Final 2014 HOPPS Rule Excludes Some Data from MR and CT Cost Center Calculations

The Centers for Medicare & Medicaid Services (CMS) elected to keep the new separate cost centers for MR and CT in its final Hospital Outpatient Prospective Payment System (HOPPS) rule for 2014, but conceded that some of the cost data hospitals had submitted was likely flawed and would be excluded from the cost center calculations. Specifically, CMS excluded data from hospitals that used a cost allocation method of “square feet” and gave those institutions four years to fix their data. The American College of Radiology (ACR) and others opposed to imaging reimbursement cuts had noted that in the initial rule, the data used created reimbursement levels for the technical component of advanced imaging that were in many cases below what a simple x-ray of the corresponding body part would have cost. In addition, the use of the flawed cost data created HOPPS payments that were below the reimbursement rates for the same studies in the Medicare Physician Fee Schedule (MPFS). A provision in the Deficit Reduction Act (DRA) instructs CMS to pay the HOPPS amount for a procedure if it is ever below the amount in the MPFS. Therefore, the deep cuts in imaging reimbursement for hospitals would also have hit outpatient imaging centers and radiology practices. According to the ACR, excluding the hospital cost data created with the “square feet” allocation method reduced the cuts by over half for hospitals and kept the HOPPS rate above the MPFS rate, ensuring that radiology procedures done in the outpatient office setting would not be affected. However, the ACR stated that it had expressed "grave concerns" to CMS about the quality of all the cost data from the hospitals and doubted that this data could ever be corrected since hospitals allocate costs in so many different ways. Overall, due to the implementation of the separate cost centers for CT and MR, hospitals will see cuts ranging from 2 to 12 percent for CT studies and 5 to 18 percent for MR, the ACR predicted on its website.