Beware the Ides of MedPAC

The annual mid-March report to Congress1 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.

[[{"fid":"19131","view_mode":"media_original","type":"media","attributes":{"height":500,"width":883,"style":"width: 460px; height: 260px; border-width: 0px; border-style: solid; float: left;","alt":" - Use of Services per Fee-for-service Beneficiary","title":"MedPAC","class":"media-element file-media-original"}}]]Table. 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%.

[[{"fid":"19133","view_mode":"media_original","type":"media","attributes":{"height":450,"width":996,"style":"width: 458px; height: 208px; border-width: 1px; border-style: solid; float: left;","alt":" - Volume growth for practitioner services, 2000–2012; adapted from MedPAC","title":"MedPAC","class":"media-element file-media-original"}}]]Figure 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 references several studies commissioned by MedPAC, including one that looked at the incidence of repeated echocardiograms, nuclear stress tests, and chest CT exams among Medicare beneficiaries. The study, by Welch et al,2 shows that some clinicians routinely repeat services. A comparison of testing in the 50 largest metropolitan statistical areas indicates a high positive correlation between the proportion of beneficiaries who are tested and the proportion of tests repeated. “The finding suggests that—in the absence of external standards—local practice style determines testing thresholds,” the authors write.

The commission also references two opinion pieces in which radiologists had a hand, both published in the New England Journal of Medicine. One urges a more active role for radiologists as gatekeepers of imaging utilization.3 MedPAC quotes the other editorial, which calls for better ordering protocols: “The goal should be to redirect nascent physicians from a shotgun approach toward the critical use of imaging in thoughtful and elegant diagnosis.”4

Lest radiologists be lulled into complacency with the status quo, MedPAC gets off a warning shot at the end of chapter 4, when it calls for the rebalancing of payment between primary care and specialty care, using a simulation (Figure 2) of radiologist salaries as evidence of the imbalance. “MedPAC’s highest policy priority with respect to Medicare’s payments to physicians and other health professionals is repeal of the SGR,” the authors state. “Repeal the SGR and replace it with a 10-year path of legislated updates with higher updates for primary care services than updates for other services.”

[[{"fid":"19135","view_mode":"media_original","type":"media","attributes":{"height":330,"width":1000,"style":"width: 458px; height: 152px; border-width: 1px; border-style: solid; float: left;","alt":" - Physician-compensation disparities, 2010; adapted from MedPAC","title":"MedPAC","class":"media-element file-media-original"}}]]Figure 2: Physician-compensation disparities, 2010; adapted from MedPAC.






1. Medicare Payment Advisory Commission. Report to the Congress: Medicare payment policy. Published March 14, 2014. Accessed April 10, 2014. 

2. Welch HG, Hayes KJ, Frost C. Repeat testing among Medicare beneficiaries. Arch Intern Med. 2012;172(22):1745-1751.

3. Jha S. From imaging gatekeeper to service provider—a transatlantic journey. N Engl J Med. 2013;369(1):5-7.

4. Hillman BJ, Goldsmith JC. The uncritical use of high-tech medical imaging. N Engl J Med. 2010;363(1):4-6.