Medical Device Daily Washington Editor

BALTIMORE – The Centers for Medicare & Medicaid Services (CMS; Baltimore) has rolled out a bundle of new rules for various prospective payment categories in 2006, and the August 8 publication of rules for ambulatory payment classifications (APCs) have generated as much anxiety as those for inpatient procedures as the Wednesday/ Thursday advisory committee meeting demonstrated.

While the APC advisory committee's votes are not prescriptive, such committees are often the last chance that stakeholders have in shaping CMS policy. However, the outcome of the first day demonstrated that the task of persuading an advisory committee to recommend a change at CMS is itself no easy task. The fact that the rules consume more than 1,000 printed pages suggests that stakeholders have their work cut out for them just to find the devils of concern in the details.

Herb Kuhn, director of the Center for Medicare Management at CMS, noted Wednesday that the rules are “new steps to make payment more accurate and promote better quality,” partly by improving reporting. He also noted that he saw “significant growth [in outpatient payments to hospitals] in volume and intensity, and that concerns us.” Kuhn asked for “thoughtful comments from the public at large, including stakeholders.”

Matthew Freedman, MD, a professor of radiation oncology at Georgetown University Hospital (Washington), spoke on behalf of Riverain Medical (Miamisburg, Ohio), which petitioned CMS to break out computer-assisted diagnosis (CAD) from chest X-rays in the hospital outpatient prospective payment system (HOPPS).

The APC code in question bundles computer-aided detection of lung abnormalities with X-ray services. The CMS document states that the agency is “proposing to accept the APC advisory committee's recommendation to maintain the packaged status of these two services . . . because of the close relationship of chest X-ray CAD to chest X-ray services and its projected modest cost,” at present tabbed at $15.

As matters stand, a hospital cannot bill Medicare for a CAD analysis unless it is performed the same day as the X-ray is taken. Several letters from hospital executives included with the Riverain presentation highlighted the cumbersome nature of the current arrangement.

Chris Skillings, director of radiology at Holdenville General Hospital (Holdenville, Oklahoma), wrote that a radiologist at Holdenville recently requested a CAD analysis of a chest X-ray “several days after the original chest X-ray was taken.” However, Holdenville “did not file a claim for reimbursement knowing it would be denied because of different dates of service.”

Much of Freedman argument was based on the prospect faced by patients diagnosed with later-stage cases of lung cancer whose diseases might have been caught earlier with CAD. He referred to a study performed at the University of Chicago that retrospectively applied computer-aided detection software to existing scans that suggested that of the 49 patients whose scans were reviewed, the 14 who were eventually diagnosed could have been picked up earlier.

“A delay in diagnosis will affect” the severity and treatability of the disease, Freedman said.

One panel member asked if CAD should be used as a screening tool, but Freedman replied that “[i]t is not appropriate for every patient.” Those who do not smoke are thought to be poor candidates for CAD analysis because of low risk, and scans that suggest pneumonia or congestive heart failure are not in need of CAD analysis. Freedman said that this fact was one of the arguments against bundling CAD analysis with X-rays.

“In my practice at Georgetown, we would CAD only about 10% to 15%,” he said.

Physicians do not currently have guidelines for CAD, a sore spot for more than one panel member. A brief discussion ensued on the prospects for overuse of CAD as a consequence of the dearth of guidelines. Freedman admitted that there are “a lot of things that look like lung cancer on a chest X-ray,” and could stimulate overuse, but a review of any of the patient's previous scans would reveal when a seemingly positive scan is nothing more than scar tissue.

Despite the substantial efforts to persuade the advisory committee to recommend that CMS allow CAD billing as a separate function, the committee voted 10-2 against advising for the separation.

New-technology APCs provide a financial boost for hospitals as they struggle to amortize expensive new technology, but CMS has exhibited an intent to strip PET/ CT scans from the new technology category. According to the rulebook, “non-myocardial PET procedures have been assigned to a new technology APC,” but the agency observed that “as a result of our collection of five full years' worth of hospital claims data, we believe that we have sufficient data to assign non-myocardial PET scans to a clinically appropriate APC for calendar year 2007.”

The CMS document reminds the reader that “we assign a service to a new technology APC only when we do not have adequate claims data upon which to determine the median cost.” The agency proposed to reshuffle the procedure, which fell under the new technology umbrella in January 2005, into an APC that would reimburse at a rate of $865, a substantial drop from the rate of $1,250 hospitals enjoyed in the two previous calendar years.

Thomas Grissom, a senior health policy analyst at the Washington law firm of Foley Hoag , represented the Academy of Molecular Imaging (AMI; Los Angeles) in proposing that CMS maintain the new-technology designation for PET/CT. According to Grissom, an external analysis of hospital charge masters concluded that “the average cost of a PET/CT scan was approximately $1,717.” Charge masters are catalogues of fees that some critics contend have little to do with the actual cost of providing a service.

Grissom said that the capital cost for a new PET/CT scan machine ran as high as $2 million vs. the $1.2 million needed to obtain a conventional PET scanner. Annual operating costs were twice as for PET/CT at $240,000 vs. $120,000, and technologist salaries for PET/CT were said to be $80,000 whereas a PET technologist was said to earn $45,000 a year. He described operating cost data for PET/CT as “unreliable.”

According to Beth Roberts of the Association of Community Cancer Centers (Rockville, Maryland), “[t]he real point of keeping this [payment category] is to ensure we work out the glitches” in reimbursement.” Roberts said her organization was concerned “about cutting access to technology.”

Grissom said that AMI had contracted with hospital consortium Premier (Charlotte, North Carolina) “to collect data on PET and PET/CT from 70 of its hospitals” and that “the Premier cost data for PET is significantly higher than the CMS median cost.” Charge master data in the Premier study “varies substantially from hospital to hospital, suggesting that additional refinements are necessary” and that “hospital charges . . . have not accurately reflected the true cost of services.”

One member of the advisory panel said that charge masters had a reputation for failing to consistently reflect the cost of a procedure, but Frank Opelka, MD, vice chair of finance in the department of surgery at Beth Israel Deaconess Medical Center (Boston), said that problems with charge masters have persisted over time and that “without a carrot or a stick,” those problems are likely to persist. Albert Einstein Jr., MD, director of the Swedish Cancer Institute at Swedish Medical Center (Seattle), observed that “it may be premature to reclassify this just yet.”

After further discussion, the motion to recommend that CMS retain the new technology payment category for PET/CT passed 8-4.