The Reading Room

Medicare x-ray reimbursement cuts on the horizon

by Erin Lane

In December 2015 President Obama signed the Consolidated Appropriations Act of 2016. Included in the 2000-page document is a special rule for diagnostic radiology that incents imaging providers to adopt more advanced x-ray technology by cutting reimbursement to older technology beginning in 2017.

Medicare cuts to imaging’s 'bread and butter'

The new legislation imposes reimbursement cuts to the technical component for x-rays performed on older technology. The reductions apply to both the Medicare Physician Fee Schedule (MPFS) and Hospital Outpatient Prospective Payment System (HOPPS).

Beginning in 2017, claims submitted for x-rays performed on analog equipment will receive a 20% reduction in payment. As most organizations replaced analog equipment, this will likely impact a relatively small number of providers.

But while few providers still use analog x-rays, some organizations replaced these units with computed radiography (CR), defined as cassette-based imaging, before digital radiography was widely available. Beginning in 2018, claims for x-rays performed using CR technology will be reduced by 7%. The cuts will increase to 10% beginning in 2023.

Based on IMV Medical Information Division’s 2015 X-ray Market Report, there are more than 8,000 CR x-rays still in use. We anticipate CMS will create a modifier to ensure that cuts only apply to claims using these older technologies, similar to the XR-29 regulation.

Medicare Reimbursement Cuts to X-ray by Technology
X-ray Technology Year Implemented Reimbursement Reduction
Analog 2017 20%
Computed Radiography 2018 7%
Computed Radiography 2023 10%
Digital Radiography None None

Reimbursement modification to reflect technology evolution is nothing new in imaging

The new payment cuts are consistent with previous attempts from CMS to adjust reimbursement to reflect the significant adoption of digital imaging, and incentivize against older technologies, in mammography. In the calendar year 2015 MPFS rulemaking cycle, Medicare proposed to eliminate the mammography G-codes and pay all mammograms using the CPT codes. This proposed change was in recognition of the fact that the typical mammogram is provided using digital technology.

While Medicare did not finalize the mammography reimbursement modification, the proposal demonstrates their stance on the importance of adopting digital technology.

In the same spirit, Medicare did update reimbursement to reflect changes in imaging technology in the most recent MPFS final rule. For 2016, Medicare raised workstation reimbursement to reflect the adoption of Picture Archiving and Communication System (PACS); they removed a list of supply and equipment items associated with film technology as these items are no longer a typical resource input.

The takeaway: Medicare will likely continue to use financial incentives to promote late adopters of imaging technology to adopt new standards of care.

How Capitol Hill will impact your imaging business

Learn how coverage expansion, value-based payments, hospital-physician bundled payments, episodic bundled payments, and shared savings will impact imaging.