Medicare

The Health Care Financing Administration (HCFA) has reduced payments to some providers who perform electrocardiogram (EKG) and ultrasound examinations in nursing homes and in beneficiaries' residences. In the past, Medicare had allowed these providers of portable diagnostic tests to receive, in addition to the fee for doing the test, a separate payment for transporting the necessary equipment. Effective January 1, 1996, HCFA eliminated separate transportation payments for ultrasound services. HCFA also eliminated separate payments for EKG services, but these payments were temporarily restored by the Balanced Budget Act of 1997. Some claim that eliminating separate transportation payments could ultimately increase Medicare outlays and adversely affect beneficiaries. They argue that providers will be less willing to provide EKG and ultrasound services without a separate transportation payment, forcing Medicare to pay for ambulances to transport homebound patients or nursing home residents to hospitals for these diagnostic tests. This report studies how changes to HCFA's payment policies would affect Medicare beneficiaries. GAO identifies and analyzes (1) the Medicare recipients, places of service, and providers who might be affected the most; (2) the numbers of services that would be affected by the change in policy; and (3) the effect on Medicare's program costs.

GAO noted that: (1) only a fraction of the electrocardiogram (EKG) and ultrasound tests paid for by Medicare are performed outside of physicians' offices or hospital settings and, thus, are potentially affected by the payment policy changes; (2) in 1995, Medicare paid approximately $597 million for 14 million EKGs and about $976 million for 5 million ultrasound tests in various settings; (3) only 290,000 of the EKGs and only 37,000 of the ultrasound tests were done in locations such as nursing homes or beneficiaries' residences where the provider needed to transport the diagnostic equipment; (4) nearly 90 percent of the services that required transporting equipment were provided to residents of nursing homes; (5) they were usually provided by portable x-ray and ultrasound providers; (6) some states appear to have a higher concentration of these services, with a small number of providers accounting for a large portion of each state's total portable EKG and ultrasound services; (7) many EKGs and ultrasound services provided in nursing homes would be unaffected if transportation payments were eliminated; (8) given the experience of 1995, about 56 percent of the EKGs and 89 percent of the ultrasound services provided in nursing homes would be unaffected by transportation payment changes and presumably would continue to be provided in those settings; (9) in July 1998, nursing homes will receive an inclusive per diem payment for all services provided to beneficiaries receiving Medicare-covered skilled nursing care; (10) a decision to eliminate or retain separate transportation payments for other beneficiaries will not affect the per diem payment; (11) another reason is that many nursing home EKGs and most ultrasound services in 1995 were performed by providers who did not receive a transportation payment; (12) the effect of eliminating transportation payments on the remaining 44 percent of the EKG and 11 percent of the ultrasound services is unknown because it depends on how providers respond; (13) because relatively few services would be affected, eliminating transportation payments would likely have a nominal effect on Medicare spending; (14) Medicare could save $11 million if mobile providers continue to supply services; (15) however, if mobile providers stopped bringing portable EKG equipment to beneficiaries, then some people would travel in Medicare-paid ambulances to obtain these tests; (16) eliminating transportation payments for ultrasound services would have a smaller effect; and (17) GAO estimates the effect on Medicare spending might range from $400,000 in savings to $125,000 in increased costs.