Navigating New Payment Models: A Survival Guide

The winds of change in radiology have been forecasted for several years. High healthcare costs in the U.S. have brought greater scrutiny to imaging, and reform efforts have been designed to stimulate new payment models that promote accountable care. Now, as these models become reality and begin spreading across the nation, it is time for radiology to act to maintain success and autonomy.

The message was delivered loud and clear at the 2013 annual meeting of the Radiological Society of North America (RSNA) in Chicago. From the opening address by RSNA President Sarah S. Donaldson, MD, of Stanford University School of Medicine in Stanford, Calif., much of the talk at the conference focused on increasing value over volume, and navigating a new patient-centered reality.

“These are extraordinary times, unsettling times, because we are working in an ever-more stressful environment, one that challenges us to change, and change is always difficult,” Donaldson said.

Cuts, cuts and more cuts

In response to healthcare costs that approach 18 percent of GDP, policy makers in the U.S. have targeted radiology with the blunt instrument of reimbursement cuts. Since 2005, there have been approximately a dozen major cuts of various forms, from bundled codes to multiple procedure payment reductions.

At AHRA 2013 in Minneapolis, Ezequiel Silva III, MD, of the University of Texas Health Science Center at San Antonio, spoke of a “triple threat” of changing fee schedules—involving the inpatient prospective payment schedule (IPPS), the hospital outpatient prospective payment schedule (HOPPS) and the Medicare Physician Fee Schedule (MPFS)—that aims to continue reducing charges in the coming years.

IPPS sets payment for the operating costs of inpatient hospital stays under Medicare Part A based on prospectively set rates. Within this system, cases are categorized into diagnosis-related groups (DRGs) with payment rates adjusted by the resources used, which the hospitals report.

And that’s the rub. According to Silva, the quality of reporting has been terrible, with only 4 percent of providers accurately capturing the appropriate cost data for CT and MR. This is largely due to the fact that hospitals treat scanners as overhead instead of radiology specific equipment.

“It’s staggering. The data are just not there,” said Silva. He added that because of the flawed data, current IPPS proposals would reimburse for a CT of the brain roughly the same as a skull x-ray.

Code bundling of multiple studies often reported together under HOPPS is also eroding payments. For example, a CT scan of the abdomen and pelvis, which pre-2011 paid $418 without contrast and $697 with contrast, fell to $193 and $300 for noncontrast and contrast scans, respectively, after being bundled.

Silva noted that hospital payments are now affecting physician office payments. Because the Deficit Reduction Act of 2005 caps physician office payment at the lower of the HOPPS and MPFS amount, HOPPS payment is determining office payment, creating a “race to the bottom.”

Continued bundling, changes to the utilization rate and the like will probably continue, as they are easy ways for the government to deal with payments they are making. Another option, though, is to move to more coordinated care with bundled payments and leave it to providers to deal with splitting the money.

ACOs on the rise

Accountable care organization (ACOs) are designed to reduce costs while maintaining high-quality care through coordination of Medicare services. A system of shared savings is used as an incentive. At the end of a predetermined time, any savings are divided among those within the ACO, though how these payments are structured is not predetermined and can vary from organization to organization.

Medicare announced 32 ACOs in December 2011, and within a year, more than 250 had been established, providing care for as many as 4 million beneficiaries. That number is now approaching 500, half of which are Medicare-sponsored, and management consulting firm Oliver Wyman has pegged the number of ACO-covered Americans at 25 to 31 million.

Payment structures within ACOs run along a spectrum from those still utilizing traditional fee-for-service to full capitation models, explains Andrew J. Del Gaizo, MD, of Wake Forest School of Medicine and Radiology Integrated Care committee member of the American College of Radiology (ACR) Commission on Economics. In the fee-for-service models, payments continue similarly to the current system, though a portion of funding is withheld and distributed only if certain metrics are met. Capitation models use per member, per month payments, and the ACO benefits if its patient population remains healthy and uses fewer resources. In between these extremes, a variety of hybrid models exist that make bundled payments in some other fashion, such as paying per patient visit or by diagnosis.

