Medicare
Trends in Fees, Utilization, and Expenditures for Imaging Services before and after Implementation of the Deficit Reduction Act of 2005 Gao ID: GAO-08-1102R September 26, 2008Rapid spending growth for Medicare Part B--which covers physician and other outpatient services--has heightened concerns about the long-range fiscal sustainability of Medicare. Medicare Part B expenditures are expected to increase over the next decade at an average annual rate of about 8 percent, which is faster than the projected 4.8 percent annual growth rate in the national economy over this time period. As we noted in our June 2008 report, spending on physician imaging services has been one of the fastest-growing sets of services paid for under the Medicare Part B physician fee schedule (PFS), the payment system used to determine fees for Medicare physician-billed services. From 2000 through 2006, Medicare spending for physician imaging services doubled from about $7 billion to about $14 billion--an average annual increase of 13 percent, compared to an 8 percent increase in spending for all Medicare physician-billed services over the same time period. We also found that by 2006 about two-thirds of spending on physician imaging services occurred in physician office settings--an indicator of a shift toward providing imaging services in physicians' offices as opposed to providing such services in hospital or other institutional settings. In our June 2008 report, we also noted that the growth in Medicare spending on imaging services has been more rapid among what are known as advanced imaging modalities--computed tomography (CT), magnetic resonance imaging (MRI), and nuclear medicine--when compared with the growth in spending among other, less advanced imaging modalities such as x-ray or ultrasound. Congress has recently acted to address the rapid growth in spending on imaging services. Under a provision in the Deficit Reduction Act of 2005 (DRA), Medicare fees for certain imaging services covered by the physician fee schedule may not exceed what Medicare pays for these services under Medicare's hospital outpatient prospective payment system (OPPS), which is used to pay for hospital outpatient services. The OPPS cap sparked intense reaction from the imaging provider community. Specifically, physician organizations and imaging manufacturers have suggested that reduced fees as a result of the cap may inhibit physicians' willingness to provide imaging services for Medicare beneficiaries, which in turn could affect Medicare beneficiary access to such services. Congress asked us to provide them with information on the impact of the DRA provision on utilization and spending on physician imaging services in Medicare's fee-for-service (FFS) program. In this report we 1) examine the extent to which fees for performing imaging tests were affected by the OPPS cap in 2007 and 2) analyze trends in expenditures and utilization for physician imaging services under Medicare FFS through 2007.
In 2007, the OPPS cap reduced the fee for the performance of about one in four physician imaging tests overall, and fees for advanced tests were more likely than other imaging tests to be paid at the OPPS rate. All advanced imaging modalities had a higher percentage (about 65 percent) of tests paid at the OPPS rate than other imaging modalities (about 13 percent). In particular, nearly all MRIs and CTs were paid at the OPPS rate. Among advanced imaging tests, the fee reductions because of the OPPS cap varied extensively. For example, among the three most commonly performed MRIs subject to the cap, fee reductions ranged from about 21 to 40 percent. From 2000 through 2006 both expenditures for and utilization of Medicare physician imaging services increased, but in 2007 expenditures declined while utilization continued to rise. From 2000 to 2006, on a per-beneficiary basis--a measure which accounts for the change in size of Medicare's FFS population--expenditures increased 11.4 percent per year and in 2007 declined 12.7 percent. The implementation of the OPPS cap had the greatest impact on the decline in Medicare physician imaging expenditures in 2007, although other factors also contributed to this trend. Per-beneficiary utilization rose 5.9 percent per year from 2000 to 2006 and continued to increase in 2007, although at a slower rate of 3.2 percent. In comparing the changes from 2006 to 2007 in per-beneficiary utilization of tests paid at the OPPS rate with tests paid at the PFS rate, we found that the volume of imaging tests subject to the cap grew almost four times faster than the volume of those not subject to the cap. In commenting on a draft of this report, CMS noted that our finding of significant reductions in spending for imaging services in 2007 was consistent with its own estimate. CMS also stated it was pleased that our findings suggested that overall beneficiary access to imaging services was maintained and remains concerned about the high volume of imaging services.
