The Reading Room

What Medicare's 2018 payment proposals would mean for radiology

by Lea Halim, Ty Aderhold, and Erin Lane

Last month, CMS released proposed rules governing hospital outpatient facility and provider payments for calendar year 2018. The rules cover payment updates, coding changes, and details for Medicare policies regarding clinical decision support and site-neutral payments—all of which directly impact imaging programs.

Our team read through the more than 1,400 pages of proposed rules and identified six key takeaways for imaging leaders and radiologists.

Summary of 2018 proposed regulatory updates for radiology

1. Hospital payments would rise, clinician payments would be flat, and Independent Diagnostic Testing Facilities would fall

Hospital Outpatient Payments: CMS is proposing a 1.75% increase in payment for hospital outpatient services, which is up slightly from the 1.65% increase hospitals saw in 2017.

The agency is also calling for a new imaging APC: Level 5 Imaging without Contrast. If finalized, services included in the current Level 4 Imaging without Contrast APC would be split into two different codes: the current Level 4 (which would include high-frequency, low-cost services) and a newly created Level 5 (which would include low-frequency, high-cost services).

Clinician Payments: CMS is setting the proposed 2018 conversion factor at $35.99, only about 11 cents greater than the 2017 conversion factor.

CMS estimates that in aggregate, diagnostic and intervention radiology would see a 1% reduction and independent diagnostic testing facilities a 6% reduction in payment in 2018. This steep decline would be due to practice expense (PE) RVU changes for IDTF services.

2. CMS proposes to cut reimbursement in half for services impacted by site-neutral payments

As a brief reminder, CMS is attempting to reduce the payment discrepancy between services performed at hospital outpatient departments (HOPDs) and provider-based sites. The number of hospital-owned practices has significantly increased over the past decade, and many sites transitioned billing to the higher hospital rate. This led to a significant jump in Medicare payment for certain services. To control these growing costs, CMS has eliminated the ability of off-campus HOPDs opened or acquired after Nov. 1, 2015, to bill on the higher rate via so-called "site-neutral payments."

CMS currently pays impacted HOPDs based on a non-facility Medicare Physician Fee Schedule (MPFS) rate, which is set at 50% of the hospital rate. Last year, CMS said that the 50% rate may be too high, as the agency found that provider-based rates were about 45% of hospital rates. Though CMS has not conducted additional analysis, it is proposing a further reduction of reimbursement down to 25% of the hospital outpatient rate.

While the 25% would represent a significant payment reduction for impacted HOPDs, it appears the agency may ultimately seek a less dramatic cut in the final rule, depending on stakeholder feedback.

3. CMS proposes delaying the imaging clinical decision support (CDS) deadline but continues to implement key program components

CMS is proposing to move the provider deadline for the Appropriate Use Criteria (AUC) Program-—also known as CDS—from Jan. 1, 2018 to Jan. 1, 2019, with the possibility of a voluntary reporting period beginning in July 2018. The program requires ordering providers consult CDS when ordering advanced imaging exams; furnishing providers must document that consultation for Medicare reimbursement.

The agency has proposed to make 2019 an "educational and operations testing period," meaning that financial penalties would not hit until the second year of the program. In other words, providers would be required to consult CDS and document usage, but Medicare would reimburse claims regardless of proper documentation in 2019.

CMS also released the list of approved CDS mechanisms, also called vendors, and is clarifying the claims-based reporting process. For a more comprehensive review of the latest CDS updates and what they mean for your program, read our latest blog post.

4. Agency maintains "Multiple Services, One Payment" approach for outpatient services

CMS continues to demonstrate its commitment to shifting outpatient reimbursement toward a bundled approach that covers related services in a single payment to encourage efficiency and cost reduction.

CMS proposes to continue to expand conditional packaging. Rather than paying separately for low-cost ancillaries, this policy groups payment of certain supportive services with a higher primary service. However, if the ancillary service is provided alone, CMS will still reimburse for that service.

CMS is proposing to conditionally package payment for low-cost drug administration services. This would be the first year drug administration services are included in the packaging policy.

CMS is not planning to expand the list of Comprehensive-APCs (C-APCs) at this time. C-APCs are aggregate payments for typically high-cost, device-related outpatient procedures. Akin to an outpatient ""mini-DRG"," providers now receive one fixed payment for the primary procedure and all related ancillary and secondary services. There are currently 62 C-APCs.

5. Reimbursement penalties for CR X-Ray exams would begin in 2018

To encourage adoption of digital x-ray technology, CMS would reduce reimbursement for x-rays performed on computed radiology equipment. Beginning in 2018, services performed on CR x-rays would see a 7% cut to technical component payments until 2022, when the penalty increases to 10%.

As a reminder, a 20% reimbursement penalty to analog x-rays began Jan. 1, 2017.

6. No proposed payment cuts for mammography—but billing codes would be updated

In the 2017 MPFS proposed rule, the Relative Value Scale Updated Committee (RUC) recommended halving the technical component of mammography RVUs—a change that would have resulted a 50% cut in mammography payment. But CMS did not accept this suggestion in the 2017 final rule, stating that the reimbursement cuts needed further review. CMS in the 2018 proposed rule again ruled against RUC recommendations and said it does not plan to move forward with the mammography reimbursement cuts.

However, CMS is proposing to update billing to reflect adoption of digital mammography. In 2017, CMS adopted new CPT codes for mammography and DBT that bundled computer aided detection (CAD) with diagnostic and screening mammograms. However for the past year, CMS has required the continued use of their G Codes, due to a lack of processing infrastructure—with the expectation of using CPT codes come 2018. Though the latest proposed rule does not specifically discus digital mammography reimbursement, Addendum B of the rule has included the new CPT codes (rather than the G-codes), suggesting CMS is ready to upgrade to CPT codes.

Other notable updates

  • Patient-physician relationship codes: CMS is seeking comments on its proposal to implement patient relationship categories and codes in 2018. This would allow CMS to attribute patients, services, and resources to providers, as required under MACRA. CMS notes that while relationship codes are required under MACRA, the agency does not need these codes to properly measure provider performance for the program.

    Of the five proposed categories, the "Episodic/Focused" relationship category pertains to time-limited treatment given by specialists such interventional radiologists, while "Only as ordered by another clinician" pertains to clinicians furnishing exams ordered by other physicians, such as diagnostic radiologists. CMS is proposing to allow voluntary reporting of patient-physician relationship codes using Level II HCPCS modifiers.

  • PACS workstation: CMS is seeking comments on expanding professional PACS workstation practice expenses to CPT codes related to vascular ultrasounds.

  • Price transparency website: As per the 21st Century Cures Act, CMS by 2018 must have a publicly available website that patients may use to search for estimated Medicare costs at hospital outpatient facilities and ambulatory surgery centers. The agency will release more details on the website later this year.

CMS is accepting comments through Sept. 11, 2017. The agency will respond to comments in their final rules, which will be released by Nov. 1, 2017 and will take effect Jan. 1, 2018. For more information on how CMS' proposals will impact those beyond radiology, read our colleagues' blogs for hospitals and providers.

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