The recently released Medicare Physician Fee Schedule (MPFS) Rule for 2007 includes implementation of the Deficit Reduction Act (DRA) imaging reimbursement cuts, revisions to practice expense payments, a 5 percent cut in the professional component as a result of five-year review, a 5 percent cut in the conversion factor, and a continued 25 percent cut for imaging on contiguous body parts. Medicare calculates a combined -13 percent overall impact to radiology as a result of this rule for 2007.

These impacts are due to take effect January 1, 2007. If Congress takes action during a lame duck or other legislative sessions after congressional elections then there still could be some relief in the cut in the conversion factor and cuts as a result of the DRA. The American College of Radiology (ACR) is seeking a two-year delay in the DRA cuts pending a Government Accountability Office (GAO) study of their effect on patient access to care, in the Access to Medicare Imaging Act (HR 5704 and S 3795).

The conversion factor for 2007 is $35.98, a 5 percent cut from 2006. Medicare is mandated to run the sustainable growth rate (SGR) formula and update this number every year based on an adjustment of actual growth versus projected growth of the previous year. Federal regulation requires that Medicare carriers implement this new conversion factor for processing of claims effect January 1 unless otherwise notified under a different mandate.


Currently the 2007 MPFS rule will implement the DRA provisions, which cap fee schedule payments for the technical component of many imaging services at the lower of the fee schedule amount or the hospital outpatient payment amount for the same service.

Due to ACR efforts, the payment reduction for contiguous CT, MRI, and ultrasound procedures will not progress to 50 percent in 2007 as originally stated in the 2006 final rule. Instead, Medicare will provide full payment for the first procedure and continue to impose a 25 percent reduction in the technical component payment for additional imaging procedures furnished on contiguous body parts during the same session. Instrumental in this decision was data provided by the ACR to show that a 50 percent reduction is excessive and unfounded.

In a decision also aided by data from the ACR, for imaging services subject to both the multiple imaging reduction policy and the DRA outpatient hospital cap, CMS will first apply the multiple imaging adjustment and then apply the hospital outpatient cap. CMS holds that this approach would result in higher payments than if the cap were applied first.

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