GAO-08-1102R, Medicare: Trends in Fees, Utilization, and Expenditures for Imaging Services before and after Implementation of the Deficit Reduction Act of 2005
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GAO-08-1102R:
United States Government Accountability Office:
Washington, DC 20548:
September 26, 2008:
The Honorable Gordon H. Smith:
Ranking Member:
Special Committee on Aging:
United States Senate:
The Honorable John D. Rockefeller IV:
Chairman Subcommittee on Health:
Committee on Finance:
United States Senate:
Subject: Medicare: Trends in Fees, Utilization, and Expenditures for
Imaging Services before and after Implementation of the Deficit
Reduction Act of 2005:
Rapid spending growth for Medicare Part B--which covers physician and
other outpatient services--has heightened concerns about the long-range
fiscal sustainability of Medicare.[Footnote 1] Medicare Part B
expenditures are expected to increase over the next decade at an
average annual rate of about 8 percent, which is faster than the
projected 4.8 percent annual growth rate in the national economy over
this time period.[Footnote 2] As we noted in our June 2008 report,
spending on physician imaging services has been one of the fastest-
growing sets of services paid for under the Medicare Part B physician
fee schedule (PFS),[Footnote 3] the payment system used to determine
fees for Medicare physician-billed services. From 2000 through 2006,
Medicare spending for physician imaging services doubled from about $7
billion to about $14 billion--an average annual increase of 13 percent,
compared to an 8 percent increase in spending for all Medicare
physician-billed services over the same time period.[Footnote 4] We
also found that by 2006 about two-thirds of spending on physician
imaging services occurred in physician office settings--an indicator of
a shift toward providing imaging services in physicians' offices as
opposed to providing such services in hospital or other institutional
settings.[Footnote 5]
In our June 2008 report, we also noted that the growth in Medicare
spending on imaging services has been more rapid among what are known
as advanced imaging modalities--computed tomography (CT), magnetic
resonance imaging (MRI), and nuclear medicine--when compared with the
growth in spending among other, less advanced imaging modalities such
as x-ray or ultrasound.[Footnote 6] We also observed that although
advances in imaging technology have enabled physicians to perform a
wide range of less-invasive medical tests and procedures and to
diagnose and treat disease more quickly, substantial geographic
variation in the utilization of imaging services indicates that not all
of the increased spending may have been warranted.[Footnote 7]
Congress has recently acted to address the rapid growth in spending on
imaging services. Under a provision in the Deficit Reduction Act of
2005 (DRA),[Footnote 8] Medicare fees for certain imaging services
covered by the physician fee schedule may not exceed what Medicare pays
for these services under Medicare's hospital outpatient prospective
payment system (OPPS),[Footnote 9] which is used to pay for hospital
outpatient services. The provision applies only to the fee physicians
receive for performing--as opposed to interpreting--an imaging test. To
the extent that PFS fees for imaging services were higher than OPPS
fees, the DRA provision--known as the OPPS cap--would reduce PFS fees
for such services. The Centers for Medicare & Medicaid Services (CMS),
the agency within the Department of Health and Human Services (HHS)
that administers Medicare, implemented the OPPS cap for imaging tests
performed on or after January 1, 2007, as required by the DRA.
The OPPS cap sparked intense reaction from the imaging provider
community. Specifically, physician organizations and imaging
manufacturers have suggested that reduced fees as a result of the cap
may inhibit physicians' willingness to provide imaging services for
Medicare beneficiaries, which in turn could affect Medicare beneficiary
access to such services.[Footnote 10] You asked us to provide you with
information on the impact of the DRA provision on utilization and
spending on physician imaging services in Medicare's fee-for-service
(FFS) program. In this report we 1) examine the extent to which fees
for performing imaging tests were affected by the OPPS cap in 2007 and
2) analyze trends in expenditures and utilization for physician imaging
services under Medicare FFS through 2007.
To examine the extent to which fees for imaging tests were affected by
the OPPS cap in 2007, we relied on three data sources. We obtained data
from the 2007 physician fee schedule, which we used to identify, by
modality, the imaging services to which the OPPS cap applied--that is,
the imaging services for which the OPPS fee was less than the PFS fee
and were therefore paid at the lower OPPS rate in 2007. We also
obtained claims data for 2007 from CMS's Physician Supplier Procedure
Summary (PSPS) Master File to determine the share of tests associated
with imaging services subject to the OPPS cap.[Footnote 11] We obtained
data on the number of Medicare FFS beneficiaries from the 2008 Medicare
Trustees report.[Footnote 12] (For more detail on our data and methods,
see enc. I.)
To analyze trends in expenditures and utilization for physician imaging
services under Medicare, we used the same data sources and included
data on the number of FFS beneficiaries from the Trustees report and
PSPS claims data for 2000 to 2006. For the purposes of this report, we
measured utilization of imaging services in terms of the volume--or
number--of tests performed, as this component of imaging services was
subject to the OPPS cap beginning in 2007. The expenditure data we
report represents Medicare Part B FFS spending associated with the
provision of all imaging services--the performance of the test, the
interpretation of the test, and related ancillary services.[Footnote
13] We analyzed national trends in expenditures and utilization but did
not examine these trends for smaller geographic areas. In order to more
directly assess the impact of the OPPS cap on the change in imaging
expenditures from 2006 to 2007, we performed an analysis of the factors
that may have affected these expenditures, such as the number of
beneficiaries in the Medicare FFS program, the volume of services
provided per beneficiary, and the fees Medicare pays for those
services. Although these factors affected expenditures simultaneously,
our analysis allowed us to isolate each factor and determine the extent
to which it alone likely affected expenditure changes from 2006 to
2007.
We examined the reliability of the claims data used in this report by
performing appropriate electronic checks and checks for obvious errors
such as values outside of expected ranges. We determined that the
claims data we used were sufficiently reliable for the purposes of our
analysis. We conducted our work from February 2008 through August 2008
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Results In Brief:
In 2007, the OPPS cap reduced the fee for the performance of about one
in four physician imaging tests overall, and fees for advanced tests
were more likely than other imaging tests to be paid at the OPPS rate.
All advanced imaging modalities had a higher percentage (about 65
percent) of tests paid at the OPPS rate than other imaging modalities
(about 13 percent). In particular, nearly all MRIs and CTs were paid at
the OPPS rate. Among advanced imaging tests, the fee reductions because
of the OPPS cap varied extensively. For example, among the three most
commonly performed MRIs subject to the cap, fee reductions ranged from
about 21 to 40 percent.
