SGR patch, 2013 edition: What just happened?

2009 03 25 14 14 33 939 Capitol Hill 70

It's become a recurring end-of-year political drama: Congress scrambles to ward off massive cuts to Medicare reimbursement with a temporary patch of the sustainable growth rate (SGR) formula. But this year's SGR theatrics came to a shocking climax: a stab in the back for radiology.

On January 1, both houses of Congress passed what is now called the American Taxpayer Relief Act (ATRA) of 2012, which, as it pertains to healthcare, averts a 27% cut in overall Medicare reimbursement through 2014 that would have been implemented if the SGR had gone into effect. Great news, right?

Not really. Because to pay for this patch -- estimated at $25 billion over 10 years -- lawmakers slashed other pockets of Medicare spending, finding $800 million from advanced imaging (that is, CT and MR) and $300 million from hospital reimbursements for radiation therapy. Both of these cuts begin on January 1, 2014.

Radiology backers believe the SGR compromise is a sign of a legislative process gone awry, in which carefully laid plans for developing healthcare policy are derailed through late-night political brinksmanship. The dysfunctional situation could already be taking its toll on the quality of patient care, they believe.

Raising the rate bar

Congress found its $800 million in cuts to advanced imaging by including in the ATRA a higher equipment utilization rate, raising it from its current 75% to 90%. In essence, this assumes that medical equipment is in operation 90% of the day at a typical imaging site -- an assumption that many in radiology believe is impossible to attain.

Legislators "robbed Peter to pay Paul," according to W. Kenneth Davis Jr., an attorney with Katten Muchin Rosenman.

"It may seem like $800 million [in cuts] is a drop in the bucket when you put it against the total revenue of the diagnostic imaging industry, but what's bothersome is that it's a reflection of where things are going," Davis told "The change in the equipment utilization rate from 75% to 90% is based on suspect evidence at best, and at worst, it's an unabashedly arbitrary cut -- a 'pay-for' for the SGR fix."

The legislation also pushed off the sequester (budget cuts totaling $1.2 trillion, scheduled to go into effect on January 1 as mandated by the Budget Control Act of 2011) for two months; if these cuts go into effect in March, there will be an across-the-board 2% cut to Medicare funding. And finally, it did not address a 2.3% excise tax on medical device manufacturers, which started on January 1.

The ATRA's cuts are in addition to those that went into effect last year, when the U.S. Centers for Medicare and Medicaid Services (CMS) increased the multiple procedure payment reduction (MPPR) rate, implementing a 25% cut in the professional component of imaging studies performed on the same patient on the same day. This MPPR percentage contributed to cuts to imaging and radiation therapy services of more than $1 billion, according to the Medical Imaging and Technology Alliance (MITA).

In September of last year, MITA published an analysis that showed per-beneficiary imaging utilization within Medicare had dropped by more than 5% since 2009, with even greater declines of about 6.5% in advanced imaging services. The group also found that since 2006, per-beneficiary spending on imaging services had fallen by close to 17%, while spending on nonimaging services had grown by 21%.

It's distressing, according to Brian Connell, MITA's director of government relations.

"We're disconcerted [by the legislation]," Connell told "It's unfortunate whenever Congress uses outdated information to make policy decisions. [The ATRA bill] threatens access to technology, which will affect the timeliness and accuracy of patient care."

Midnight lawmaking

Congress' and President Barack Obama's administration's last-minute efforts to avoid the so-called "fiscal cliff" meant that long-negotiated plans for how to pay for another doctor pay fix went by the wayside, according to Cynthia Moran, assistant executive director of the American College of Radiology (ACR).

"What we're seeing is a total failure of normal legislative process," she told "These truncated legislative writing sessions are taking place at midnight on New Year's Eve, with people who are not the normal negotiators for public policy. There were a set of [solutions] for a one-year SGR patch that both House and Senate Republicans and Democrats had agreed to -- and then all of a sudden, the door opened and [Vice President Joe] Biden walked in with CMS staff, and everything that had been agreed to was thrown out the window."

Much of what the ACR had worked on with Congress to refine the 2010 Patient Protection and Affordable Care Act (PPACA) was not considered -- particularly the equipment utilization rate, Moran said.

"Every year [the ACR has] fought to keep the equipment utilization rate down, or have gotten it removed from other bills," she said. "But during this last-minute fiscal cliff negotiation, equipment-use rates proposed in the first year of the Obama administration came up, and no one in the room fought against them."

Purchasing panic

The ATRA's cuts to reimbursement via an increased equipment utilization rate will affect the equipment purchasing market as well, according to Dr. Frank Lexa, from the Wharton School of the University of Pennsylvania. After all, the technical component was developed to defray the high cost of owning an advanced imaging device.

"If you look at why and how people make decisions to buy or upgrade equipment, at the end of the day, they assess whether it's worth buying an MRI or upgrading their CT depending on the numbers on the revenue side of the balance sheet," Lexa told "A higher -- and unrealistic -- utilization rate will affect how people think about this stuff."

Disincentives toward equipment purchasing can negatively affect patient care, MITA's Connell said.

"There have been significant improvements in radiation dose technology, especially with modalities such as CT," he said. "[If centers are using] equipment installed even a few years ago, they're using units that often don't have dose optimization technologies, which affects patients."

Going forward into 2013, it's unclear how many more cuts radiology can sustain, Lexa said.

"How many more hits are we going to take?" Lexa asked. "They just keep coming, and meanwhile, we've got just another stopgap measure in terms of the SGR. The problem is not fixed. Congress is still going to have to come back and cut from somewhere."

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