Medicare Finalizes Cuts to DXA and VFA

On November 1, 2006, The Centers for Medicare & Medicaid Services (CMS) released the final rule which will determine reimbursement for physician services for the next four years. Click here for an abbreviated explanation.   

CMS-1321-FC, Medicare Revisions to Payment Policies, Changes to Practice Expense Methodology under the Physician Fee Schedule (click to view CMS-1321) will dramatically cut reimbursement for DXA and VFA performed in the physician office setting and have a profound impact on the diagnosis and management of patients with osteoporosis.

Combined with the cuts to outpatient imaging procedures enacted under the Deficit Reduction Act, reimbursement for DXA will drop on January 1, 2007 by 40% from the current $139.46 to $82.33 and will plummet to $35.48 when the fee schedule is fully implemented in 2010. This amounts to a 75% cut in DXA reimbursement. In January 2007, reimbursement for VFA will drop from $39.41 to $33.10. When fully implemented in 2010, reimbursement for VFA will be cut by 51% to $19.13.  Click to view PowerPoint slideshow detailing reimbursement cuts for DXA and VFA.

Although no reason was provided, the CPT code for axial DXA will also change from 76075 to 77080 and VFA will change from 76077 to 77082. The SGR (Sustainable Growth Rate) correction will be 5.0% for 2007, not 5.1% as initially projected.

Over the past few months, in an effort to overturn these cuts, the ISCD has taken the following actions:

• Filed two sets of formal comments with CMS in response to CMS rules 1512 and 1321 (click to view ISCD comments to CMS 1512 and here for ISCD comments to CMS 1321);
• Created a survey nearly identical to the one used by the AMA Relative Value Update Committee (RUC), distributed it electronically to a broad representation of physicians in practice in coordination with AACE (Endocrinology), ASBMR, ACR (Rheumatology), TES (Endocrine Society), and NAMS (Menopause Society) and tabulated the results to determine appropriate work RVUs for DXA and VFA. Survey results were included in both sets of ISCD comments to CMS;
• Participated in a Refinement Panel Hearing called by CMS to contest changes in the physician work RVU;
• Called on key members of Congress in Washington;
• Met personally with CMS Administrator Dr. Mark McClellan, his successor Leslie Norwalk, and senior CMS staff;
• Participated in a second meeting with senior CMS staff to upgrade the Practice Expense RVU and discuss flaws in the Refinement Panel process.
  
  

The ISCD is continuing to analyze the final rule, which is 1418 pages in length, and is in discussions with our sister societies to determine the most appropriate plan of action. In the meantime, we felt it was important to provide you with an update on the current status of DXA and VFA reimbursement in the physician office (non-facility) setting.

Background:

It is statutorily mandated that CMS review the Medicare Physician Fee Schedule (MPFS) at five year intervals to determine if services are appropriately valued. The cuts to DXA and VFA result from three factors: (1) significant changes in the methodology used by CMS to calculate the direct and indirect practice expense relative value units (PE RVUs); (2) the application of a provision in the Deficit Reduction Act of 2005 which requires the Medicare payment for the technical component (e.g., equipment, non-physician personnel, supplies, and overhead) of an imaging service to be set at the Hospital Outpatient Department (HOPD) payment rate, if the HOPD rate is lower than the Physician Fee Schedule (PFS) payment rate; and (3) a re-examination of the physician work RVU by the AMA RUC.

Typically, procedures have both a professional and technical component with unique RVUs assigned to each. The total RVU for each procedure is calculated as the sum of physician work RVU + practice expense RVU + malpractice RVU. The total RVU is then multiplied by a conversion factor to determine payment for the designated procedure.

The ISCD, our sister societies, individual members of these societies, and members of Congress implored CMS to revisit the proposed cuts and to restore reimbursement for DXA and VFA to current rates. Specifically, ISCD urged CMS to correct certain faulty inputs used to calculate Practice Expense RVUs, to restore the physician work RVU for DXA and to treat screening procedures differently under the MPFS to insure access to these critical preventive services.

While CMS agreed to correct several errors made in determining the direct Practice Expense RVU, these changes did not add significantly to the new total RVU proposed by CMS on June 21, 2006.  In addition, CMS rejected the ISCD data generated from a survey of 453 physicians which indicated that the physician work component for DXA was sufficiently complex to warrant an RVU of 0.5. CMS upheld the recommendation of the RUC subgroup that felt that DXA interpretation was “more mechanical” and “less intense” adopting the proposed 33% reduction in the physician work RVU. Additionally, while CMS has previously championed the importance of axial DXA testing in the diagnosis and management of osteoporosis in the “Welcome to Medicare Exam,” in the end CMS refused to depart from their newly adopted Practice Expense methodology that caused the largest percentage of the cuts to DXA and VFA. Finally, CMS rejected the argument that critical preventive screening services should be treated differently under the MPFS in order to optimize patient access.