From 2000 through 2006 both expenditures for and utilization of
Medicare physician imaging services increased, but in 2007 expenditures
declined while utilization continued to rise. From 2000 to 2006, on a
per-beneficiary basis--a measure which accounts for the change in size
of Medicare's FFS population--expenditures increased 11.4 percent per
year and in 2007 declined 12.7 percent. The implementation of the OPPS
cap had the greatest impact on the decline in Medicare physician
imaging expenditures in 2007, although other factors also contributed
to this trend. Per-beneficiary utilization rose 5.9 percent per year
from 2000 to 2006 and continued to increase in 2007, although at a
slower rate of 3.2 percent. In comparing the changes from 2006 to 2007
in per-beneficiary utilization of tests paid at the OPPS rate with
tests paid at the PFS rate, we found that the volume of imaging tests
subject to the cap grew almost four times faster than the volume of
those not subject to the cap. In commenting on a draft of this report,
CMS noted that our finding of significant reductions in spending for
imaging services in 2007 was consistent with its own estimate. CMS also
stated it was pleased that our findings suggested that overall
beneficiary access to imaging services was maintained and remains
concerned about the high volume of imaging services.
Background:
Medicare generally pays for physician services using a resource-based
fee schedule. The fee schedule contains billing codes for more than
7,000 services. For each billing code, Medicare has determined the
resources required to provide the service and expresses these resource
requirements in relative value units (RVU), which account for a
physician's time, expertise, and operating costs required to deliver
one service compared to other services.[Footnote 14] Because the
resources required to deliver services may change over time, CMS
reviews RVUs every 5 years. In 2007, as part of its periodic review,
CMS revalued the RVUs so that physician payments more accurately
reflected the cost of providing services.
In 2007, there were 839 billing codes for imaging services in the
Medicare physician fee schedule. These codes fall into six modalities
which can be grouped into two subcategories. The CT, MRI, and nuclear
medicine modalities comprise advanced imaging tests, while ultrasound,
standard imaging (which includes x-rays), and procedures that use
imaging comprise other imaging tests.
In addition to the OPPS cap, in 2006 CMS implemented a reduction in
payment for certain imaging services when multiple images are made of
contiguous body parts during the same office visit, known as the
multiple procedure reduction (MPR). The estimated impact of the MPR was
small,[Footnote 15] and all the procedures subject to the MPR were also
subject to the OPPS cap.
In implementing the OPPS cap, CMS identified the services that would be
subject to the cap, effective in 2007. Under the cap, the Medicare fee
a physician receives for performing an imaging test in the physician's
office or independent diagnostic testing facility (IDTF) may not exceed
the fee for the same test performed under OPPS.[Footnote 16] As a
result, if the fee under OPPS is less than the PFS fee, the physician
is paid at the OPPS rate for the test. If the fee under OPPS is greater
than the PFS fee, the physician is paid at the PFS rate. Because fees
paid under the PFS and OPPS systems are revised each year, the services
to which the OPPS cap applies may change.
The OPPS Cap Resulted in Fee Reductions for About One in Four Imaging
Tests, with a Larger Impact on Advanced Tests than Other Tests:
In 2007, the OPPS cap resulted in reduced physician fees for the
performance of about one in four imaging tests overall, and fees for
advanced imaging tests were more likely than fees for other imaging
tests to have been paid at the OPPS rate. Of the 65.9 million physician
imaging tests performed in 2007, about 23 percent were paid at the OPPS
rate. Fees for about 65 percent of the 13.3 million advanced imaging
tests--which comprised about 20 percent of the total volume of imaging
tests performed in 2007--were paid at a lower rate as a result of the
OPPS cap (see fig. 1). In contrast, the fees for relatively few other
imaging tests were affected by the cap, as about 13 percent of the 52.7
million other imaging tests performed in 2007 were paid at the OPPS
rate.
Figure 1: Percentage of Physician Imaging Tests Paid at OPPS Rate and
PFS Rate in 2007:
[See PDF for image]
This figure is a stacked vertical bar graph depicting the following
data:
Advanced imaging:
PFS rate: 4.7 million tests;
OPPS rate: 8.6 tests (64.8%);
Total: 13.3 million tests.
Other imaging: 46.0673 6.58851
PFS rate: 46.1 million tests;
OPPS rate: 6.6 million tests (12.5%);
Total: 52.7 million tests.
Source: GAO analysis of Medicare Part B claims data and physician fee
schedule data.
[End of figure]
All advanced imaging modalities had a higher proportion of fee
reductions resulting from the OPPS cap when compared with other imaging
modalities. Fees for over 90 percent of all CTs and MRIs were reduced
as result of the OPPS cap in 2007, while only about 20 percent of the
fees for ultrasounds were paid at the OPPS rate--the highest percentage
among other imaging modalities (see table 1).
Table 1: Percentage of Imaging Tests Paid at the OPPS Rate by Modality,
2007:
Modalities: Advanced: MRI;
Total tests (in millions): 3.1;
Percentage of tests paid at OPPS rate: 98.8.
Modalities: Advanced: CT;
Total tests (in millions): 3.8;
Percentage of tests paid at OPPS rate: 90.8.
Modalities: Advanced: Nuclear Medicine;
Total tests (in millions): 6.3;
Percentage of tests paid at OPPS rate: 32.4.
Modalities: Other; Ultrasound;
Total tests (in millions): 18.7;
Percentage of tests paid at OPPS rate: 20.1.
Modalities: Other; Imaging Procedures;
Total tests (in millions): 5.5;
Percentage of tests paid at OPPS rate: 15.2.
Modalities: Other; Standard Imaging;
Total tests (in millions): 28.5;
Percentage of tests paid at OPPS rate: 7.0.
Source: GAO analysis of Medicare Part B claims data and physician fee
schedule data.
