Imaging industry escapes additional reimbursement cuts

The imaging community dodged a bullet last week when legislators, heeding radiologists and vendors' concerns, dropped provisions from a compromise bill to reauthorize the State Children's Health Insurance Program (SCHIP). Had the provisions been enacted, imaging providers would have suffered even deeper reimbursement cuts than they are already enduring, with potential fallout for equipment vendors following close behind.

The Deficit Reduction Act (DRA), which took effect this year, has hurt CT and MR vendors through declining U.S. sales to outpatient imaging centers (DI SCAN 7/6/07, CT joins MR in market slide as demand ebbs). PET/CT vendors have been particularly hard hit, given that 70% of last year's U.S. sales were to outpatient clinics (DI SCAN 8/1/07, DRA crushes demand for big-ticket scanners).

Imaging's latest concern was proposed legislation, which cleared the House of Representatives in August, directing the Centers for Medicare and Medicaid to assume that imaging equipment is used 75% of the time rather than 50%, the current assumption. This would have effectively cut Medicare reimbursement by reducing unit service costs (DI SCAN 9/7/07, Lobbyists take aim at proposed reimbursement cuts).

In response, lobbyists for the imaging community sought the ear of legislators, hoping to convince them to drop the Medicare provisions, an effort that appears to have succeeded.

Seeking a middle ground between the House bill and one passed by the Senate, negotiators from the two wings of Congress excluded the language that would have prompted these cuts and agreed to a compromise bill structured to reauthorize SCHIP.

Notably absent from this newly formed legislation is the much-contested Medicare provision, which would have:

• eliminated Medicare global billing for imaging;

• increased the discount in technical fees for the imaging of contiguous anatomy;

• required mandatory certification for various imaging modalities; and, most important,

• increased the assumed utilization rate to 75% and adjusted downward the assumed equipment interest rate, which is currently 11% in the relative value unit formula.

House and Senate leaders announced Sept. 21 the compromise measure, which will add $35 billion in funding for SCHIP over five years. The House version, CHAMP, increased funding to $75 billion over the same period.

Whether the compromise will fly with the White House, however, is yet to be determined. The Bush administration has threatened vetoes against both House and Senate plans, saying the programs would compete against private insurance plans by extending SCHIP benefits to children in households of four with annual incomes of up to $83,000. The White House instead proposed a $5 billion plan to continue SCHIP, an initiative it says represents a 20% funding increase.

If the president does veto the bill, the legislation could yet become law if both the Senate and House override the veto with two-thirds majority votes. This could be tough. While the Senate passed its proposed bill 68 to 31, the margin on the CHAMP bill was narrower, 225 to 204.

Regardless of any further political action, imaging is safe, at least for a while. The Medicare provisions are off the table, but they could return. Washington pundits believe the provisions written initially into the CHAMP bill could be the starting point for legislation next year, when Congress is likely again to look for ways to control Medicare spending.