Welcome to the wonderful world of reimbursement. It’s a wacky, mixed up place full of Cheshire cats, looking glasses and girls named Alice where Medicare and Medicaid reimbursement for medical imaging procedures can plummet nearly 10 percent despite the rising real costs of providing the procedures. Another wrench in the system is disproportionately low payments for some new, cost-saving technologies. Reimbursement for new technologies isn’t necessarily commensurate with the medical costs of the disease being treated. These circumstances create a setting reminiscent of Alice in Wonderland. Just ask any facility that complied with a Centers for Medicare and Medicaid Services (CMS) mandate to register as an independent diagnostic testing facility (IDTF) in order to receive Medicare payments. Centers that complied fell through the looking glass and found they could no longer collect Medicaid payments. And the saga goes on and on.

Outpatient imaging reimbursement takes a hit
The CMS 2002 fee schedule is full of nasty surprises for outpatient providers of medical imaging services. This year’s cuts to outpatient radiology total nearly 10 percent. The formula CMS uses to determine payments depends on two factors, both of which dropped for outpatient radiology. CMS derives a dollar amount by multiplying the relative value unit (RVU) for each code by a conversion factor, which remains constant across codes.

One portion of this year’s cut affects providers of all types of outpatient services, not just radiology. This drop originates with the conversion factor CMS uses to determine payments. The conversion factor formula is driven by the entire market basket, and because last year’s economy was sluggish, the conversion factor dropped. The end result of some complex mathematical calculations is that professional component payments for 2002 will be 5.4 percent less than 2001.

Although the CMS 2002 fee schedule was implemented in February, many outpatient facilities have not yet felt the impact of the cut. That’s because the payor community started to enter the changes in their computers in March (and many did not finish until June). Outpatient imaging centers and radiology practices also tend to run behind on noticing receivables. Cherrill Farnsworth, president and CEO of HeathHelp, a Houston, Texas, company that develops quality assurance programs and utilization management programs for radiology, affirms, “It will be a while before the cuts are felt.”

Please refer to the August 2002 issue for the complete story. For information on article reprints, contact Martin St. Denis