September 22, 2017

ACR Expresses Concerns About Site-Neutral Policy

The American College of Radiology met with recent Trump Administration appointees to the Centers for Medicare & Medicaid Services (CMS) and the Office of Management and Budget in September to express concerns about policies that could threaten implementation of clinical decision support and lead to unsubstantiated cuts to radiology reimbursement.

The ACR explained that CMS’ new payment system for hospital off-campus sites that fall under Section 603 of the Bipartisan Budget Act of 2015 (Pub. L. 114-74) is especially troubling. For Calendar Year (CY) 2017, CMS implemented site-neutral payments to new hospital off-campus sites that provide items and services to outpatients based on a new technical component (TC) rate that is 50 percent lower than rates paid by the Hospital Outpatient Prospective Payment System (HOPPS).

This proposal reflects Congress’ recognition that hospitals have recently purchased many physicians’ offices and are paid a higher TC or facility rates under the Outpatient Prospective Payment System (OPPS) than from the Physician Fee Schedule (PFS).

Section 603 mandates that certain items and services furnished by off-campus sites that were new as of Nov. 2, 2015 shall not be considered covered outpatient department services for purposes of OPPS payment and shall instead be paid “under the applicable payment system” beginning Jan. 1, 2017.

Hospitals are now paid the new rates when services are billed on the claim form using the “PN” modifier to indicate that an item or service is a non-excepted (or not excluded) item or service. For CY 2017, the payment rate for these services is generally 50 percent of the OPPS rate. Packaging and certain other OPPS policies continue to apply to such services. CMS chose to not move forward with imposing site neutral payments for service expansions on existing sites.

For CY 2018, CMS proposes to revise the formula, known as the PFS Relativity Adjuster, to pay for these services at 25 percent of the OPPS payment rate.

The ACR expressed deep concern that CMS’ proposal to reimburse off-campus sites at these even lower rates will not adequately pay for clinical services, especially for radiology services. For example, under these revised payment rates, the technical component for a CT heart without contrast (code 75571) would be paid $15 and a MRI of the jaw joint (code 70336) would be paid $37.

In direct talks and written comments, the ACR informed CMS and OMB officials the proposal for these historically low rates is unreasonable and should not be finalized for the coming year. The ACR recommended that CMS keep its site-neutral payment rates at 50 percent of OPPS for 2018 until enough data is collected to justify a different percentage. We also believe a comparison of HOPPS rate and the technical component of the MPFS rates is not realistic for radiology.

Radiology has experienced an extraordinary number of cuts to the technical component of the PFS since 2006. Sources of severe rate reductions include a reduced hourly rate of the physician practice information data, provisions in the federal Deficit Reduction Act that cut radiology payments to the lower of published OPPS and PFS rates, Medicare’s multiple procedural payment reduction policy and changes to the equipment utilization rate for calculating overhead expense. Because of such policies, radiologists can no longer afford the cost of owning and operating diagnostic imaging centers.

The cumulative effect of these policies also leads us to believe radiology is already subject to a site-neutral policy. More cuts would only cause these off-campus sites to stop providing imaging services as well. In addition, the negative effects of the proposed policy on radiologists will compound further if other payers adopt CMS’ lower payment rates to further their marketplace expansion. Site-neutral policy would hamper efforts by our members and hospitals to improve patient care.