Medicare Compliance & Reimbursement

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A series of drastic reforms to payment for imaging services under the Medicare physician fee schedule are all underway--and recent testimony before House lawmakers has sealed the deal for providers.

The changes have come about after lawmakers noticed that spending on imaging services had skyrocketed in recent years. "Between 2000 and 2005, spending for imaging services paid under the physician fee schedule more than doubled from $6.6 billion to $13.7 billion, an average annual growth rate of 15.7 percent," Center for Medicare Management director Herb Kuhn testified before the House Committee on Energy and Commerce's Subcommittee on Health. That growth rate compares to an annual rate of 9.6 percent for all physician fee schedule services, Kuhn told the subcommittee in the July 18 testimony.

In his testimony, Kuhn outlined the steps the Centers for Medicare & Medicaid Services (CMS) is taking to curb its spending on imaging services, including recommendations from the Medicare Payment Advisory Commission (MedPAC) and provisions in the Deficit Reduction Act of 2005 (DRA).

"MedPAC suggested that imaging equipment could be assumed to be used more than 50 percent of the time, given the rapid growth in imaging services," Kuhn says. In June, MedPAC reported to Congress that if a provider actually uses a machine most of the time, "its cost is spread across more units of service, resulting in a lower cost per service than if it were operated half the time." The Commission concluded that CMS overvalues imaging equipment.

Kuhn also cites DRA mandates that prevent CMS from offsetting the savings from the multiple imaging payment reduction policy for 2006 and 2007 by increasing payments for other services payable under the physician fee schedule in 2007. The DRA also "establishes caps on physician fee schedule payments for certain imaging services at the payment levels established in Medicare's hospital outpatient prospective payment system (OPPS)," he testified. The policy, which will take effect in 2007, applies only to imaging services' technical components, and Medicare will pay the professional component--a physician's interpretation of the test--with a separate fee.

"We are still working on the proposed rules for 2007 for both OPPS and the physician fee schedule," Kuhn says. "We will implement the DRA provisions through notice and comment rulemaking," and the notices of proposed rulemaking for the physician fee schedule and OPPS will come out this summer, he adds. He also told the subcommittee that CMS would publish final rules this fall, which would be effective for physicians' services on or after Jan. 1, 2007.

To read a transcript of Kuhn's testimony before the subcommittee, go to www.cms.hhs.gov/apps/media/press/testimony.asp?Counter=1903. Lawsuit Follows New Medicaid Citizenship Documentation Rule A [...]