The Great CT Bundling Heist of 2011
Medicare is looking for misvalued imaging codes—and it has already found several for which it has reduced payment. Its efforts have dismayed radiologists. Facing more revenue losses from CMS and the private insurers that follow in the agency’s footprints, radiologists feel targeted and, as a specialty, misvalued themselves. Gary Dee, MD, treasurer of Midstate Radiology Associates, Inc (Wallingford, Connecticut), says, “I understand that Medicare has no money, but the private insurance companies are taking money out of my pocket and putting it in their pockets. It’s only going to their profit margins.” Since the beginning of 2011, Medicare’s imposition of a new bundled CPT® code on a combined CT exam of the abdomen and pelvis has severely decreased imaging-center revenues. Many radiologists (including Dee) are particularly upset that big insurance carriers are following Medicare’s lead by imposing the same cut on the combined procedure themselves, using the new single-payment code for a CT exam of the abdomen and pelvis for what was formerly reimbursed as a two-code exam of separate, though contiguous, body parts. “I understand Medicare,” Dee says, “but I don’t think the private insurance carriers necessarily have the right to follow it. My health-care premiums are up 13%, and this change is taking 25% out of my practice, too. This is bleak.” Midstate Radiology Associates is a 10-physician practice in central Connecticut that operates seven imaging centers and reads for MidState Medical Center, a hospital in Wallingford. “A solo practice of 10 people is not going to take on the Anthems and Aetnas,” Dee says. “The ACR® is doing the best that it can. We’re working longer and harder, but that’s not enough.” John A. Patti, MD, FACR, a thoracic-imaging specialist at Massachusetts General Hospital (MGH) in Boston, is chair of the ACR’s board of chancellors. He notes that the new bundled abdomen and pelvis code flows from a process that has been ongoing for years, but has recently been accelerated. Key to that acceleration have been reimbursement evaluations for CMS done by the RVS Update Committee (RUC) and a push by the Medicare Payment Advisory Commission (MedPAC) for more bundled codes. “From our perspective,” Patti says, “this is really a process that has been going on at the RUC for quite a while. It was generated by impetus from CMS, and particularly from MedPAC, for what they refer to as correct pricing. Initially, codes were reviewed every five years for misvaluation. That was very rigorous and defined, and did result in changes to many codes.” Patti continues, “Then, CMS and MedPAC decided this review of misvalued codes needed to be stepped up; they also began looking at procedures that were paired more than 95% of the time. That screening was then dropped to about 90%—and now we are embarking on a screening level of 75%. Any two CPT codes, in any specialty, that are submitted together more than 75% of the time are now open to review. That will be for 2012, and there will be a lot of radiology codes that fall into that category.” The bottom line, as Patti traces it, is that radiologists should expect more imaging procedures that are frequently performed for a patient on the same day to be bundled under a single CPT code that reduces reimbursement, just as has happened with the newly bundled abdomen and pelvis code for CT exams. “I don’t see this ending. The pressure is still on to look at these codes for bundling. If codes are submitted together more than 75% of the time, then the CPT Editorial Panel will have to look at those codes. The end point is money. I don’t think CMS will let up,” Patti says. Greater Impact While the recent bundling of CT exams of the abdomen and pelvis might appear, at first glance, to be minimally detrimental financially, it has turned out to be anything but that. The dual exam is a common procedure. The exam can also be performed with contrast, without contrast, and before and after contrast, adding to the financial impact and complexity when the codes are bundled and paid as one. Just how much the bundling is costing radiology clinics and hospital-based practices is impossible to assess, since the bundling has only been in place since the start of the year. Dee says that his aggregate first-quarter returns for this year are down 25%, compared with 2010. He acknowledges that some of that decrease is probably due to reduced demand for advanced imaging generally, but a lot of it stems from the bundling of CT exams of the abdomen and pelvis by CMS—and the copycatting that has followed in the private sector, he maintains. “We used to get more than $800 for a CT exam of the abdomen and pelvis with and without contrast; we’re down to around $400 now. That’s a huge drop,” he says. He estimates that his practice does 1,000 combined abdomen and pelvis procedures per year that are bundled now. He says, “That’s down $300 to $550 per exam. That’s $500,000. Where are we going to find that money? Our costs aren’t dropping. It’s a big number. The bundling of the abdomen and pelvis is the big one that tipped us over; with a big practice, this would be in the millions.” Gregory M. Kusiak, MBA, is president of California Medical Business Services (CMBS), headquartered in Arcadia. CMBS is a wholly owned subsidiary of Hill Medical Corp, which provides radiology services to four imaging centers and a major Pasadena hospital. Hill employs 19 FTE radiologists and interprets about 350,000 exams yearly, Kusiak says. CMBS also operates a billing service that gives Kusiak a broader view of the impact of the