Update on SVU's Ongoing Efforts Regarding the Budget Reconciliation Bill

Over the past 3 weeks, we are sure that most of you have heard of the Budget Reconciliation Bill (BRB). When enacted, this bill will result in dramatic changes in reimbursement that will affect all imaging services and their providers. Vascular ultrasound procedures will be particularly impacted. You may be wondering what if anything has been happening. I can assure you that there have been numerous conference calls and nearly continuous thought and efforts invested into finding a solution. We understand that most providers of these services will not survive these drastic cuts and we believe these changes have the potential to end our profession. Therefore, we plan to aggressively pursue a solution. The cuts will not go into effect until January 1, 2007, which provides us one year to seek reconsideration or pursue an advocacy course intended to soften the impact of the cuts.

We have been working with our counsel, William Sarraille, to organize an appropriate response with a wide range of arguments. As previously mentioned, there are some positive aspects to this Bill in that it negates the approximately 4.5% cut in the Physician Fee Schedule (PFS) slated for 2006. It also codifies the SAAAVE act that provides a Medicare benefit for abdominal aortic aneurysm screening. Therefore, the degree of support for this legislation varies greatly among many physician groups. The SVU and SDMS have been working closely with our allies on this issue as well as a variety of other organizations to form an appropriate and unified voice. The history of this legislation and its potential impact are included below. It is vital to read this information because it will provide you with the details of the process and its ramifications. Our plan of action, formulated after much discussion and advice, is briefly summarized below, and will help you appreciate the detailed information contained in the letter. Our plan is multifaceted, and includes:

• Meet with Staff from the House Ways & Means Committee (although preliminary correspondence leads us to believe that significant changes are unlikely.)
• Request a meeting with CMS to address an adjustment of the Hospital Outpatient Department (HOPD) rates or the methodology by which they are calculated
• Schedule a meeting with the Medicare Payment Advisory Committee (MedPAC).
• Call upon SVU members to obtain cost data from a manageable group of non-hospital vascular ultrasound-only laboratories.

This is the plan! Now read why this plan is crucial to our survival as a profession.

How did this happen?

Over the last 30 days of the Congressional session the legislative focus has been on passing the Budget Reconciliation Bill (BRB). Neither the House nor Senate versions of the original bill contained expense reductions which would have affected ultrasound. However, when the bill went to conference committee (a process of negotiation and compromise to resolve differences in the House and Senate bills), a very late-in-the-process change resulted in language which has a dramatic effect on reimbursement for imaging. Vascular ultrasound services specifically are being disproportionately affected. Incredibly, this massive change was first hinted at on Friday, December 16, and unfortunately, by Monday morning, December 19, it appeared as a "done deal" in Congress. The impetus for creation of this rule of course is to save money by attempting to control the rapid growth of expenditures associated with imaging services, which have increased at double digit percentages over the past several years. While there is relatively little savings associated with the proposed decrease in reimbursement for ultrasound services to make a significant difference, they are included as ultrasound is an "imaging service".

What is the proposal?

Congress has looked at the Physician Fee Schedule (PFS) and the Hospital Outpatient Department (HOPD) rates and their strategy is to use the lower of the two reimbursement fees universally. Basically, it "ensures that payment rates for imaging services delivered in physician offices" (or out patient facilities) "do not exceed payment rates for identical imaging services delivered in hospital outpatient departments." This provision is extremely problematic for several reasons, but particularly because it will result in huge cuts for many imaging services. The net effect of this approach within the family of ultrasound codes (approximately 15 CPT codes) is reduction of payment ranging from 20-50%. General and echo ultrasound codes fared considerably better than did vascular procedures. There was one echo/cardiology code (CTA) which will face a significant reduction. CT and MRI were also significantly impacted. This kind of dramatic reduction in reimbursement rates will pose a significant threat to the viability of vascular labs currently offering these services outside of the HOPD setting. We have posted a spread sheet on the SVU and SDMS websites ( www.svunet.org, www.sdms.org ) which outlines the effects of each affected vascular codes so you can determine exactly what this may mean to you.

Congress has argued that it should not reimburse differently for identical services performed in different settings. On the surface, this seems a reasonable argument. However, the two reimbursement systems are vastly different and the two sites of service reflect very different cost structures and delivery models; the HOPD mechanism starts with department wide costs and uses a widely criticized allocation mechanism to assign those broad costs to specific services. It was never conceived as a method to determine the cost of delivering an actual service. In contrast, the Physician Fee Schedule has been implemented and refined over the last 7 or so years and was created using survey data that more accurately reflects the actual cost of providing that service in an outpatient setting.

