Beware the Ides of MedPAC

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 - Julius Caesar

The annual mid-March report to Congress 1 of the Medicare Payment Advisory Commission (MedPAC) often is a good predictor of things to come, many of which have rocked radiology’s boat since 2005. After repeated requests, however, the commission has not succeeded, so far, in persuading Congress to scrap the sustainable growth rate (SGR) formula. That might account for the note of weariness in MedPAC’s reiterated call to repeal the SGR, rebalance payments between primary care and specialty care, transition to legislated updates, and increase incentives to move providers into coordinated care-delivery systems.

The commission also restates what it considers the primary failing of the Medicare fee-for-service system: the fact that providers are paid more when they deliver more services, without regard for the quality or value of additional services. MedPAC recommends broader deployment of payment reforms—such as penalties for hospital readmissions— and the close monitoring of delivery-system reforms, with adoption of those models that improve the quality (and reduce the cost) of care.

MedPAC recognizes that the fee-for-service system will be around for a while, and until it is gone, the commission states, its intention is to keep a close watch on the unit price. What does this mean for radiology?

One of the big themes in MedPAC’s report, this year, is the need to equalize relative prices of the same service, across sectors, at the rate of the most efficient provider—a recommendation with the potential to have an impact on all providers. The commission uses the example of cardiac imaging in the current report, identifying a 9% decline in 2012 in the number of echocardiograms per beneficiary in office settings and a corresponding 13.5% increase per beneficiary in hospital outpatient departments.

Likewise, a 15.9% decline in cardiac nuclear studies per beneficiary in the freestanding outpatient setting and a 9.4% increase in hospital outpatient departments were identified. MedPAC attributes the trend to hospitals’ acquisitions of cardiology practices and urges Congress to equalize payments, not just between physicians’ offices and hospital outpatient departments, but among all settings where the same service is provided. “Basing the payment rate on the rate in the most efficient clinically appropriate setting would save money for Medicare, reduce cost sharing for beneficiaries, and reduce the incentive to provide services in the higher paid setting,” the commission writes, putting providers on notice that the so-called hospital premium’s days are numbered.

 - Use of Services per Fee-for-service BeneficiaryTable. Use of Services per Fee-for-service Beneficiary .

Yesterday, Today, and Tomorrow

The growth in Medicare spending per beneficiary on physician and other health-professional services was flat in 2012, with a negative growth rate (–0.2%). Imaging dropped even further in 2012, at –3.2% (see table), but MedPAC spent some time qualifying that decline.

“The decrease occurred amid concerns about overuse of the services,” the authors write. “Further, the decrease includes a shift in billing from cardiovascular imaging from professionals’ offices to hospitals.” The commission further points out that if the aforementioned shifts of echocardiography and nuclear cardiac studies from office to hospital outpatient settings is removed from the equation, the change in imaging services per beneficiary would be –1.9%—still quite a bit more than the average of –0.2%.

 - Volume growth for practitioner services, 2000–2012; adapted from MedPACFigure 1: Volume growth for practitioner services, 2000–2012; adapted from MedPAC.

Even with the decline, MedPAC remains concerned that the use of imaging far exceeds what it was in 2000 (Figure 1). “Cumulative growth from 2000 to 2009 totaled 85%, compared with a cumulative decrease in imaging volume since then of about 7%,” the authors write. “The growth in imaging volume from 2000 to 2009 was exceeded only by the 86% growth in use of tests—such as allergy tests—during those years. Such growth was more than double the cumulative growth rates during the same period for [evaluation and management] services and major procedures, which were 32% and 34%, respectively.”

While imaging continues to be of concern to MedPAC, there is evidence, in this report, that the commission might be less focused on unit cost in radiology, in the immediate future—and more interested in ideas that will ensure imaging appropriateness. For instance, it cites the American Board of Internal Medicine Foundation’s Choosing Wisely® initiative.

It also