[End of table]
Among the advanced imaging modalities CMS identified as subject to the
cap, the magnitude of the specific fee reductions in 2007 varied
extensively. For example, as a result of the OPPS cap, the fees for the
three most commonly performed MRIs subject to the cap--MRI of the
lumbar spine without dye, MRI of the joints of the lower extremity
without dye, and MRI of the brain with and without dye--were reduced
between about 21 and 40 percent. In contrast, the fees for the three
most commonly performed CTs subject to the cap--CT of the pelvis with
dye, CT of the thorax with dye, and CT of the thorax without dye--were
reduced between about 7 and 15 percent. The fees for two of the three
most commonly performed nuclear medicine tests subject to the cap were
not reduced as a result of the OPPS cap in 2007, because the OPPS rate
was greater than the PFS rate (see table 2).
Table 2: Impact of OPPS Cap on the Most Commonly Performed Advanced
Imaging Tests, 2007:
Imaging test description: MRI of the lumbar spine w/o dye;
PFS rate: $557.09;
OPPS rate: $419.90;
Percentage difference: -24.6.
Imaging test description: MRI of joints of the lower extremity w/o dye;
PFS rate: $519.57;
OPPS rate: $413.08;
Percentage difference: -20.5.
Imaging test description: MRI of the brain w/ and w/o dye;
PFS rate: $1,025.51;
OPPS rate: $611.29;
Percentage difference: -40.4.
Imaging test description: CT of the pelvis w/dye;
PFS rate: $327.81;
OPPS rate: $306.21;
Percentage difference: -6.6.
Imaging test description: CT of the thorax w/dye;
PFS rate: $342.59;
OPPS rate: $310.38;
Percentage difference: -9.4.
Imaging test description: CT of the thorax w/o dye;
PFS rate: $289.54;
OPPS rate: $245.2;
Percentage difference: -15.3.
Imaging test description: Heart wall motion add-on;
PFS rate: $79.96;
OPPS rate: $119.00;
Percentage difference: Unaffected.
Imaging test description: Heart image (3d), multiple;
PFS rate: $532.84;
OPPS rate: $472.58;
Percentage difference: -11.3.
Imaging test description: Heart function add-on;
PFS rate: $72.01;
OPPS rate: $111.04;
Percentage difference: Unaffected.
Source: GAO analysis of 2007 Medicare physician fee schedule data.
Note: These fees represent a national average of amounts paid for
globally billed physician imaging services. These tests were the most
commonly performed imaging tests of those identified by CMS as subject
to the OPPS cap in 2007.
[End of table]
Expenditures for and Utilization of Imaging Services Increased until
2007, When Expenditures Declined While Volume Continued to Increase:
From 2000 through 2006 both expenditures for and utilization of imaging
services in Medicare Part B increased, but in 2007 expenditures
declined while utilization continued to rise. The implementation of the
OPPS cap was the largest of several factors that contributed to the
decline in Medicare expenditures for imaging services in 2007. Although
expenditures declined in 2007, utilization continued to increase that
year, as the volume of imaging tests subject to the OPPS cap grew
almost four times faster than the volume of tests that were not subject
to the cap.
After Years of Growth, Imaging Expenditures Declined in 2007, with the
OPPS Cap the Largest of Several Factors Influencing the Decline:
From 2000 through 2006, total Medicare expenditures for physician
imaging services increased from $6.7 billion to $13.8 billion, an
increase of 12.9 percent per year. Expressed in terms of imaging
expenditures per beneficiary--a measure which accounts for the size of
Medicare's FFS population--imaging expenditures increased from $220 to
$419, an increase of 11.4 percent per year. From 2000 through 2006, the
rate of growth in spending for advanced imaging was twice the rate of
growth for other imaging. Expenditures per beneficiary for advanced
imaging services increased 15.4 percent between 2000 and 2006, compared
with an increase of 7.7 percent over this time period for other imaging
services.
In 2007, the increase in spending on physician imaging services
reversed, as Medicare's expenditures fell to $12.1 billion--a decline
of 12.7 percent from 2006. Per beneficiary, Medicare's expenditures on
physician imaging services declined 10.5 percent in 2007 to $375.
Despite this decline, per beneficiary expenditures in 2007 for
physician imaging services were 70.7 percent higher than they were in
2000. In 2007, expenditures per beneficiary for advanced imaging
services fell 14.8 percent, compared with a 5.4 percent decline in
expenditures for other imaging services (see fig. 2).
Figure 2: Imaging Expenditures per Medicare FFS Beneficiary, 2000 to
2007:
[See PDF for image]
This figure is a multiple line graph depicting the following data in
expenditures per beneficiary in dollars:
Year: 2000;
Total imaging expenditures: $219.88;
Other imaging expenditures: $124.56;
Advanced imaging expenditures: $95.32.
Year: 2001;
Total imaging expenditures: $255.39;
Other imaging expenditures: $137.59;
Advanced imaging expenditures: $117.81.
Year: 2002;
Total imaging expenditures: $268.46;
Other imaging expenditures: $141.3;
Advanced imaging expenditures: $127.16.
Year: 2003;
Total imaging expenditures: $303.48;
Other imaging expenditures: $154.56;
Advanced imaging expenditures: $148.92.
Year: 2004;
Total imaging expenditures: $352.69;
Other imaging expenditures: $175.89;
Advanced imaging expenditures: $176.8.
Year: 2005;
Total imaging expenditures: $391.57;
Other imaging expenditures: $185.27;
Advanced imaging expenditures: $206.29.
Year: 2006;
Total imaging expenditures: $419.21;
Other imaging expenditures: $194.24;
Advanced imaging expenditures: $224.97.
Year: 2007;
Total imaging expenditures: $375.27;
Other imaging expenditures: $183.66;
Advanced imaging expenditures: $191.62.
Source: GAO analysis of Medicare Part B claims data.
