Anatomy of a Pay Cut

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My initial reaction was to flinch and move on, like a punch-drunk fighter, when I heard about the 90% assumed equipment-utilization rate in the omnibus bill intended to avert the fiscal cliff. Instead, I bear witness to the latest in a series of cuts to the technical and professional components of radiology reimbursement. Passed on January 1, 2013, the American Taxpayer Relief Act of 2012 increases the utilization-rate assumption for imaging equipment costing more than $1 million from 75% to 90% of a 50-hour work week (45 hours), resulting in a savings to Medicare of $800 million over the next 10 years.

Phil Russell, MBA, is CEO of South Texas Radiology Group in San Antonio (a practice with exposure to technical-component cuts). I ask him what he did after learning that Congress had raided the radiology kitty (again!) to help pay for the sustainable growth rate (SGR) fix. He says, “Nothing: I learned, long ago, to spend my time on things on which I can have some influence or impact.” He adds that the time to invest effort in this rule passed many months ago, when Medicare first proposed the idea. He wrote letters and contacted his elected representatives then, but now, it’s in the hands of Congress and the ACR®.

“I haven’t spent one moment on it,” he says. “What does it matter? We’re not going to stop providing the services.” Not for a minute do I believe that Russell didn’t at least assess the impact of the law on revenue, but he is far too discreet to discuss practice finances. By some estimates, however, the hit to the technical component of MRI and CT would range from 10% to 20%.

What he says next drips with irony: “In the eyes of the bureaucrats, if everybody has to go to a hospital to have radiology services, fine. They’ve got to keep the hospitals open anyway, so people might as well go and sit in lines at a hospital. They don’t care if there’s an independent center on the planet.”

Inside the Beltway

Cynthia Moran, assistant executive director of the ACR, provides a blow-by-blow account of the cut’s dramatic prologue. High hopes for a preholiday resolution during talks between Speaker of the House John Boehner (R–OH) and President Obama ended with Boehner’s exit from the talks.

“Then it became a Vice President Biden–Mitch McConnell (R–KY) act,” she reports. “That started to be put together immediately before Christmas; then—and this had never happened before—Congress reconvened after Christmas.” On December 31, the dealmakers outlined what they were going to park, what they were going to try to address, and which tax rates would be increased, and they came up with the idea of moving the sequestration to March 1.

By 10 pm, just a few dealmakers remained, meeting in a small office. According to Moran, there had been tacit agreement (between both chambers and both parties) on what was going to pay the $25 billion to $27 billion cost of the one-year SGR fix: They were going to go back to the Patient Protection and Affordable Care Act (PPACA) to revisit some of its formulae.

“Diagnostic imaging was not a pay-for item,” Moran adds. “We were on a list, but we were way down on the list.” At the top of the list were items such as Medicaid eligibility and evaluation/management payments to hospital outpatient departments.

What came next was a directive from the White House that prohibited opening the PPACA to pay for the SGR; then, the staff of Senate Majority Leader Harry Reid (D–NV) walked in and sent everyone back to the drawing board. That’s when the new list came out: $800 million (over 10 years) from the 90% equipment-utilization–rate assumption; $400 from radiation-oncology treatment payments to hospitals; reductions in bundled payments for end-stage renal disease; and multiple-procedure payment reductions for all therapies.

Why It’s Us Again

Did RADPAC give too much money to Republican candidates? “We are the poster child for why there is no quid pro quo in contributions to candidates,” Moran says. Every Republican incumbent in the House and every Democrat in the Senate received radiology’s largesse.

Is the technical component within the college’s purview? Moran asserts that the ACR walks arm in arm with the manufacturing community on the subject of cuts to the technical component, but allows that it is a big, attractive, irresistible target.

“If you are in Congress, and you need hundreds of billions of dollars of savings for the Medicare program, you go where the money is,” she says. “The