DMBN: What do you do as global reimbursement director for Philips Healthcare?

LS: I work in the office of medical affairs, on the health economics and reimbursement front. So I'm responsible for reimbursement and market access for our technology and services. That includes understanding the clinical and economic evidence requirements of the financial stakeholder as well as the health technology assessment body. We also track changes in reimbursement policies and evidence requirements that will impact our products on the market.

DMBN: What do you think the imaging industry is paying most attention to these days as it relates to the changes going on in health care?

LS: We're still operating largely in a fee-for-service environment and we have to look at the increasing budget pressures that will continue to make imaging a target for payment reduction. For example, there are really significant issues in the Medicare proposed fee schedules that came out that will affect imaging payments. In the physician fee schedule, which pays for freestanding imaging centers, they are proposing to change the formula that figures out that payment, which means they are changing the assumption that's used in the formula from 75 percent to 90 percent, which will make a difference in the overall payments for those settings.

In the hospital outpatient setting, Medicare is proposing to divide the diagnostic radiology hospital cost center into three separate buckets: MR, CT and "other" diagnostic radiology services. This is really going to affect the payment for CT and MR, especially CT in the hospital setting. A way to gauge that is a CT will be paid the same as an X-ray. So these are some big payment cuts. These are proposed rules so we're spending a lot time working with imaging partners and CMS on this issue. The final rule comes out in November and the comment period ends Sept. 1.

There is certainly this commonly held belief that what health care reform drives is that fee-for-service creates the wrong incentives because it's focused on volume rather than value. To improve quality and reduce costs you have to break down the silos of care. Both of these things have provided impetus for new polices that have affected things like value-based purchasing, readmission management and new models like bundled payments and shared savings agreements like ACOs. It impacts the imaging industry because it puts the focus on value. How is this imaging test going to impact care — that's really the question — and what's the incremental value of this imaging test? There's a huge emphasis on doing the right test at the right time. But I want to make the point that I don't really see any of this as threat to radiology because things like ACOs and bundled payment are really about reducing cost and improving quality and I see this as an opportunity for radiology to drive improvements and step in and take on a new role as the gatekeeper.

DMBN: You spoke last year at AHRA about the rise of ACOs. You said you were seeing more and more cropping up on a daily basis. Now that a year has passed, can you give us an update on ACOs?

LS: They took off a lot faster than people expected. Many were on the fence thinking we'd only see a few. But since that time we've seen a lot of growth. Between Medicare and private payer ACOs we are close to 500 right now. And I think we'll see that number increase.

ACOS are still evolving. There is no cookie-cutter approach either, especially because populations are different. I think we'll see a lot of stops and starts and changes in delivery models as people figure out what works and what doesn't.

Bundled payment models are also increasing and some of the providers are working under both the bundled and ACO models. Bundled payments are a little different in that you're paid a fixed amount for an episode of care-as opposed to looking at shared savings at the end of the year. Although in both you're focusing on population health management.

DMN: The news about the Pioneer ACO program not managing to lower costs is causing quite a stir. Do you have any thoughts on this?

LS: Obviously, it's a new payment model so it's going to take time to work out the kinks. I think some of issue is that not all those pioneer ACOs failed. In fact, a good portion achieved cost savings, but there were some that didn't. So you have to be careful about not drawing too many conclusions from a one year study like that. And you have to remember that some did achieve their cost savings. So if I were Medicare or other providers, I would look at them and see what they did right and what we can replicate from them.

The Pioneer ACOs that have announced they are dropping out of the program have said they are moving to the Medicare Shared Savings program which is just the other ACO model - there are three: Pioneer, Medicare Shared Savings program, and Advanced Payment ACOs.

DMN: What else do you think our audience should know about reimbursements?

LS: I think it boils down to moving from volume to value with a bigger emphasis on appropriateness and evidence-based medicine, and also breaking down the care cycle in particular as patients move from hospital to home but also within the hospital. As long as we're faced with this budget crisis, reimbursement will always be on the table, especially for technology like imaging, which is perceived as costly. So it's important for radiology to take the lead in promoting appropriate utilization and it's critical that we keep at it.