Most of the discussion of healthcare reform, including my last two postings here, deals with system-level issues — will there be universal coverage? A public health insurance option? A robust program of comparative effectiveness research?
These issues will be fought out in the Congress over the next few months, will shape a reform package that will take effect over several years — and may have significant impacts on how we receive and pay for healthcare in the future.
But while the debate continues, the normal annual process of incremental Medicare policy and payment adjustments continues.
Medicare posted its Notice of Proposed Rule Making (PDF) July 1 for payments to physicians under the Medicare Physicians’ Fee Schedule for calendar year 2010. The NPRM announces CMS’ intent to make minor adjustments to the relaive values of dozens of different physician services.
Many of those adjustments are driven by purely technical considerations: Medicare projects the predicted volume of each service for the coming year, yielding a projected total of Relative Value Units for the entire Medicare program (each distinct service, identified by a CPT code, carries an assigned number of RVUs); that total of RVUs is then divided into the total amount “budgeted” for physicians’ services (current year’s spending updated by a growth factor) to yield the next year’s “base amount” — the dollar value of a single RVU.
From that calculation, the payment amount for each CPT code easily follows. Actual total spending, of course, is not limited by the projected “budget,” but rather follows from the real volume and distribution of services performed.
Before these calculations are made, however, CMS annually reviews the relative value assigned to some identified subset of CPT codes — codes for which there’s reason to believe there’s been a meaningful change in physician time or other inputs (sometimes identified by the AMA, sometimes by CMS), or codes that are central to some policy initiative CMS wants to implement. The impact of those RVU reviews and adjustments can have a meaningful impact on the distribution of Medicare payments to different medical specialties, and the incomes of physicians in those specialties, and can therefore be extremely controversial.
They can also reveal the larger policy goals CMS is pursuing. The PFS NPRM for 2010 contains one such major redistributive proposal — substantial reductions in RVUs, and therefore in Medicare payment, for advanced imaging services. The reductions are produced by a change in the utilization assumption for imaging equipment costing $1 million or more — where in past years CMS amortized the capital cost of such equipment to individual services using the assumption of 50 percent utilization (i.e., that the equipment was being used on average 25 hours/week) over the effective life of the equipment, Medicare now proposes a 90 percent utilization rate for cost calculation purposes — trumping congressional proposals to increase the utilization factor to 75 percent. This seemingly technical and empirically driven adjustment significantly reduces the capital equipment cost component, and consequently the total RVUs and the Medicare payment amount, for each service. It also has the effect, given the zero-sum nature of the distribution of Medicare payments under the PFS, of narrowing the gap between Medicare payment for advanced imaging services and primary care services.
This shift toward primary care is an important component of many reform proposals. The Obama administration has clearly expressed its commitment to increase the number of primary-care doctors; they are needed to provide care for the newly insured under broadened coverage consequent to healthcare reform, and to serve the needs of an aging population. The stimulus package contained $500 million to train and give other financial support to primary care doctors; the various congressional reform proposals all contain similar incentives.
But should better pay and other incentives for primary care come at the expense of advanced (i.e., high technology) imaging service? Don’t these new and undeniably expensive imaging technologies (PET, SPECT, MRI, Echo, etc.) greatly enhance diagnostic capabilities and accuracy? Won’t better diagnostics lead to smarter and more cost-effective treatment decisions, and save money in the long run? What about putting patients first?
Advocates for the imaging technology companies and the affected medical specialties are hard at work making these arguments. In testimony before the Health subcommittee of the House Energy and Commerce committee, Siemens executive Thomas Miller said, “diagnostic imaging technologies support more cost-effective care by enabling earlier, faster, and more accurate diagnosis, eliminating the need for expensive and invasive surgeries and inappropriate therapies, reducing hospital admissions, and, in many cases, avoiding costs of long-term chronic conditions.”
Miller argued that the road to health system transformation runs, not through the imaging industry, but rather “through healthcare information technology and [management of] imaging utilization through physician-driven appropriateness guidelines.”
