2007 a Mixed Bag for Radiologists; Imaging Centers in for Strict New Oversight Regulations
This Year on the Hill: What to Expect in 2007
CMS Changes Policies and Payment for Outpatient Services

2007 a Mixed Bag for Radiologists; Imaging Centers in for Strict New Oversight Regulations

The news from Washington is not all bad for imaging professionals, but general practitioners, internists, and other office-based physicians stand to benefit the most from reimbursement policy changes in 2007. Independent diagnostic testing facilities (IDTFs), however, were hit with stringent new oversight restrictions, in addition to reimbursement cuts contained in the Deficit Reduction Act of 2005 (DRA).

On December 21, President Bush signed into law the tax, trade, and health care bill that reversed a 5.1% reduction in physician reimbursement scheduled to cast a pall over the new year. And both Medicare patients and primary care physicians stand to benefit from measures in the 2007 Medicare Physician Fee Schedule (MPFS) final rule that call for increased payment to physicians for time spent talking with Medicare beneficiaries about their health care; in tandem, the Centers for Medicare and Medicaid Services (CMS) also will pay for a broader array of preventive services, including ultrasound and bone density screenings. CMS projects that the new payment rates and policies will result in $61.5 billion paid to physicians and other health care professionals.

By increasing the work component for the relative value units (RVUs) for face-to-face visits—otherwise known as evaluation and management (E&M) services—CMS hopes to boost patient awareness of preventive measures, thereby ultimately reducing costs. The work component for RVUs is increasing as follows:

• associated with an intermediate office visit, which is the most frequently billed physician service: 37%;
• an office visit requiring moderately complex decision-making: 29%; and
• a hospital visit requiring the same degree of decision-making: 31%.

Medicare also will expand its preventive services benefits, a change provided for by the DRA, beginning January 1, 2007. Now, Medicare will pay for preventive ultrasound screening for abdominal aortic aneurysms (AAAs)—the 10th-leading cause of death for men over 55—for at-risk beneficiaries during the Welcome to Medicare physical examination. AAA screening will be free to men aged 65 to 75 who have smoked at least 100 cigarettes in their lifetimes, individuals with a family history of AAAs, and any other individuals recommended for screening by the US Preventive Services Task Force.

The 2007 MPFS expands the number of beneficiaries who qualify for bone mass measurement due to long-term steroid therapy; the dosage equivalent for eligibility will be reduced from 7.5 mg/day of prednisone for a minimum of 3 months to 5 mg/day. Further, colorectal cancer screening is now exempted from the Part B deductible.

Another Hit for IDTFs

Owners of IDTFs will need to scramble to get into compliance with the new oversight restrictions contained in the MPFS final rule.

Physicians are limited to providing supervision to no more than three independent diagnostic testing facilities. Furthermore, supervising physicians will be held responsible for the overall

IDTF operations and administration, including the hiring of competent personnel and compliance with applicable regulations.

The new regulations also prohibit IDTFs from directly soliciting patients, which includes a prohibition on telephone, computer, or in-person contacts. "CMS did clarify that it is not attempting to prohibit public advertising such as television, radio, and direct mailing of its services to beneficiaries, physicians and other suppliers," Cherrill Farnsworth, former president of the National Coalition for Quality Diagnostic Imaging Services (NCQDIS) and CEO of HealthHelp, Houston, told members at the year-end meeting.

Additional requirements follow:

• IDTFs also will be required to report to CMS any change in IDTF operations as stated in its enrollment application within 30—previously 90—days.
• IDTFs are now required to carry comprehensive liability insurance policy of at least $300,000 that covers the place of business, customers, and employees.
• IDTFs must have "proper medical record storage" and be able to retrieve a record on request from CMS within two business days.
• IDTFs must permit access to representatives of CMS on demand to conduct unannounced inspections to confirm compliance with standards.
• IDTFs are required to calibrate and maintain their testing equipment as per manufacturer suggested standards.

—C. Vasko and C. Proval

This Year on the Hill: What to Expect in 2007

By Cat Vasko

The New Year has brought fresh leadership to Capitol Hill, with Democrats in control of both the House and the Senate. Already, speculation has begun about what the blue party has on its agenda regarding health care, particularly in light of the mounting national deficit. Imaging Economics combs through the rumors and promises to parse the regulatory changes that could be in store for medical-imaging professionals in 2007.

At the Federal Level: Revitalizing Medicare, Price Transparency, and More

The House Ways and Means Committee, which has jurisdiction over Medicare, is under new leadership. Bill Thomas (R-Calif), the former chairman of the committee, has retired, and Representative Charles Rangel (D-NY) has taken his place. Also, former Health Subcommittee Chair Nancy Johnson (R-Conn), defeated in the midterm elections, cedes her role to Representative Pete Stark (D-Calif), author of the Stark antireferral laws. Sharing jurisdiction over Medicare physician payment issues is the House Energy and Commerce Committee, which also has experienced a shift in leadership, with Representative John Dingell (D-Mich) assuming chairmanship of the Health Subcommittee—a position that he held 12 years ago, before Republicans gained the majority.

Democrats have declared that within their first 100 hours in control of the House, their top priorities regarding health care issues will be expanding stem cell research and giving the federal government the ability to negotiate prices with pharmaceutical companies, a practice currently forbidden under Part B. Beyond this initial agenda, Democrats promise to generate more funding for health IT initiatives, expand coverage for the uninsured, and—perhaps most dauntingly—tackle the challenge of permanently repairing the oft-criticized Medicare physician payment system.