new abdomen and pelvis code bundling. Taken together across the Medicare and private-payor spectrum, Kusiak estimates, the new bundling of the various abdomen and pelvis CPT combinations, all by itself, is reducing hospital-based radiology revenue (mostly from an outpatient income stream) by a whopping 6%. “A hospital practice with reimbursements of $1 million a year could take a $60,000 hit from just this one change alone,” Kusiak says. Of course, how much a practice is harmed by the abdomen and pelvis code bundling depends on how many such procedures the practice does. It also depends on how successful the practice or center is at negotiating reimbursement rates with private insurance companies. As Patti notes, all payors must use the new bundled codes, but private insurance companies aren’t bound to pay Medicare reimbursement rates. They might pay more if they are contractually bound to do so, or if they find it advantageous to the broader relationship to do so. “That becomes part of the negotiation,” Patti says. “Typically, the private payor uses RVUs. There’s very little horse trading going on, but there’s always the potential to have a negotiation. I’m not saying you should invoke negotiations because of bundling; however, if a radiology practice has the opportunity to negotiate a contract, it’s always best to do so.” As Dee notes, for a small practice, the chance to win in negotiating with the big insurance companies amounts to no chance at all. Larger radiology practices can and do negotiate better-than-Medicare rates in the private-payor arena, however. Technical Absurdities Christie James is group practice manager for radiology billing services at the Massachusetts General Physicians Organization (MGPO) in Boston and is chair of the RBMA payor-relations committee. What has jumped out at James about the newly bundled abdomen and pelvis exams is the reduced reimbursement level for the technical component. “The applied RVUs for the bundled procedure are less than the RVUs for just the abdomen by itself,” James says. According to a letter that the MGPO sent to CMS in 2010 (commenting on the proposed bundling for 2011), the technical-component reimbursement for the bundled code for a CT exam of the abdomen and pelvis, without contrast, comes in at 3.9 RVUs.
TableACR Comparison of RVUs and Payments for CT Exams of the Abdomen and PelvisThe CT exam of the abdomen alone, without contrast, carries 4.3 RVUs. The old double-coded RVU for separate CT exams of the abdomen and pelvis carries 6.46 RVUs. The bundled codes for the procedures with contrast, and before and after contrast, are currently slightly higher in technical-component RVUs than the single exam is, but the new RVU amounts still represent a reduction from the old unbundled payments, according to the MGPO’s calculations. The MPGO’s letter to CMS states that the bundled technical-component RVUs do not “provide any recognition of the incremental work involved when performing these exams.” The letter asks CMS to rethink its RVU methodology for the bundled codes. The individual pelvic and abdominal CT exams both carry higher technical-component reimbursement, but James says that a radiology practice can’t just bill the dual exam as a single exam and collect the higher fee, either. That could be considered fraudulent. “Your report states abdomen and pelvis,” she says. The lower-paying bundled code must be used. Pamela Kassing, MPA, RCC, the ACR’s senior economic advisor for economics and health policy, is the person principally charged with monitoring CMS bundling activity for the ACR. According to Kassing, both technical-component reimbursement and the radiologist’s professional fee have taken significant hits under the new abdomen and pelvis bundled codes (see table). For the bundled abdominal and pelvic CT exams, Kassing says, technical reimbursement—which especially hits hospitals, since they own and operate many CT systems—is half what the old reimbursement was for the procedures, when coded separately. In fact, she says, the bundled technical-fee reimbursement is, in some cases, 65% less than the old technical-fee payments for separately coded exams. Professional Fees On the professional-reimbursement side, Kassing says, the RUC imposed a 50% reduction in physician work for CT exams of the abdomen and pelvis exams done together, even though the ACR’s survey data showed that the full physician-work value for two separate exams was accurate in reflecting the work of the combined exams; there were no economies gained by performing the exams together. The end result, Kassing says, is that radiologists are now being paid 25% less to interpret bundled CT exams of the abdomen and pelvis than they were being paid to interpret the exams of both body areas in the past. Is this reduced professional reimbursement justified? Dee doesn’t think so. “On the technical side, the patient is only on the table once, but on the professional side, I argue that it takes longer to read. I’ve got to coordinate the two. The whole thing doesn’t make sense. It’s unfair,” Dee says. Kassing agrees with others that the financial impact of the bundling has been severe. “It could be as much as $4 million in annual revenue for each imaging center,” she says. Some losses, she adds, “are as low as $250,000, but some are much higher, depending on the volume and the case mix. That’s a huge impact, when they really didn’t see it coming.” Hospitals Feel the Pain To date, freestanding outpatient imaging centers paid under the Medicare Physician Fee Schedule (MPFS) have borne the brunt of payment reductions aimed at imaging