The further toward a full capitation model an ACO moves, the higher the financial risk, says Del Gaizo, because in those models, unhealthy patients will be unprofitable. However, this model offers the maximum potential reward compared with ACOs that still mix in fee-for-service components.

That’s the big picture view, but within the ACO, payments to radiology could vary from the model used by the ACO as a whole.

“The assumption is you’ll be making less per study, with the goal of having a shared savings payment at the end that compensates for that difference or, ideally, allows you to come out on top,” says Del Gaizo.

The key point to remember is that none of the payment structures are set in stone for ACOs that are still forming. How the organization divides the shared savings or budget among its members is up for negotiation.

“The most important thing is to be involved and know at the local level what your ACO is going to require to help save money and improve quality care,” says Del Gaizo.

Amid the growth of ACOs, some in the radiology community have expressed concerns that their autonomy and revenue streams will be threatened. One unintended consequence of shifting payment models will be increased pressures for hospital employment, according to Lawrence R. Muroff, MD, FACR, clinical professor of radiology, University of South Florida College of Medicine and University of Florida College of Medicine, and board member for ACR’s Radiology Leadership Institute. Radiologists will feel this pressure differently than primary care physicians as the former can join multiple ACOs, while the latter cannot. Still, many organizations may find the easiest way to split bundled payments is if physicians are employed and bonuses can be provided if money is left over after salaries are paid.

“One of the biggest challenges for radiologists who’d like to maintain their current status as independent contractors is to figure out a fair and equitable way to determine what their share of the bundled dollar should be,” says Muroff.

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Get to the table, and make the most of it

To get their fair share, it is critical for radiologists to be at the negotiating table when payment structures are set by their ACO. But showing up is only half the battle.

“It’s all well and good to tell people to get to the table, but it’s not sufficient,” says Muroff. Radiologists must come equipped with the data that allows them to speak with authority once they’re at the table. “It’s really a two-step process.” 

To that end, ACR established the Harvey L. Neiman Health Policy Institute (HPI) to study the value and role of radiology in a shifting payment landscape. Leveraging vast amounts of Medicare data, HPI research can help radiologists when negotiating imaging’s share of payments from ACOs and also pinpoint areas where the specialty can provide added value and bolster savings.

A June 2013 HPI report provided an example of the type of information useful to radiologists by looking at the use of imaging services in specific episodes of acute ischemic stroke. By examining the corresponding DRG data for these strokes, HPI revealed a large amount of variability in the share of imaging costs in these episodes (see chart, next page). A small number of extremely expensive encounters is shifting the average cost of stroke care upward, closer to the 75th percentile than the median.

HPI has created the Inpatient Imaging Information (I3) App to allow anyone to conduct his or her own analysis of DRG data to get a better understanding of the average cost of imaging services for specific inpatient episodes. The I3 App is accessible through the HPI page on

Once imaging specialists are armed with this spending data, they can benchmark their own services and better establish their value in a shared-savings model. The information also can also be used to identify outlying providers to follow the example of those offering exceptional care at below average spending levels.

From volume to value

Accountable care requires physicians to prove themselves. If they aren’t making significant contributions to cost-efficient and timely care of the population an ACO is responsible for, then their share of a bundled payment or shared savings will be dramatically reduced.

The knee jerk reaction to the reimbursement cuts thrown at imaging in the last eight years is to increase productivity. PACS, voice recognition and a host of other informatics advances have let radiologists hunker down in the reading room to focus on efficiency of interpretation. The tradeoff is that this decreases visibility and perceived relevance at a time when radiology needs to tout its ability to provide patient-centered care. Sitting in a dark room is not the long-term solution, says Bibb Allen, Jr., MD, FACR, of Trinity Medical Center in Birmingham, Ala., and vice chair of the ACR Board of Chancellors.

“[Radiologists] are going to have to provide value beyond just image interpretation,” he says.

This cultural change has been dubbed Imaging 3.0 by the ACR. Imaging 3.0 is both a call to action for radiologists to take a leadership role in healthcare and also a collection of tools and initiatives that embody appropriateness, quality, safety, efficiency and satisfaction.

