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CMS Cuts Worse Than Deficit Reduction Act for Clinics, Physicians

by Brendon Nafziger, DOTmed News Associate Editor | October 08, 2009
CMS' proposed cuts to
freestanding clinics and doctors'
offices could slash almost
a quarter of reimbursement
income for imaging services
Expected changes to the Centers for Medicare & Medicaid Services reimbursements could cause more financial mayhem to freestanding clinics and physicians' offices than the Deficit Reduction Act of 2005 (DRA), according to a recent analysis by 3d Health, a Chicago-based consulting firm.

Analysts at 3d Health believe the proposed changes to how CMS pays physicians for services, the Medicare Physician Fee Schedule, could gut reimbursements to doctors and non-hospital clinics by an average of 26 percent across all imaging modalities.

That's higher than the 18.5 percent reduction freestanding imaging units were hit with as result of the DRA, at least according to recent estimates, published this summer in the Journal of the American College of Radiology.

MRI, CT expecting the worst pain

"[The cut from the CMS rules] varies by modality, with CT and MR taking some big cuts and nuclear cardiology as well," Jon Geise, a principal at 3d Health, tells DOTmed News.

The DEXA bone-density scan is particularly hard hit, with an expected 43 percent reduction in reimbursements, while CT (down 38 percent), nuclear cardiology (32 percent) and MRI (31 percent) all take a drubbing, according to 3d Health's figures.

For example, while hospitals will get an average of $238 per CT unit, clinics or doctors' offices only get $152. And for MRI, clinics will receive only $277, compared to a hospital's $391 average reimbursement per unit.

Cause for alarm

"There are several moving parts," says Geise, noting that the cause of the reductions are manifold, though the now-infamous reduction in assumed utilization rates is a big part of it.

The Medicare Physician Fee Schedule bases its reimbursement rates on complex nation-wide assessments called relative value units, or RVUs.

CMS plans to overhaul the imaging malpractice RVUs -- reimbursements to offset insurance premiums for each procedure paid by doctors and clinics. CMS will move cash from the technical component, the facility fee covering staff, equipment and overhead, to the physician fee shelled out to interpreting radiologists and other doctors, whom CMS believes carry more of the malpractice risk.

This means physicians who have their own equipment and are only billing the technical component will lose some income. "The previous malpractice RVUs generated some technical component revenue," Geise says. "[It] was a small part, and now it's shifted down to almost zero."

Utilization rates

Of course, one of the biggest blows is the predicted change in utilization rates for equipment costing more than $1 million.