[End of figure]
Our analysis shows that the implementation of the OPPS cap was the
factor that had the greatest impact on the change in Medicare physician
imaging expenditures, which declined 12.7 percent in the aggregate in
2007. Specifically, we estimate that in 2007 the implementation of the
OPPS cap caused spending on physician imaging services to decline 11.1
percent. In addition, a decrease in the size of Medicare's FFS
population caused a 2.5 percent decline in expenditures,[Footnote
17]and a change in PFS fees for imaging services caused an additional
3.6 percent decline.[Footnote 18]
Partially offsetting the factors that contributed to the overall
decline in imaging expenditures in 2007 was an increase in per-
beneficiary volume of imaging services (which included tests and
interpretations). This increase in volume---or utilization---exerted
upward pressure on expenditures for physician imaging services in 2007.
Specifically, the increase in volume of imaging services paid at the
OPPS rate increased expenditures 2.6 percent, and the increase in
volume of services paid at the PFS rate increased expenditures 1.9
percent (see fig. 3).
Figure 3: Relative Impact of Factors Affecting Imaging Expenditures
from 2006 to 2007:
[See PDF for image]
This figure is a vertical bar graph depicting the following data in
percentage change in expenditures:
Relative impact of factors affecting expenditures:
Change in FFS enrollment: -2.5%;
Fees for services paid at OPPS rate: -11.1%;
Volume of services paid at OPPS rate: 2.6%;
Fees for services paid at PFS rate: -3.6%;
Volume of services paid at PFS rate: 1.9%.
Source: GAO analysis of Medicare Part B claims data and physician fee
schedule data.
Note: The impact of ancillary services, such as radiopharmaceuticals
and iodine supplies, is excluded from these results because it
increased total expenditures less than 0.5 percent.
[End of figure]
Utilization of Imaging Tests Increased from 2000 through 2007, with
Utilization of Tests Paid at the OPPS Rate Increasing Almost Four Times
Faster Than Tests Paid at the PFS Rate:
Similar to expenditures for physician imaging services, utilization of
imaging services increased from 2000 through 2006, from 42.6 million
tests to 65.5 million tests. This increase represented an annual growth
rate of 7.4 percent. Per beneficiary, the volume of imaging tests
increased over this time period from 1.41 to 1.99, or an annual growth
rate of 5.9 percent (see fig. 4). However, unlike Medicare's
expenditures for imaging services, which declined in 2007, the volume
of imaging tests continued to increase to 65.9 million tests in 2007.
This increase represents a 0.6 annual rate of growth for 2007. The
relatively slower growth rate for 2007 in the volume of imaging tests
is largely attributable to the 2.5 percent decrease in Medicare's FFS
population for that year. On a per-beneficiary basis, the volume of
tests increased from 1.99 to 2.05, or 3.2 percent in 2007.
From 2000 through 2007, utilization of advanced imaging tests grew more
rapidly than utilization of other imaging tests. This trend continued
in 2007 as the number of advanced tests per beneficiary increased 3.9
percent, whereas the volume of other imaging tests increased 3.0
percent. Because of the more rapid growth in volume for advanced
imaging tests, the proportion of all tests that were advanced imaging
increased from 12 percent in 2000 to 20 percent in 2007.
Figure 4: Imaging Tests per Medicare FFS Beneficiary, 2000 to 2007:
[See PDF for image]
This figure is a multiple line graph depicting the following data in
number of tests per beneficiary:
Year: 2000;
Total tests: 1.41;
Advanced tests: 0.2;
Other tests: 1.2.
Year: 2001;
Total tests: 1.52;
Advanced tests: 0.2;
Other tests: 1.3.
Year: 2002;
Total tests: 1.55;
Advanced tests: 0.24;
Other tests: 1.31
Year: 2003;
Total tests: 1.62;
Advanced tests: 0.28;
Other tests: 1.34.
Year: 2004;
Total tests: 1.77;
Advanced tests: 0.33;
Other tests: 1.44.
Year: 2005;
Total tests: 1.89;
Advanced tests: 0.36;
Other tests: 1.53.
Year: 2006;
Total tests: 1.99;
Advanced tests: 0.40;
Other tests: 1.59.
Year: 2007;
Total tests: 2.05;
Advanced tests: 0.41;
Other tests: 1.64.
Source: GAO analysis of Medicare Part B claims data.
[End of figure]
As part of our analysis of utilization trends, we examined the change
in utilization of tests paid at the OPPS rate compared to the
utilization of tests paid at the PFS rate from 2006 to 2007. We found
that the per-beneficiary volume of tests paid at the OPPS rate
increased 7.4 percent, almost four times faster than the 2.0 percent
rate of growth in the volume of tests paid at the PFS rate.
Concluding Observations:
Although implementing the OPPS cap raised concerns that reduced fees
might curtail beneficiary access to physician imaging services, our
analysis suggests that this did not occur in 2007. Our results apply to
the national level only and may not be indicative of trends in smaller
geographic areas. Although spending for imaging services declined from
2006 to 2007, utilization of tests increased. In fact, utilization
increased more for imaging tests subject to the OPPS cap than for
imaging tests not subject to the cap.
Agency Comments:
In commenting on a draft of this report, CMS noted that our finding of
significant reductions in spending for imaging services in 2007 was
consistent with its own estimate of a 20 percent reduction in payments
for imaging services subject to the OPPS cap. CMS also stated it was
pleased that our findings suggested that overall beneficiary access to
imaging services was maintained during the first year the DRA was in
effect. According to CMS, the agency remains concerned about the high
volume of imaging services and their value to beneficiaries.
