Fact Sheets

CHANGES FOR PAYMENT FOR IMAGING SERVICES UNDER THE PHYSICIAN FEE SCHEDULE

Overview

The Medicare Physician Fee Schedule (MPFS) final rule for CY 2007 implements three provisions affecting payment for imaging services under the fee schedule:

• The first provision addresses payment for certain multiple imaging procedures, with full payment for the first procedure, but a 25 percent reduction in payment for additional imaging procedures furnished on contiguous body parts during the same session.  This is a smaller reduction for 2007 than had previously been announced in the final rule for the 2006 physician fee schedule for 2007.
• The second limits the payment amount under MPFS to the outpatient Department (OPD) payment amount for the technical component (TC) of certain imaging services.  This payment limit is required by the Deficit Reduction Act of 2005 (DRA).  Under this provision, the physician fee schedule payment amount for furnishing certain imaging procedures can not exceed the amount paid to a hospital outpatient department.
• Finally, payments for imaging services are also affected by revisions to payments for practice expense. CMS is implementing a new methodology for determining practice expense payments for all services including imaging services.

Background

Imaging procedures generally have two parts: the actual taking of the image (which is called the technical component), and the interpretation of the image (the professional component.  Medicare pays for each of these components separately when the technical component is furnished by one provider and the professional component by another.  When both components are furnished by one provider, Medicare makes a single global payment that is equal to the sum of the payment for each of the components.  The multiple imaging payment policy and the DRA payment cap apply only to the payment for the technical component.

When multiple images of contiguous body parts are taken in a single session, some portion of the technical component, including clinical labor, supplies, and equipment, is furnished once for the entire series of images.  In order to avoid duplication of payment, the March 2005 MedPAC report recommended reducing the technical component of fee schedule payments for multiple imaging services performed on contiguous body areas.  The final rule for the 2006 physician fee schedule, provided for a 25 percent adjustment in 2006 payment amounts for the second and subsequent images of contiguous body parts.  That final rule also indicated that the adjustment would be increased to 50 percent beginning in 2007, but also sought additional data and comments on the appropriateness of 50 percent as the final level of the adjustment.  Since the adjustment was a change in relative values for practice expenses, the final rule increased the practice expense relative values for all services by 0.3 of one percent in order to make the multiple imaging adjustment budget-neutral.

Deficit Reduction Act of 2005

After the 2006 physician fee schedule final rule became effective, the DRA was enacted.  The DRA contained two provisions affecting imaging services.  The first provision eliminated the requirement to apply the multiple imaging payment adjustment in a budget-neutral manner. This DRA provision is effective beginning with 2007; the 0.3 percent increase in practice expense relative values for 2006 was not changed.  This means that the increase in relative values under the fee schedule resulting from the savings realized from the multiple imaging payment policy are to be eliminated beginning with 2007. 

Second, the DRA caps the physician fee schedule payment for the technical component of certain imaging services at the hospital outpatient payment amount for the same service.  This DRA provision does not affect the professional interpretation of the test, nor does it apply to mammography services

Physician Fee Schedule Final Rule for 2007

As required by the DRA, the final rule for the 2007 physician fee schedule removes from the practice expense relative values the 0.3 percent increase previously made to these relative values in 2006 to ensure the budget neutrality of the impact of the multiple imaging policies.  This final rule also caps payment for the technical component of certain imaging services at the amount that is paid under the hospital outpatient payment system as required by the DRA. In response to comments received, several services that were included in the proposed list for application of the cap have been removed from the list.

In response to comments on the multiple imaging adjustment policy in the 2006 physician fee schedule final rule, and in light of the cap imposed by the DRA, CMS is maintaining the adjustment at the 25 percent level.  For imaging services subject to both the multiple imaging reduction policy and the outpatient hospital cap, we will first apply the multiple imaging adjustment and then apply the outpatient cap.  This approach results in higher payments than if the cap were applied first.

Physician Practice Expense Payment Revisions

In addition, Medicare proposed changes in physician practice expense payments to ensure that Medicare and beneficiaries are paying the proper amount for all types of health care services and maintaining access to necessary technology.  The proposed payment amounts are based on data provided by physician groups and reviewed by the Relative Value Update Committee (RUC), an expert panel of physicians established by the American Medical Association, representing all major specialty societies.  Medicare proposed to phase in these changes over a four year period to allow for continuing review and revisions, in consultation with physician groups.

Promoting Improvements in Women’s Health Care

Concerns were raised by some, in support of women’s health issues, in regards to reductions in payment amounts for bone mass measurement and screening, and Computer Assisted Detection (CAD) as an add-on service for mammograms.  These reductions primarily occur as a result of the practice expense payment refinements.  The data upon which these payments are based are the best data available and have been reviewed by the RUC.  However, it is important to understand that these proposals are not specifically targeting Women’s Health Issues.  They are part of comprehensive reviews of Medicare payment amounts for all physicians’ services by expert physician panels to insure that Medicare pays appropriately for all services including preventive services. 

Improving the quality and efficiency of the nation’s health care for both men and women are major goals for the Medicare program.  It is important that a priority be given to women’s overall health care and not narrowly focus on any one service. These broad goals for women’s health care are supported by a number of actions being taken in this final rule. 

Here is what CMS is doing:

• Implementing substantial increases in payments for “evaluation and management services” such as office visits so that physicians can spend more time with their patients to manage their care and achieve better outcomes-- to reduce complications and avoid unnecessary tests and procedures.  This includes critical services that can help to prevent or detect early the underlying conditions for the top causes of death in women such as heart disease, stroke, diabetes, and pulmonary disease. 
• Even after accounting for the payment decreases for DXA and CAD, there would be hundreds of millions in additional spending directed to physicians to manage women’s health care, due to the increases for evaluation and management services. 
• Taking additional steps in 2007 to further improve Medicare coverage of preventive services. 

We are implementing a provision in the DRA that exempts the colorectal cancer screening benefit from the Part B deductible, eliminating a potential financial barrier to using this benefit.