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Get ready: DRA just weeks away

Radiology Administrator's Compliance and Reimbursement Insider, December 1, 2006

Ask a Magic 8-ball anything and generally, it replies,

“Ask again later.”

“Unlikely.”

“Maybe so.”

Now, ask imaging industry insiders to opine on the fiscal effect of the Deficit Reduction Act (DRA) and the proposed Access to Medicare Imaging Act (AMI) on the field of radiology.

Generally, they answer much the same way as the 8-ball.

“What’s going to happen between now and January 1 is anybody’s guess,” says Bob Maier, president of Regents Health Resources, Inc., in Brentwood, TN.

Recent history

President George W. Bush signed the DRA into law in February. The law essentially cuts federal spending across a variety of entitlement programs from school loans to community block grants, and from Medicaid to Medicare.

The Congressional Budget Office, in its January opinion, suggested that the cuts could save the federal government $35 billion in less than four years.

The American College of Radiology (ACR), however, says $1.2 billion annually comes from cuts to radiology reimbursement.

As required by the DRA, CMS would cap Medicare payment amounts for certain imaging services at the amount paid to hospitals under the Outpatient Prospective Payment System (OPPS).

In a release, the ACR says it views the policy “as ill-advised and inappropriate and believes it will lead to inequitable payment amounts and compromise Medicare beneficiaries’ access to high quality imaging services.”

For its part, CMS says it plans to exercise discretion in the case of imaging services potentially affected by both the multiple imaging procedure reduction and the cap by applying the multiple imaging procedure reduction first and then the OPPS cap, says the ACR.

Although it may help somewhat, the ACR says any technical component reduction for contiguous imaging is inappropriate and should be eliminated, because the Ambulatory Payment Classification (APC) payment rate already accounts for any cost efficiencies that are incurred when contiguous body parts are examined.

Road to remediation

Leaders of various radiology associations lobbied against the DRA as it moved swiftly across the Congressional landscape.

Despite the DRA’s passage, such efforts did produce results. Pennsylvania Representative Joseph Pitts presented mitigating legislation—AMI—just four months later.

Pitts’ proposal recommends a two-year moratorium on radiology reductions included in the DRA.

The temporary stopgap measure gives imaging time to analyze the effect both on the industry and on Medicaid and Medicare patients possibly disadvantaged by the DRA, says Maier.

Initial investigations show the DRA reimbursing some 87% of imaging scans at less than what it costs to perform them, says Maier.

At that rate, expect centers to start closing and facilities to stop performing expensive scans in order to keep bill collectors at bay.

“A two-year delay [as proposed in AMI] could be beneficial,” says Maier. “It may help us determine reasonable reductions in price. And, it offers providers two years to refinance loans, consolidate practices, and improve performance.”

Even with nearly 130 cosponsors of AMI, Maier holds little hope of the measure becoming law prior to the DRA’s January 1, 2007, implementation date.

“It’s a tall order for anything to happen before the December recess,” he says.

As RACRI hit the presses, Congress adjourned for its annual autumn recess. It returns after the November election.

Which political party wins the day will sway which legislation gets debated, says Fred Gaschen, MBA, CHE, executive vice president of Radiological Associates of Sacramento (CA) Medical Group.

“Let’s say the election goes to the Democrats, then a lame duck session through the new year is the best scenario. That’s what we hope for,” Gaschen says.

The best Magic 8-ball prognostication gives AMI a mid-February spot on the debate floor.

“If that’s the case, then good for us and bad for us,” says Gaschen.

Good, because radiology may indeed get the two-year moratorium it wants.

Bad, because the imaging industry must still deal with the DRA until Congress approves AMI.

Worse, because even after an AMI study (assuming AMI passes), significant cuts to the imaging industry still loom on the horizon.

The Magic 8-ball says, “Likely so.”

Look to the future

Escalating imaging costs add to escalating healthcare costs. Look to any number of recent studies and investigations for proof.

“Imaging volume increases have been twice the average of all other physician services,” says Maier. “It’s a high-cost, high-tech service.”

So it makes sense for CMS to seek some remediation from increases in imaging costs, Maier and Gaschen both agree. It goes to the heart of why the DRA passed to begin with, says Gaschen. It’s about available government money and how to spend it.

“CMS wants this to happen,” says Maier. “It’s seen dramatic increases in costs over the last several years.

“The only way to mitigate cost, in theory, is by cutting reimbursement and driving people out of the market at the same time.”

“The DRA is only about the money that the government has to spend. It has nothing to do with what the market needs,” Gaschen says.

The real magic question, says Gaschen, isn’t whether DRA will be implemented, it’s when and how much it will cost the imaging industry.

Insider sources

Fred Gaschen, MBA, CHE, executive vice president, Radiological Associates of Sacramento Medical Group, Inc., 1500 Expo Parkway, Sacramento, CA 95815, 916/646-8400; ragaschen@radiological.com.

Bob Maier, president, Regents Health Resources, Inc., 783 Old Hickory Boulevard, Suite 260, Brentwood, TN 37027, 615/376-4424; bmaier@regentshealth.com.

DRA reimbursement countdown

October 27, 2005: New Hampshire Senator Judd Gregg introduces the Deficit Reduction Act (DRA) of 2005 (S. 1932, H.R. 4241) to provide for reconciliation for the fiscal year 2006 budget.

November 3, 2005: Senate passes the DRA with amendments by a 52 to 47 vote.

November 18, 2005: The DRA measure passes the House without objection.

December 19, 2005: The House files its conference report, which is approved 212 to 206.

December 21, 2005: Conference agreement amended and approved by the Senate, 51 to 50, with Vice President Dick Cheney casting the deciding vote.

January 27, 2006: Congressional Budget Office reports DRA would reduce direct spending by $35 billion between the 2006–2010 period.

February 8, 2006: President George W. Bush signs the DRA into law, No. 109–171.

June 28, 2006: Pennsylvania Representative Joseph Pitts introduces the Access to Medicare Imaging Act (H.R. 5704; S. 3795) to provide a budget-neutral, two-year moratorium on certain Medicare physician payment reductions for imaging services. The proposal garners 128 cosponsors.

July, 18, 2006: The House Energy and Commerce Subcommittee on Health hears testimony from the American College of Radiology, among other organizations, regarding the fiscal effect of the DRA on imaging services and the importance of the Access to Medicaid Imaging Act.

September 30, 2006: Congress in recess until after November mid-term elections.

November 9, 2006: Congress returns to session.

January 1, 2007: Budget considerations included in the DRA take effect.

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