providers. This time around, hospitals are getting a taste of the same medicine. The MPFS codes are based on RVUs, which are calculated differently than Hospital Outpatient Prospective Payment System (HOPPS) relative weights are calculated, Kassing explains. In 2010, when CT exams of the abdomen and pelvis were done in hospital outpatient settings, the hospitals were paid about twice as much as they will be paid this year for the bundled exam. “The hospitals are quite upset about this,” Kassing says. “We did meet with Medicare to explain to them that they made errors with pricing the new codes and are waiting for this year’s proposed rule to see if CMS will correct it.” Under HOPPS, services are assigned to Ambulatory Payment Classifications (APCs). There are APC codes for single CT studies, as well as composite APCs, which are paid at a higher rate. Silva1 notes in a recent report in the Journal of the American College of Radiology: JACR: “CMS assigned the new bundled codes to the APCs for single CT studies, failing to acknowledge that the new codes actually represent more than one service.” The technical-fee reductions in the bundled codes have had the most impact, according to James (who is responsible for the professional-revenue cycle for MGPO Radiology Associates), even though both technical and professional fees have been reduced. The technical-fee reimbursements for the bundled procedures have ultimately fallen by more than 50%, she says. “The hospital is getting the big brunt of it, but we have substantial technical billings, too. We have definitely noticed a reimbursement impact, from both the technical and the professional sides,” James says. One reason that professional reimbursements for the bundled abdomen and pelvis billings haven’t fallen more is that some private insurers and radiology benefit management companies have agreed that radiologists do, indeed, have more work to do to interpret a bundled exam, James says. These payors have very recently raised the reimbursements for the professional fees—sometimes, back to 100% of the fees for the unbundled exams—although the gross reimbursement from all payors remains around 60% on the professional side, compared with the old unbundled payments, James says. She adds that for several months before they backpedaled, the private payors were participating in the payment reductions by using the new Medicare reimbursement rates for the bundled codes. “They got a ton of money from those professional fees off bundling. That was a win for everybody on the insurer and payor side,” James says. “They’ve started to back off; they’ve reversed, but they had done the reduced payment for half a year.” More Bundling on the Way Kassing says that the same-day abdomen and pelvis exam isn’t the first code to carry a reduced CMS reimbursement from bundling—and it won’t be the last. Following an accelerated review process that began about four years ago, Kassing says, CMS bundled myocardial-perfusion imaging. She recalls, “It was quite a significant hit for nuclear medicine, although it didn’t get noticed as much as the CT of the abdomen and pelvis.” Kassing says that lower-extremity revascularization imaging—which has the first codes to be picked up by CMS screening for companion procedures at the 75% level of combined performance—is on its way to being bundled. Beyond that, she says, CT angiography of the abdomen and pelvis is set to be bundled, too. “That’s going to be big news, but that’s 2012,” Kassing says. At the 75% screening level, Kassing says, “We are looking at a lot of codes—some in interventional radiology and a lot in diagnostic radiology.” The ACR “still needs to get the word out that more bundling will be on the horizon,” Kassing says. Multiple-procedure Discounts Supposedly misvalued codes that can be bundled aren’t the only target of CMS. Reduced Medicare reimbursements have already been implemented for a host of procedures done for a patient on the same day. These reductions are taking place through a multiple-procedure discounting process. James says that much of the multiple-procedure discounting occurs in the care of cancer patients. So far, only technical fees have been hit; she says, “All same-day multiple procedures are being reduced 50%.” She says that professional fees for multiple procedures have not been reduced, although MedPAC has recommended that they, too, should be cut in 2012. “The ACR is lobbying against this,” she adds. Multiple-procedure discounting adds up to serious money. A memo from a consultant, which the ACR shared with the RBMA, estimates the overall impact of the multiprocedure discount at $193 million in 2011, $161 million in 2012, and $149 million in 2013. In addition to instituting all this bundling and discounting of imaging reimbursement, the DHHS secretary is operating under a health-reform mandate to look for so-called misvalued codes and outsized reimbursements paid to physicians. Kusiak says that the congressional mandate to the DHHS under the Patient Protection and Affordable Care Act effectively gives the secretary the ability to impose cuts in reimbursement unilaterally for services designated as misvalued. “The DHHS secretary can be overruled, but it pretty much takes an act of Congress to do it,” Kusiak says. “People think radiology is a bottomless pit of money that can be used to cover other people’s sins.” Kassing says that the criteria that the DHHS secretary can use to screen for misvaluation include fast-growing services, those reflecting changes in practice expenses, those that are billed multiple times, those involving new technology, or