Recently, CMS released proposed rules governing hospital outpatient facility and provider payments for calendar year (CY) 2020. Unlike previous years, Medicare did not propose major changes specific to imaging payments, but did include a proposal to increase price transparency that affects radiology programs.
To help you understand the potential new payment rates and regulatory updates, we read through more than 2,500 pages and identified four key takeaways below for imaging leaders and radiologists.
1. Medicare seeks to reveal private payer rates for outpatient services, focusing on radiology
By far, the most buzz-worthy proposals center on increasing price transparency, which comes in response to President Trump's executive order directing the HHS Secretary to accomplish this goal.
The agency proposed outpatient price transparency requirements that greatly expand on the current requirement to post chargemaster prices online implemented in January 2019.
The proposals are broken down into two major components:
The first component requires hospitals to post both their chargemaster and all of their payer-specific negotiated charges in a machine-readable format (e.g. an Excel file).
Second, hospitals must post payer-specific rates for 300 "shoppable" services in an online format that's easily accessible and understandable to patients. CMS will define 70 of these services, while hospitals are able to define the other 230. Importantly, 13 of the 70 services proposed by the agency are imaging procedures such as CTs, MRIs, and mammograms (outlined below).
CMS also identified shoppable services from other service lines including evaluation & management codes, lab, and medicine and surgery.
To enforce this rule, Medicare proposed a fine of $300 per day until organizations are in compliance or provide a corrective action plan.
What this means for radiology: While CMS will likely make changes to this proposal, it's clear that the agency seeks to drive greater price transparency by pulling back the curtain on hospital-payer negotiations. Expect to see widespread debate about the pros and cons of this proposal in the coming months.
Regardless of the outcome, imaging leaders should consider moving on price transparency early as a market differentiator and potential to increase revenue capture. That said, it's important to make the distinction between payment rates and individual patient price estimates. Simply posting a fee schedule provides individual patients limited insight into out-of-pocket expenses.
Our research shows that providers are 20% more likely to collect full patient obligations if they provide a price estimate to patients. At the same time, imaging's bad debt as a percent of net patient revenue is over 11%, more than any other service line. Setting payment expectations upfront, asking for payment early, and providing realistic payment options improves the financial health of imaging programs. To learn more about how you can begin this process at your organization and hear about other organizations who've successfully implemented price estimation tools, register for an in-person or virtual Imaging Performance Partnership National Meeting session.
2. Overall hospital payments increase, but clinician payments remain flat
Hospital outpatient payments: CMS proposed a 2.7% increase in payment for hospital outpatient services, an increase from last year's finalized 1.35%.
Clinician payments: CMS proposed a $36.09 conversion factor for 2019, only 5 cents greater than the 2019 conversion factor.
Notably, aggregate reimbursement for most radiology services slightly declined. As detailed in the table below, interventional radiology, independent diagnostic testing facilities (IDTFs), and radiology will see slight payment decreases due to drops in practice expense RVUs.
While the table summarizes aggregate payment changes by specialty, reimbursement impact varies by individual services. For example, ultrasound practice expense inputs for equipment and supply items increased.
What this means for radiology: Aside from nuclear medicine, payment rates will decrease for imaging providers, adding pressure to present financial strains. Similar to recent years, imaging programs must continue to control costs and secure revenue to maintain slim margins.
3. Square feet methodology for MRI, CT cost centers proposed to begin in 2020, will lead to reimbursement reductions
Currently, CMS uses "dollar assignment" and "dollar value" cost allocation methods to determine payment for MRI and CT Ambulatory Payment Classifications (APCs). A third method, the "square feet" methodology, has been excluded for the past six years. The agency removed this method when calculating APC payment, despite widespread use by imaging programs, because it lowers overall reimbursement. However, as planned, CMS will begin using the "square feet" cost allocation method in 2020.
What this means for radiology: If not already, imaging leaders should adopt either the "dollar assignment" or "dollar value" cost allocation methods to avoid significant CT and MRI payment reductions. The chart below shows the large impact excluding "square foot" methodology has on CT and MRI rate calculations.
4. Site-neutral payments expand with clinic visit reductions in 2020 as planned
The site-neutral payments policy mandates that newer off-campus HOPDs receive reimbursement at a site-specific MPFS rate, which is currently set at 40% of the hospital rate. Off-campus HOPDs acquired, opened, or built before November 1, 2015, are considered "excepted sites" and are not subject to this reduced rate.
Last year, CMS expanded the policy by instituting a phased two-year payment cut for code G0463, hospital outpatient clinic visits, across all off-campus HOPDs. This code saw a 30% reimbursement reduction in 2019. Next year, CMS proposed moving forward with the planned additional 30% cut. This will save Medicare an estimated $810 million for 2020 and reduce Medicare patients' payments by $14 each visit.
Sept. 3 webcon: Unpack the MPFS proposed rule
What this means for radiology: Although the site-neutral policy did not play as big of a role in the Medicare proposals as in previous years, the agency continues to view HOPD payments as a source of potential cost savings. The payment reduction for routine clinic visits clearly signals that the agency will continue to push for more cuts in future rulemaking. With this in mind, programs should consider how future cuts to HOPD payments may impact their freestanding growth strategy.
Other notable proposals impacting imaging
Medicare will accept comments on both proposed rules through September and release the final rules in November 2019. We encourage you to submit your thoughts and concerns to CMS. For more general information on the rules, read our colleague's blogs on the HOPD and clinician payment proposed changes.
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