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Medicare Update for Radiologists: Predictions for 2008 and Beyond

¹ Diagnostic Radiology, Yale University, 333 Cedar St., New Haven, CT 06510-3206.

Address correspondence to H. P. Forman, Associate Editor, Health Policy (HealthPolicy{at}arrs.org).

Keywords: Medicare • Part A • Part B • Part D • radiology • trustees report

Is the glass getting emptier? Each year, I give an update on the Medicare "problem," based in large part on the annual Medicare trustees report. As I've described in the past, the Medicare problem is not a single problem but rather a combination of issues. Medicare is funded through two distinct mechanisms and each has its concerns. The Part A (Hospital Insurance) program is fiscally unsound, with less revenue flowing in than flowing out and a demographic crisis confronting it. The Part B program, which is generally now combined with the prescription drug benefit (Part D) when talking about its fiscal effects, is a huge budgetary strain, but with no crisis over fundability. In this brief, I will give an update on the current state of these programs and also make some predictions for the coming 18 months.

In 2006, Medicare covered 43.2 million people, with 7 million qualifying as disabled. Total benefits paid for the combined program were $402 billion. The Medicare Part D benefit, in its first full year of operations, expended $47 billion, coming in below expectations. The average benefit to enrollees was $4,410 for Part A, $4,121 for Part B, and $1,690 for Part D totaling, on average, $10,221 for the year per enrollee. These benefits require a Part B and Part D premium, thus making the net benefit slightly smaller. Still, the total medical expenses covered are clearly huge, considering that they nearly equal the total Social Security benefit for many individuals.

The Medicare trustees report that recently was released once again reaches dire conclusions regarding the Medicare program. Major conclusions from this report include:

• The Part A Trust fund will be exhausted in 2019 (Fig. 1). This will require either increased taxes or decreased benefits, or some combination. Making such changes earlier, rather than later, will certainly spread the pain. It also will reduce the intergenerational transfer of wealth that will be required.
  
• Total Medicare outlays, less dedicated revenues, will exceed 45% of outlays in 2013 (Fig. 2). By earlier legislated definition, this triggers a requirement that the President must send to Congress a plan for curtailing this growth within 15 days of the 2009 budget submission (which generally would occur in early February 2008). Thus, at the height of the primary season next year the President will need to make a statement as to his intentions regarding curtailing Medicare's costs and/or raising taxes.
  

View larger version (14K): [in this window] [in a new window] [as a PowerPoint slide]   Fig. 1 —Part A Trust Fund balance at the beginning of each year as a percentage of annual expenditures. From the Medicare Trustees Report (Center for Medicare and Medicaid Services; 2007).

View larger version (10K): [in this window] [in a new window] [as a PowerPoint slide]   Fig. 2 —Projected difference between total Medicare outlays and dedicated financing sources, as a percentage of total outlays. 45% trigger, as per Medicare Prescription Drug, Improvement and Modernization Act (MMA) of 2003. Requires federal budgetary action in 2008.

So what does all this mean for radiology? In the past, I have been optimistic that we could overcome many of the major fiscal challenges we have been facing (i.e., our glass has been full). This year's Medicare trustees report indicates that may no longer be the case. Based on the report, I predict:

1. Any hope of reversing the Deficit Reduction Act (DRA) 2005 reductions that our practices are now seeing approach nil.
   
2. While imaging costs have not been separately spelled out in the Medicare trustees report, MedPAC has raised this issue in the past, and the Government Accountability Office currently is studying the problem (at the request of Senators Rockefeller [D-WV] and Smith [R-OR]). In the face of grave Part B fiscal concerns, imaging will continue to be scrutinized and further reimbursement reductions and/or utilization curtailment initiatives will be recommended.
   
3. The Sustainable Growth Rate (SGR) legislation (from the Balanced Budget Act of 1997) will again be fixed, for "one-time-only," in 2007, preventing Medicare conversion factor reductions in 2008. The budgetary effects of a permanent fix are enormous and Congress will wait to tackle this one with the overall Medicare reforms that will come out of the 2009–2010 session. It is not impossible to imagine Congress acting in the presidential election year, but I think it is unlikely.
   
4. As self-referral is one of the few areas where savings could be found, some curtailment of high-cost self-referral may come out of this current congressional session (Stark III anyone?). However, I'm not sure that this change would cause any substantial effects on our practices.
   
5. Medicare Advantage will move to front and center in the battle to hold down overall costs. The trustees report is agnostic about whether managed Medicare is a cost-saving option, but that would not change the views of those who believe managed care is the only solution that can save the health care system. Whether or not managed Medicare is a cost-savings tool does not change the fact that it can be used to transition current Medicare beneficiaries to a "personal responsibility" model, where each new enrollee is given a "voucher" for the purchase of health insurance and more expensive programs would be funded with additional out-of-pocket expenditures.
   
6. The Medicare program will consider some of the mechanisms that the radiology benefits management industry uses in curtailing private sector imaging costs. These include precertification, preauthorization, and utilization review. Some of these changes could occur as part of a transition to a pay-for-performance model.
   

The Medicare problem remains the most serious threat to the continued robustness of our specialty. Most changes in modern medicine have evolved only after Medicare began coverage; and reimbursement from Medicare has dictated (in relative terms) the overall reimbursement from private payers. The good news is that our clinical importance appears intact, with ever-increasing numbers of medical students choosing our specialty and ever-increasing numbers of examinations being ordered by referring physicians. However, all of medicine is standing on shifting ground.

There are things that we as radiologists can do to balance that shift. Quality improvement initiatives, primarily occurring through the Radiological Society of North America and the American College of Radiology, need to be visibly supported by all radiologists. Furthermore, they must target initiatives that demonstrate health and health care improvement, not merely process improvement. Industry (primarily equipment providers) needs to partner with radiologists to do more to demonstrate cost-effectiveness and improvement in health outcomes. The primary direction of such dollars, currently, has been on novel technologies and new applications. Radiologists need to be a visible presence in providing imaging interpretations. Interpreting studies (final reports) after the patient has been clinically managed may be legal and even acceptable, but gives the perception that we are not part of the clinical encounter. In addition, academic institutions either should accept the fact that board-certified radiologists have primary responsibility for timely, contemporaneous interpretations, or should reanalyze the length of residency training. Accepting a resident-interpretation during night-time and weekend hours is counter to our efforts that we add real value. Surgeons do not defer to their trainees to perform weekend and evening surgery, and neither should we.

The optimist would look at our situation and say that our glass is still more than half-full; the pessimist would say that it is almost half-empty. I will take the optimist's view with a caveat. We will need to be extra vigilant on behalf of quality care to ensure it stays that way.

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