in terms of the ability to continue to deliver care.”
Table. Liability Policiies: Types, Coverage, and Premiums “The ACR is concerned that only 33% nonfacility billing is not representative of the true practice of radiology and that the survey is inappropriately biased to hospital-based physicians,” thus causing the practice expense per hour to decrease, the ACR’s comment letter states. Pamela Kassing, MS, ACR senior director of economics and health policy, lays the odds at 50–50 that CMS will delay implementing the new practice expense data for another year. “There are some groups that are severely hurt, and there are others that benefit,” she notes. “It’s a budget-neutral redistribution. For those of us who have asked for a delay, the data are very weak.” Kassing says that the survey was so flawed that the AMA could use only a third of responses, and then, for radiology, only one-third of the respondents included office-cost data. “They want to revise reimbursement for 33,000 radiologists based on the data from 18 surveys,” she emphasizes. Equipment-utilization Rate Both the RBMA and the ACR strongly oppose the proposal for a 90% equipment-utilization rate. The RBMA cites CMS comments published last year, in the 2009 MPFS, that highlight the about-face: “We do not believe that we have sufficient empirical evidence to justify an alternative proposal” to the 50% utilization-rate assumption. The RBMA letter reminds CMS of the Balanced Budget Act of 1997, which requires the secretary of HHS to use generally accepted cost-accounting principles when developing new resource-based RVUs. The association’s own data, based on a member survey, are closer to Medicare’s current 50% utilization rate. Three policy considerations raised by the CMS proposal have been identified: first, any change in Medicare’s utilization-rate assumption should apply to all medical services, not just imaging; second, any change in a rate assumption beyond 60% is excessive and should be phased in gradually, at no more than 10% per year; and third, any change in the utilization-rate assumption should not apply to new and emerging modalities until they are widely performed and well integrated. The RBMA recommends that CMS conduct the necessary studies to obtain accurate utilization rates and to gauge the impact of change on providers, particularly those in rural settings. In its response to the proposal, the ACR has offered to work with CMS to gather accurate data on equipment-utilization rates for the wide variety of equipment used in the field. Malpractice RVUs Also woefully inadequate are the malpractice RVUs that CMS has determined for the technical component of radiology services. Citing a lack of actual liability-premium data, CMS instead uses medical physicists’ malpractice-premium information as a proxy in calculating malpractice RVUs for radiology services, the letter notes. The outcome is that most malpractice RVUs for the technical component of radiology procedures are set to zero. The RBMA explains that imaging centers face malpractice exposure and can be sued for the actions or inactions of technologists. Radiology groups, likewise, can be sued for the alleged liability of radiologist shareholders, as well as nonshareholder employees. Insurance typically carried by imaging centers includes umbrella liability policies that cover the center and nonphysician clinical personnel, separate from physicians’ personal malpractice coverage; errors-and-omissions policies; general liability policies; and property, fire, extended coverage, flood, hurricane, worker’s compensation, commercial auto, fidelity/crime, employee health/dental, pollution, directors and officers, employee practices, and kidnap/ransom liability insurance policies. The letter notes that these costs are significant and cannot be spread across the full line of health care services, as in a hospital. In response, the RBMA conducted a survey (see table), with 39 imaging centers responding, that put the cost of annual liability policies at $14,297 in the low quartile and $47,812 in the upper quartile, for a mean of $31,526. The survey’s results were submitted to CMS, along with a list of insurance brokers with freestanding imaging center clients and the recommendation that CMS incorporate this information in its malpractice-RVU calculations for radiology technical-component providers. Woe Is Us In a member teleconference called by the Association for Quality Imaging, Christopher Hogan, PhD, associate with Dyckman & Associates (a Washington, DC-based health care consulting company), and Alyse Schuman, vice president of NEMA and managing director of the Medical Imaging & Technology Alliance, shared data prepared for members that paint a grim outlook for imaging-technology owners if the proposal is not scaled back by CMS. Noting that the new practice-expense survey resulted in reducing practice expense per hour from more than $200 to between $120 and $130, Hogan says, “Once you start off on that cash basis, it is very hard to see anything but reductions in your rates. Three specialties were hit pretty hard, but everyone else is pretty happy.” Radiation oncology, clinical oncology, and cardiology are among the hardest-hit specialties. Schuman explains, “The percentage change for CT, for example, for the combined effect of utilization-rate change as well as the practice expense, will be a 30.7% cut; for MRI, a 26.5% cut. MRI of the lumbar spine without contrast would go from $348 to $231; MRI of a joint (lower extremity) without contrast, from $348 to $261.” Schuman recited a list of the most extreme cuts. Hogan says, “Regardless of what happens, we are looking at getting hit by CMS, in a regulatory sense, as well as legislatively, with respect to the utilization-rate change. We are in a position where we need, very loudly and clearly, to communicate that the cuts, on top of what already has happened with DRA, are going to be devastating in terms of the ability to continue to deliver care.”