Study Shows Deep Impact from DRA-’05 Imaging Cuts

FOR IMMEDIATE RELEASE
Contact: Robin Strongin, 703-516-7382
Ron Geigle, 703-516-7382

WASHINGTON, DC - September 18, 2007 - Nearly 90% of the medical imaging procedures whose Medicare reimbursement rates would drop under the Deficit Reduction Act of 2005 would be paid less than the estimated costs of performing the procedures in physician offices and independent imaging centers.

That is among the conclusions of a new study by The Moran Company that assesses the impact of the DRA-'05 cuts on medical imaging reimbursement and costs across sites of care. The study was done for the Access to Medical Imaging Coalition (AMIC), a consortium of providers, physicians, patients, and manufacturers.

The primary findings of the study include the following: 

• Of the 145 imaging procedures whose payment would be affected by the caps imposed by DRA-'05, 126 (or 87%) would be paid below the estimated cost of performing the procedures in the physician office setting. Examples include Cardiac MRI/Limited Study (Code 75555TC); CT Bone Density, Axial (76070TC); Acute Venous Thrombus Image (78456TC); Tumor Imaging 3D (78803TC); and Ultrasound Exam, Pelvic, Limited (76857TC). An appendix to the report provides a full list of the procedures, payment levels, and estimated costs. To arrive at the estimated costs of performing the procedures, the study used a cost-estimation approach consistent with that used by CMS.
• Under the DRA-'05, aggregate Medicare payment for imaging services in physician offices and imaging centers would fall 16-18% below aggregate payment for similar services provided in hospital outpatient departments. This is in contrast to aggregate imaging spending prior to DRA-'05 which has been virtually identical in both the physician office and hospital outpatient department payment settings.
• Much of the overall reduction in spending brought about by DRA-'05 would be concentrated on a limited number of high-volume procedures used widely by Medicare patients. These include MRI exams to detect brain tumors, nuclear imaging studies for heart problems, ultrasound scans to evaluate leg arteries or bypass grafts, and bone density studies for osteoporosis.

AMIC Executive Director Tim Trysla said that the report confirms what had been widely suspected after the DRA-'05 cuts were passed. "These cuts are extreme, and they will unquestionably change how, where, and if Medicare patients get the imaging services they need," said Trysla. "You cannot cut MRI of the brain by 49%, ultrasound for prostate cancer by 72%, or CT for abdominal aortic aneurysms by 52% without affecting patients."

"The cuts were hastily crafted at the end of last year and it is hard to believe that Congress or CMS anticipated cuts this severe," added Trysla. "The DRA cuts overshoot the target and directly hit procedures that Medicare patients use all the time-for heart disease, back pain, tumors, and artery problems."

The Moran report used Medicare claims data and 2006 payment rates from the CMS Physician Fee Schedule and Hospital Outpatient Payment System to make cross-site spending comparisons and to assess the DRA reductions in relation to the costs of performing the procedures. It also factored-in the expected volume in both the physician-office and hospital outpatient settings. The analysis did not take into account proposed CMS changes in the physician fee schedule or the hospital outpatient payment system that the agency published in 2007.

The Moran study also provides additional insight about a number of issues surrounding the DRA-'05 imaging cuts:

• The study findings contradict the widely-held view that the physician fee schedule has provided excessive payments for medical imaging services when compared to the hospital outpatient payment system. As noted, overall imaging spending in the two systems is virtually identical-at least until the DRA cuts go into effect. The study concludes that "current payment policy, prior to the application of the DRA caps, does not exhibit a bias toward higher payments in one setting versus another." 
• The study findings also contradict the view that imaging payments under the hospital outpatient payment system more accurately reflect the actual costs of performing imaging procedures than do the rates under the office-based system. As noted, the study finds that 126 of 145 codes whose prices would drop to the hospital outpatient level would be paid below the estimated costs of performing the procedures in the office setting.

"This is point-blank proof that Congress needs to pass the Access to Medicare Imaging Act [HR 5704, S 3795] to delay these cuts so GAO can figure out just what the impact on patients will be," stressed Trysla.

Copies of the study are available at the Access to Medical Imaging Coalition website: www.imagingaccess.org.