Imaging Cuts - How Will Your Practice Respond?

(PYA Alert dated August 25, 2006)


A dramatic cut to the Medicare physician fee schedule will be fully effective beginning January 1, 2007. This cut involves two major provisions, both of which are a result of the Deficit Reduction Act of 2005 (DRA). (S. 1932, Sec. 5102). Although reimbursement for imaging services accounts for 10 percent of Medicare payments, these provisions for reductions in imaging services reimbursement equate to nearly one-third of all the Medicare reductions proposed by the DRA. In fact, the Congressional Budget Office (CBO) estimates that these provisions will reduce Medicare reimbursement for imaging services by $2.8 billion over a five year period while the American College of Radiology estimates that these same provisions will reduce reimbursements by $6 billion over the same time period. Overall, DRA cuts to Medicare and Medicaid programs from 2006 to 2015 are projected to save the Medicare program over $11 billion.

Provision 1

Overall Technical Component Reduction: The technical component of all imaging services will be paid at the lesser of the current physician fee schedule amount OR the payment rate under Hospital Outpatient Prospective Payment System (HOPPS) Ambulatory Patient Classification (APC). This sweeping change will shave hundreds, or in some cases thousands of dollars, off of the physician-based reimbursement for procedures such as PET, CT and MRI. (The cuts do not affect mammography screening or diagnostic imaging.) Specialty societies project cuts ranging from 8% to 51% from current reimbursement rates. Wall Street has estimated that MRI reimbursement rates will be reduced by 15% to 40%, CT by 12%, ultrasound by 10% and PET by 40% to 50%. According to Part B News, 70553-TC, MRI brain w/ and w/o dye will be cut to $513.48 from $876.46 and payment for 75554, cardiac MRI/function will decrease to $360.07 from $560.29. (Part B News, Vol. 20, No. 33).

Provision 2

Multiple Procedure Reduction: Partially enacted this year, the reduction for multiple imaging procedures in the same “family” has an additional impact on reimbursement. Beginning January 1, 2007, the payment for technical components (already reduced as described above) will be reduced by 50% for all but the primary procedure when procedures in the same imaging “family” are performed at the same session. For example, an MRI of the chest and an MRI of the abdomen performed at the same session will be subject to a reduction of at least $400 for the secondary procedure.

Based on the expected substantial reductions in reimbursement, legislators are attempting to counteract the effects of the cut. The Access to Medicare Imaging Act (H.R. 5704) proposes a two year delay on technical component reimbursement cuts for in-office imaging. This act also requires that a study on patient access to imaging services be conducted by the Government Accountability Office by July 31, 2008 to demonstrate the effects of DRA reimbursement reductions.

How will these changes impact your practice? PYA recommends analysis of the impact of these cuts based on your practices’ CPT coding patterns. For further assistance or information please contact Marty Brown at (800) 270-9629.

The information provided via PYA Alert, Tax Planning Alert, or Audit and Accounting Alert should not be construed as accounting, auditing, consulting, or legal advice on any specific facts or circumstances. The contents are intended for general information purposes only.  Please contact us at (800) 270-9629 to discuss your specific situation or to discuss any specific questions you may have.

back to PYA Alerts