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Budget neutrality has cost radiologists $2.8 billion in Medicare reimbursements since 2005: study

by John R. Fischer, Senior Reporter | September 12, 2023
Business Affairs Insurance
From 2005 to 2021, Medicare reimbursements for radiologists dropped 31.9%.
Despite performing more services for patients, radiologists have seen Medicare reimbursements nosedive by 31.9% since 2005, causing them to lose out on $2.8 billion, after adjusting for inflation, according to a study by researchers at the Harvey L. Neiman Health Policy Institute. This is because of the current payment system’s budget neutrality policy, which dictates that cuts be made to offset increases to spending, so as not to exceed the spending budget.

In 2005, total Medicare Physician Fee schedule reimbursement for radiologists was $6.2 billion, compared to 5.8 billion in 2021. When adjusting the 2005 MPFS reimbursement to 2021 dollars, these figures change to $8.6 billion and $5.8 billion, respectively.

As a result, patients are at greater risk for limited access to care, while radiologists could more easily burn out from having to perform 13% more work to cancel out the effects of these cuts, say the researchers. This includes extending working hours, working faster, and/or taking fewer breaks, leading potentially to a higher rate of medical errors. Lower relative reimbursement has also been associated with reduced access to newer medical technologies.

From 2005 to 2021, payments per beneficiary rose 4.2%, from $182 to $189, and relative value units shot up 13.1%. But when factoring in inflation, these payments dropped to 24.9%, with reimbursement in 2021 at $252.

The primary cause of these declines has been the conversion factor, which is multiplied by the relative value units to determine payments. CMS has repeatedly adjusted this component to maintain its Medicare budget, dropping its value 33% between 2005 and 2021, when adjusting for inflation. In 2023, the decline is 43%. Had it not been for the rise in RVU values and an increase in the volume of patients seen, reimbursement would have fallen 34%, say the authors.

“Preventing these cuts requires radiologists as a group to support advocacy efforts across the specialty as well as with the house of medicine at large to advocate against further cuts to the Medicare conversion factor,” Erich Christensen, director of Economics and Health Services Research at Harvey L. Neiman Health Policy Institute, told HCB News.

Changing the system
According to Christensen, advocacy efforts may need to “highlight the access to care challenges reimbursement cuts exacerbate for Medicare patients, compared with commercial patients.”

In a recent episode of the podcast AMA update, Todd Askew, senior vice president of advocacy for the American Medical Association, said that the increased spending threshold for when cuts go into effect should be higher than $20 million, as is currently mandated under the Omnibus Budget Reconciliation Act of 1989. “We think $100 million is a reasonable number before Medicare needs to trigger those cuts.”

AMA also says that providers should be able to participate in alternative payment models and that automatic inflation-based annual updates should correlate with the Medicare Economic Index. It also encourages reforming the Medicare Quality Payment Program by addressing challenges within the Merit-based Incentive Payment System and making it more clinically relevant.

The findings were published in the Journal of the American College of Radiology.

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