Whether or not Congress fulfills promises to enact medical imaging physician payment cuts next year, CMS said July 1 that it plans to do just that through its own administrative means.

The agency's draft 2010 ¹ physician fee schedule proposes to increase the imaging equipment "usage assumption" that helps determine Medicare payments for imaging on systems with a price tag of more than $1 million.

Increasing the assumed use rate to 90% of a 50-hour work week from the current level of 50% for the most expensive imaging systems, as proposed, would reduce the per-scan Medicare payments for technologies including magnetic resonance imaging, computed tomography and positron emission tomography.

Citing data from the Medicare Payment Advisory Commission, CMS says it is convinced that the current 50% assumption for all imaging equipment physician payment calculations underestimates actual practice.

"We believe the studies cited by MedPAC suggest what we have long suspected, that physicians and suppliers would not typically make huge capital investments in equipment that would only be utilized 50% of the time," the agency writes in its proposed rule, which will be published in the Federal Register July 13.

The MedPAC data comes primarily from a 2006 commission-sponsored survey of imaging service providers in six markets, which found that CT and MRI were used between 75% to over 90% of the time.

MedPAC has also cited more recent data from the market research firm IMV suggesting a use rate for CT systems approaching 100%.

The proposed rule does not detail the precise impact of the change on individual payment levels, but it says that independent diagnostic testing facilities and radiation oncology specialties would be most impacted by the policy adjustment.

The utilization rate change alone would decrease payments in these sectors in 2010 by 2% and 5%, respectively, beyond the already substantial reductions resulting from the established statutory cap on physician imaging payments.

Other specialties are also impacted by the use rate change, but not significantly beyond the impact of the statutory cap.

CMS' Opinion Of Usage Data Grows In Two Years

CMS discussed increasing the utilization rate in its 2008 proposed Physician Fee Schedule, but decided against it at the time, citing the lack of "empirical evidence" to support the change.

Two years later, with the same 2006 MedPAC data driving the debate, the agency appears to have revised its outlook.

The increased political momentum to reduce Medicare spending to help pay for comprehensive health reform probably contributed to the adjustment.

The imaging use rate proposal resurfaced earlier this year when MedPAC included it in its March report to Congress.

In June, President Obama included the recommendation in a plan he sent to Congress to cut an additional $313 billion from federal health care spending. He floated the idea of increasing the assumption to 95% (² Also see "White House Again Looks To Imaging Cuts To Help Raise Health Reform Funds" - Medtech Insight, 22 June, 2009.).

The recently released House health reform discussion draft would change the assumed rate to 75%.

The imaging industry and radiology community have railed against such changes, arguing that the MedPAC survey did not capture a statistically significant sampling of U.S. imaging practices and that it is increasingly outdated.

These stakeholders point to a recent study from a radiology business professionals association finding the current 50% use rate assumption to be accurate.

The biggest complaint among manufacturers and radiologists is that the proposed cuts would make it impossible for rural facilities to retain already inadequate imaging capabilities.

CMS anticipated this argument in its proposed fee schedule, citing data from MedPAC showing that a large majority of rural hospitals have advanced imaging equipment that can fill gaps left by the equipment at doctors' offices and freestanding facilities lost because of the fee schedule policies.

The physician payment proposal includes one provision that imaging stakeholders generally support. It begins implementation of an accreditation process required under the Medicare Improvements for Patients and Providers Act of 2008 that will make reimbursement to imaging facilities conditional on them meeting certain quality standards starting in 2012 (³ Also see "New MITA Head Highlights Health IT, Appropriateness Criteria" - Medtech Insight, 2 February, 2009.).

Industry favors the professional accreditation approach over across-the board payment cuts.

Payments Down For Several Specialties

CMS' plan to switch to a new survey of physician practice costs as a source for calculating payment levels in 2010 and the agency's overall emphasis on increasing payments for primary care services at the expense of specialties would lead to further reductions in imaging and radiation treatment reimbursement.

Overall, radiation oncology payments would decline 19%, diagnostic testing facility payments would go down 24%, and nuclear medicine payments would be reduced by 13%, for instance, under the proposed schedule.

Cardiology payments would decline 11%, but some other device-heavy areas would see increases, including orthopedic surgery (+3%) and ophthalmology (+11%).

None of these adjustments include the automatic, across-the-board, 21.5% payment cut that is required for 2010 by the sustainable growth rate calculation based on previous year spending. But Congress is widely expected to reverse that reduction before it takes effect, as lawmakers have done every year since 2004.

Comments on the proposal are due Aug. 31. A final schedule will be released in the fall to take effect Jan. 1.

- David Filmore ( ⁴ d.filmore@elsevier.com )

Imaging Use Assumption Increase Crops Up In Physician Fee Proposal

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