December 2006 | Vol. 24, No. 12

SVU's 2006 Advocacy Effort

William B. Schroedter, BS RVT FSVU

The largest effort this year has been to lessen the dramatic reimbursement cuts coming in 2007 as dictated by the Deficit Reduction Act (DRA) of 2005. While we have kept you up-to-date throughout the year, a re-cap follows. This large omnibus spending bill was passed and signed by the president early in 2006. Neither the House or Senate versions of the original bill contained expense reductions which would have affected ultrasound. However, when the bill went to conference committee (process of negotiation and compromise to resolve differences in the House/Senate bills), a very late-in-the-process change resulted in language which has a dramatic effect on reimbursement for imaging and with vascular ultrasound services being specifically hard hit. The strategy adopted by Congress uses a mechanism for implementing the cut by combining the Physician Fee Schedule (PFS) and the Hospital Outpatient Department (HOPD) rates and taking whichever of the two reimbursement fees is lower.

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." Incredibly, this massive change was first hinted at on Friday December 16, 2005 and unfortunately, by Monday morning, it appeared as a "done deal" in Congress. This provision is extremely problematic for a large number of reasons but particularly because it will result in huge cuts for many imaging services. Noninvasive vascular imaging procedures were easily the most disproportionately affected family of codes resulting in reduction of payment ranging from 5% to more than 50%. General and echo ultrasound codes fared considerably better than vascular. 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 services.

Congress makes the argument that why should it pay more for a service offered in one facility than in any other. On face value, 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 physician Fee Schedule has been implemented and refined over many years and has survey data that more accurately reflects the actual cost of providing that service in an out patient setting. In contrast, 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. For many years, we have known that the APC's for our procedures were dramatically undervalued and in fact, SVU has attempted to demonstrate to CMS that their methodology failed to accurately capture the costs of providing these services in a hospital outpatient setting. Changes were also opposed by other groups as any increase in our APC's would have the effect of reducing payment in others. While there was acknowledgment that indeed this was problematic, the methodology "is what it is" and was not changed. The argument - hospitals generally provide a large number of services and they make money on some and lose on others, but generally this averages out. For a smaller specialty provider, this is clearly not the case.

This proposal is not even equitable on its face.  First, DRA would set the vast majority of noninvasive vascular Physician Fee Schedule (PFS) reimbursement amounts equal to the corresponding HOPD APC payment rate, with Medicare paying 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 this system since its inception 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%. Consequently, the language, as written, would penalize providers 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 dramatic, critical access hospitals can still be paid under the reasonable costs system.  Neither of these mechanisms are available to PFS suppliers. 

We understand that many providers of these services will not be able to survive these cuts and believe the DRA has the potential to end our profession. Therefore, with the advice of our advocacy counsel Bill Sarraille we undertook a well conceived regulatory and legislative plan to aggressively pursue an appropriate response on a wide range of arguments.

SVU contracted with the Lewin Group, a Washington based consulting firm, to perform an analysis of the impact of the DRA imaging provision on our codes. The Congressional Budget Office ("CBO") estimated a $500 million savings from this provision. Our analysis estimated that nearly $160 million (32%) would come from just our codes. The Lewin Group confirmed our analysis and offered the following conclusions:

1. The DRA disproportionately reduces reimbursement to vascular ultrasound procedures in a PFS setting compared to other imaging codes and the OPPS environment.
2. The difference between reimbursement in an OPPS setting and a PFS setting is larger for vascular ultrasound than other imaging codes.
3. A comparison of RVU's in vascular ultrasound codes compared to remaining imaging codes shows that median APC HCPCS costs are lower for vascular ultrasound APC HCPCS codes than other imaging APC HCPCS codes of similar RVU weight.

We also met with the Medicare Payment Advisory Committee (MedPAC) on two occasions this summer explaining the disproportionate impact. We asked for help on relief as well as explanations of why this so dramatically affected this small family of codes.

We met twice with the Centers for Medicare and Medicaid Services ("CMS") delivering a similar message. We also ask for an exclusion of the physiologic codes (93875, 93922, 93923, 93924, and 93965. We also participated with the Access to Medical Imaging Coalition ("AMIC"). ( www.imagingaccess.org ) The AMIC is a broad based coalition including those who develop medical imaging technologies, those who apply it, and those who benefit from it. The AMIC represents more than 75,000 patients, physicians, medical providers, and U.S. health technology firms. The coalition was organized in early 2006 to address these dramatic and poorly conceived payment reductions. There is currently a bill before both the House and Senate that would delay implementation of these cuts for two years until further study to evaluate the full impact of these cuts can be undertaken. I urge you to find out how to contact your Congressional members and then urge them to support this legislation. We sincerely appreciate and deeply thank our members who have supported these incredibly expensive advocacy efforts with their generous contributions to the SVU Government Relations Fund. If you have not done so, I urge you to consider donating what you can with your 2007 dues renewal payment.

Given these reimbursement issues, it will be a very trying time to continue to promote our long standing message of quality assurance in the provision on non-invasive vascular testing procedures. While one may be inclined to consider abandoning our efforts given the drastic reimbursement cuts, I urge you to consider that these are indeed two separate issues that should not necessarily be intertwined. Over the past decade, our efforts at influencing payment policy to require either personnel credentialing and/or laboratory accreditation has achieved good success. The overwhelming majority of Medicare carriers either requires (most) or recommends this policy as a prerequisite for payment under the Medicare system. California and Florida are our two most recent victories in this arena. There is also some evidence that at least one carrier is moving towards a pre-payment audit to ensure compliance with this requirement. Our biggest fear is that the payment reductions will make provision of high quality services even more difficult or impossible. The tendency may be to allow quality standards to suffer but again, I strongly urge us to remain steadfast in our commitment to the high standards for our profession and our patients. Poor quality testing will be the surest demise of this profession we love. Thank-you.