Ducking the cuts aimed at medical imaging

If the Deficit Reduction Act of 2005 wasn't enough of a blow to the imaging industry this year, just wait. Congress has a surprise awaiting us in 2008. To understand what's at stake, take a look at some of what is prescribed by the latest cuts Congress is considering. Before leaving for August recess, the House of Representatives passed the Children's Health and Medicare Protection (CHAMP) Act calling for more cuts to medical imaging.The proposed legislation, which must still be reconciled with similar legislation in the Senate, places imaging in a Standardized Growth Rate (SGR) physician payment silo with a capped growth rate equal to the gross domestic product. Each silo has to absorb deferred SGR cuts in the future. Industry analysts are still unsure as to the overall economic impact of this provision, but believe it will be substantial. Here's why.

The proposed legislation:

• raises the modality utilization rate to 75%
• directs the Centers for Medicare and Medicaid Services to use the prevailing interest rate instead of a fixed rate of 11%
• moves forward on its original plan to reduce by 50% payments on contiguous body parts rather than the current 25%
• creates a disallowance on global billing that will force independent diagnostic testing facilities into split-bill situations
• requires accreditation for imaging equipment but not for the physicians who utilize it

Under CHAMP, the House decided to pile on diagnostic imaging services, using a worthy cause like providing children with healthcare coverage. Folded into a plan to rebuild CHAMP and to reverse the pending Medicare payment reductions to physicians, the House passed legislation that would cut payments to imaging providers by another $1.2 billion during the next 10 years to pay for CHAMP. But just how much can an industry sustain? Not much more. With the DRA, the average outpatient center has witnessed reimbursement reductions as high as 48%.

What's a center to do if this looming reimbursement scheme goes through? And how can vendors help? This past year, many centers followed the "three simple Ps" rule: planning, prevention, and preparation.

Planning

. Many radiology groups and hospitals begin their capital budget meetings this month, anticipating battles for a specific piece of equipment when there are limited capital purchase dollars. Cash is king, and fair market leases are trendy and back in style. Small centers that "parked" purchases last year to see how the DRA would affect their bottom lines need to upgrade. They are looking toward equipment vendors for monthly skips, low interest rates, and extended terms to lower equipment payments.

Prevention. Providers and vendors have an opportunity to lessen the impact of section 309 of CHAMP by stopping its implementation. Everyone should get involved, spreading the word or donating to the lobbying effort:

• Write letters to local congressional representatives and educate them about the impact of section 309 of the CHAMP Act.
• Make the call -- find the name of your representative and his or her phone number in Washington or call the Capitol switchboard at 202/224-3121.
• Explain the potential ramifications the CHAMP Act will have on the delivery and continuity of quality healthcare among their constituents.

Preparation. These organizations can serve as good reference points and help provide guidance through this maze of cuts. The American College of Radiology, the National Coalition for Quality Diagnostic Imaging Services, and a range of vendor websites, including the Radiology Business Management Association, and Siemens are providing informational pages on the CHAMP Act.

There is still time. Vendors have been helpful in funding the lobbying effort and assisting centers by calculating pro forma numbers to forecast the possible impact. Using a simple formula of weighted CPT (Current Procedural Terminology) averages and a Medicare mix allows a vendor to predict purchase effects on its business. As with the DRA, vendors should analyze backlogs and be prepared to justify sales based on a center's increased throughput. If this law sticks, efficiency will be the key to survival for any center.The time to act is now. Our industry is the target. We must fight for our cause and protect our patients as we continue to defend the quality of care we provide. Everyone in this industry needs to band together to strengthen our mission and preserve our position.

Steven R. Renard is a diagnostic imaging and radiology industry consultant with nearly 15 years of related experience, primarily in imaging center operations.