CMS suggested that our analysis should include two additional
comparisons that, in its view, would provide further support for our
concluding observations. The first was a comparison of growth rates for
tests subject to the OPPS cap versus those that were not from 2000 to
2006. The second was a comparison of growth rates for capped and non-
capped tests by modality from 2006 to 2007.
While further research could be interesting, we do not believe either
comparison is necessary to bolster our concluding observations, which
focused on the impact of the OPPS cap on beneficiary access. Despite
the decline in fees for tests subject to the OPPS cap and total
expenditures, the volume of tests continued to rise and the volume of
tests subject to the cap rose more rapidly than the volume of tests not
subject to the cap.
We are sending copies of this report to the Secretary of HHS, the
Administrator of CMS, appropriate congressional committees, and other
interested parties. We will make copies available to others upon
request. This report is also available at no charge on GAO's Web site
at [hyperlink, http://www.gao.gov]. If you or your staff have any
questions about this report, please contact me at (202) 512-7114 or
steinwalda@gao.gov. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this
report. Jessica Farb, Assistant Director; Todd D. Anderson; Manuel
Buentello; Iola D'Souza; Krister Friday; and Julian Klazkin made key
contributions to this report.
Signed by:
A. Bruce Steinwald:
Director, Health Care:
[End of section]
Enclosure 1: Scope and Methodology:
Under a provision in the Deficit Reduction Act of 2005 (DRA), Medicare
fees for certain imaging services covered by the physician fee schedule
(PFS) may not exceed what Medicare pays for these services under
Medicare's hospital outpatient prospective payment system (OPPS), which
is used to pay for hospital outpatient services.[Footnote 19] The
provision applies only to the fee physicians receive for performing--as
opposed to interpreting--an imaging test. To the extent that PFS fees
for imaging services were higher than OPPS fees, the DRA provision--
known as the OPPS cap--would reduce PFS fees for such services. The
Centers for Medicare & Medicaid Services (CMS), the agency within the
Department of Health and Human Services (HHS) that administers
Medicare, implemented the OPPS cap for imaging tests performed on or
after January 1, 2007. To measure the effects of the OPPS cap on fees
for, spending on, and utilization of, Medicare physician imaging
services, we relied on several data sources.
* We analyzed Medicare claims data from 2000 through 2007 to determine
trends in expenditures for and utilization of physician imaging
services from CMS's Physician Supplier Procedure Summary (PSPS) Master
File --a data source that aggregates data to the billing code
designated under the Healthcare Common Procedure Coding System (HCPCS).
[Footnote 20] We analyzed national trends in expenditures and
utilization and did not examine these trends for smaller geographic
areas.[Footnote 21]
* We analyzed data on fees from the 2007 Medicare PFS to identify codes
to which the OPPS cap applied.
* We obtained data on the number of Medicare fee-for-service
beneficiaries from the 2008 Medicare Trustees report.[Footnote 22]
We relied on the Berenson-Eggers Type of Service (BETOS) codes assigned
to our claims data to determine which services could be classified as
imaging.[Footnote 23] We extracted data if the first digit of the BETOS
code was equal to "I" in a given year, indicating that the service was
imaging. We also used the BETOS code to group HCPCS codes into imaging
modalities and the broad subgroups of advanced and other imaging
services. Of the 652 HCPCS codes:
identified by CMS as being subject to the OPPS cap in 2007, 631 were
classified as imaging using the BETOS code. Because the other 21 codes
were not classified as imaging using the BETOS code, we excluded them
to establish a consistent code classification method across years
[Footnote 24]
In analyzing the effect of the DRA provision on fees, spending, and
utilization of Medicare physician imaging services, we classified the
HCPCS code as having an OPPS fee if the OPPS fee was below the PFS fee.
If the PFS fee for these services was based on relative value units
(RVU),[Footnote 25] we determined the national facility and nonfacility
PFS and OPPS fee.[Footnote 26] If the fee was not based on RVUs--that
is, it was set by Medicare's claims processing contractors or by some
other method--and it was on the list of codes CMS identified as subject
to the OPPS cap, we classified the code as having an OPPS fee. Using
the alphanumeric HCPCS codes, we differentiated tests from other
imaging services including interpretations and separately billed
services, such as radioactive agents and iodine supplies that accompany
the imaging exam.[Footnote 27] For the purposes of this report, we
measured utilization of imaging services in terms of the volume--or
number--of tests performed, as this component of imaging services was
subject to the OPPS cap beginning in 2007. The expenditure data we
report represents Medicare Part B fee-for-service (FFS) spending
associated with the provision of all imaging services--the performance
of the test, the interpretation of the test, and related ancillary
services.
To analyze the factors that influenced the change in expenditures from
2006 to 2007, we examined the three primary elements that determine
Part B physician spending: the size of the FFS beneficiary population,
services per beneficiary, and the average fee for each service.
Specifically, we examined the influence of changes in the FFS
beneficiary population, OPPS fees, the volume of services paid at the
OPPS rate, PFS fees, and the volume of services paid at the PFS rate,
for a total of five factors.[Footnote 28] To measure the effect of each
factor, we allowed that factor to change while holding other factors
constant. The percentage difference between the estimated spending as a
result of allowing one factor to change relative to actual 2006
spending is our estimate of the impact of that factor. The difference
between the sum of all factor impacts and the actual change is a
residual that we were unable to measure directly.
