Proposed Medicare change would affect diagnostic testing

August 1, 2008

Another Medicare physicians' pay cut, this one an estimated 5.4%, is in the offing for 2009 as well as rule changes affecting the ability of urologists to provide diagnostic tests for their patients without running afoul of federal physician self-referral and anti-markup prohibitions.

All of this and more was contained in Medicare Physician Fee Schedule regulations proposed June 30 by the Centers for Medicare & Medicaid Services, presented little more than a week before the Senate voted on July 9 to rescind the 10.6% cut for 2008 that was slated to take effect July 1. The legislation, approved by the House of Representatives June 24, delays this year's cut for 18 months, financing it by reducing payments under the Medicare Advantage program. While President Bush warned he would veto any cuts to Medicare Advantage, overwhelming House and Senate votes in favor of the bill indicated sufficient support to override such a veto.

This action sets the stage for expected new discussions next year within Congress and the new administration regarding the decade-old Medicare fee schedule formula that requires payment cuts to physicians whenever the growth rate in Medicare costs climbs above the growth in the gross domestic product. Physicians' groups have argued that the formula is unfair, outdated, and must be reformed.

CMS is proposing to require that physicians and non-physician practitioner organizations who furnish diagnostic testing services meet most of the quality and performance standards required for independent diagnostic testing facilities (IDTFs). They would be required to enroll as suppliers of these services and meet applicable federal and state licensure, health, and safety requirements that apply to IDTFs.

In its regulation, CMS said it had received complaints that imaging service standards were not applied consistently for all imaging centers, and that two distinct compliance and regulatory standards would result.

The standards would take effect Jan. 1, 2009, for newly enrolling suppliers, although existing suppliers would have until Sept. 30, 2009, to come into compliance. CMS is specifically soliciting comments on whether to limit the enrollment requirement to less than the full range of diagnostic testing services and, if so, what criteria should be used. Examples of possible limitations given by CMS include applying only to procedures that generally involve more costly testing and equipment; and applying only to imaging services or to only advanced imaging services, such as diagnostic magnetic resonance imaging, computed tomography, and nuclear medicine.

The proposal also would require that entities furnishing mobile diagnostic services must enroll in Medicare and bill directly for the services they provide, regardless of where they are furnished.

"It is essential to our program integrity and quality improvement efforts that an entity furnishing mobile diagnostic testing services comply with the performance standards of IDTFs and bill the Medicare program directly for the services provided to Medicare beneficiaries," CMS explained on the Physician Center page of its web site.