Radiologists Unite to Fight Sagging Reimbursements


As managed care companies continue to follow Medicare's lead by ratcheting back reimbursements for imaging, radiologists across the country are fighting back.

Late last year, radiologists successfully convinced managed care giant Humana, based in Louisville, Ky., to roll back its decision to eliminate reimbursement for the technical component of the second and third scans of contiguous body parts. Humana had gone much further than Medicare, which in 2006 reduced the reimbursement on second and third scans to 75 percent of the first scan.

"Humana was pretty dug in," says Christopher G. Ullrich, M.D., chair of the ACR's Managed Care/Private Payer Relations Committee. "As they faced a provider revolt, they ultimately softened."

Ullrich expects managed care companies to continue cutting imaging costs wherever they can. He notes that the ACR is in discussion with Minneapolis-based UnitedHealthcare to roll back its reimbursement cut, which has set the reimbursement rate for the technical component of the second and third scans at only 50 percent of the first one.

"We will continue to see very active efforts to cut imaging," Ullrich says, noting that the Managed Care Committee also hopes to convince private payers to consider other reimbursement models, rather than relying on the flawed Medicare formula.

Cuts in the reimbursements for scans of contiguous body parts are only the latest indication of a concerted effort between government and private payers to reduce imaging costs. That effort kicked into high gear with the passage of the Deficit Reduction Act (DRA) in 2005.

The bill – passed in the final days of the Congressional session in closed-door meetings, without public hearings or input from groups targeted by the cuts – did three things that impacted radiologist reimbursements:

  • The bill capped reimbursement for the technical component of the Medicare Physician Fee Schedule, effective this year. For many imaging procedures, the capped rate is the lesser of the Medicare Physician Fee Schedule rate or the rate for the same procedure in the Hospital Outpatient Prospective Payment System (HOPPS), based on information provided by the hospitals. HOPPS rates often are lower than those in the Medicare Physician Fee Schedule by as much as 40 percent. The technical component payment covers practice expenses, including clinical staff time, supplies, and equipment and typically represents as much as 70 percent of the overall payment for the medical imaging procedure.

  • The bill reduced by 25 percent the reimbursement for the second, lesser paid of contiguous body scans within a family of codes that are grouped by modality. For a major procedure, the difference in payment between the old and new reimbursements could be in the hundreds of dollars for a single patient, Ullrich says.

  • The bill froze the Medicare conversion factor at the 2005 rate.

The ACR estimated that the DRA cuts would drain some $6 billion from imaging providers nationwide. The Medicare cuts also caused private payers to sit up and take notice as they too began cutting reimbursements, sometimes going beyond Medicare's cuts.

"Private payers can influence Medicare, and vice versa," says Kathryn Keysor, an economics and health policy analyst for ACR.

Imaging is viewed as a fat target by government and private payers because it is one of the few areas of medicine where productivity is rising, according to Ullrich. And, imaging costs – driven by better technology and increased use of it – also are a new source of concern for payers, many who have seen double-digit cost increases in recent years.

In addition, imaging is vulnerable because critics say a medical arms race is under way, one that finds greater numbers of doctors and hospitals acquiring high-end scanners that can't be justified by patient loads or the kinds of scans they are providing.

There is some waste in the system, Ullrich says, but recent reimbursement cuts don't target waste. Instead, they target the entire system, across the board.

The implications are serious. Vulnerable operators, including those providing care in rural settings, may be squeezed out of business. Another likely casualty: hospitals that rely on imaging to subsidize services such as emergency care or internal medicine.

Ultimately, what's at stake is patient care. Left to run its course, this trend could soon find doctors and hospitals unable to afford the latest equipment and patients unable to benefit from advances in technology.

Radiologists can set the profession on sounder footing by waging an offensive on several fronts, says Ullrich. Hearts and minds must be won in the halls of Congress and in the board rooms of managed care.

Because Medicare is such a large payer and often used as an index by the private sector, Ullrich underscores the need to work in the nation's capitol to undo the damage wrought by the Deficit Reduction Act. Medicare, he says, should revert to payments based on the Medicare Physician Fee Schedule. Although that system was flawed, he says, it was based on hard data.

Campaigns to change Medicare are likely to be difficult fights, but Ullrich says this fight must be fought. As just one indication of the irrationality within Medicare's payment decisions, Ullrich points out that the cuts in reimbursement for contiguous body part scans were based on a procedure in an entirely different area of medicine. In part, the new formula was based on the savings Medicare believes are reaped in surgery when two procedures – say, appendectomy and gall bladder removal – are done with one incision.

While radiologists continue to press for changes to Medicare, Ullrich says they also should take on private payers, using the Humana success as their guide.

He points out that, over the course of many months, individual radiology practices raised issues of concern with the company's field representatives. At the same time, the ACR's Managed Care Committee met with Humana's decision-makers, provided them key data, and asked the company's leaders to explain how they arrived at their decision to cut reimbursement.

"Not one of them had any data that justified the adjustment," Ullrich says. A few practices even threatened to sue Humana for breach of contract, he added. Eventually, the managed care giant backed down.

Deciphering the minutia of payment systems, and then trying to convince payers to base their reimbursements on rational factors, can be frustrating, says Ullrich, but the fight is worth it.

"I take it as a challenge," he says. "It's kind of Alice-in-Wonderland, but at the end of the day, it makes a huge difference."