Imaging advocates have a point, but it would be a good deal stronger and more convincing if it were not for two things:
• Their unwavering opposition to the use of Radiology Benefit Managers (RBMs) as a way of assuring appropriate utilization of imaging services;
• Compelling evidence of over-utilization of imaging services driven by physician self-referral when they own and profit from the use of imaging equipment.
The opposition to RBMs was best summarized by physician representatives of the American College of Radiology in a June 24 briefing on the subject to the House Rural Caucus. According to AuntMinnie.com (reg. req.), “The doctors said that RBMs take decisions out of the hands of physicians and patients, can cause treatment delays, and form barriers to necessary imaging care for patients.”
They also took the occasion to argue that cuts in Medicare imaging payments would have “a devastating effect on the ability of physicians in rural areas to continue to provide imaging care to patients.”
Opposition to RBMs on these grounds mirrors arguments made against Pharmacy Benefit Managers when they first arrived on the scene many years ago. But the experience with PBMs should lay those arguments to rest — they demonstrably provide significant positives in the quality of prescribing behavior (e.g. monitoring for inappropriate drug interactions, improved information for patients, counseling services for chronic disease patients) while expediting prescription filling and delivery (e.g. automatic renewals, telephone reminders, mail-order delivery) and saving money (e.g. identification of generics, discounts for three-month supply delivery, etc.).
RBMs, working for insurance companies including Medicare will similarly be motivated to assure service appropriateness but also assure timely delivery of valuable diagnostics to achieve speedy and accurate diagnostics — goals that the industry and insurers certainly hold in common.
Playing the “hurts rural healthcare” card has a long history in congressional policy debates and has often been a winning strategy on account of rural representatives’ key positions on various health subcommittees. But in this case it is, according to MedPAC, almost wholly bogus. In its June report to Congress, MedPAC addressed a broad range of imaging service frequency and accessibility issues, pointing out that while population density precludes rural physicians from achieving the high utilization rates of urban and suburban areas (making physician-owned imaging centers financially untenable in rural areas) patient access to those services is not compromised because the equipment is readily available in accessible hospitals (which are unaffected by the PFS utilization assumption change). Congress and CMS have an obligation to assure that services can be accessed by rural patients, not that rural physicians can profit from owning imaging equipment.
MedPAC’s most telling finding bears directly on physician ownership of imaging equipment. As summarized by AuntMinnie, MedPAC found that:
“Physicians who own or lease their own imaging equipment in some cases utilize imaging twice as often as physicians who don’t. … MedPAC researchers used 2005 Medicare claims data from eight U.S. metropolitan regions, then grouped that data into 13 episode treatment groups (ETGs) based on the type of condition being treated and its severity. The researchers then compared imaging usage rates among physicians who did not self-refer to those who did (with self-referring physicians defined as those who sent 50 percent or more of their imaging studies to their own practice). Both direct equipment ownership and equipment leasing arrangements were classified as self-referral.”
Here is MedPAC’s tabular presentation of findings for selected ETGs:
This is pretty extreme: utilization rates for these imaging services are doubled when the doctor has a financial incentive to order the test. The MedPAC report also found that treatment episodes with self-referring physicians had higher ratios of actual spending, compared to expected spending based on the average cost of similar episodes in the geographic area. The differences ranged from 5 percent to 104 percent depending on ETG, with a mean difference of 68 percent, according to the report.
Until the imaging industry and physician specialists provide real data to demonstrate that reduced payment for these services will result in real patient access issues and to counter the only possible conclusion an independent mind can draw from these data — that doctors overprescribe imaging services when they profit from the utilization of the equipment — we must chalk up their opposition to RBMs, and to proposed payment reductions for these services, as driven primarily by financial self-interest.
That is not to say that there aren’t legitimate arguments to counter MedPAC’s conclusions and recommendations — but rather that those arguments aren’t being made effectively and the ones being made ring hollow. If quality of care and patient well-being are really at risk, advocates for the imaging industry and societies need to step up their game, make empirically compelling contributions to the debate and find common ground with the advocates of reform. Right now, they are getting beaten badly.