We examined the reliability of the claims data used in this report by
performing appropriate electronic checks and checks for obvious errors
such as values outside of expected ranges. We determined that the
claims data we used were sufficiently reliable for the purposes of our
analysis. We conducted our work from February 2008 through August 2008
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
[End of section]
Enclosure 2: Comments from the Centers for Medicare & Medicaid
Services:
Department Of Health & Human Services:
Office Of The Secretary:
Assistant Secretary for Legislation:
Washington, DC 20201:
September 16, 2008:
A. Bruce Steinwald:
Director, Health Care:
Government Accountability Office:
441 G Street NW:
Washington, DC 20548:
Dear Mr. Steinwald:
Enclosed are the Department's comments on the U.S. Government
Accountability Office's (GAO) draft report entitled: "Trends in Fees,
Utilization, and Expenditures for Medicare imaging Services Before and
After the Implementation of the Deficit Reduction Act of 2005" (GAO-08-
1102R).
The Department appreciates the opportunity to review and comment on
this report before its publication.
Sincerely,
Signed by:
Jennifer R. Luong, for:
Vincent J. Ventimiglia, Jr.
Assistant Secretary for Legislation:
Attachment:
Department Of Health & Human Services:
Centers for Medicare & Medicaid Services:
200 Independence Avenue, SW:
Washington, DC 20201:
Date: September 12, 2008:
To: Vincent J. Ventimiglia, Jr.
Assistant Secretary of Legislation:
From: [Signed by] Kerry Weems:
Acting Administrator:
Subject: Government Accountability Office (GAO) Draft Report: "Trends
in Fees, Utilization, and Expenditures for Medicare Imaging Services
Before and After the Implementation of the Deficit Reduction Act of
2005" (GAO-08-1102R):
Thank you for the opportunity to review and comment on the GAO report
entitled "Trends in Fees, Utilization, and Expenditures for Medicare
Imaging Services Before and After the Implementation of the Deficit
Reduction Act of 2005" (GAO-08-1102R).
Effective January I, 2007, the Deficit Reduction Act of 2005 (DRA)
(P.L. 109-171) capped the payment for the technical component of many
imaging services paid under the Medicare physician fee schedule at the
amount paid under Medicare's outpatient prospective payment system
(OPPS). GAO reviewed the effects of the OPPS cap on the spending and
utilization of imaging services.
Between 2000 and 2006, Medicare spending on imaging services doubled,
reaching approximately $14 billion. During that time span, the average
increase in Medicare spending was approximately 16 percent. Utilization
of imaging services varied widely from one geographical area to
another. The Centers for Medicare & Medicaid Services (CMS). the
Medicare Payment Advisory Commission (MedPAC), and the imaging industry
are unable to definitively explain the growth and geographic variation
in imaging spending. MedPAC has suggested that the trend has been
driven by a number of factors, such as the availability of costly and
sophisticated new equipment, patient demand, flaws in the payment
system that led to more scans being performed in doctor's offices,
"defensive medicine" practiced by doctors fearful of malpractice
lawsuits, or simply the desire of physicians to increase their incomes.
Still, the trend suggested cause for concern, from both a fiscal and a
clinical standpoint. The rapid increase in Medicare spending for
imaging services, coupled with extensive geographic variation in their
use, raised questions about whether such growth is appropriate and
whether all imaging services are used appropriately.
In response to this trend, Congress enacted in the DRA reductions in
payment rates for the technical component of certain imaging services
paid under the physician fee schedule, capping them at the OPPS payment
rates. CMS estimated that the DRA changes resulted in a 20 percent
decrease in payments for these services. Consistent with this estimate,
the GAO found significant reductions in payments for imaging services
during 2007, particularly advanced imaging services. While imaging
expenditures in 2007 declined, GAO found that the utilization of
imaging services increased. GAO also found that the volume of imaging
services subject to the cap grew almost 3.7 times faster than the
volume of imaging services not subject to the cap.
We believe the GAO's analysis of the issue should include two
additional comparisons. First, the GAO analysis should present data
comparing the rate of growth in imaging services subject to the cap and
not subject to the cap for the 2000-2006 period. This time trend
analysis would present valuable information about the underlying growth
trend for DRA cap vs. non-cap imaging services. Second, the GAO
analysis should present data comparing the rate of growth from 2006 to
2007 for DRA cap and non-cap imaging services by type of imaging
modality. This analysis would present a more detailed picture of the
sources of imaging service growth. These analyses should provide
information for more robust Concluding Observations.
We are pleased that GAO's findings suggest that overall beneficiary
access to imaging services was maintained under the DRA payment rate
reductions. We continue to be concerned about the high volume of
imaging services and their value to beneficiaries. We appreciate the
work the GAO has done on this issue and we will continue to monitor the
effects of imaging payment reforms on beneficiary access to quality
imaging services, as well as implement the accreditation requirements
for advanced diagnostic imaging services and appropriateness
demonstration that were included in the Medicare Improvement for
Patients and Providers Act of 2008 (P.L. 110-275) provisions.
[End of section]
Footnotes:
[1] Medicare is the federally financed health insurance program for
persons aged 65 and over, certain individuals with disabilities, and
individuals with end-stage renal disease. In addition to services
covered under Part B, Medicare covers hospital and other inpatient
stays through Medicare Part A. Medicare Parts A and B are known as
original Medicare or Medicare fee-for-service (FFS).
[2] These rates of growth are based on nominal dollars. See the Boards
of Trustees of the Federal Hospital Insurance and Federal Supplementary
Medical Insurance Trust Funds, 2008 Annual Report of the Boards of
Trustees of the Federal Hospital Insurance and Federal Supplementary
Medical Insurance Trust Funds (Washington, D.C.: Mar. 25, 2008).
