Radiology advocates say ‘excessive’ cut to Medicare practice-expense pay could imperil independent docs
Specialty societies are railing against what they believe is an “excessive” cut in the practice expense component of Medicare payments, potentially imperiling independent interventional radiology groups.
The Centers for Medicare & Medicaid Services (CMS) first revealed the update in the 2026 proposed physician fee schedule, released in July. CMS cited previous estimates, showing a steady decline in radiologists and other docs working in private practice, with a corresponding uptick in hospital employment.
The methodology for how Medicare calculates practice overhead expenses is the same regardless of whether a service is delivered in a physician office or other hospital department. That’s because CMS had assumed that radiologists and other physicians maintain a personal office, even when practicing in a facility, the American College of Radiology noted in comments submitted Sept. 12.
However, with the shift away from private practice, CMS now feels that indirect costs (i.e., rent, utilities and administrative staff) may be overstated, with some radiologists no longer maintaining their extra office. The agency is proposing to slash practice expense payments to address this trend. But advocacy groups such as ACR and others believe this could disproportionately impact interventional specialists.
“[The Radiology Business Management Association] stands with the house of medicine in expressing concern that the proposed site of service payment differential is not evidence-based or supported by data,” the trade group wrote in its own comments submitted Sept. 5. “RBMA recommends CMS reconsider this policy and work with physicians to develop data-driven, evidence-based solutions before implementing this policy.”
If CMS moves forward with the proposed update, RBMA encouraged the agency to provide clarity and clearly state that the indirect practice expense differential does not apply to the professional component (modifier 26) of diagnostic radiology services. It also emphasized that current estimates for indirect expenses in radiology remain undervalued. Practices have become increasingly complex, face rising regulatory burdens and are experiencing substantial growth in overhead costs. Including diagnostic imaging services in this site-of-service adjustment “would further disadvantage radiology groups,” RBMA said.
In addition, the association’s analysis of several IR services reveals that the surgical codes used by IR specialists are especially impacted by the proposed practice expense site-of-service payment differential.
“While it is reasonable to acknowledge that interventional radiologists benefit from not having to cover facility overhead (e.g., surgical suite rent), these physicians still bear substantial indirect costs—such as billing, coding, IT infrastructure, administration, scheduling, and marketing,” Radiology Business Management Association leaders wrote. “RBMA believes that a 50% reduction in the indirect [practice expense] RVU component for interventional radiology services is excessive. RBMA is particularly concerned that such a reduction could accelerate consolidation and threaten the viability of independent interventional radiology practices, especially given that many procedures must be performed in facility settings.”
ACR echoed these concerns in its own separate comments, noting interventional radiologists’ work predominantly involves staffing hospitals while maintaining private offices and handling their own scheduling. The college is asking for clarification on Medicare’s rationale for selecting the chosen reduction of 50%, which “appears to be arbitrary.”
“We recommend that CMS wait to implement this site of service differential until CMS has established a mechanism to identify and exclude office-based physicians who staff hospitals,” ACR said in its comment letter, shared in a news update published on Thursday.
Other radiology groups detailed their own reservations with the site-of-service proposal in comments submitted to CMS ahead of the Sept. 12 feedback deadline:
- The Society of Interventional radiology also encouraged CMS to consider more targeted policy alternatives that support office-based practices without disadvantaging facility-based providers. SIR said potential strategies could include differentiating between independent and hospital-employed rads, collecting detailed data on practice overhead and implementing any substantial payment changes gradually to minimize disruption.
“The proposed site-of-service payment differential risks accelerating consolidation into larger health systems, which may negatively impact independent specialists who provide care in hospital or [ambulatory surgery center] settings,” SIR wrote Sept. 12. “It is essential to acknowledge that facility-based interventional radiologists also incur indirect [practice expenses].”
- Meanwhile, Radiology Partners, the largest practice in the U.S. with 4,000 physicians, noted that providing care in a facility setting, rather than a doc office, does not equate to hospital ownership nor employment. With rising expenses and Medicare pay that hasn’t kept pace with inflation, many independent practices “will have little choice but to join in the trend to consolidate. The result of this cut will be an acceleration of consolidation into large, vertically oriented hospital systems.”
“Radiology Partners strongly urges CMS to exclude independent facility-based providers from this policy,” the El Segundo, California-based imaging group, which is backed by Whistler Capital Partners and New Enterprise Associates, said in its Sept. 12 comment letter. “A practical mechanism could be the use of a modifier on submitted claims to designate independent facility-based groups,” RP added later. “We strongly urge CMS not to finalize this significant change to [practice expense] calculation without a clear carve-out for independent facility-based providers.”
- Finally, the American Society for Radiation Oncology (ASTRO) noted that when private practice physicians deliver services in hospitals, they still incur indirect expenses. These can include coding, billing and scheduling. Administrative costs are typically paid for via the professional component of a Medicare claim, with it important to note that, when docs are directly employed by a hospital, such institutions often “charge” physicians for related costs to the department or unit.
ASTRO recently surveyed its members on this issue and found an overwhelming majority of facility-based radiation oncologists still incur indirect expenses. A portion of their professional revenue is allocated to cover the administrative and overhead costs, regardless of employment status. These costs, often calculated as a percentage-based assessment of professional fee collections, cover essential services and can reach as high as 23%, ASTRO estimated.
“This highlights the reality that even when directly employed by a hospital, physicians are still responsible for expenses that are billed to their department or group” the society said. “ASTRO recommends that CMS define ‘hospital employed physicians,’ (HEP) establish a new self-reported modifier to signify an HEP and apply an appropriate reduction to the indirect expenses in those instances only.”
You can read much more about the fee schedule, with others submitting comment letters including Strategic Radiology, the American Society of Neuroradiology, RadNet Inc., the Society of Nuclear Medicine and Molecular Imaging and the American Registry of Radiologic Technologists. You can also search the thousands of submitted comments here.
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.