CMS plans to cut billions from Medicare imaging payments

Washington -- The legislation that earlier this month handed doctors a small measure of good news in the form of a Medicare rate freeze also brought with it a dose of bad news for physicians who conduct imaging services under the program.

Starting in 2007, Medicare will cap reimbursements for most kinds of imaging scans by paying the lesser of hospital outpatient or physician fee schedule charges. The change applies to the technical component of the services, not the interpretation of the scans, and excludes mammography.

Some lawmakers and the Centers for Medicare & Medicaid Services said this was a necessary addition to the Deficit Reduction Act of 2005 because of the explosion in utilization of imaging services in recent years. Herb Kuhn, director of CMS' Center for Medicare Management, reported last year that nearly 20% of a major spike in Medicare outpatient spending in 2004 was due to patients receiving more frequent and more complex imaging. In addition to being a waste of money, any medically unnecessary scans in this category could be dangerous to the patients involved, he said.

Radiologists and other physicians conducting the services see the situation a different way. The measure, which also codifies a Bush administration plan to reduce by half the payments for multiple scans on contiguous body parts, will interfere with physicians' ability to offer the types of imaging technologies that their patients increasingly need, they said. The Congressional Budget Office estimates that the government will squeeze roughly $2.8 billion from the sector over five years.

"These cuts will keep physicians from investing in equipment that would save or extend lives and will deny patients the opportunity to receive the highest-quality less-invasive care," said James Borgstede, MD, a radiologist in Colorado Springs, Colo.

Dr. Borgstede, who serves as chair of the American College of Radiology's board of chancellors, estimated that the imaging services that will be affected could decrease by 38% to 69% next year.

The cuts would particularly impact promising newer technologies, such as the 64-slice CT scanners that can produce high-quality three-dimensional images of the heart, he said. This could mean that some practices hold off on buying more advanced machines and stick with outdated scanners for the time being.

For some smaller physician practices that already have made a large investment in such technologies, the financial strain of cuts to medical imaging could prove to be too much, said Peter Conti, MD, PhD, a professor of radiology at the Keck School of Medicine of the University of Southern California in Los Angeles.

"All Americans understand the need to be fiscally responsible. However, this bill's imaging components affect the care of patients," he said. "Patients deserve continued access to needed ... services, and in the future, they may find fewer imaging offices available as independent establishments close due to financial challenges."

Adapting to change

Not every practice will find its very survival in jeopardy. Some physicians said that the diagnoses and treatment options that imaging makes possible are such a clinical benefit that doctors will continue finding ways to offer the services.

"The survival of any species is dependent on its ability to adapt to its environment," said Dennis Breen, MD, a cardiologist in Sacramento, Calif. "While reimbursements do threaten Medicare participation to the point where some doctors decide to get out of the program, we just can't do that. That would mean we would be closing the door on too large a group of patients."

The cardiology and vascular practice of which Dr. Breen is a member is going forward with its plans to purchase a 64-slice CT scanner for use with its heart patients. Expected benefits to the patients, in the form of clearer scan images and lessened radiation levels, will far outweigh the potential adverse effects of the rate cuts, he said.

But even in cases where investments in technology continue unabated, some practices will shift more focus to bringing in patient business on the non-Medicare side of the equation, he said. Such a move would involve a combination of treating more patients not eligible for Medicare as well as more of those who are willing to pay out-of-pocket for full body scans and other imaging services not covered by Medicare in the first place. Some beneficiaries could feel the downside of this, he said.

"We do have a retail arm that deals with the public directly, and we're just going to have to emphasize our efforts in those areas and compensate for the Medicare cuts," he said. "But clearly what will happen is that fewer studies will be ordered for Medicare patients."

Preparing for the future

Physicians have about a year until the Medicare spending reductions go into effect, and doctors report that the part of the medical community involved with imaging has been preparing and will continue to ready itself for the changes.

A practice might find itself in trouble if it fails to make the changes necessary to adapt to the new rates, hoping that enough physician outcry can cause their repeal, said Randy Fuller, manager of market intelligence for GE Healthcare Financial Services. Lawmakers and the Bush administration have made it clear that they consider imaging utilization to be due for a measure of restraint.

"Physicians have somewhat of a tendency to hunker down a little bit when these kinds of things happen and hope that this too shall pass, and that's probably the worst thing that they could do," Fuller said. "These cuts are probably here to stay."

Practices must manage market changes effectively, whether that means offering more varied Medicare and non-Medicare services or doing something drastic, such as becoming part of a hospital or offering the practice as an acquisition target, he said.

Federal officials, meanwhile, said they are committed to paying appropriately for imaging scans and emerging technologies when they are clinically necessary. In the same legislation that set the rate cuts into motion, for instance, Congress approved new Medicare coverage of ultrasound testing for certain patients who are at risk for abdominal aortic aneurysms.