Over the past seven years, molecular imaging and nuclear medicine have moved beyond the academic environment and into the community setting. The growth has resulted in a variety of services being offered by several medical subspecialties. The increased utilization has also attracted the notice of the U.S. Centers for Medicare and Medicaid Services (CMS).
In the August 8, 2005, Federal Register (Vol. 70:151, pp. 92-94), the CMS proposed a rule to prohibit physician self-referral for nuclear medicine services and supplies with which the physicians have a financial relationship. The proposed rule effectively extends long-standing Stark prohibitions to diagnostic and therapeutic nuclear medicine services.
"In the January 4, 2001, physician self-referral Phase I final rule (66FR 856), we defined 'radiology and certain other imaging services' and 'radiation therapy services and supplies' at § 411.351," the CMS wrote. "We did not include nuclear medicine services in either definition because, at that time, we believed that diagnostic nuclear medicine services were not commonly considered to be radiology services and that therapeutic nuclear medicine services were not commonly considered to be radiation therapy services."
The past four years have witnessed a change of heart at CMS. According to the proposed rule, the agency believes that "nuclear medicine services (both diagnostic and therapeutic services and supplies) pose the same risk of abuse that ... Congress intended to eliminate for other types of radiology, imaging, and radiation therapy services and supplies."
"This change certainly was not unexpected," wrote healthcare attorney Ken Davis in an e-mail to AuntMinnie.com. Davis, a partner in the law firm Katten Muchin Rosenman in Chicago, noted that CMS had listed it in its rule-making agenda for the last two years.
The challenge, according to Davis, will be dealing with PET and other nuclear medicine businesses in which referring physicians have an ownership interest.
Existing businesses aren't the only ones that will be affected by the proposed rule. Outpatient nuclear medicine facilities in the planning and development stage may see a halt to their activities until CMS issues a final rule.
"Unless CMS can be persuaded to not go through with the rule change, the impact on planned facilities with referring physician ownership is pretty clear: their development will likely be terminated or at least halted until a new, Stark-compliant structure can be put in place," Davis wrote.
Between a rock and a hard place
For nuclear medicine facilities currently in operation, the language of the proposed rule raises more questions than answers.
"What's less clear is the impact on facilities that are currently operating," Davis wrote. "On the one hand, in a somewhat unusual move, CMS said '[w]e are soliciting comments as to whether, or how, to minimize the impact on physicians who are currently parties to arrangements that involve nuclear medicine services and supplies (that is, by specifying a delayed effective date or by grandfathering certain arrangements).' Delayed effective dates and grandfathering are relatively uncommon for CMS.
"They seem to be willing to consider such steps here because they 'are mindful that [CMS'] previous guidance, particularly that provided in the Phase I final rule, may have encouraged physician investment in nuclear medicine equipment and ventures (including PET scanners),'" he wrote.
"On the other hand, in its regulatory impact analysis, CMS states that '[even] if we assume that a substantial number of physicians have ownership or investment interests in these types of entities, we believe that, in general, the economic impact on these physicians would not necessarily be substantial.' In light of this statement, I query what type of impact-minimizing steps CMS is going to consider," Davis stated.
What is clear from the proposed rule is that the in-office ancillary services exception to Stark will be available for nuclear medicine services, as long as the provider can satisfy its requirements, according to Davis. However, he observed that although some existing ventures may already be compliant with Stark laws, many others could require restructuring involving ownership divestiture.
"Owner/operators of PET and other nuclear medicine facilities that involve referring physician ownership need to be evaluating what sort of restructuring alternatives may be available," Davis wrote. "All the sorts of ownership structures that are available for entities providing items and services that are already designated health services should still work."
"Some alternatives may be obvious, and the parties can start working on them immediately. However, it may also make sense to take a 'wait and see' attitude until CMS gives guidance on how it plans to minimize the impact of this rule change," he stated.
Subspecialty reaction
"The designated health services, or DHS, was really designed to stop people from setting up venture capital deals and then making a lot of money off of inappropriate imaging; and nobody in the cardiology community is really in favor of that sort of thing happening," said Dr. Kim Williams, a member of the American College of Radiology and board certified in nuclear medicine, cardiology, nuclear cardiology, and internal medicine.
Williams is also a professor of medicine and radiology and director of nuclear cardiology at the University of Chicago in Illinois and president of the American Society of Nuclear Cardiology. He shared his thoughts on the proposed rule with AuntMinnie.com earlier this week.
"There are two sources of nervousness in the cardiac community about the changes," he said. "Number one, you now have only one thin way as a provision that allows a practitioner to provide nuclear medicine services, especially nuclear cardiology, to their patients, and that's the in-office ancillary services exception."
"Does that really matter?" he asked. "Well, if nobody tries to change the designated health services then, no, it doesn't matter." However, Williams said, if CMS seeks to curtail the ability of physicians to provide nuclear medicine services in their office, that would be a problem.
"If someone says that's our new target (in-office ancillary services) because we think that there's a lot of nuclear cardiology going on in offices that shouldn't be done, then that is a problem. Because they're basically going to shift to more expensive, invasive-type of care or screen less people, which will allow more people to die of heart disease. Either of those is unacceptable," he said.
"The other thing that makes us uncomfortable about the proposed rule is that it sounds like all of the talking points accuse the practitioners of criminal activity instead of doing imaging with the purpose of taking care of patients in an optimum fashion. The language (having to do with imaging utilization) is unfortunate.
"For example, in nuclear cardiology it used to be that we'd get a scan on an occasional patient. You can't actually optimally manage a patient with coronary disease without knowing exactly what the impact of the coronary disease is on the muscle. And there's only one way to get that. You can't get that from a cath, you can't get that from an echo, you can only get that from nuclear cardiology. So this type of imaging has grown, and should have grown -- perhaps even faster," Williams said.
Market menace?
Although short-term orders for some nuclear medicine equipment may be put on hold for the next few months, the overall impact of the proposed rule on nuclear medicine services should be minimal, according to Marvin Burns, president of market research firm Bio-Tech Systems in Las Vegas.
"There will continue to be a market for the small cardiology-dedicated gamma cameras," Burns told AuntMinnie.com. "You can justify buying one of them if you can do five or six procedures per day. But that's not a trivial amount of procedures; you'll have to have a fairly good-size practice to do that sort of volume," he said.
Sales of larger equipment, such as SPECT, SPECT/CT, PET, and PET/CT may see a very slight downturn as those nuclear medicine sites that are classified as designated health services work out ownership restructuring issues. But the impact on these modalities should be minimal, Burns said.
"For example, the SPECT market is approximately 70% oriented toward cardiology procedures. For the physician practices out there that have the patient volume and the trained personnel to support this equipment, they'll continue to buy it," he said.
The proposed rule is open for comment until September 30, and a final rule will be published by CMS later this year. If you wish to send comments to CMS (Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, MD 21244-1850), please include the caption "Nuclear Medicine Services" at the beginning of your comments.
By Jonathan S. Batchelor
AuntMinnie.com staff writer
August 31, 2005
Related Reading
CMS sets final date for HIPAA TCS compliance, August 5, 2005
CMS to limit nuclear medicine self-referral, August 2, 2005
Turf sharing: Rads and cards in joint venture imaging, July 28, 2005
ACR questions proposed Medicare imaging pay cuts, July 27, 2005
Medicare's condition in 2005: critical, June 15, 2005
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