Transcription Costs Q & A
1. Is the cost of transcription reimbursed under the technical or professional component?
Transcription costs for radiology and radiation oncology services are reimbursed under the technical component and are never included in the professional component. The professional component for radiology services paid under the Medicare Physicians Fee Schedule (MPFS) is not intended to cover transcription costs.
In addition, transcription costs are not included in the physician work valuation process. The professional component represents the physician’s professional services associated with their interpretation (via hand written or dictation etc.) and not transcription itself. Transcribing a report or transcription from a Dictaphone is typically performed by administrative staff and not part of the physician interpretation/work.
For radiology services provided within hospitals, the transcription costs are part of the hospital cost and not included within the fees set by the MPFS.
2. How does Medicare reimburse transcription costs in a hospital setting?
Medicare pays for a hospital’s transcription costs under its inpatient prospective payment system (Diagnosis-related Groups, DRGs) or under its outpatient prospective payment system (Ambulatory Payment Classifications, APCs) as part of the hospital cost reporting system.
3. Should hospitals charge hospital-based radiologists and radiation oncologists for transcription services?
No. Hospitals likely would violate Medicare payment policies if they charged and attempted to collect transcription costs from a hospital-based radiologist/radiation oncologist because they already get reimbursed for these expenses under their normal technical charges.
Furthermore, hospitals potentially risk violating the federal anti-kickback law if they attempt to get paid more than once for transcription costs (i.e., through Medicare hospital payments and again from the hospital-based physician, such as a radiologist who receives referrals of federal-pay patients). This is because any amounts charged to radiologists for transcription costs would not represent the fair market value of actual services provided to the radiologists (an indication of fraud and abuse risk), since transcription costs were something historically incurred by hospitals, not radiologists.
Since 1991, the HHS Office of Inspector General has expressed concern about the fraud and abuse risks underlying certain financial arrangements between hospitals and hospital-based physicians. See “OIG Management Advisory Report on Financial Arrangements between Hospitals and Hospital-Based Physicians”; 1998 Compliance Guidance for Hospitals and the 2005 Supplemental Compliance Guidance for Hospitals which will provided more detailed information. Notably, the OIG acknowledged in a 1993 letter to the ACR that the practice of hospitals demanding payment for transcription services from hospital-based radiologists may implicate the anti-kickback law.