those meeting any other criterion determined appropriate. It is likely that imaging codes will be subject to DHHS review, Kassing says. Fighting, but Losing One reason that the bundled abdomen and pelvis reimbursements were so shocking to radiologists this year, Kassing says, is that they occurred largely without warning. By virtue of a confidentiality agreement with the medical panel that produces each new round of codes, the ACR can’t release the new figures until they’ve officially been made public. The ACR can comment privately, however, and it can lobby CMS not to impose the new codes. Through these activities, the ACR was able to delay the issuance of bundled codes for several years, Kassing says—but then, as pressure built to reduce health-care spending, the writing on the wall became clear. “If we didn’t participate, it was going to happen anyway,” Kassing says, “so we participated.” The ACR did its own studies, and when the abdomen and pelvis bundling was proposed, it lobbied CMS to leave the old reimbursements in place. Its efforts, though, largely fell on deaf ears. In January 2011, Bibb Allen Jr, MD, FACR, chair of the ACR’s commission on economics, wrote a stinging memo to ACR members, noting that CMS “did not accept ACR’s recommendations” to maintain separate coding and valuation for the abdominal and pelvic CT exams. He charges that the CMS designation of the services as misvalued was, in fact, a euphemism for what the agency really thought: that the radiology services were overvalued. In other words, radiologists weren’t worth what they were being paid. What CMS was doing was transferring reimbursements from radiologists to primary-care physicians, according to Allen. Such reimbursement changes are part of a larger effort being conducted by CMS, Congress, MedPAC, the Government Accountability Office, the OIG, “and other policy makers in Washington to find savings in the Medicare program and redistribute dollars to primary-care providers,” Allen writes. Paul S. Viviano is board chair and CEO of Alliance HealthCare Services, Newport Beach, California. Through a subsidiary, Alliance HealthCare Services provides imaging services to hospitals and imaging centers. It is a large company that performs more than a million exams annually. Viviano says that his biggest concern about the abdomen and pelvis bundling introduced by CMS is that it will set a precedent for the agency to change the MPFS without providers getting the chance to comment. “Without posting for comment, CMS unilaterally changed the structure of the MPFS,” Viviano says. “From a policy perspective, this is very dangerous.” Viviano says that lobbying needs to continue to make sure that in the future, CMS issues proposed reimbursement changes for comment, so that studies can be done on their impact prior to implementation. “Our eyes are open that imaging has been a target for cuts, and we are worried that will continue to be the case,” Viviano says. There are a number of organizations lobbying on behalf of radiologists (in addition to the ACR). One of the largest is the RBMA. Michael R. Mabry is the RBMA’s executive director, and he says that one argument that the RBMA is making, as it continues to fight discounted reimbursements, is that bundling codes does not make sense clinically. There are clinical reasons to perform abdominal and pelvic exams together, and these reasons should not be overlooked in reimbursing for the procedures, Mabry says. Clinical demands should be highlighted when there is discussion of future bundling by CMS. “We are working to come up with a strategy for dealing with these changes,” Mabry says. “We are raising issues and making CMS aware of them. We are trying to make them see that there is an impact on patient access, on imaging centers staying open, and on how radiology is provided.” It’s too early to say how the abdomen and pelvis bundling has affected the provision of imaging services nationally, if it has, Mabry adds. Those imaging centers that rely on CT exams might be hurt most. “The continuing reimbursement squeeze is making radiology groups take a harder look at their other costs and find opportunities to shed or defer expenses,” he says. Surviving on Less Kusiak says that, in his view, the bundling of the abdomen and pelvis codes might cause imaging providers to become more conservative in performing the lower-paying bundled exams. “One result of this is you could see more conservative use of contrast media and more conservative selection of body regions for imaging,” he says. “Some of these procedures are radiologist elective. The radiologist will determine what’s necessary to make the diagnosis.” There might be more single abdominal CT exams or pelvic CT exams performed instead of poorly paid combination studies, Kusiak says. “I think this will encourage people to be much more conservative,” he says. “The radiologist may not go that extra mile, since in essence, he or she is negatively rewarded.” The bundling of services with lower reimbursements attached is just one more step in a series of payment reductions that have left imaging centers across the country available at fire-sale prices, Kusiak says. It isn’t just radiologists who are being hurt, either. The advanced systems available from closed imaging centers are piling up on the market, he says, and the incomes of equipment manufacturers have plummeted. George Wiley is a contributing writer for Radiology Business Journal. Additional Reading - The 2012 Hit List: Code Pairs That Meet the 75% Threshold
TableACR Comparison of RVUs and Payments for CT Exams of the Abdomen and Pelvis