DXA & VFA Reimbursement Issues

On June 21, 2006 the Centers for Medicare & Medicaid Services (CMS) published a notice in the Federal Register proposing revisions to the Medicare Physician Fee Schedule (MPFS) and significant changes to the methodology for calculating practice expense (PE) Relative Value Units (RVU) [link to Federal Regulation CMS-1512-PN].  These changes will have major consequences for patients with low bone mass and the field of bone densitometry.  Specifically, the changes proposed in the Federal Register (CMS-1512-PN) will result in a 71% drop in reimbursement for central DXA (CPT code 76075) when fully implemented over the next four years.  When fully implemented in 2010, the global reimbursement for in-office central DXA will decrease from the current national average of $139.46 to $39.80.  Additionally, VFA (CPT code 76077) reimbursement will decrease by 37% over the same four-year period from the current $39.41 to $24.64. These cuts in reimbursement seem likely to reduce patient access to care in physicians’ offices where these important services are currently being delivered.

CMS is required by law to periodically review the physician fee schedule to determine if particular services are over-, or under-valued.  The revisions proposed in CMS-1512 PN are the result of the most recent review.   Part of this evaluation is an analysis of whether the resources necessary to perform a particular service have changed since the last five-year review.  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 (PE) RVU + malpractice RVU.  The total RVU is then multiplied by a conversion factor (currently $37.895) to determine payment for the designated procedure.

In conducting the review, CMS relies on the AMA’s Specialty Society Relative Value Update Committee (RUC), which makes recommendations to CMS based on standardized surveys conducted by the associated “stake-holder” societies for new or existing CPT procedures.  In this instance, the American College of Radiology submitted its survey for DXA and VFA to the RUC.  The comments submitted to the RUC from the American College of Radiology supported maintaining the physician work RVU for DXA at the current level, an RVU of 0.3.  However, RUC recommended reducing the work RVU to 0.2 explaining that the recommended reduction for the DXA work RVU was “because the workgroup believed that the actual work is less intense and more mechanical than the specialty society’s description of the work.” [Page 98 of Federal Regulation CMS-1512-PN]. CMS agreed with the RUC recommendation, thus decreasing the work component by 1/3rd effective in 2007.

Moreover, CMS used a new methodology during this 5-year review to calculate the practice expense (PE) RVU. Using this new methodology, the DXA PE RVU is slated to be cut by 79% incrementally over the next four years from 3.1 to 0.61.  Additionally, the PE for VFA would decline 48% from 0.81 to 0.42 over the same period.  Practice expense is calculated from direct and indirect costs such as equipment purchase and maintenance cost, utilization time, office rent, etc. 

It is important to recognize that the proposed reimbursement reduction described above would be in addition to the imaging cuts enacted in the Deficit Reduction Act of 2005 (DRA) which are slated to take effect in January 2007.  The DRA cuts would decrease the non-hospital bone density technical component (now $123.92) to bring it in line with payments to hospital facilities (now $72.70).  At this time, it is not entirely clear what the DXA and VFA reimbursement will be after institution of both the DRA cuts and CMS physician work and PE RVU reductions.

The ISCD Board of Directors met in Hartford, CT, July 14-15 and developed a plan to respond to the CMS proposal.  Drs. Andrew Laster and Sanford Baim presented an analysis of the CMS proposal and its potential impact on central DXA and VFA.   ISCD will submit formal comments to CMS by the August 21, 2006 deadline.  Our comments will focus on potential flaws in calculating new work and practice expense RVUs and the effect this will have on access to bone density testing.  In addition, the ISCD is taking a leadership role in collaborating with other societies having an interest in bone density assessment and osteoporosis prevention/treatment, thereby enhancing other societies’ ability to respond to these proposed changes.  A more detailed analysis of the CMS proposal, ongoing developments in this regard, and a copy of the ISCD response when finalized, will be posted on this Web site.

Physician Work and Direct Practice Expense Survey
August 2006
ISCD and other specialty society members were invited to participate in the survey to assist in crafting ISCD's formal response to CMS.   Invitations to participate in the survey were sent via e-mail.

Page Last Updated: 12/11/2010

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