Radiology Practices Nationwide Brace for Imminent Cash Crisis

A perfect storm is underway, negatively impacting First Quarter 2012 physician reimbursement nationwide. The causes are multiple issues materializing all at once. The components of the storm are:

Temporary Cash Delays Due to:
• Widespread 5010 Payment Delays – This has been confirmed by numerous, independent sources.
• CMS Mandated Payment Delays Due to Implementation of the 2012 Physician Fee Schedule

Permanent Cash Reductions Due to:

• MPPR 25% Reduction to the Professional Component of CT, MRI, and Ultrasound
• Revisions to the Geographic Practice Cost Indices (“GPCI”)
• CPT coding changes for 2012

Pending Payment Reductions:
• Sustainable Growth Rate (“SGR”)

Issue Summary

Temporary Cash Delays

5010 Conversion Causing Widespread Payment Delays
Effective January 1, 2012, all electronically submitted health claims in the USA must be submitted in compliance with the upgraded data transmission rules, named 5010 operating rules. To be compliant, version 5010 must be used to send and receive claims and all other HIPAA-adopted electronic transactions. All of ADVOCATE’s systems and data transfer methods are 100% tested and certified 5010 compliant.

Medical practices nationwide are experiencing significant payment delays (in many cases up to 15%) from payors in processing their 2012 claims submitted in the required 5010 format. Every major claims clearinghouse is reporting payor difficulty processing 5010 claims. In addition, almost half of the governmental payors are experiencing claims processing slowdowns due to 5010. Click here for a partial listing of payers who are currently experiencing delays in paying providers due to issues related to 5010.

Medicare Payments Delayed
CMS announced that it had directed its contractors to hold new, January 2012 claims, for up to 10 business days in order to effectively test and implement the new 2012 Medicare Physician Fee Schedule (“MPFS”). CMS reports that claims were to be released into processing no later than January 18, 2012. Claims with dates of service prior to January 1, 2012, are unaffected. We are now seeing Medicare payments begin to resume. The hold was released last Wednesday, January 18th, and we anticipate Medicare payments will increase over the next several weeks. However, in many areas, the resumption of a normal payment cycle has been interrupted by the 5010 issues described above.

2012 Permanent Payment Reductions

Professional Component Multiple Procedure Payment Reductions (“MPPR”)

Estimated overall practice reduction ranges from 0.5% to 1.0%. For calendar year 2012, CMS is applying a MPPR to the professional component (“PC”) of certain diagnostic imaging services (CT, MRI, ultrasound). The 25% reduction would apply to the less expensive procedure, but would cut across modalities. For example, if a patient receives an MRI of the brain and a CT of the chest on the same day, the reimbursement for the CT of the chest would be decreased by 25%. The procedure with the highest PC and TC payments would be paid in full-the PC payment for each subsequent procedure furnished to the same patient, by the same physician, in the same session, on the same day will be reduced by 25%.

CMS has reported that due to “operational limitations” they will not be able to apply the imaging professional component MPPR to group practices beginning January 1, 2012. Therefore, CMS will not apply the professional component MPPR for imaging services performed by separate physicians in the same group practice for 2012. This decision will affect both office and hospital practices.

Revisions to the Geographic Practice Cost Indices (“GPCI”) Estimated overall practice reduction ranges from 1.0% to 2.0%. CMS assigns separate geographic practice cost indices (“GPCI”) to the work, practice expenses (“PE”), and malpractice cost components of each to more than 7,000 types of physician services. The cause of the current revenue delay is the requirement in the legislation that the relative value units (“RVUs”) used to calculate the 2012 MPFS rates be budget neutral. According to a CMS press release, “To make those changes budget neutral, the conversion factor must be adjusted for 2012.” CMS is currently developing and testing the new 2012 MPFS to implement these modifications. Medicare contractors posted the new rates on their websites on January 11, 2012.

In addition to the delayed Medicare payments, the requirement in the legislation that the RVUs used to calculate the 2012 MPFS rates be budget neutral will equate to income redistribution for radiologists. The change will not raise or lower total Medicare expenditures but it will “redistribute” the money available.

2012 CPT Coding Changes
Estimated overall practice reduction is up to 1%. The CPT coding changes for 2012 again saw significant changes in interventional radiology, as well as changes in nuclear medicine lung imaging. CTA of the abdomen and pelvis will also be a combined code, following the lead of the 2011 major change to CT abdomen and pelvis. All of the CPT changes are effective with January 1, 2012 dates of service.

Sustainable Growth Rate (“SGR”)
Under current law, providers will face steep across-the-board reductions in payment rates based on a formula, the Sustainable Growth Rate (SGR), which was adopted in the Balanced Budget Act of 1997. Without a change in the law from Congress, Medicare payment rates will be reduced by 27.4% for services beginning March 1, 2012. While this cut would obviously be substantial, this will be the eleventh time that the SGR has called for a cut in physician reimbursement. And with the exception of the calendar year 2002, these cuts were always avoided by last minute intercessions by Congress.

ADVOCATE will continue to provide updates as they become available.

Best regards,
Kirk Reinitz, CPA
President & CEO