Anthem’s recent decision to no longer pay for outpatient CT and MR exams performed in hospitals didn’t come from nowhere—and, going forward, the move is not likely to be an outlier among private payers’ business stratagems.

The precipitating factors and what they may portend came up for consideration at last week’s annual meeting of RBMA’s New England Chapter in Somerville, Mass.

Pam Kassing, MPA, senior economic advisor for the American College of Radiology, covered the ground as part of a broad overview of Medicare’s proposed rules for 2018 and what they mean for radiology.

Pointing to some peculiarities in Medicare’s fee schedules, Kassing noted the incorporation of “site-neutral” policy in the Physician Fee Schedule (PFS).

“It’s really confusing, because last year it was in the Hospital Outpatient Prospective Payment System (HOPPS) rule, and now it’s in the Physician Fee Schedule rule,” Kassing said. “The only way we can figure out why it’s in there is because Medicare is supposed to create a PFS-like payment system for the use of new sites.”

Kassing recalled how the Medicare Payment Advisory Commission—aka MedPAC, the independent federal body that advises Congress as well as Medicare—said they’d noticed when many physician offices, cardiology offices and imaging centers started getting bought out by hospitals.

“MedPAC thinks the hospitals are chasing the money, or someone is chasing the money, to make sure the hospitals that own these sites are going to get paid at the HOPPS rate,” Kassing said.

So it was that legislation passed mandating any off-campus sites built after Nov. 1, 2015, and located more than 250 yards off the main hospital campus, to be paid under a different fee schedule—one that’s site-neutral.

“You will not get paid more or less by having these new sites,” Kassing said. “Why they didn’t just decide to pay them by the PFS, I don’t know. But now a new fee schedule is to be developed.”

She further noted that the new schedule will apply to existing off-campus facilities that relocate: If you move, you’re considered new. It won’t apply to sites that merely expand their services, although CMS did propose as much last year without seeing the idea through to finalization, Kassing said.

Shrinking dollars, baffling math 

The next key development came earlier this year, Kassing continued, when Medicare determined they were going to pay new off-campus sites at 50 percent of the hospital outpatient rate.

And indeed, that’s what they’re paying this year—but don’t expect it to stand. CMS has now said 50 percent is too high, Kassing recalled, and “they’re probably going to reevaluate, and it’s probably going to be lower.”

In the current proposed rule, for 2018, the agency essentially says it lacks data from hospitals’ off-campus sites that would inform the setting of appropriate percentages off the hospitals’ in-house outpatient rates. So CMS has come up with a formula, called the “relativity adjuster,” and this has led them to set the payments at 25 percent of HOPPS, Kassing explained.

“All the stakeholders in D.C. just went, ‘What?’” she said. “And when we look at the data, we see that they want to pay for the technical component of a CT at $15 and a technical component of an MR at $35.”

Faced with numbers like those, ACR and like-minded stakeholders, including hospitals and large imaging vendors, recently went to high-level officials at CMS and the Office of Management and Budget, Kassing said.

Kassing said the group told the federal officials, in so many words: “No matter how you calculate this thing, there’s no way you should be paying [only] $15 for a CT technical component or $35 for an MR. There’s something wrong with your formula.”

Making the case

The officials were not at all surprised to see the ACR and colleagues, Kassing said. “I think they’ve been visited by a lot of stakeholders who are up in arms about this.”

In comments ACR and the general medical community have submitted to the proposed rule, the gist is that CMS should hold the off-campus site rate to 50 percent of the hospital outpatient rate “until they have some solid data to show that this percentage should be different,” Kassing said.

Many groups would like to see the off-campus site at 65 to 75 percent of the hospital rate. “I’m not sure how they would justify that, but that’s what they would like to see,” Kassing said. “In any case, 25 percent of HOPPS for off-campus imaging sites is unacceptable.”

“First of all, it’s ridiculous what they want to pay for imaging,” she said. “Secondly, we don’t want to see this spread to other private payers who, in turn, want to have lower prices they can steer their patients to. We’ve already seen that take place with Anthem.”

Earlier in the day at RBMA New England, Elisabeth Quam of the CDI Quality Institute and the Imaging for a Cause Foundation had noted that UnitedHealthcare was moving in this direction as well.

“There are already several payers that are on to this idea,” Kassing said. “They already want to steer their services away from hospital outpatient sites and into lower-cost sites. We’re working hard with the hospitals to negotiate on how this could be better going forward. But again, it’s mandated to take place, so it can’t completely go away.”