THE CMS ANALYSIS

Technical Component - Practice Expense

CMS makes minor adjustments to the Practice Expense RVU: While CMS reviewed and corrected certain direct inputs for costs related to DXA and VFA, the overall reimbursement remained essentially unchanged from the proposed rule published in the June 21, 2006 Federal Register. CMS made the following adjustments based upon the comments received by ISCD, our sister societies, and individual physicians:

1.  Increased the cost of the DXA machine from pencil beam technology ($41,000) to fan beam technology ($85,000);

2.  Added, on an interim basis, the cost of a phantom

3.  Added back 5 minutes of non-physician labor time in the PE

Utilization rates: CMS did not adopt the ISCD recommendation which was based on a survey of 453 physicians to decrease the utilization rate for DXA to 20% and for VFA to 10%. CMS uses a 50% utilization rate for all equipment to calculate direct costs in the Practice Expense. CMS acknowledged that utilization rates may in fact vary by equipment type, but would not rely on the ISCD clinical society information at this time. They left the door open as to whether in the future they might consider using different utilization rates to reflect actual usage by machine type. This is significant since the new methodology for calculating Practice Expense rewards efficiency (higher utilization rates) and penalizes single disease state imaging procedure such as DXA.CMS indicated that they “are committed to working with all interested parties to define the most accurate utilization and interest rate information for equipment used in the performance of physicians’ services. We do not believe that we have sufficient empirical evidence to justify a change in this final rule, but we will continue to work with the physician community to examine, and potentially revise, these estimates in future rulemaking.”

Professional Component-Physician Work

CMS rejects survey data and decreases physician work RVUs for DXA:As you may recall, part of the cut in reimbursement for DXA resulted from the AMA’s RUC recommendation. The AMA’s RUC recommended a 33% decrease in the physician work RVUs from 0.3 to 0.2 because the workgroup, comprised of six physicians, “believed that the actual work is less intense and more mechanical than the specialty society’s description of the work.” CMS had the results of a survey by the American College of Radiology of 51 radiologists that supported retaining the work RVU at 0.3 and the ISCD clinical society survey that supported increasing the work RVU to 0.5. On September 26th, CMS convened a refinement panel that considered the DXA work RVU because public comment demonstrated significant disagreement with the CMS proposal to decrease the work RVU for DXA.  CMS invited AACE and ACR (Rheumatology) to participate on this panel, and Drs. Andrew Laster and Sanford Baim, representing ACR (Rheumatology), gave a comprehensive presentation, including data from the ISCD clinical society survey of 453 physicians. Dr. Nelson Watts, representing AACE, fully supported Drs. Laster and Baim. The refinement panel rejected the combined survey data from over 500 physicians who actually perform DXA that supported maintaining or increasing the work RVU for DXA. Instead, the refinement panel adopted the RUC recommendation to reduce the work RVU from 0.3 to 0.2 based upon the opinion of the working sub-group of 6 RUC physicians who would not necessarily have experience with the procedure. Inexplicably, CMS adopted this recommendation.

A Glimmer of Hope

There are several bills pending in Congress that would delay or eliminate the Deficit Reduction Act (DRA) cuts. If Congress acts and the DRA cuts are delayed, the reimbursement for DXA in January of 2007 would be reduced to approximately $106.14 rather than the $82.33 figure noted above. ISCD will continue to work on DRA issues when Congress returns after the mid-term elections. We will keep you posted about any legislative developments regarding the DRA that might provide stop-gap relief while the ISCD and other interested parties try to remedy the larger cuts that are slated to take effect over the next four years.

As previously explained, cuts in the reimbursement due to the new PE methodology will be phased in over a four year period. CMS decided to phase in the new reimbursement schedule “to give specialties and practitioners the opportunity to work with us to determine whether any changes in our payment calculation for such services is warranted and we are open to further discussion on this issue.”

The ISCD will continue to work with our sister societies, other interested stakeholders, members of Congress and CMS to restore reimbursement for DXA and VFA to appropriate levels that will ensure quality densitometry testing in the US.

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Page Last Updated: 07/16/2008

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