Elsewhere, it is anticipated that Democrats will not press forward with Republican plans for adoption of personal health savings accounts (HSAs). Meanwhile, on November 17, Department of Health and Human Services (HHS) Secretary Michael O. Leavitt assured a roundtable gathering of health care industry CEOs that HHS will push forward with pricing transparency initiatives called for by President Bush in an August 22 executive order.¹ These measures would make it easy to compare the cost and quality of medical procedures, but also would serve as a first step toward the transition to personal HSAs.

In another issue sure to remain controversial in 2007, Democrats will delay the ongoing development of pay-for-performance systems while the impact of such measures is further analyzed; however, a November 17 Government Accountability Office (GAO) letter to congressional leaders² urged Congress to seriously consider pay-for-performance as a way to improve Medicare quality and efficiency. The letter also called for improved financial oversight of Medicaid, saying, "Absent reform, Medicare's and Medicaid's long-term fiscal sustainability for supporting health care for elderly, disabled, and low-income Americans is in jeopardy."

In the meantime, two lawmakers from opposite sides of the aisle—Representative Tammy Baldwin (D-Wis) and Representative Tom Price (R-Ga)—are calling for a new method of ensuring government accountability for health care reform measures: test them in the states.

At the State Level: Expanding Coverage, Reforming Financing

Three bills have been introduced in Congress since July to institute a laboratory-like system wherein states would experiment with different measures for expanding coverage and reforming financing. Although the federal government remains divided on health care policy, states—which already have taken the lead in recent years on health care policy reform—could be real-life examples of which ideas work best. The three bills differ slightly; however, all would have states submit proposals to a commission or task force, after which the most promising ideas would be fast-tracked by Congress.

The first bill (S 2772 IS), introduced last May, was co-sponsored by Senator George Voinovich (R-Ohio) and Senator Jeff Bingaman (D-NM); in July, Baldwin and Price, with other co-sponsors, introduced a similar bill (HR 5864) in the House. Senator Russ Feingold (D-Wis) introduced another bill in July. Whether the trend will persist in 2007 remains to be seen, but the concept's bipartisan support bodes well.

Imaging in the Hot Seat

Of utmost concern to medical-imaging professionals are the Deficit Reduction Act of 2005 (DRA), the Access to Medicare Imaging Act (HR 5704), and the Access to Medical Imaging Coalition (AMIC) legislative retort. At press time, the American College of Radiology (ACR), Reston, Va, intended to continue to fight the imaging reimbursement cuts prescribed by the DRA by pushing for a retroactive delay and eventual repeal (retroactive to January 1) during the first quarter of 2007, in the event that HR 5704 went unaddressed by the December lame duck session of Congress.

But irrespective of the fate of HR 5704, the ACR warns that utilization of imaging services—which account for a healthy percentage of overall Medicare costs—will remain under scrutiny by both Congress and the administration. On a more optimistic note, the ACR predicts that "with a government focused on quality, efficiency, and fiscal restraint, there may be an increasing desire to address Congress' utilization concerns by taking a closer look at loopholes in the Stark self-referral laws." The ACR also observes that improvements to the Mammography Quality Standards Act will be possible after its 2007 reauthorization.

Cat Vasko is associate editor of  Imaging Economics. For more information, contact .

References

1. Burgess MC. Statement on Bush's push for health care transparency. Michael C. Burgess Web site. August 22, 2006. Available at: burgess.house.gov/News/DocumentSingle.aspx?DocumentID=49057. Accessed December 6, 2006.
2. United States Government Accountability Office. Suggested areas for oversight for the 110th Congress. November 17, 2006. Available at: www.gao.gov/cgi-bin/getrpt?rptno=GAO-07-235R. Accessed December 6, 2006.

CMS Changes Policies and Payment for Outpatient Services

In November, the Centers for Medicare and Medicaid Services (CMS) issued a final rule for Medicare payment for hospital outpatient services in 2007. The final outpatient prospective payment system (OPPS) rule includes measures to expand quality reporting services and lengthen the list of services for which Medicare will pay ambulatory surgical centers.

"In this final rule, we are taking one more step toward rewarding hospitals for providing quality care, not just in the inpatient setting, but also in the outpatient department," Acting CMS Administrator Leslie V. Norwalk said in a statement.

Hospitals will receive an estimated $32.5 billion for outpatient services provided to Medicare beneficiaries; the rule affects outpatient services provided by general acute care hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities, long-term acute care hospitals, children's hospitals, and cancer hospitals. The rule includes the required 3.4% market basket update to Medicare payment rates, and CMS projects that after other factors are taken into account, providers of outpatient services will receive an increase in Medicare payments of about 3%.

CMS estimates that hospital outpatient expenditures increased nearly 12% between 2005 and 2006 due to growth in the volume and intensity of services; this rapid rate of growth is of concern to the agency because of its potential impact on Medicare beneficiaries whose monthly premiums cover 25% of Part B expenditures.

To adjust for this rise and promote greater value in the purchase of hospital outpatient services for Medicare beneficiaries, the rule ties OPPS rate increases to reporting of quality measures beginning in 2009. In accordance with recommendations from the National Quality Forum and the privately held Hospital Quality Alliance, hospitals will be required to report more quality measures for inpatient services, and also will report risk-adjusted outcome measures for the first time, including 30-day mortality measures for patients hospitalized with an acute myocardial infarction.

—C. Vasko