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September 29, 2008

DRA advanced imaging cuts examined by GAO; MIPPA accreditation rules welcomed by industry

Advanced diagnostic imaging reimbursement (i.e., payment for MRI, CT and nuc med) has taken a beating under the DRA (Deficit Reduction Act of 2005), and last week's GAO report looking at the impact of the legislation on this slice of the health care economy -- specifically, technical fees for advanced diagnostic imaging in physician office settings -- confirmed that there have been deep cuts.  The cuts were a response to a couple of key factors.  First, the rapid increase in Medicare expenditures in this sector -- at an average annual inflation rate of 13% from 2000 to 2006 (i.e., doubling in that time), compared with a general Medicare physician-billed services inflation rate of 8% over the same time period.  Second, the geographic distribution of services rendered seemed, in the eyes of the regulators, to be related more to the distribution of physician-office-based diagnostic imaging services than to anything else.  The OPPS cap resulted in a cut of $1.7 billion -- a 12.7% drop, from $13.8 billion to $12.1 billion -- in Medicare reimbursement for physician imaging services (2007 vs. 2006).  These cuts were more than intended by Congress, according to the Access to Medical Imaging Coalition, an industry group.

The questions of the moment: Were the cuts too deep, and what does the future hold for physician-office-based advanced diagnostic imaging?

AMIC says that CBO scoring anticipated lesser cuts as a result of the DRA OPPS cap.  The GAO seeks to pre-empt the claim that the cuts are too deep by noting that the volume of tests subject to the cap grew (from 2006 to 2007) at a rate four times that of tests not subject to the cap.

The future of physician-office-based advanced diagnostic imaging will be played out under the accreditation provisions of MIPPA (Medicare Improvements for Patients and Providers Act of 2008) -- initially under a two-year pilot program, and eventually under accreditation provisions that will be applicable to all by 2012.  The provider community -- as represented by certain specialty societies -- prefers the accreditation approach over the prior authorization approach to quality and cost control. (See HealthBlawg post re: recent related GAO report and industry response.)  Some accreditation bodies (e.g., certain specialty medical societies) would prefer that the federales not even impose standards and criteria, noting that few, if any, applicants for their accreditations fail to meet their standards, reaching the conclusion that lesser providers don't even bother to apply.  (Of course, alternative interpretations are possible.)   In any event, some professional societies (e.g., American College of Cardiology) are in on the development of the pilot accreditation standards.  Industry groups such as the Medical Imaging & Technology Alliance would also prefer to see the OPPS cap reversed, and allow quality and cost control to be implemented through accreditation alone.

Another notable finding in this report is that advanced diagnostic imaging has migrated out of the hospital and into physician offices.  While many similar migrations have been due to providers (at the behest of payors) finding the least expensive setting in which to provide a service, this migration seems to have been due to an inverse incentive -- higher reimbursement in a physician office setting.  While physician office imaging volume has continued to grow despite the reimbursement cuts, it remains to be seen whether that trend will continue (or whether the growth was based in part on expectations of higher reimbursement that is no longer available), and whether industry and government can agree on a set of guidelines that can promote cost control and quality control without jeopardizing the economic viability of providers and appropriate access to diagnostic services.       

On a related note, the latest OIG advisory ruling, blessing an arrangement that outsourced the obtaining of prior authorizations for diagnostic imaging services from payors (since the contractor was neither drumming up business for the providers nor a supplier to the providers in question), addresses a business arrangement that may not be around five years from now, if the MIPPA accreditation approach takes hold on time and percolates into the private sector as well.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

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