Government Cuts Radiology Services

As the largest insurer in the nation, the government has sufficient clout to dictate reimbursement rates to medical providers.

In theory, hospitals, clinics, and medical labs have the freedom to set the prices for the services they perform. In practice, those prices are bounded by the reimbursement policies authorized by insurers – particularly by America’s biggest insurers, Medicare and Medicaid. Their reimbursement policies, including financial limits, are set by the Centers for Medicare & Medicaid Services (CMS), a federal agency that is part of the Department of Health and Human Services.

A History of Cuts

Radiological service providers have experienced significant cuts in authorized payments in recent years. In fact, CMS has reduced radiology payments through Medicare and Medicaid 12 times since 2006.

Further cuts are in store. CMS has studied the cost containment and reduction provisions of Obamacare, or the Affordable Care Act, and prepared a report containing new recommendations for service provider reimbursement. The recommendations include substantial cuts in funding for radiology.

How big is substantial? Early reports indicate that radiologists could see a cut of 10 percent to 45 percent in reimbursement for 47 common procedures, with a particular emphasis on CT and MRI procedures.

Dark Clouds, Silver Linings

Offsetting these cuts somewhat will be authorizations for higher reimbursement for other procedures. For example, ultrasound scans of the upper extremities are reportedly slated for a 41 percent payment increase.

Experts who have studied the CMS report say some of the agency’s recommendations are problematic. For example, CMS is proposing that Medicare reimburse providers $85 for a CT scan and $84 for an X-ray. These prices don’t take into account the major difference in equipment cost, facilities, personnel, and training for the two procedures. Nor do they reflect the reality that CT scans provide substantially more information – and, arguably, medical benefit – to patients.

Concerns About the Guidelines

Critics of the report say that the proposed reimbursement limits overlook significant costs incurred by service providers. Using the duration of the procedure as the personnel time associated with a test is misleading, they say, because it fails to account for the time medical personnel spend getting the patients dressed in examination gowns, delivered to the radiology suite, briefed about the procedure, and positioned for the test. These steps take significant time, and doctors worry that under the proposed payment models, that time must be absorbed by service providers without payment.

Members of the American College of Radiology have met with CMS officials to express concern about the proposed reimbursement limits. They hope to convince CMS to implement significant cuts gradually over several years instead of all at once.

Coping with the Cuts

Government watchers say that the proposed cuts, like the cuts that preceded them, are likely to go into effect without significant modification. As a result, radiology practices must adapt their business models to adjust to the new economic reality.

For example, the board-certified radiologists at SteleRAD are focused on expanding its array of sub-specialization services we offer. That helps ensure that if some of our services are reimbursed at lower levels, the reduced revenues are offset by higher payments for other radiology services.

If your hospital or medical center is seeking stellar radiological services, look no further than SteleRAD. Our radiologists are standing by to provide best-in-class care to your patients. Call us today at 954-358-5250 or contact us online.