Navigating New Payment Models: A Survival Guide

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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