Over the years, many practices added imaging to the list of services they provide on site.
The most common reasons are quicker diagnosing and results, patient convenience, improved access
and additional income. Consequently, for better or worse, imaging services have increased
exponentially. As a result, Medicare has targeted imaging services and continues to reduce
payments made under the physician fee schedule. As a result, you might be subsidizing your
imaging services with your income.
Imaging services more than doubled from 2000 to 2005. During this period, Medicare payments
for imaging services paid under the physician fee schedule increased from $6.6 to $13.7 billion.
The average annual growth rate was 15.7% compared to 9.6% for all other physician services.
Recognizing the efficiencies gained when multiple services are furnished sequentially, (CT scan
of the pelvis and then the abdomen for example), Medicare reduced the technical or practice
expense component of the secondary procedures by 50% on machines costing over $1 million effective
1/1/2007. Similar to multiple surgeries performed, only the primary procedure is paid at 100%.
Medicare is cutting the technical or practice expense component, again, effective 1/1/2010.
Medicare raised its imaging equipment utilization assumption from 50% to 90% and concluded
the more procedures done on a machine, or the more a piece of equipment is used, the lower
the expenses per procedure. The technical or practice expense component of an RVU is about
is 45%. (Many high cost procedures are already subject to statutory payment limits based on
hospital OP rates.) While the reduction in the technical component will negatively impact all
physician owned imaging equipment, it will have the greatest impact on diagnostic testing
facilities and certain specialties that rely heavily on imaging like cardiology and urology.
Medical groups should be doing a profitability analysis on every piece of imaging equipment
they operate. Although the recent cuts will be phased in over the next four years, every
practice needs to know at what point in house imaging procedures will begin to cost the practice
money, (if they don't already). This will determine future business decisions regarding staffing,
supplies, equipment leases or upgrades, use of space, insurance, and possible joint ventures with
other practices or hospitals. A lot of the decline in physician's income can be traced to
unknowingly "subsidizing" loses on imaging equipment. I suggest the analysis be done by an
independent practice consultant to preserve accuracy and objectivity. Too often, politics and
sacred cows influence the outcome of analysis done by staff.
