Practice expenses (PEs) account for a majority of the total Medicare reimbursement for radiology services, but calculations used to determine payments are either outdated or don’t account for the specialty’s needs, according to a paper published March 11 in the Journal of the American College of Radiology.
A team led by Guilherme Dabus, MD, from Baptist Health of South Florida and Michael Booker, MD, of Radiology Medical Group in San Diego, CA, assembled some of the factors and equations underlying the drive for radiology reimbursement reform in the U.S. The authors highlighted approaches to radiology PE payments.
“Budget neutrality adjustments in [the Medicare Physician Fee Schedule (MPFS)] are particularly noteworthy,” explained Dabus, Booker, and colleagues. “Payment reductions from budget neutrality have created anomalies throughout the fee schedule.” Radiology is particularly sensitive to PE adjustments, they said.
Various methodologies and calculations that determine reimbursement for medical imaging are complex but generally have revolved around relative value units (RVUs), the team explained.
RVU consists of work RVU that pays for physician service time, technical skill, and judgment; malpractice liability expense; and direct and indirect PE.
Direct PE includes clinical staff labor; disposable medical supplies; and equipment such as PACS, CT, and MRI equipment. Indirect PE includes overhead expenses such as administration labor, rent, coding and billing, energy, and other office expenses.
The Centers for Medicare and Medicaid (CMS) dealt a blow when its 2024 MPFS reduced total RVUs per practitioner across Current Procedural Terminology (CPT) codes in diagnostic radiology and interventional radiology, noted the authors, explaining that these decisions failed to recognize that RVUs include PEs. PEs account for close to 70% of total RVU in radiology, compared with 45% across the MPFS in general, according to the team.
“There are dozens of codes where the total practice expense payment fails to cover the cost of the supplies,” stated the researchers. “For some codes, the total payment fails to cover even one high-cost supply.”
An important issue pertinent to radiology practices is that under the MPFS there is only one CMS PE code for MRI and one for CT, they noted. “The contribution of the type of scanner to the direct PE payment will be the same independent of how expensive the equipment is (e.g., a 3-tesla MRI scanner vs. a 1.5-tesla MRI scanner will have the same direct PE payment).”
In addition, calculation of the indirect PE component is based on an outdated survey.
“PE payments today remain the same regardless of which specialty bills the procedure,” the group explained. Moreover, radiology, which does not bill evaluation and management (E/M) codes, bore the full brunt of conversion factor reductions brought on by a 2021 budget neutrality measure increasing RVUs for office-based E/M codes, according to the group.
“The power to lift budget neutrality adjustments largely resides with the U.S. Congress, since updates will have to be statutory,” the team said.
See radiology-relevant calculations in the full report.