[3] Throughout this report we define "physician imaging services" as
services billed by physicians and paid for under the physician fee
schedule.
[4] See GAO, Medicare Part B Imaging Services: Rapid Spending Growth
and Shift to Physician Offices Indicate Need for CMS to Consider
Additional Management Practices, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-08-452] (Washington, D.C.: June 13, 2008).
[5] Depending upon the setting, Medicare pays for imaging services
under different payment systems. For example, when a physician provides
imaging services in an office setting, the physician may bill for and
receive, under Medicare PFS, one fee for performing the imaging test
and another fee for interpreting the test. If the physician bills for
both, it is known as a "global bill." In contrast, when a patient
receives imaging services in an institutional setting, such as a
hospital outpatient department, the physician receives a fee under PFS
only for the interpretation of the test, while the fee for the
performance of the test is paid to the institution under Medicare's
hospital outpatient prospective payment system (OPPS).
[6] Nuclear medicine is the use of radioactive materials in conjunction
with an imaging modality to produce images that show both structure and
function within the body.
[7] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-452]. See also
Medicare Payment Advisory Commission, Report to the Congress: Medicare
Payment Policy (Washington, D.C.: March 2005).
[8] Pub. L. No. 109-171, § 5102(b), 120 Stat. 4, 39-40 (2006).
[9] If the PFS fee exceeds the OPPS fee, providers will be paid the
OPPS fee. If the OPPS fee exceeds the PFS fee, payment will be based on
the PFS fee.
[10] Some health policy analysts dispute the assertion that payment
reductions necessarily result in a lower volume of services. Some
studies have suggested there is a "behavioral offset," that is, a
tendency by providers to increase the volume of services to counter the
loss of revenue from individual fee reductions. See Congressional
Budget Office, Factors Underlying the Growth in Medicare's Spending for
Physicians' Services (Washington, D. C.: June 2007); and Stephen
Zuckerman, Stephen A. Norton, and Diana Verrilli, "Price Controls and
Medicare Spending: Assessing the Volume Offset Assumption," Medical
Care Research and Review, vol 55, no. 4 (December 1998).
[11] The PSPS file contains an estimated 98 percent of claims from the
calendar year.
[12] The Boards of Trustees, 2008 Annual Report.
[13] Ancillary services for imaging include items such as
radiopharmaceuticals and iodine supplies. These items are necessary to
provide certain imaging tests.
[14] RVUs for each service are determined relative to a benchmark
service defined as a mid-level office visit. For example, if a midlevel
office visit had an RVU value of 1.000, a service with 1.475 RVUs is
estimated to be 47.5 percent more costly to provide.
[15] Using 2004 data, CMS analyzed the impact of MPR. Based on this
analysis, we estimate the MPR would have reduced expenditures by 1.6
percent had the provision been in effect in that year.
[16] IDTFs are facilities that are independent of a hospital or
physician office and only provide outpatient diagnostic services.
[17] The decline in FFS expenditures in 2007 did not necessarily
represent a net savings to the Medicare program, as the decrease in FFS
enrollment that year was attributable to higher enrollment in Medicare
Advantage--Medicare's private health plan option.
[18] CMS revalued RVUs in 2007. Although these RVU revaluations are
designed to leave aggregate Medicare PFS expenditures largely
unchanged, they can result in increases or decreases in spending for
specific services. In fact, CMS projected expenditures for services
provided by radiologists--physicians who primarily perform imaging
services--would decline 5 percent as a result of these RVU changes.
[19] Pub. L. No. 109-171, § 5102(b), 120 Stat. 4, 39-40 (2006).
[20] The PSPS file contains an estimated 98 percent of claims from the
calendar year.
[21] Our analysis of trends in expenditures and utilization includes
tests performed in physician offices or independent diagnostic testing
facilities (IDTF). In addition our analysis of expenditures includes
ancillary services and physician interpretations for tests performed in
physician offices, IDTFs, and institutional settings.
[22] The Boards of Trustees of the Federal Hospital Insurance and
Federal Supplementary Medical Insurance Trust Funds, 2008 Annual Report
of the Boards of Trustees of the Federal Hospital Insurance and Federal
Supplementary Medical Insurance Trust Funds (Washington, D.C.: Mar. 25,
2008).
[23] The BETOS coding system was developed primarily for analyzing the
growth in Medicare expenditures by broad service categories. Each HCPCS
billing code is assigned to only one BETOS category. There are 18
distinct BETOS categories for imaging services.
[24] Including these additional HCPCS codes in our analysis would have
increased total 2007 expenditures about 1.1 percent.
[25] RVUs measure the relative costliness of each service compared to a
benchmark service defined as a mid-level office visit. For example, if
a midlevel office visit had an RVU value of 1.000, a service with 1.475
RVUs is estimated to be 47.5 percent more costly to provide.
[26] Under the physician fee schedule, the RVUs for each HCPCS billing
code are adjusted to account for geographic differences in the cost of
providing services. National fees do not account for these geographic
adjustments. Each fee can be facility-based or nonfacility-based.
Facility-based fees are paid for services that are provided in an
institutional setting such as a hospital. Nonfacility-based fees are
paid for services that are provided in an office-based setting such as
a physician clinic.
[27] Services for which the first digit of the HCPCS code was numeric
or "G" and had no modifier to indicate that the claim was for the
physician interpretation, were classified as imaging tests.
[28] We also examined, as a separate factor, the combined effect of
volume and fees for ancillary services, such as radiopharmaceuticals
and iodine supplies, but ultimately excluded this factor from our
results because it increased total expenditures less than 0.5 percent.
[End of section]
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