Among the ways radiologists are supported by Imaging 3.0 is ACR’s Incidental Findings Committee, which is working on providing guidance at the point of care so that radiologists interpreting a scan with, for example, an incidental adrenal nodule or incidental liver nodule will be prepared to proceed in the most appropriate manner. Natural language software could assist by reading the report and automatically asking if the radiologist would like to see standardized recommendations from the committee.

Other programs under the Imaging 3.0 umbrella include:

  • Image Wisely
  • Imaging Gently
  • Choosing Wisely
  • ACR Select
  • RSNA Image Share
  • National Dose Index Registry

“Frankly, [interpretation] is one of the easier things to do,” says Allen. “We’re trained to do it. We know how to do it from home, the hospital or halfway around the world. But if that’s the only thing the system values, it will just become a commodity, and that’s what we’re trying to avoid.”

The spirit of Imaging 3.0 may even have made it to Congress, as a draft policy to replace the sustainable growth rate formula includes a provision requiring ordering physicians to consult appropriateness criteria for advanced imaging services provided to Medicare patients. The proposal from a joint Senate Finance and House Ways and Means Committee would withhold payment for exams if the criteria were not consulted. Outlying providers with inconsistent ordering patterns also would be required to receive prior authorization under the proposed legislation.

Some of the details of this requirement would be left to the Secretary of the Department of Health and Human Services. Under the policy draft, the secretary would have to specify the appropriateness criteria to be used and also identify the methods referring physicians would use to consult this criteria, such as clinical decision support tools.

Allen believes that these tools will trigger more conversation between referring physicians and radiologists that will ultimately reduce unnecessary imaging.

“Radiology has evolved so, so fast that it’s probably unreasonable to expect primary care physicians to figure out all the nuances of what radiologists are doing and what the best imaging studies for their patients are,” says Allen. “But this will give them some triggers to say ‘Maybe I need to talk to the radiologist about that.’”

Ultimately, what’s good for patients also will be good for radiologists. By leveraging the tools of Imaging 3.0, radiologists will be able to demonstrate value to the system and this should allow them to maintain autonomy. Those that want to remain their own bosses would have that opportunity, and if they don’t want to throw in the towel and go the route of employment, they won’t have to.

“For the practices that want to remain independent, we [ACR leadership] want to give them the tools to help them succeed no matter what comes down the pike,” says Allen.

Thinking Outside the Viewbox

It’s assumed that radiologists will provide a good interpretation. Simply churning out reads offers no added value. While there are no RVU measurements for consulting, going to conferences or serving on committees, noninterpretive services truly offer a way to boost value, says Andrew J. Del Gaizo, MD, of Wake Forest School of Medicine.

Del Gaizo provided a number of examples of such noninterpretive services in a presentation at the 2013 annual meeting of RSNA, including:

  • Managing the number of studies performed—Imaging specialists can offer better patient care by serving as gatekeepers to reduce the number of repeat or unindicated exams. Within a shared savings model, this could have a positive effect on bonus payments.
  • Managing the appropriateness of studies ordered—Imaging specialists also can help ensure that the studies that are performed meet standards such as the ACR Appropriateness Criteria. This can be accomplished by encouraging use of computer order entry with decision support software within an ACO.
  • Quality and safety metrics—While there are no agreed upon nationwide quality and safety metrics for radiology pertaining to ACOs, radiologists can help create their own quality and safety measures to serve as benchmarks in a local arrangement. This can include radiation dose management, MRI safety programs and technological staff accreditation.
  • Patient management—Interactions with patients are limited for radiologists compared with primary care physicians in an ACO, though mammography and interventional procedures are two exceptions. For mammography, centralized scheduling can help coordinate screening or follow up exams and help meet screening metrics. Improvement in referral patterns for interventional procedures can reduce complications and length of stay, worth significant value in an ACO.
  • IT leadership—Radiology can use its expertise in health IT to improve systems across an entire ACO. Implementation of vendor neutral archives and regional image access can reduce repeat exams and improve care coordination.