When read in the context of the recent projections by the Congressional Budget Office (CBO), the efforts of CMS to wring waste out of health care programs bring to mind a little Dutch boy.

If you do not have the sense that you are on a moving train heading for a crash, with no exit strategy, then a recent CBO report should remedy that. Requested by the Senate Committee on the Budget, the report analyzes the potential effects of using higher tax rates alone to finance projected increases in spending on Medicare, Medicaid, and Social Security over the next several decades. Health care costs were the biggest driver.

The assessment is sobering indeed. If health care costs continue to rise at a rate of 2.5 percentage points above the gross domestic product (GDP) as they have in the past 40 years, and the sole source of funding the increase is income taxes, the following levies would be required: the lowest tax bracket would increase from 10% to 26%; the middle bracket would go from 25% to 66%; and the top bracket would increase from 35% to 92%.

Given that projection, one has to wonder if physicians will once more effect their Houdini-like escape from the annual sustainable growth rate correction in the proposed 2008 Medicare Physician Fee Schedule (MPFS). This year's proposed rule contains a jaw-dropping 9.9% cut in physician reimbursement. CMS also appears to be getting tough on gain-sharing by physicians in the Medicare program by proposing to crack down on "per-click" lease arrangements, prohibit "under arrangements" agreements between physicians and hospitals, and invoke the anti-markup provision for diagnostic tests.

Here are highlights from the 924-page document, including relevant page numbers because the PDF on the CMS site (the rule had not been published yet in the Federal Register at time of writing) did not use page numbers in its table of contents.

• Equipment Usage Percentage (page 58). This is the percentage of a 24-hour day that equipment is assumed to be in use for the purpose of calculating the practice expense allowance. CMS proposes holding it at 50%, despite the urging of the AMA RVS Update Committee (RUC) to raise it to 70% to 80%. Comments are requested.
• Radiology Practice Expense per Hour (page 61). At the request of the ACR, CMS has proposed to increase the PE/HR, to more appropriately reflect the differential in practice expenses between small and large practices, from $174.18 to $204.86.
• IDTF Performance Standards (page 248). The 2007 rule contained 14 new performance standards, some of which CMS proposes to tweak. CMS proposes to delete altogether the totally unrealistic standard that required the supervising physician to be responsible for overall imaging center operations and administrations.
• New IDTF Performance Standards (page 248). Several new standards have been proposed. CMS will establish an initial enrollment date for an IDTF to be the later of a) the date of filing an application that is approved, or b) the date an IDTF first starts rendering services at a new location. To standard 410.33, CMS has added a prohibition against providers who "share space, equipment, or staff, or sublease its operations to another individual or organization," reasoning that allowing sites to commingle resources may allow an IDTF to circumvent billing requirements, self-referral prohibitions, and anti-kickback laws.
• Physician Self-Referral Provisions (page 305). Here CMS proposes invoking the anti-markup provision under the purchased interpretation rules and offers this example: If A rents office space from B for $50 and A charges B $100 per test, then B would be limited to charging Medicare $50, because it already made $50 on the transaction. The example speaks to the pod-labs prevalent in the pathology world, but there are implications for self-referrers and teleradiology.
• In-Office Ancillary Services (page 315). CMS made no proposal to amend this part of the rule, but did ask for suggestions on who should and should not qualify for the exemption, specifically asking if "nonspecialist physicians should be able to use the exemption to refer patients for specialized services involving the use of equipment by nonspecialists"?
• Unit of Service (Per-Click) Payments (page 324). CMS proposes to prohibit "unit of service-based payments to a physician lessor for services rendered by an entity lessee to patients who are referred by a physician lessor." Comments are solicited.
• Services Furnished "Under Arrangements" (page 346). CMS appears to be targeting these arrangements because it views them as an attempt to circumvent the lower MPFS rates for the higher HOPPS rates, which the agency clearly wants to reserve for the more "medically intensive" hospital setting.

CMS clearly intends to wring waste and abuse from the system in its efforts to close self-referral loopholes, prohibit lease deals between entities, and eliminate per-click arrangements. But when reading the rule in the context of the CBO projections, they appear to be a finger in the proverbial dike. After all, what does it matter who owns the equipment? Or how the scans are sold? Or which entities own the imaging centers? What matters is this: Is the imaging exam necessary, is it performed properly, and will it have a positive impact/outcome for the patient? The same applies throughout health care, but how do we get there?

Cheryl Proval is the business editor of Imaging Economics. For more information, contact .