This proposal is not equitable on its face.  First, the bill would set the majority of noninvasive vascular Physician Fee Schedule (PFS) reimbursement at a level equal to the corresponding HOPD Ambulatory Patient Classification (APC) payment rate. Medicare would reimburse 80% of the 'payment rate' and the remaining 20% being paid by beneficiaries or secondary payors.  Since its inception however, CMS recognized an inherent inequity in the APC system and created what is called the "Maximum Unadjusted Copayment" as a correction.  With regard to noninvasive vascular diagnostic studies, this results in a hospital having the ability to charge beneficiaries or secondary payors an additional 20% copayment. The benefit of this additional copayment is not available to PFS providers. Consequently, the language, as written, would penalize suppliers covered under the PFS by 20% as compared to hospitals.

Second, hospitals are not limited to the HOPD APC (or DRG) payment rate as a means of covering costs.  For example, if a hospital year-end cost report shows that the Medicare DRG payments have not covered Medicare inpatient beneficiary costs, they can receive additional funds.  Even more dramatically, critical access hospitals can still be paid under the reasonable costs system.  Neither of these mechanisms is available to PFS suppliers. 

We fear the result of this will be a significant decrease in the amount of vascular testing performed under Medicare Part B and force much of the testing back into the hospitals. It is our belief that most hospital vascular laboratories are not positioned to significantly increase their testing volumes, further "stressing" their typically over burdened systems due to the access issues created by the bill. Additionally, as non-hospital testing venues begin to disappear, so will the opportunity to work in diverse settings, giving hospitals a "virtual" monopoly on sonographer employment and hence greater control over salary, benefits, call schedules, etc. Finally, as reimbursement decreases, so will quality and quality initiatives, not just in non-invasive vascular testing but throughout imaging. Most critical, this could have wide ranging and long lasting effect on Medicare Beneficiaries access to quality non-invasive vascular procedures.

What is the strategy?

It is important to understand that the root of this change lies with Congress, not CMS. This creates two problems in attempting to correct this crisis. First, we have relatively little experience working with Congress because our issues have historically been on payment issues rather than policy decisions (which have required us to work through issues with CMS). While we have spent time walking the halls of Congress, educating members, it was usually as a member of a Coalition promoting credentialing and accreditation or the SAAAVE bill. Unfortunately, gaining access to Congressional members takes vast sums of money that our societies simply do not have. Working with counsel, we have focused on the following avenues of possible action:

• As a result of our initial contact with staff from the House Ways & Means Committee, they have agreed to meet with our representative early this year to discuss the impact of the HOPD cap on vascular ultrasound services. However, preliminary correspondence leads us to believe that significant changes are unlikely.
• We will request a meeting with CMS. While CMS is bound by Congressional action, the agency is well positioned to fully understand the magnitude and possible effects of this bill. There may be an opportunity to adjust the HOPD rates or the way they are calculated. Problem: We have tried in the past to effect the HOPD calculation in an attempt to 'even out' the reimbursement between the PFS and HOPD and have been unsuccessful. At that time, the cardiology community opposed our approach because it would have re-allocated echo reimbursement dollars to general and vascular ultrasound.
• Given the importance of Congress' reliance on The Medicare Payment Advisory Committee (MedPAC), we will seek to schedule a meeting with MedPAC staff as soon as possible. We can attempt to demonstrate to MedPAC staff how this bill will, in effect, establish policy that will limit access to care. Problem: This will be a difficult sell in that Congress, in some ways, has done what MedPAC suggested---address the burgeoning costs associated with Medicare imaging services. It would require data to support the argument that the specific expense control tool they've chosen will have a dramatic and debilitating effect on access to care.
• We will attempt to obtain cost data from a manageable group of non-hospital vascular ultrasound-only laboratories.

I would also like to take this moment to ask for your help. Your future may well depend upon your participation and help.

• If we ask you to contact a legislator, please take the time to do so. We will provide a template to be used for this purpose to ensure we deliver a cogent and consistent message.
• If you or someone you know has a personal relationship with a Representative or Senator, please let us know.
• Finally, these efforts will assuredly require funds that could threaten your Society's resources. I ask you to seriously consider an additional donation to the SVU Government Relations Fund.

Rest assured that SVU is working feverishly on your behalf to protect your livelihood and the entire vascular ultrasound profession. Thank you.

Bill Schroedter, BS, RVT FSVU
Chair, SVU Government Relations Committee